Matco Foods invests Rs. 1.4 billion for a new Corn Starch Facility
Matco Food has decided to setup a Corn Starch Processing Plant in Allama Iqbal Industrial Estate SEZ, Faisalabad with an estimated investment of Rs. 1.40 billion which will be financed through mix of debt and equity. The capacity of plant will be 200 Tons Per day of Corn Grinding which will produce 40,000 MT of Corn Starch per year and 18,000 MT of Animal Feed per year.
As per research, the market size for Corn Starch in Pakistan is growing by nearly 5-7% per year which means the size of the market will double in the next 10 years. The corn starch is used majorly by textile industry followed by food & pharma sector and paper & board sector in Pakistan. Considering the expected investment in textile industry and next 5 year textile policy, the Company is expecting the increase in the corn-starch demand in Pakistan.
Corn Starch Business complements Matco’s existing Rice Glucose Division which caters to the same market of confectionary, food segment where Corn Starch is sold. Rice Protein, and Rice Bran from existing business also complements the Corn Gluten products as it will be sold in the Animal Feed segment. Matco will rely on its existing distribution network of Rice Glucose and Maltodextrin to market to existing customers and establish potential new customers. Matco has distributors in Karachi, Lahore, Faisalabad, Gujranwala, Peshawar, Sukkur, Hyderabad, Multan and other major cities.
Corn is the 3rd Largest Food Crop of Pakistan at 7.2 Million Tons of annual production. There is only one existing player with sufficient scale and market dynamics suggest that customer base is looking for other options of supply. Whereas, investment in Allama Iqbal Industrial Estate Special Economic Zone – Faisalabad will allow us tax holiday for 10 years. Further, Faisalabad is ideally located close to the main corn growing divisions of Faisalabad, Sahiwal and Multan.
Matco Foods Chief Executive Mr. Khalid Sarfaraz Ghori said that Matco already produces paddy and rice from the same growing areas where corn is grown – Jhang, Okara, Pakpattan and has links with suppliers for corn. Matco has extensive experience of procurement of agricultural raw material and we have experience of export marketing for over 26 years and will be able to leverage that experience in trade marketing fairs to attract customers for corn starch internationally. Matco also has experience of selling its rice glucose division products, to the same customer base that will be targeted for corn starch in the food segment. There is already a big established market for corn starch and we expect that the market is further growing at a very rapid pace due to demand of textiles from Pakistan and Food & FMCG demand within Pakistan. There is only one existing large player in the market - leaving ample opportunity for a new entrant to provide options for customers.
Pakistan economy is started to rebound in FY 2021 as the impact of the pandemic gradually fades and domestic demand recovers. Moreover, structural reforms should boost investment, while foreign demand is expected to pick up in tandem with the global economic recovery. Asian Development Bank projects growth of 1.5% in FY 2021, and 4.0% in FY 2022. Matco Foods Ltd. being Social Economic growth partner delivering its roll that will generate vacancies and economic activities in Pakistan, Insha’Allah. The Project is expected to be complete by June, 2022.