The Dewan Group, once a towering symbol of industrial strength in Pakistan, found itself in a battle for survival in the mid-2000s. The group, which had reached its peak with successful ventures in cement, textiles, and automobiles, was now struggling under the weight of mounting debts, political instability, and shifting market dynamics. With creditors closing in and assets at risk, the once-mighty conglomerate was forced to make difficult decisions to salvage what remained of its empire.
The Mounting Debt Crisis
By 2006, Dewan Group had accumulated billions in debt. The rapid expansion that had once been its greatest strength had now become its Achilles' heel. With multiple business sectors demanding financial resources, the company found itself unable to keep up with loan payments. The pressure from financial institutions, particularly Habib Bank, National Bank of Pakistan, and other commercial lenders, had intensified.
At the head office in Karachi, a tense meeting was underway. Dewan Muhammad Yousuf Farooqui, the group's leader, sat at the head of the conference table, flanked by key executives and financial advisors. The air was thick with anxiety as they reviewed the latest reports.
"We need a solution," Yousuf said, his voice firm but weary. "The banks are losing patience, and the market isn't favorable. We need to find a way to restructure our loans."
Tariq Mehmood, the group's CFO, adjusted his glasses and leaned forward. "We have two options. Either we sell off some non-core assets to generate liquidity, or we negotiate with the banks for a restructuring plan."
"Selling assets is not ideal," Yousuf replied. "But if that's the only way to stay afloat, we may have to consider it."
The Sale of Key Assets
One of the first steps taken by the group was to sell Dewan Textile Mills, one of its oldest and most prestigious units. The decision did not come easy, as the textile sector had been one of the cornerstones of the Dewan empire. However, with declining exports and rising costs, the business had become unsustainable.
A private buyer from Faisalabad had shown interest in purchasing the mills. Negotiations were held at the Dewan headquarters, where Yousuf and his team met with the prospective buyer, Saeed Ahmed, a veteran in the textile industry.
Saeed looked over the financials, then placed the file on the table. "The numbers don't look great, Mr. Dewan. You're asking for a price that doesn't reflect the market reality."
Yousuf sighed. "Saeed bhai, you know as well as I do that this mill has historical value. It has potential, given the right investment."
Saeed nodded. "I won't deny that. But I can only offer 60% of your asking price."
There was a moment of silence. Selling at a lower price would be a bitter pill to swallow, but survival was the priority. After hours of negotiation, the deal was finalized. The mill was sold, and the proceeds were immediately directed toward clearing some of the group's outstanding debts.
Struggles in the Cement Industry
While the textile sector had been a significant loss, the cement division was still operational, and there was hope for recovery. Dewan Cement had long been a major player in Pakistan's construction boom, but increased competition from giants like Lucky Cement and DG Khan Cement made survival difficult.
A crucial meeting was held at the cement plant in Hattar. The production manager, Adil Khan, briefed Yousuf and his executives about operational challenges.
"Our production costs are too high," Adil explained. "Lucky Cement has more efficient plants, and they're undercutting our prices. If we don't modernize, we won't be able to compete."
Yousuf ran a hand through his graying hair. "We don't have the capital for major upgrades right now. But we need to find a way to improve efficiency."
Tariq, the CFO, interjected. "What if we bring in a strategic partner? Someone who can invest in the upgrades while we retain operational control?"
It was a risky move, but the idea of finding an investor seemed like the only viable option. Talks were initiated with international investors, but the deteriorating economic conditions in Pakistan made them hesitant.
Internal Conflicts and Family Struggles
As if financial troubles weren't enough, internal conflicts within the Dewan family also began to take a toll on the company's stability. The younger generation of the Dewan family had differing visions for the future of the business. While some believed in a cautious approach, others wanted aggressive expansion to regain lost ground.
At a family gathering in Karachi, tensions flared between Yousuf and his younger brother, Junaid Dewan.
"You keep cutting back, selling assets," Junaid argued. "That's not how we built this empire. We need to take risks, invest in new markets!"
Yousuf, ever the pragmatist, shook his head. "Junaid, we're already struggling to stay afloat. We need stability before we can even think about expansion."
The disagreement reflected a deeper divide in the company's leadership. While Yousuf remained cautious, the younger members of the family were eager to restore the group's former glory, even if it meant taking bold risks.
Government and Legal Battles
Adding to their woes, the Dewan Group found itself entangled in legal disputes with creditors and regulatory authorities. The Securities and Exchange Commission of Pakistan (SECP) had started an investigation into certain financial dealings, further damaging the group's reputation.
In 2009, a major legal case was brought against Dewan Motors by disgruntled investors who accused the company of financial mismanagement. The courtroom was packed as lawyers from both sides argued their cases.
"This company made promises it could not keep," argued the plaintiff's lawyer. "Investors have suffered, and we demand accountability."
Dewan's legal team countered. "The economic downturn affected all businesses. Dewan Group is committed to restructuring and fulfilling its obligations."
The case dragged on for months, further eroding investor confidence. The negative media coverage only added to the company's struggles.
The Last Attempt at Revival
By 2012, it became clear that Dewan Group needed drastic measures to survive. A decision was made to consolidate its businesses, focusing only on core industries like cement and automobiles. However, with mounting debt and a lack of investor interest, the chances of recovery were slim.
In a final board meeting, Yousuf addressed his executives. "We've fought hard, but we must face reality. The empire we built is no longer what it used to be. We need to take what we have left and move forward wisely."
It was an emotional moment for everyone in the room. The realization that the once-mighty Dewan Group was no longer an industry leader was painful, but necessary.
Conclusion
The struggles of the Dewan Group serve as a cautionary tale of rapid expansion without sustainable financial planning. From being an industrial powerhouse to battling for survival, the group's journey was marked by bold ambitions, political entanglements, and market miscalculations.
Though the company still exists today in a much-reduced capacity, it never regained its former glory. Yet, its legacy remains a testament to the highs and lows of business in Pakistan—where ambition can lead to greatness, but missteps can just as easily bring an empire to its knees.