Term Paper of Dbbl

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Introduction:

To finance their investments firms use retained earnings, new borrowings or the issue of stock. The financing decision involves i) dividend and ii) the capital structure.

Dividend policy involves the decision to pay out earnings versus retaining them for reinvestment in the firm, and dividend policy decisions can have either favorable or unfavorable effects on the price of a firm’s stock. Cash distributions are made to stockholders form the firm’s earnings, whether those earnings were generated in the current period or in previous periods.

Origin of the Report:

During this semester of Summer 2010 in MBA program of East West University, we are required to submit a term paper in the course Corporate Finance: “An Appraisal of Dividend Policy and Capital Structure of An Organization”. We have chosen PRAN for our term project.

Objectives of the Report:

The general objective is to prepare and submit the term project within specified time by having an idea and over viewing the PRAN, their Dividend Policy and their Capital Structure.

Scope of the Report:

The scope is limited to over viewing PRAN their dividend policy and the Capital Structure they have adopted for their organization.

Limitations of the Study:

Secondary data were used in this study as result it may differ from actual data. As a group, we have also faced some difficulties in compiling and discussing it due to unavailability of all members at the same time. The absence of solid and verse knowledge about dividend policy is absent and we have taken it as an addition in our learning curve.

Methodology:

The report is originated from secondary data sources-

1. The Company’s Annual Report
2. DES website
3. Different Articles from Internet
4. Other related websites

Company Profile PRAN:

PRAN stands for Programme for Rural Advancement Nationally.

“PRAN” is currently the most well known household name among the millions of people in Bangladesh and abroad also. Since its inception in 1980, PRAN Group has grown up in stature and became the largest fruit and vegetable processor in Bangladesh. It also has the distinction of achieving prestigious certificate like ISO 9001:2000, and being the largest exporter of processed agro products with compliance of HALAL & HACCP to more than 70 countries from Bangladesh.

PRAN is the pioneer in Bangladesh to be involved in contract farming and procures raw material directly from the farmers and processes through state of the art machinery at our several factories into hygienically packed food and drinks products. The brand “PRAN” has established itself in every category of food and beverage industry and can boost a product range from Juices, Carbonated Drinks, Confectionery, Snacks, and Spices to even Dairy products.

Today, our consumers not only value “PRAN” for its authentic refreshing juice drinks products, but also for its mouth watering quality confectionery products with high visual appeal and exciting texture. We intend to expand our presence to every corner of the world and strive to make “PRAN” a truly international brand to be recognized globally.

The authorized capital of PRAN is BDT 50,000,000 and paid up capital is BDT 8,000,000. The proportion is given below:

|Share Percentage | |Director /Sponsor |Govt. |Institute |Foreign |Public | |42.75% |0% |1.27% |0% |55.98% |

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Dividends:

Dividend is that part of the profits of a company which is distributed amongst its shareholders.

According to ICAI, "Dividend is a distribution to shareholders out of profits or reserves available for this purpose."

In other words we can say that a corporation makes Dividend payments to its shareholder. It is the portion of corporate profits paid out to its stockholders. When a corporation earns a profit...
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