By the late 1990s, the Dewan Group had already established itself as a dominant player in multiple industries—cement, automobiles, and synthetic fiber. But for Dewan Muhammad Yousuf Farooqui, standing still was never an option. As Pakistan's economy evolved, he saw opportunities beyond manufacturing. Banking, real estate, and sugar—these were industries ripe for investment.
With rapid diversification, Dewan Group aimed to join the ranks of Pakistan's largest industrial conglomerates, like Nishat, Engro, and Fauji. But with every expansion came new risks. Managing such a vast business empire required not only vision but also careful strategy.
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The Big Decision
In early 1998, Yousuf sat in his Karachi office, reviewing market trends with his top advisors.
Yousuf:
"Gentlemen, our empire is strong, but it lacks financial stability. We rely too much on industrial production. It's time to expand."
Aslam Siddiqui (COO):
"Into which sector, sir? Cement and fiber are performing well, and the automotive industry is on the rise."
Yousuf:
"Financial services. If we control financing, we control the economy. Look at Nishat—they own MCB Bank. We need our own financial institution."
A silence fell over the room. Diversification into banking was bold but risky. Pakistan's banking sector was highly regulated, and competition was fierce.
Finance Director:
"Sir, setting up a bank from scratch will take years. Acquiring an existing institution might be a better strategy."
Yousuf (smiling):
"Exactly what I was thinking. Find me a bank that's struggling but has potential."
By mid-1998, Dewan Group acquired Metropolitan Bank, a mid-sized financial institution struggling with liquidity issues. Under Yousuf's leadership, the bank was restructured, offering competitive corporate loans to Pakistan's growing industrial sector.
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The Move into Real Estate
With financial services secured, the next target was real estate. The Pakistani property market was booming, and Yousuf saw an opportunity to create a high-end real estate empire.
In 1999, during a site visit to Islamabad, Yousuf and his team stood on a vast piece of undeveloped land. The Margalla Hills loomed in the background, offering a stunning backdrop for luxury properties.
Yousuf:
"This land has potential. We'll build high-end housing here, with commercial plazas, hotels, and shopping centers."
Real Estate Consultant:
"Sir, acquiring land is one thing, but development requires massive investment. Bahria Town and DHA are already dominating this sector."
Yousuf:
"They focus on large-scale projects. We'll target premium investors. The elite of Islamabad want exclusivity, not just housing."
With that, Dewan Real Estate Developers was born, launching premium housing projects in Islamabad, Lahore, and Karachi. The company also invested in commercial spaces, developing high-rise office buildings in major cities.
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Sugar – A Sweet but Risky Business
By the early 2000s, Dewan Group had entered yet another industry: sugar manufacturing.
Pakistan's sugar industry was controlled by a handful of powerful business families—the Sharifs (owners of Ittefaq Group), the Tareens, and the Habibs. Competing in this space meant facing political and financial challenges.
At a meeting with industry analysts, Yousuf discussed the opportunity.
Yousuf:
"Sugar is a necessity. Whether the economy is booming or crashing, people need it. If we enter this industry, we'll always have a cash flow."
Industry Expert:
"True, sir, but the sugar business is highly political. Government policies can make or break profits."
Yousuf (leaning forward):
"Then we make sure we're on the right side of government policies."
With heavy investment, Dewan Sugar Mills was launched, quickly becoming one of the largest sugar producers in Sindh. The mills supplied sugar to leading food brands and exported surplus to international markets.
But the sugar business was not without its struggles. Political interference, government price controls, and smuggling issues created unexpected hurdles. In a heated board meeting, executives discussed rising concerns.
Operations Manager:
"Sir, the government has set a price cap on sugar sales. Our production costs are rising, but we can't increase prices."
Yousuf (frustrated):
"This is exactly why I wanted control over financial services. We need banks to support our cash flow during price drops."
The group survived the crisis by leveraging Metropolitan Bank's financial strength, offering credit to distributors and securing government subsidies.
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The Challenges of Managing a Conglomerate
By the early 2000s, Dewan Group had transformed into a multi-industry powerhouse. However, managing such a vast empire came with challenges.
In a closed-door meeting with his closest advisors, Yousuf reflected on the complexities of running a business empire.
Yousuf:
"We've grown beyond my expectations. But managing cement, textiles, automobiles, banking, real estate, and sugar—this is not easy."
COO:
"Sir, other conglomerates like Engro and Nishat are also diversified, but they have strong internal structures. We need better corporate governance."
Yousuf:
"We need professionals to manage different sectors. Family businesses struggle when they try to control everything themselves. It's time to bring in experts."
With this decision, Dewan Group hired experienced executives from multinational firms to oversee various divisions, ensuring operational efficiency.
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Lessons from Other Giants
To avoid the fate of other failed conglomerates, Yousuf studied how Pakistan's business empires operated.
Nishat Group had sustained its empire by focusing on a few industries—textiles, banking, and energy—rather than overextending.
Engro Corporation successfully transitioned from fertilizers to energy and foods through professional management.
Ittefaq Group had collapsed due to family disputes and excessive government interference.
Yousuf was determined to learn from these examples and strengthen Dewan Group's governance.
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The Warning Signs
By the mid-2000s, cracks began to show. Pakistan's economy was becoming unstable, and Dewan Group's aggressive expansions had led to high debt. In a private discussion with his financial director, Yousuf received alarming news.
Finance Director:
"Sir, our debt has crossed a dangerous level. Our sugar mills and real estate projects require more investment, but our cash flow is tightening."
Yousuf (concerned):
"How long before this becomes critical?"
Finance Director:
"If economic conditions worsen, we could face a liquidity crisis within a few years."
Yousuf knew he had taken bold risks, but he believed in the resilience of his empire. He was confident that Pakistan's economy would stabilize, allowing Dewan Group to recover.
Little did he know, the biggest financial storm was yet to come.
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Conclusion
Dewan Group's diversification strategy had taken it to the heights of industrial success. From cement and automobiles to financial services, real estate, and sugar, the empire had expanded beyond expectations. But with expansion came risk. The challenge of managing multiple industries, navigating government regulations, and handling financial strain would soon put Dewan Group to the ultimate test.
As Yousuf looked at his empire, he remained confident. But deep down, he knew that the next few years would determine whether Dewan Group would remain a dominant force—or fall like so many before it.