One of Pakistan's best-known industrial groups is walking away from the milk business. Nishat Mills Limited (NML) has approved the sale of its entire 49.1% stake in Nishat Sutas Dairy Limited (NSDL) to its Turkish joint-venture partner, Sütas Süt Ürünleri A.S., at a proposed price of Rs5 a share. In a notice to the Pakistan Stock Exchange (PSX) on Wednesday, the company cited prevailing market and regulatory conditions in the dairy industry, and the resulting strain on the venture's finances, as reasons for its exit.

NSDL is an associated company of Nishat Mills, set up as a joint venture with Sütas, a dairy group based in Turkey. The board concluded, after deliberation, that leaving the investment was in the best interests of the company and its shareholders.

The transaction is not yet final. It requires approval from Nishat Mills' shareholders, the signing of definitive agreements and compliance with all legal and regulatory requirements before ownership can change hands. Sütas has said it is willing to buy the stake and continue running the business. The Turkish firm, which Nishat describes as a leading international dairy company, would thereby take full control of an operation it had previously shared with its Pakistani partner.

Nishat presented the deal in a positive light for the wider economy. The company said the transaction would encourage foreign investors to keep participating in Pakistan's economy and demonstrated a foreign strategic investor's continued commitment to the country's dairy sector.

That framing sits alongside a less flattering message. By pointing to market and regulatory pressures and the financial strain on the venture, Nishat has signalled those conditions in Pakistan's dairy industry have proved difficult enough to prompt a major domestic investor to withdraw. How Sütas fares running the business alone will offer a further test of the sector's prospects.