THE International Multi Group of Companies is a recipient of Export Trophy in vegetable ghee and cooking oil sector. Its export proceeds are around Rs1 billion per annum, while its sales turnover is nearly $250 million, or over 1,000MT a year.
It has 2,000 workers in Pakistan. The group was set up in 1985. Its premium brand is ‘Shama,’ while another brand, ‘Fryday,’ was recently introduced in the UAE.
Shaikh Amjad Rashid is the chairman of the IMGC Group. The group runs three plants for edible oil processing, packing and solvent extraction at Nowshera, Multan and Port Qasim in Karachi.
Q.1. As an important exporter, how do you look at the export scenario for your industry/food sector in particular, and the country’s exports in general?
Ans. As an agrarian economy with great potential, Pakistan can increase its exports of agriculture and food products manifold. Rice continues to hold the third position on our export list. We have started exporting sugar over the last two years, and wheat is also available for export after meeting strategic reserves.
To increase value-added exports, agriculture should be considered an industry, and facilities available to the industrial sector should also be extended to farm products.
Special emphasis needs to be placed on quality, grading, packaging, and cold storage facilities. Lack of aggressive marketing of Pakistani brands in foreign markets is another shortcoming that the Trade Development Authority of Pakistan (TDAP) needs to focus on, as no individual setup can undertake such an expensive venture. The Export Development Fund (EDF) should be used for the purpose.
Similarly, warehouses in all major cities near growing areas of fruits and vegetables can contribute in reducing wastage, as growers can bring their produce for grading and packaging for export. This should run on a corporate basis.
Exports of ghee and cooking oil can also increase if facilitation is extended, and if the current restriction of 90 per cent refund of custom duty, sales tax and income tax paid is removed, as this makes our products uncompetitive in the international market.
Further delays in the releasing of refunds of Customs and sales tax add to the cost.
Similarly, no refund is allowed on custom and sales tax on export of cooking oil.
The government should provide a business friendly environment that follows two basic principles of reducing the cost of doing business and reducing the number of processes.
Q.2. How much is the rupee depreciation helping your exports?
Ans. The rupee’s deprecation does not help industries where imported input is essentially required. The ghee and cooking oil industry imports items like RBD, palm oil, olein, degummed soybean oil etc. The rupee’s depreciation, in fact, acts negatively on exports of this segment.
Q.3. Can you tell us about:
(a) The share of your exports in your overall foreign sales, and the role of brands? And (b) Your plans to build up on your exports; underway investment; and markets that your group intends to target?
Ans (a). Our brand ‘Shama’ has been in the lead for exports since 1960, particularly to Afghanistan, and in the past to some Middle East countries. Our share, as compared to the international share of exports from Dubai UAE, Muscat, Sri Lanka and India is very low due to difficulties like the non-refunding of 100 per cent Customs duty and sales tax, whereas Gulf countries have allowed this concession to their members for exporting ghee.
Ans (b). We have started a project at Port Qasim with an investment of Rs900 million, and now intend to export from here. We used to export to Afghanistan and CIS states through the Torkham border from Nowshera in Khyber Pakhtunkhwa, where the group’s main plant is located and is functioning.
In the new set up at Karachi, we plan to seek permission to export to the Middle East, including Saudi Arabia, and other markets where the Pakistani diaspora is living and familiar with our brand. Additionally, opportunities are also seen there in countries like Iraq, Syria and Jordan, and in Saudi Arabia during the Hajj season.
Q.4. How do you see the growth in the domestic market for ghee and cooking oil?
Ans. Ghee and cooking oil are important consumer products, and with the population growth here as well as the extended population of Afghanistan, the prospect for growth is there. The market segment is also changing from ghee to cooking oil due to more health awareness.
Preparing for this change, the Group has set up a solvent extraction plant at Multan. Two more extraction plants are being set up at Nowshera and Karachi with our own investment.
Q.5. What measures should be taken to cut edible oil imports?
Ans. The growth in production of oil seed, particularly sunflower, cotton, canola and rapeseed will reduce the import of finished edible oil products.
The production of sunflower seed is increasing, and efforts are being made for higher value seeds like corn and canola. The preferred locations for these seeds are in KP and Central Punjab.
The long-term strategy should focus on growing palm, fruits and oil mills on the coastal areas of Sindh and Balochistan for achieving higher goals and self-sufficiency.