Engro compelled to sell 45pc shares of Engro Foods | Pakistan Today

Engro compelled to sell 45pc shares of Engro Foods

The devaluation of heavy investment along with production crisis due to gas curtailment has compelled Engro Corporation to sell up to 45 per cent shares of its subsidiary Engro Foods Limited.
It has been learnt that the corporation is in talks with some two or three companies for selling of up to 45 percent shares of Engro Foods, but no deal has been reached in this regard as yet, primarily by dint of percentage of shares.
Sources at the corporation informed Profit that the said subsidiary is facing serious production issues due to gas shortage, which has been resulting in the devaluation of their heavy investment.
The main contention in the deal is the percentages of shares, as the corporation wants to retain its control over the subsidiary that can go out of the domain of corporation in case majority of the shares are sold, sources added. Perhaps the corporation does not want to sell more than 45 percent shares, sources informed. ‘One of the main reasons for retaining the control of the subsidiary is the increasing demand of fertiliser in Pakistan. The corporation does not want to lose a very critical business,’ sources added.
The corporation is in shambles due to many reasons, and one of them was their huge loan for expansion that has now become a headache for them to repay due to dollar-rupee disparity along with increasing markup on it, sources said.
Sources further pointed out that this situation has led to spoil the equity ratio of the corporation, Therefore in order to set the house in order, the corporation management has been selling their land, unutilised machines, etc in order to remain stable.
Similarly, Engro Corporation sold 15 per cent shares of Engro Foods in terms of Engro Rupiya Certificates, and that initiative with 14.5 percent profit rate proved to be good for the corporation as they raised Rs2 billion against their expectation of Rs1 billion, sources said. These measures have gone on to stabilise their credit rating, sources said.
One of their decisions to establish a plant in Sahiwal was not planned initially, as they had decided on non-expansion after establishing a plant at Sukkur, and this forced expansion resulted in poor equation of the corporation, sources reasoned.
“The corporation is currently at the stage of finalising the deal, and it is expected that the deal would mature very soon by dint of the crisis the corporation is facing,” sources added.
When asked, the Chief Financial Officer of Engro Foods, Imran Anwar said ‘this is all rumour and they are not considering selling shares of the subsidiary.’



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One Comment;

  1. Rubbish journalism said:

    what nonsense! Do you even know what engro foods does? or the difference between urea and milk?

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