Engro Polymer plans capital expenditure of Rs10.3bln

KARACHI: Engro Polymer and Chemicals Limited has announced a capital expenditure of Rs10.3 billion, which would be funded through issuance of right shares, debt and internally generated cash flows, a bourse filing said on Thursday.

However, the market did not reacted positively to the development, as the company’s scrip lost 3.25 percent at the bourse.

The board of directors of Engro Polymer and Chemicals has approved capital expense of approximately Rs10.3 billion, of which Rs7.6 billion would be spent on the addition of new PVC plant of 100,000MT (taking the total capacity to 295,000MT/annum) and VCM Plant debottlenecking of 50MT/annum with the target completion in the third quarter of 2020, it added.

The expense is intended to be funded through the issuance of right shares of approximately Rs5.4 billion and the remaining Rs2.2 billion through debt.

Other investment of Rs2.7 billion, funded through internally generated cash and debt will be used on installing a new product line by adding Caustic Flaker of 20MT/annum and on debottlenecking of sodium hypochlorite and hydrochloric acid plants for local / export markets.

The company has also planned membrane replacement of existing caustic soda plant to enhance efficiency and production and upgradation of gas turbines to enhance reliability and efficiency of the power plant. All such projects will be completed within 2018, it said.

Engro Polymer is the only fully-integrated Chlor-Vinyl chemical complex in Pakistan. It is a subsidiary of Engro Corporation, involved in the manufacturing, marketing and distribution of quality Chlor-Vinyl allied products and PVC.

Engro Polymer and Chemicals had announced a net profit of Rs1.046 billion for the half-year ended June 30, 2017.

According to the company’s latest half-yearly report, domestic market for PVC is expected to remain strong, while the caustic market is projected to remain stable.