Engro assessing options to invest Rs60 billion

KARACHI: Engro Corporation, with a surplus Rs60 billion invested in short-term government papers, is assessing investment options in electricity transmission projects, petrochemicals, and business solutions, the company’s management informed an analyst briefing on Wednesday evening.

Analyst Amreen Soorani at JS Global Capital said Engro was looking to open new avenues in agri-solutions, renewable energy and power transmission projects.

“The management remains open to Greenfield/Brownfield expansions or merger/acquisition to deploy the more than Rs60 billion cash on the books, bulk of which is invested in short term government papers at present,” she added.

In December 2016, Dutch company FrieslandCampina completed its acquisition of a majority stake in Engro Foods. The Netherlands-based dairy company acquired 51 percent stake at Rs120/share in Engro Foods.

A report issued by First Capital Equities said Engro’s management was exploring options in agri-space, renewable energy, and chemicals in addition to technological developments, “first internally and then selling expertise outside in collaboration with the GE (General Electric”.

However, Engro has not made the final decision with regards to timeline and business avenues, while the corporation does not plan any more divestments going forward.

Under LNG business, it has signed additional contracts with Sui Southern Gas Company (SSGC) to augment revenues. Engro Elengy terminal’s occupancy increased with 70 cargos in 2017 versus 46 last year.

As per the management, Thar coal projects are ahead of time and are expected to commence operations during mid-2019, while the projects are also running under the budget.

The company is already in talks with various upcoming coal-based power producers that are likely to procure local coal from Sindh Engro Coal Mining Company (SECMC) for generation of 4,000 megawatt.