Engro Polymer raises Rs8.75b through Sukuk issue

With the financing, the company will expand PVC production plant

KARACHI: Engro Polymer and Chemicals Limited (EPCL) has raised a debt of Rs8.75 billion by issuing a Shariah-compliant Sukuk for the expansion of its plant, according to a notice sent to the bourse on Wednesday.

“EPCL has successfully completed the Sukuk issue of Rs8.75 billion, carrying a rental rate of 3-month Kibor (Karachi Interbank Offered Rate) plus 0.9% over a tenure of 7.5 years,” stated the company in a notice to the PSX.

The financing is part of the company’s Rs10.3-billion expansion plan for its production plant of polyvinyl chloride (PVC) - a chemical for the production of construction plastic products, including water and sewerage pipes, cables and consumer items like shoes and packaging films.

Of the total, the company had raised Rs5.4 billion by issuing right shares, said an EPCL official. Another $35 million was received from the International Finance Corporation (IFC), a member of the World Bank Group.



Pakistan has a wide demand and supply gap in real estate, which is sparking a surge in PVC demand. EPCL is capitalising on the situation by adding a new production line.

With the addition of the new plant, total capacity of the company will go up from 100,000 to 295,000 tons per year. The expansion plan includes production of other chemicals like VCM and caustic soda flakes, a new production line in its portfolio. With the issuance of the Sukuk, the company has achieved its goal of converting all its long-term debt into Islamic financing.

“The purpose of this Sukuk was to re-profile long-term loans of the company appearing on its books as on December 31, 2017. Post-completion of the Sukuk, the long-term funding of the company is now entirely Shariah-compliant,” stated company secretary in the notice.

Published in The Express Tribune, January 17^th, 2019.

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