Amir Khan

The acquisition of Zulfiqar Industries Limited (ZIL) by New Future Consumer International General Trading LCC (NFCI) for $6 million is seen as a strategic move to expand its presence in Pakistan’s FMCG sector, said Muhammad Irfan, planning manager of supply and demand at ZIL, while talking to WealthPK. “This acquisition, along with the additional investment planned by NFCI, is expected to boost the growth of ZIL brands, such as Capri and Opal soaps, leveraging their strong market presence and expertise,” he said. The State Bank report states that FDI for the FY2022-2023 is $1.58 billion, which is considered relatively low for a developing economy like Pakistan. The low GDP to investment ratio, which is 13% to 14%, reported by Pakistan Bureau of Statistics, indicates that the economy needs more investment to support its development.

“The acquisition of ZIL by NFCI demonstrates investor trust in the Pakistani economy and has the potential to attract more foreign investment. When reputable foreign entities make significant investments, it can enhance confidence in the country’s business environment. This increased confidence can encourage other foreign investors who may have been hesitant to invest in Pakistan previously,” said Irfan. According to ZIL Limited’s financial statement for 2023, the company experienced 68% growth in the top line, with revenues reaching Rs1.24 billion compared to Rs793 million in the previous year.

Despite facing economic and political challenges, the company was able to increase gross profit from 14.1% to 28.3% due to effective raw material procurement, price adjustments, and well-timed business decisions. NFCI recently acquired majority stake in ZIL Limited, purchasing 61% of the company’s shares from its directors at Rs286.64 per share and an additional 23% from the general public at Rs340 per share. The acquisition has resulted in a weighted average acquisition price of approximately Rs301 per share.

By purchasing 84.8% or 5.19 million shares in ZIL Ltd, LCC (NFCI) – an emerging international player in the FMCG sector, completed its foreign direct investment (FDI) in Pakistan in June 2023. This was made through a share purchase agreement under the substantial acquisition regulation of 2017. “Foreign investments often bring advanced technologies, management practices, and expertise to the host country. This can lead to the development of local industries, improved productivity, and enhanced skills among the local workforce,” he emphasized.

“The knowledge and expertise transfer resulting from foreign investments can make Pakistan a more attractive destination for other foreign investors looking to leverage the local talent pool.” “Overall, the investment in ZIL is seen as a positive development for Pakistan’s economy. It not only brings economic growth and job opportunities but also has the potential to pave the way for more foreign investment in the country, contributing to its overall development and competitiveness in the global market,” said the ZIL planning manager.

Credit: Independent News Pakistan-WealthPk