DGKC to invest PKR 500 million in Nishat Dairy – Alfalah Securities Limited

Karachi, October 03, 2012 (PPI-OT): The management of DG Khan Cement (DGKC) has approved equity investment of up to PKR 500 million in Nishat Dairy (Pvt.) Ltd. which was incorporated on October 28, 2011 to carry on dairy business in Pakistan having a paid up capital of PKR 1,500 million which will be further raised to PKR 2,700 as and when required.

According to Alfalah Securities Limited, the fund will be utilized to set up a dairy farm with the capacity of 2,500 milking animals in two phases with 1,500 animals in the first phase and 1,000 animals in the second phase. The company will sell raw milk to companies associated with diary business and the cattle feed will be outsourced. The cattle farm is to be set up on 147 acres of land purchased at Sukheki Road – Hafizabad District.

DGKC will benefit from the dividend income from investment in the said associated company. DGKC will have an equity shareholding of 18.52% of the raised paid up capital by taking up 50 million shares. The breakup value of Nishat Dairy is PKR 9.86 per share as at June 30, 2012 and the fair value is PKR 28.55 per share as estimated by Tabassum Saleem and Co. Chartered Accountants at cost of capital of 16.98% and 4% terminal growth rate. It bodes well for the profitability of DGKC, however, it would take over a year and a half before the benefit begins to realize in DGKC as the commercial operation of this project April 01, 2013.