The CEO of Engro Corporation resigns and sends shares tumbling
After more than 27 years, Asad Umar has resigned from his position in one of Pakistan’s largest conglomerates to jump on the popular bandwagon of Imran Khan's politics.
At the time of his resignation, the Chief Executive Officer chose not to announce his immediate plans to join Pakistan Tehreek- e- Insaaf (PTI) but his conspicuous moves in the corridors of power with influential politicians were sufficient for the media to make an educated guess.
The market however did immediately respond to this corporate behemoth's departure as the stock price went up 5 percent within minutes of the announcement. According to Elixir Securities Analyst Sibtain Mustafa, "Engro closed down 2.3 percent to Rs100.04, as investors were mixed on the resignation and its impact on the future of the company.”
Under Asad's leadership, Engro expanded phenomenally in the past two decades with revenues growing from scarcely Rs13 billion in 2004 to Rs114 billion in 2011, growing at a generous annualised rate of nearly 36.4%. (Inflation during that time averaged 12.6% per year.)
An MBA graduate from IBA, Asad started his career in Karachi with HSBC in 1984 but soon joined Exxon Chemical Pakistan which after Pakistan's most successful employee led buyout in 1992 was renamed to Engro Corporation Limited. His career progressed through various divisions of the company and thereafter in 2004 became the president and CEO of Engro Corporation.
When Umar took over, Engro was just a fertiliser producer with a petrochemical subsidiary. But when he took it under his wings, the company turned into a diversified industrial business whose portfolio included stakes in chemical fertilizers, food, petrochemicals, terminal storage industries automation and power generation.
Even within the core fertiliser business, he took the company to new heights with the $1.1 billion project that set up the world’s largest single-train urea manufacturing plant in Pakistan.
His departure from the Engro Corporation is likely to affect the performance of the company and can only be a negative for Engro.However, it is yet to be seen, as to who would replace his position and how the company performs under the new management. Therefore, the best bet is to hold on to the stock at current levels.
Quitting an exceedingly well-paid job, at one of the top corporations in the country is a spectacle you rarely observe in Pakistan which makes many wonder if he is in search of greener pastures.