Engro Foods in Pakistan, is among the biggest and fastest growing firms with a vision to cater to domestic needs with products conforming to worldwide standards. Highly passionate about offering millions of people across the length and breadth of the country and beyond with the ultimate brand experience, its product portfolio comprises some of Pakistan’s biggest and best selling brands counting Olper’s, Olper’s Lite, Olper’s Lassi, Omore, Dairy Omung and Tarang.
Engro Foods no doubt, is a company that prides itself on being the market leader in innovative new offerings. From Tarang to the new Olper’s Lassi, the management has organized this cutting edge by gauging consumer requirements in the market and offering products differentiated on their quality and value proposition.
The emphasis on fostering creativity and successfully implementing those plans translates into its unique product portfolio, which sets Engro Foods apart from their competitors.
2014 was a landmark year for Engro Foods in terms of innovations, with a spate of radical new products offering welcome breath of fresh air.
During the nine months closed September 30, 2016, the Company registered revenue of Rs34.3 billion as against to revenue of Rs37.3 billion in the same period last year.
The management of the Company recorded a net profit of Rs2.59 billion vs Rs2.60 billion in the corresponding period last year, despite lower revenue and imposition of ST through the government of Pakistan in the Budget FY2016-17 mainly because of declined financing and administrative costs.
During the nine months closed September 30, 2016, the ice cream business posted volumetric growth led by consumer relevant product introduces and focused brand investment. Volume growth coupled with improved margins resulted in the segment reporting a net profit of Rs203 million versus net profit of Rs101 million in the same period last year.
Furthermore the Company’s dairy farm continued to be a rich and nutritious source of raw material for Engro’s dairy segment.
However, declining global market prices of animals led to non-cash valuation losses and consequently the segment recorded a loss of Rs66 million versus a net profit of Rs15 million in the same period last year.
Engro intends to accelerate volumetric growth and consolidate its market leadership positions on the back of further brand investment in the future countering intensified competition and increased product rate also the negative effects of changes in GST regime.
Presently in partnership with the World Bank Group’s International Finance Corporation and the Dutch development bank FMO, Royal FrieslandCampina N.V. has acquired a majority stake of 51 percent in Engro Foods. Through the strategic coalition, Engro Corporation would remain an important shareholder and partner in Engro Foods. The execution of this transaction is one of the single largest private sector FDI (Foreign Direct Investment) in the country in present years, amounting to a total investment of $450 million (430 million euros).
TAX STRUCTURE ON DAIRY INDUSTRY
In the budget for 2016-17, the Government of Pakistan imposed 17 percent tax on the inputs of the dairy industry by withdrawing the zero-rating regime. It also slapped an extra 25 percent regulatory duty on imported powdered milk, rising overall duty on the product to 45 percent.
The government withdrew the zero-rating regime facility on inputs of milk, butter and other dairy products to hide the inefficiency of the FBR that was explaining the industry’s Rs8 billion yearly ST refunds as part of its revenues. It imposed extra regulatory duties that the government mentioned was to protect the farming community’s interests. The change in tax structure adversely disturbed the profits of the dairy industry firms.
OLPER’S BRAND FITS FOR CONSUMPTION
After conducting tests of packaged milk given UHT (Ultra High Temperature) and pasteurization treatment, PCSIR (Pakistan Council of Scientific and Industrial Research) has examined that Olper’s milk is safe for consumption.
Engro uses UHT treatment to raise the shelf life of packaged milk. For UHT treatment, milk is heated to above 135 degrees Celsius to kill harmful bacteria. Pasteurization is a similar process, but involves lower temperatures and seeks to preserve microbes that are good for human consumption while eliminating harmful ones.
Pakistani people mostly have been consuming milk adulterated with dissimilar chemicals, counting detergent powder. The use of contaminated and substandard milk has been leading to serious diseases like hepatitis-C and cancer in humans. The concerned authorities should ban the use of contaminated and adulterated milk and even water.
The authorities must play a role in organizing a level playing field in import and export of dairy products, for example by ensuring realistic and competitive import charges. The low duties will enable import of high value-added dairy products.
The Government of Pakistan should also at least lower the duties on those dairy products that are not produced in the country such as infant milk. The dairy industry also national and provincial governments need to endorse the significance of safe and healthy nutrition by ensuring clear standards and legislation. There was a rising need for high quality dairy products in Pakistan.