Pak Arab Refinery Limited (PARCO) — Management of Circular Debt Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Debt that changed the Pakistani market and corporate business operations as a whole was created by an unexpected slowdown in recovery of payments. The case discusses the energy and electricity sectors, along with the reasons for the debt that is annular.

The Government of Pakistan had devoted its focus on the Pakistani power and energy sectors; to respond to high petroleum prices, a subsidy was provided in 2008 to keep the price of diesel low. The government, nevertheless, hadn't created an effective strategy to recover these funds, and when big public sector businesses like Pakistan International Airlines didn't pay its bills, no action was taken. The focus of this case is on determining the quite big quantities of debt that had accumulated in various energy businesses.

Learning Objective: The case is suitable for use in a number of subject areas:

In a class on management control, this case can be used to assess working capital debt difficulties.

In a category on risk management, the case can be used to illustrate the utilization of currency swaps, foreign exchange risks to reduce cash flow change, risk, and regulatory risks. Students are exposed to ratio evaluation of the data in the exhibits.

In a group on corporate governance, this case can be used to examine the function of supervisors and directors in coping with the government.

In a course on government and business connections, this case exemplifies just how to empower a business to convince government officials that changes made in pricing and other regulations have been harmful to company.

Publication Date: 07/05/2011

This is just an excerpt. This case is about Finance