The decline of the Dewan Group was not an overnight event. It was a slow, painful unraveling that mirrored the broader economic and political challenges of Pakistan. From being one of the most powerful conglomerates in the country, the group found itself on the brink of financial ruin. This chapter explores the critical events that led to its downfall, the missteps in financial management, and the external pressures that contributed to the collapse of one of Pakistan's most influential business empires.
Mounting Debt and Financial Mismanagement
By the early 2000s, the Dewan Group had significantly expanded its business empire, but with expansion came an enormous amount of debt. The company's aggressive borrowing strategy, which had initially fueled growth, soon turned into an unbearable burden. Interest payments alone were consuming a substantial portion of the group's revenue.
In a boardroom meeting at Dewan House, Dewan Muhammad Yousuf Farooqui sat across from his financial advisors and legal experts. The tension in the room was palpable.
"Our debt obligations have crossed PKR 50 billion," stated the Chief Financial Officer, flipping through pages of financial reports. "The banks are getting impatient."
Dewan Yousuf rubbed his forehead, deep in thought. "We've handled crises before. What are our options?"
A senior financial consultant sighed. "The banks want a structured repayment plan. If we fail to provide one, we risk being declared a defaulter."
This marked the beginning of the end. Several local and international banks, which had once eagerly lent to the Dewan Group, began pulling back. The stock prices of Dewan companies plummeted, causing panic among investors.
Industry Shifts and External Challenges
While internal financial mismanagement played a major role in the decline, external factors also contributed to the group's downfall. The automobile sector, one of Dewan's strongest divisions, took a severe hit due to government policy changes and rising competition.
In 2008, the global financial crisis sent shockwaves through Pakistan's economy. The construction boom that had driven Dewan Cement's success came to an abrupt halt. Orders dropped, and operational costs soared.
At a high-level strategy meeting, the CEO of Dewan Cement looked grim. "Cement prices have crashed, and our margins are shrinking. If this continues, we might have to shut down a few plants."
Dewan Yousuf, always the optimist, refused to accept defeat. "There must be a way to turn this around. We have assets—real estate, factories—we can leverage them."
But by then, the cracks were too deep. Suppliers were demanding payments, and banks were refusing to extend credit lines. The collapse of Dewan Cement was a major blow, marking the group's first significant retreat from an industry they had once dominated.
Legal Troubles and the Banking Crisis
In 2010, the Dewan Group found itself entangled in legal troubles. Several banks, including major national institutions, filed cases