Asahi Glass Co., Ltd. ("Asahi", Headquarter: Tokyo, President: Mr. Hiromichi Seya), Mitsubishi Corporation ("MC", Headquarter: Tokyo, President: Minoru Makihara) and Engro Chemical Pakistan Ltd.("Engro"), which is a major fertilizer company of Pakistan, concluded the joint venture agreement at Karachi on October 10 to establish a joint venture company to be engaged in the Polyvinyl Chloride ("PVC") business, the first major PVC manufacturer in Pakistan.

The demand for PVC in Pakistan has been growing at 10% per year for the past several years. PVC has been mainly used for pipes, shoes and electric wires and the consumption of 1996 is estimated to be about 90,000tons. There used to be a small local PVC manufacturer but it already stopped producing and all the demands for PVC at present are relying on imports from Saudi Arabia, Iran, Thailand and other countries. Under such situation, Engro, which is the second largest fertilizer company in Pakistan and has been keen to diversify its business into PVC and other petrochemical industries, decided to cooperate with Asahi and MC in producing and selling PVC in Pakistan.

Asahi is one of the largest chlor-alkali manufacturer in Asia, having its chlor-alkali business in Indonesia and Thailand in addition to its own operation in Japan, and this project will be its third chlor-alkali overseas base.

MC already has polyester fiber and polypropylene film businesses in Pakistan and this project will be its first major step into petrochemical business in Pakistan.

Engro, Asahi and MC are equity partners in the ratio of 50%, 30% and 20% respectively in the joint venture company called Engro Asahi Polymer & Chemicals Ltd. ("EAPCL"). The total investment of this project is estimated approximately US$83million and the capital of EAPCL will be US$37million. Asahi and MC's combined equity in the amount of US$18.5million will constitute the largest investment so far made by Japanese companies for a joint venture in Pakistan. The president and executive vice president of EAPCL are planned to be nominated by Engro and Asahi respectively. Engro will also support EAPCL in the marketing area by providing its business know-how in Pakistan, while Asahi will support EAPCL in the field of manufacturing PVC and MC will support EAPCL as the supplier of Vinyl Chloride Monomer ("VCM"), the main raw material of PVC.

The PVC plant of EAPCL, when constructed at Port Qasim Industrial Estate about 60km east of Karachi, will produce 100,000tons per year under the technology license from Mitsui Toatsu Chemicals Inc. (which has recently changed its name to Mitsui Chemicals Inc.). The construction will start in coming December and the commercial operation is targeted to start in December, 1999. EAPCL will import VCM in this plan but has a desire to expand its business toward upstream industries, eventually consummating a through production chain from (i) caustic soda and chlorine by electrolytic dissociation of raw salt to (ii) Ethylene Dichloride ("EDC"), which is the intermediate raw material for PVC, (iii) VCM and (iv) PVC.

Information

1. Engro Asahi Polymer & Chemicals Ltd.

      1. Address : 24-M.T.Khan Road, Karachi-74000, Pakistan
      2. Capital : US$37million
      3. Number of Employees : approx. 140 persons

2. Engro Chemical Pakistan Ltd.

      1. Address : 24-M.T.Khan Road, Karachi-74000, Pakistan
      2. President : Mr. Zaffar A. Khan
      3. Capital : Rs876million
      4. Main Product : Ureal Fertilizer
      5. Annual Sales : Rs7,168million (1996)
      6. Number of Employees : approx. 650 persons