Improved dynamics likely to enhance Engro profits: CEO

KARACHI: Engro Corporation President and CEO Ali Ansari said the profits of the holding company is likely to increase further this year, mainly due to improved dynamics in dairy and fertiliser businesses and expectedly timely commencement of the liquefied natural gas import at the LNG terminal.
“The year 2015 seems to be positive for the Engro’s food business, as we are planning to bring out new dairy products such as cream and desi ghee by the end of this year,” Ansari said in an interview.
The LNG terminal will be operational at the contractual date of March 31, he said, adding, the floating storage and regasification unit (FSRU), a large ship with onboard liquid-to-gas conversion facility and storage tanks, will be docked at the newly-constructed jetty at Port Qasim.
“This is the world’s fastest build project and complete within a span of 10 months. It was signed on April 1, 2014 and was completed last month,” Ansari said.
Currently, Pakistan is producing four billion cubic feet of gas/day. This project can produce 400 to 600 million cubic feet (mmcfd) of gas/day,” he added.
About Sindh Engro Coal Mining Company, Ansari said work has been started at the Thar coal project.
“We have done two million cubic meter (overburden) earth removing, while land acquisition is going on. The EPC contract has been signed. For the financing of the project, equity from the shareholders is closed, but we are doing the financial close on the debt side, which is expected to complete in the next quarter,” he added.
“We do not have any issue with the National Electric Power Regulatory Authority (Nepra), as it has given upfront tariff, which is very comparative and it is cheap than the electricity generated in the country,” he said.
Ansari said the Sindh Engro Coal Mining Company will generate 650MW at Thar coal in the first phase and 650MW in the second, while from LNG project, 25,000-33,500MW can be produced.
“The LNG and coal projects are going to be the game changers in Pakistan’s energy mix, which will help overcome energy crisis,” he said.
The company faced liquidity issues in 2012, as the government did not honour its contract for the installation of a new power plant of $1 billion. “It curtailed our debt repayment capacity. We signed agreements with banks and rescheduled loans. Our balance-sheet has improved, as we made debt repayments of Rs20 billion in 2013.”
“We faced some challenges in our trading business because of substantial appreciation in the exchange rate in the few weeks of March 2014, coupled with deep bearish rice market sentiment prevailing throughout the period, he said, adding, our trading business and petrochemical business affected from appreciation in exchange rate and lower commodity prices.”
Ansari envisages overall corporate profitability and businesses will improve this year, as the economy is gaining momentum and expected to grow between four and 4.5 percent with inflation projected at five to six percent. Moreover, interest rates are also softened.
The banks will improve their performance to increase their profitability. The appetite for the private sector credit is likely to go up with the consumer financing seems to gain momentum in the times to come, he added.