Expanding footprint: Meat One to go public in first food company listing in 5 years

Company offering 25 million shares at floor price of Rs43 per share

KARACHI:

In what is likely to transform the trade of meat in Pakistan, Al Shaheer Corporation Limited is set to expand its footprint across the country by going public.

After recording a phenomenal growth in its business during the last couple of years, the Karachi-based parent of Meat One – a high-end retail chain of butcheries – has decided to list on the Karachi Stock Exchange. This will be the first Initial Public Offering (IPO) by a local foods company in five years since the 2011 listing of Engro Foods.

The book building is taking place on June 10 and 11 with 25 million shares on offer at a floor price of Rs43 per share. The Karachi-based company will use this capital injection of over Rs1 billion (based on the floor price) to fund its nationwide expansion and take an early-mover advantage in the country’s Rs1.25 trillion largely untapped meat market.

The company will construct modern slaughterhouses and meat processing units for both red and white meat near Lahore and expand into poultry segment, which is double in size of the red meat market.

“Even if 10 new players enter the retail meat market, they will not be able to meet the current demand,” Chief Executive Officer Kamran Ahmed Khalili told The Express Tribune in an interview at the company’s Karachi office on Wednesday.

With new players entering this segment, consumer awareness will increase and the category will grow further, Khalili says of the market he thinks is largely untapped despite a growing demand for hygienically processed quality meat.

With conventional butchers, the largely unregulated segment known for their unhygienic slaughtering and processing of meat, failing to satisfy local consumers, the chain of specialty meat shops received an overwhelming response.

This very demand has been driving Meat One’s business, requiring them to expand into other cities.

Meat One’s journey

Starting in 2008, Al Shaheer set up a slaughterhouse in Karachi and soon became one of the largest exporters of meat to the Middle East. Though the bulk of its revenues still come from exports, the recent growth in its retail business seems to be driving the focus back to the local market.



It entered the local retail market in 2010 by launching Meat One that offers a variety of beef, chicken and mutton cuts.

Fast forward, the company reported an after-tax profit of Rs115 million in the first six months of fiscal year 2015. It expects to close the year with Rs5 billion in annual revenues, which translates to an increase of 13% year-on-year compared to Rs4.4 billion it grossed in FY14.

On the operations side, too, the company has been expanding aggressively as in the last six months alone, it increased the number of Meat One outlets from 14 to 24.

Company’s new shop ‘Khas’

Since Meat One is a high-end brand that remains out of reach for many, the company also launched conventional butcher-style small shops under the brand ‘Khas’ that offers the same quality of meat at cheaper prices.

The idea behind the business was to give masses access to high-quality meat but Meat One remained out of reach for many, Khalili said. They charge up to 10% premium for Meat One because it has no wastage.

“We, therefore, launched the Khas brand,” the CEO said, adding they source the same quality of meat for both the brands but Khas has competitive prices and is giving traditional roadside butchers run for their money. The brand, which was launched only a year ago, witnessed 200% growth in the first year and has 18 outlets.

After ensuring a significant presence in Karachi, the company entered the country’s largest consumer market Punjab last year by opening its first outlet in Lahore and second in Islamabad. The company has its own abattoir in Karachi that processes up to 40 cows and 500 goats per hour. It has also set up a farmhouse for 2,000 cattle in rural Sindh to ensure supply of high-quality meat by feeding the animal in controlled environment.

By constructing similar slaughterhouses in Lahore, Al Shaheer aims to capture Punjab’s market and expand further.

“We want to be in every big and small city where we can have profitable presence,” the company’s Head of Retail and Marketing Adnan Hussain said, adding they are receiving scores of requests from consumers to open outlets in their cities.

Published in The Express Tribune, June 4^th,  2015.

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