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Business Analysis: Pakistan Cable Essay

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Pakistan Cables, the country’s oldest and most reputable cable manufacturer was established over 5 decades ago in 1953 as a joint venture with BICC. In the subsequent six decades, Pakistan Cables has earned a reputation as a market leader and premier cable manufacturer in the country and a company that does not compromise on quality. Pakistan Cables has been listed on the Karachi Stock Exchange since 1955. In November 2010 General Cable Corporation, a Fortune 500 company and global leader in cable manufacturing invested in Pakistan Cables by taking up a 25% equity stake in the company.
Pakistan Cables is part of the Chinoy Group of Companies, which includes International Industries (IIL) and International Steels Limited (ISL), as well as …show more content…

But PCAL believes that its current capital structure is optimal as all its financial needs are being satisfied by its retained earnings and short term borrowings. They believe that their decision to pay off all long term loans and also the 25% equity stake that Generable cables bought has accelerated the growth and expansion of the company which can be seen through the growth in the EPS from 2011 to 2013. As a result, the company does not plan to change its capital structure in the near future and plans to run its day to day business using short term running finance.

Financial Sources
When deciding on what financial sources to use for its projects or assets, PCAL considers a number of different aspects. When deciding over the source of financing, PCAL analyzes the nature of the project which needs to be financed. Initially retained earnings are preferred for financing but if retained earnings are not sufficient, then PCAL decides to use debt that is financed through banks. They prefer banks over any other source of financing as the loans are secured.

For projects which have a relative smaller payback period and are expected to yield greater cash inflows in the near future, short term financing is preferred. Projects which require large investment with lesser initial returns, long term financing is used. In 2013, PCAL paid off all its long term debt and has moved to be all equity since it

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