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Karachi, July 20, 2012 (PPI-OT): Engro Corporation Ltd. (Engro) is reported to have approached financial institutions to get its loan rescheduled as it is facing a liquidity crunch mainly due to low productivity from the fertilizer business in the wake of gas supply curtailment.
According to Alfalah Securities Limited, Engro s new plant ENVEN1.3 remained shut due to non availability of gas supply where it received gas only for about 5.5 months in 2011 while in 2012, the new plant received gas supply for only one and a half month.
Engro has started negotiations with the banks to get a major rescheduling of its loans to avert chances of a default on the loans. However, Engro s chief financial officer has denied such chances of defaults. In case of a default by Engro on any of its TFCs (Term Finance Certificates) or loans would have serious repercussions on all the companies under the umbrella of Engro Corporation making further borrowing intensely difficult and increase the borrowing cost for the company. Therefore, Alfalah Securities Limited recommends a cautious stance on the stock amid heightened risks.