KARACHI: The ICI Pakistan Limited makes first foray into the food business by participating in the import and distribution of Morinaga Milk Industry Company Limited Japan’s range of infant formula and nutrition products in Pakistan.

The board of ICI approved the signing of memorandum of understanding (MoU) with Unibrands (Pvt) Limited (“Unibrands”). A Searle Pakistan group company, Unibrands (Pvt) Limited was formed in 1978.

“The company has the entire range of infant formulas manufactured by Morinaga Corporation, Japan that are now market leaders in their respective market segments,” a person familiar with the business said.

ICI Pakistan’s company Secretary Saima Kamila Khan affirmed on Friday that the MoU with Unibrands was in line with the company’s corporate strategy for growth through diversification and added that the partnership “would position ICI Pakistan to leverage the opportunities represented by the high-growth food and nutrition sector in Pakistan.”

With total assets at over Rs21 billion, ICI Pakistan operates in a range of activities, the significant among them being soda ash, polyester staple fibre (PSF) and life sciences.

In 2012, Younus Brothers Group, the sponsors of the country’s largest cement plant Lucky Cement, acquired three-quarters of ICI for Rs14.4bn.

The market warmly greeted the ICI initiative to enter the food and nutrition business with the company’s stock price quickly climbing by Rs15 and hitting the ‘upper circuit’ to close at Rs321 on Friday.

Market participants believed that the ICI entry into the consumer goods sector, represented its desire to profit from the enormous earnings of companies on the sector and the expected forward growth mainly in the food segment, which is pushing the stock prices of companies to mind-boggling earning multiples.

The 10-rupee share in Nestle (Pakistan) the dairy producer is currently trading at incredible price of Rs12,480 a share.

Khurram Schehzad, head of research at Arif Habib Limited, contends that for the last four years (2008-2012) the consumer goods companies have returned, on average, an enviable 20pc growth in sales and 19pc in earnings.

He observes that during this period, the country’s food sector had seen the fastest growth of 26pc in, nearly four times the average consumption in the Asian region.

Economist Muzammil Aslam MD Emerging Economics Research believes that the increased consumerism (mainly in the food segment) stems from burgeoning middle class, rising health awareness, improving literacy rate and strong growth in rural income.

As the population of Pakistan is one of the fastest growing in the region at two per cent a year, with already 180 million mouths to feed, most market watchers are upbeat on the continuing growth of consumer goods (in the lead of dairy, food and nutrition) sector.

“The dairy segment in the consumer goods in Pakistan now commands market of $10bn,” a senior research analyst said on Saturday.

In 2012, ICI earned profit after tax of Rs893 million on sales revenue at Rs35bn. “From sharing in the business of import and distribution of Morinaga range of products, the company would

be able to supplement its earnings by receipt of ‘marketing margins”, the analyst said.