LAHORE: Engro Polymer & Chemicals on Monday announced it had signed a contract with Tianchen Corp China (TCC) for an integrated manufacturing facility with an annual capacity of 100,000 MT per annum for capacity expansion of PVC plant.
In a notification sent to the Pakistan Stock Exchange (PSX), Engro Polymer said, “In continuation of the disclosure provided by Engro Polymer and Chemicals Limited on December 28, 2017, wherein the company had announced approval of capacity expansion of PVC (including for which purpose the Company was raising funds, inter alia, by way of a rights issue of shares), it is intimated that the Company has signed a contract with Tianchen Corp China (TCC) for an integrated manufacturing facility with an annual capacity of 100,000 MT per year.”
While speaking to Profit, Director Research Capital Stake, Maha Jafer Butt said, “EPCL announced progress on its expansion project by going into agreement with China.
The company has already increased its revenue and profits and this shall help sustain and continue with it.”
Adnan Sheikh Pak Kuwait Investment Co AVP Research told Profit, “It shows us Engro is making swift progress towards expanding its PVC capacity and it will increase production capacity by around 50% and will positively impact the bottom line.”
“This agreement was signed a week ago and it’s only for plant and machinery. EPCL is already pretty efficient in PVC and they have been doing it for a long time. Mitsubishi is their partner and China is only providing a plant,” he added.
The company at the end of December 2017 had sent a notification to Pakistan Stock Exchange (PSX), informing its board of directors had approved a capital expenditure of Rs10.3 billion for the addition of a new PVC Plant and various other projects.
Also, a major capital expenditure was approved by Engro Polymer’s BOD was for a new PVC plant having 100,000 MT (taking total capacity to 295,000 MT per annum) & VCM Plant debottlenecking of 50,000 MT per annum, with target completion in Q3 of 2020, the notification read.
The project was set to cost around Rs7.6 billion, which was to be funded through the issuance of right shares of approximately Rs5.4 billion and remainder Rs2.2 billion will be funded via debt.
Other capital expenditures of Rs2.7 billion were also given go-ahead was to be funded through a mix of internal cash and debt, which includes “new product line by adding Caustic Flaker of 20,000 MT per annum. CAPEX of the project is approximately Rs 0.34 billion with target completion in Q4 of 2018”.
Also, the notification had stated “Debottlenecking of Sodium Hypochlorite & Hydrochloric Acid Plants for local/export markets. CAPEX of the project is approximately Rs 0.15 billion with target completion in Q3 of 2018.”
Furthermore, Engro Polymer approved membrane replacement of current caustic soda plant to improve efficiency and production and the capital expenditure for this project is estimated to be around Rs0.6 billion, with a completion deadline of Q3 2018.
Engro Polymer & Chemicals Limited (EPCL) 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 under the brand name ‘SABZ’.
China Tianchen Engineering Corporation provides construction and engineering services. The company was founded in 1953 and is based in Tianjin, China.
China Tianchen Engineering Corporation operates as a subsidiary of China National Chemical Engineering Group Corporation.
Engro Polymer & Chemical shares were trading at Rs34.82, up Rs0.56 (+1.63 percent). KSE-100 index was trading at 42,853.76 points, up 265.47 points (0.62 percent) at mid-day.
Engro polymer and chemical ltd ambitious expansion plans in the chemical and petrochemicals field are in line with the aspirations of the new govt as rapid industrialization and jobs creation to fight the menace of unemployment in the country.
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