1. Rising Debt and Financial Strains
By the mid-2000s, Dewan Group had become one of Pakistan's largest conglomerates. From cement and textiles to automobiles and finance, their empire seemed unstoppable. However, behind the scenes, cracks were beginning to form. The group's rapid expansion had been fueled by heavy borrowing from banks, and the financial strain was beginning to show.
One afternoon in 2005, Dewan Muhammad Yousuf Farooqui sat in his Karachi office, reviewing the latest financial statements. His chief financial officer (CFO), Faisal Iqbal, entered the room, looking tense.
Faisal: "Sir, I think we need to talk about our debt situation. Our liabilities have reached PKR 40 billion, and the interest payments alone are becoming unmanageable."
Yousuf: "We've taken loans before, and we've always managed. What's different this time?"
Faisal: "The difference is that our expansion hasn't translated into cash flow as expected. The cement industry is slowing down, and our auto division is facing stiff competition. Hyundai is reconsidering its partnership, and if they pull out, we'll be in serious trouble."
Yousuf leaned back in his chair, deep in thought. For years, he had built his empire on aggressive growth, but now, it seemed that the foundation was beginning to crack.
2. Trouble in the Automobile Sector
One of the biggest warning signs came from Dewan Motors. The company had successfully introduced Hyundai and Kia vehicles in Pakistan, challenging the dominance of Suzuki, Toyota, and Honda. However, rising import costs, increased competition, and internal mismanagement were taking a toll.
In 2006, Hyundai's regional executives from South Korea visited the Dewan Motors plant in Sujawal. In a tense boardroom meeting, Hyundai's Executive Director, Joon-Woo Park, expressed concerns.
Joon-Woo Park: "Mr. Yousuf, our sales have dropped by 25% in the last two years. Kia has already suspended production, and Hyundai's global strategy is shifting. We are considering exiting the Pakistani market."
Yousuf: "That would be a disaster for both of us. We have invested millions in the local auto industry. If we lose Hyundai, we'll lose everything."
Joon-Woo Park: "We need guarantees of better market conditions and financial stability. Otherwise, we cannot justify continuing."
Despite Yousuf's reassurances, Hyundai eventually pulled out of Pakistan in 2008, dealing a massive blow to Dewan Motors. The assembly plant was shut down, and thousands of employees were laid off.
3. Internal Conflicts and Leadership Struggles
As financial pressures mounted, tensions within the Dewan family also began to surface. Yousuf's younger brother, Mohammad Farooq Dewan, and other family members started questioning his leadership decisions.
In a heated family meeting at the Dewan House in Karachi, Farooq confronted his elder brother.
Farooq: "Yousuf Bhai, we've been reckless. We should have slowed down expansion, focused on consolidating our assets. Instead, we kept borrowing and expanding blindly."
Yousuf: "You don't build empires by playing it safe, Farooq. If we stop now, we'll fall behind our competitors."
Farooq: "But look at where we are now! The banks are refusing to lend us more money, and our stocks are crashing. We need to rethink our strategy before it's too late."
Other family members sided with Farooq, demanding more financial discipline and a pause on further expansion. However, Yousuf remained adamant that Dewan Group could recover if they just pushed harder.
4. The Cement Industry Crisis
Another major blow came when the cement industry entered a downturn in the late 2000s. Dewan Cement, once a leading player, started facing difficulties due to:
Global recession (2008-2009) reducing demand.
Rising fuel and production costs making operations expensive.
Strong competition from Lucky Cement and DG Khan Cement, which had more efficient operations.
In a meeting with his cement division executives, Yousuf was given more bad news.
Executive: "Sir, our margins are shrinking. Lucky Cement is producing at a lower cost, and they've secured major contracts that we were hoping to win."
Yousuf: "What about our government contracts?"
Executive: "There are delays in payments. The government is prioritizing other suppliers."
The cement division, which had been a pillar of the Dewan empire, was now struggling to stay afloat.
5. The Banking Sector's Warning
By 2009, Dewan Group's problems were becoming public knowledge. Banks started pulling back their support, fearing that the conglomerate might default on its loans.
In a high-stakes meeting with Habib Bank's senior executives, Yousuf tried to secure a financial restructuring plan.
HBL Executive: "Mr. Yousuf, we have supported Dewan Group for decades, but your current debt situation is alarming. We need a repayment plan, otherwise, we might have to classify your loans as non-performing assets."
Yousuf: "Give us time. We have assets that can be restructured. Our cement and textile divisions can still generate profits."
HBL Executive: "The market confidence in Dewan Group is declining. If you don't take immediate action, your creditors will start legal proceedings."
This meeting marked the beginning of Dewan Group's financial downfall. The once-mighty conglomerate was now on the verge of defaulting on billions in loans.
6. Public Perception and Media Scrutiny
As news of Dewan Group's troubles spread, the media began reporting on the company's financial mismanagement, internal conflicts, and political connections.
Newspaper Headline (2009): "Dewan Group Faces Crisis – Another Industrial Giant on the Brink?"
The stock market reacted negatively, and investors started pulling out. The empire that had once stood as a symbol of industrial success was now seen as a cautionary tale.
7. The Turning Point – Facing Reality
By 2010, it was clear that Dewan Group had overextended itself. The company defaulted on its loans, and creditors started seizing assets.
In his office, Yousuf finally admitted the reality to his close advisors.
Yousuf: "I built this empire with everything I had. But maybe… I was too ambitious."
Advisor: "Sir, we still have a chance to restructure. If we sell off non-core assets, we can save what's left."
Yousuf: "What's left? The banks own us now. We're losing control."
It was a painful moment for a man who had once stood at the top of Pakistan's business world. The Dewan Group, which had dominated multiple industries, was now collapsing under its own weight.
Conclusion: The Fall Begins . This chapter sets the stage for Dewan Group's downfall. From a golden era of success, they now faced debt, internal conflicts, failed partnerships, and industry downturns. The very ambition that had built the empire was now tearing it apart.