Initial public offering: Engro Foods targets Rs675m from share offer

Company to also take internal financing and loans for capital injection.

KARACHI:

Engro Foods has announced an initial public offering (IPO) of its shares, targeting to raise Rs675 million in a bid to finance different projects.

Speaking to the media on Wednesday, Engro Foods Limited President and CEO Sarfaraz A Rehman said 27 million shares of the company would be offered at Rs25 per share, including a premium of Rs15. Subscription will be open from July 5 to 7.

Rehman said Engro needed capital injection of Rs7 billion for its projects and it had already secured Rs1.2 billion through sale of 48 million shares. “The company will also use internal financing and loans to achieve the targeted investment,” he said.

Engro, whose core products include tetra pack milk, ice cream, drinks and dry milk, has started a project of rice processing for local and international markets.

Replying to a question, the Engro Foods CEO said the company was focusing on an organised purchase of fresh milk from rural areas. Thirty thousand dairy farmers from across the country are providing milk to the company, which has set up 800 milk collection centres. Now, the company is planning to set up automated milk collection centres.

In the year 2010, he said, total turnover of the company was Rs21 billion, giving a profit of Rs171 million. In January to March this year, turnover of the company rose 32 per cent to Rs6.6 billion compared to the corresponding period last year. Of the turnover, Rs117 million was profit for the company.

Replying to another question, the CEO said Engro Foods was also active in the international market with five per cent of total turnover being exported, adding the company was selling tetra pack milk to Afghanistan and Oman while a strategy to export rice was also being devised.

Halal food business potential

The CEO said Halal food business was flourishing across the world and experts saw enormous opportunities in trade of Halal products. He said there were 1.6 billion Muslims in the world and the volume of Halal business amounted to $1.2 to $2 trillion, including $632 billion share of Halal food.

Rehman said Engro Foods had decided to introduce best food brands at the international level, adding the company had acquired brand name Al-Safa in Canada and North America with a trade volume of $63 million. He said Al-Safa had operations in 38 states of North America and it started Halal food business in Canada and US from May 6. In the second phase, Al-Safa network will be extended to Europe and later to Gulf Arab countries.

Published in The Express Tribune, June 30^th, 2011.