Details

Case

Educator Copy

Engro Chemicals Pakistan Ltd. - Dividend Policy

Shazia Farooq, Naim Sipra


INDUSTRY : Chemicals

AREA : Finance

ORGANIZATION : Engro Chemicals Pakistan Ltd.

LENGTH : 13

LUMS No : 02-606-98-1

PUBLICATION YEAR : 1998

DESCRIPTION

KEYWORDS:

Engro Chemicals,Pakistan,Limited,Dividend Policy,Finance


DESCRIPTION:

Engro Chemicals Pakistan Limited was the second largest urea manufacturer in Pakistan. The company was previously under the management control of Exxon Chemicals Limited. In 1991, Exxon decided to divest its urea business globally, selling its 75% equity in Pakistan to employees. Despite strong urea demand in Pakistan, Exxon did not focus on capacity expansion. After the employee buyout Engro Chemicals Pakistan Limited (Engro), the new company, embarked upon an ambitious capital expenditure which did not allow it to maintain a high payout pattern followed by Exxon.


LEARNING OBJECTIVES:

The purpose of the case is to demonstrate the effects of a change in management priorities on the dividend policy of the company. Furthermore, the case contains a bried overview of the urea industry as well as Engro Chemicals Pakistan Limited.


SUBJECTS COVERED:

Finance