Unity Foods Limited (Unity) will make an equity investment of almost Rs2 billion in its subsidiary, Sunridge Foods (Private) Limited, which makes sugar and rice among other products, the company shared in a notice to the Pakistan Stock Exchange (PSX) on Tuesday.
“We hereby convey that the Board of Directors of the company has approved a further equity investment of Rs1,999,999,980/- in Sunridge Foods (Private) Limited, a wholly-owned subsidiary of the company, by way of subscription of 44,444,444 right shares at Rs45/- per share (including premium of Rs35/- per share),” read the notice.
The investment is being funded through Unity Food's retained earnings and will allow Sunridge Foods to complete acquisition of assets of Uni-Food Industries Limited (a joint venture of Faran Sugar, Habib Sugar and Mehran Sugar in the bakery and confectionery segment) as well as a rice and flour mill at Jaranwala Road, District Sheikhupura.
Unity believes the investment will enhance Sunridge's production capacity, reduce distribution costs for sales in central and northern part of the country and help it "in increasing its product pallet as well as improve its profit margins going forward."
"This also is another step for the company to establish itself as a true national brand," said Unity.
Along with rice and sugar, Sunridge makes besan, suji, flour, lentils and pulses.
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At the time of this report, Unity's share price was hovering around Rs16.73 after starting the day at Rs16.7.
Unity Foods Limited was incorporated in Pakistan in 1991 as a Private Limited Company and subsequently converted into a Public Limited Company on June 16, 1991.
Previously the company operated in textile sector under the name of Taha Spinning Limited. Later, due to operating losses and financial problems, that business was closed down and the company was revived under the name of Unity Foods with the principal business activity of the company having been shifted from yarn manufacturing to edible oil extraction, refining and related businesses.