Chapter 10: Expanding the Industrial Web.
By the mid-1990s, the Dewan Group, under the astute leadership of Dewan Mohammad Yousuf Farooqui, had firmly established itself in Pakistan's textile and polyester industries. However, Yousuf's vision extended beyond these sectors. He recognized the rising opportunities in Pakistan's automotive and construction industries and was determined to position the Dewan Group as a major player.
This chapter explores the group's expansion into the automotive and cement industries, detailing key decisions, strategic alliances, and the challenges faced along the way.
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Venturing into the Automotive Industry
In 1998, the Dewan Group took a monumental step by founding Dewan Farooque Motors Limited (DFML). This marked their ambitious entry into the automotive industry, a sector with vast potential given Pakistan's growing middle class and rising demand for vehicles.
At a high-stakes board meeting at the Dewan Group headquarters in Karachi, Yousuf gathered his core team:
Dewan Salman Farooqui (his brother and close business partner)
Nadia Hussain (financial advisor)
Sikandar Mehmood (operations head)
Yousuf leaned forward, scanning the faces of his team.
> "The automotive industry in Pakistan is on the verge of a breakthrough. We have the resources and the vision to make a major impact," he declared.
Salman, always the pragmatist, tapped his pen against the table.
> "Automobiles require heavy investment and technical expertise. Do we have a manufacturing partner in mind?"
Yousuf nodded, smiling slightly.
> "We've been in negotiations with Kia Motors from South Korea. They are eager to enter Pakistan and are looking for a trusted local partner."
Nadia adjusted her glasses, pulling up a report.
> "A partnership with Kia is an excellent move. Their lineup includes both economy and luxury vehicles, which gives us flexibility. But how will we fund the assembly plant?"
Yousuf was ready with an answer.
> "We will secure financing through a mix of private investment and bank loans. The government is also interested in encouraging local automobile manufacturing, and we may receive policy incentives."
With the technical collaboration agreement with Kia Motors finalized, DFML was ready to set up its first automotive plant.
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Building the First Assembly Plant
Finding the right location was crucial. After assessing multiple sites, the team chose Sujawal, Sindh, near Karachi, where essential infrastructure was already in place.
At the plant's groundbreaking ceremony, Yousuf stood on a makeshift stage, addressing the gathered workers and engineers.
> "This plant is not just a factory; it's a symbol of Pakistan's industrial progress. In the coming years, we will not just assemble vehicles—we will manufacture them, creating thousands of jobs."
As construction progressed, engineers from Kia Motors arrived in Pakistan to oversee the plant setup. The machinery, imported from South Korea, was installed under strict quality controls.
Sikandar, who had been overseeing the logistics, reported to Yousuf one evening.
> "The production line is almost ready. We're running test assemblies to ensure quality before mass production begins."
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Launching Pakistan's First Locally Assembled Kia Vehicles
By 2000, DFML was ready to launch its first vehicle—the Kia Classic. The unveiling ceremony at the Karachi plant was attended by government officials, business leaders, and media representatives.
Yousuf, standing before the newly assembled Kia Classic, addressed the attendees.
> "This car represents our commitment to quality, affordability, and the future of Pakistan's automotive industry."
The market response was overwhelmingly positive. The Kia Classic, known for its affordability and reliability, quickly became popular among consumers. Encouraged by this success, DFML expanded its lineup, introducing the Kia Spectra and Hyundai Shehzore, a light commercial vehicle that gained widespread acceptance.
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Expanding into Cement Industry
While the automotive venture was flourishing, Yousuf identified another high-growth sector—cement manufacturing. Pakistan's booming construction industry and government-led infrastructure projects had led to increased demand for cement.
In 2004, the Dewan Group acquired Pakland Cement Limited and Saadi Cement Limited, consolidating them under Dewan Cement Limited (DCL).
At the acquisition meeting, Nadia presented her financial analysis.
> "The cement industry is experiencing unprecedented demand. With this acquisition, we can position ourselves as a major player in Pakistan's construction sector."
Salman, always thinking ahead, added,
> "We can also leverage our logistics network from DFML to optimize cement distribution, reducing costs."
Yousuf, seeing the long-term potential, declared,
> "This expansion aligns with our vision of self-sufficiency. Cement is the backbone of infrastructure. We're not just entering a business—we're contributing to Pakistan's development."
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Challenges and Market Realities
Despite their strategic moves, the Dewan Group faced serious challenges.
Automotive Competition: Established brands like Suzuki and Toyota dominated the market, making it difficult for Kia and Hyundai to secure a significant share.
Economic Instability: Currency fluctuations and rising production costs put pressure on profit margins.
Government Policies: Shifts in import duties and tax regulations affected the feasibility of large-scale car manufacturing.
Cement Price Volatility: The rising cost of raw materials led to inconsistent cement pricing, impacting profitability.
At a crisis meeting, Yousuf acknowledged the challenges but remained resolute.
> "Every industry faces ups and downs. Our job is to adapt, innovate, and stay ahead of the curve."
Sikandar proposed an idea.
> "For DFML, we should introduce localized models tailored to Pakistani consumers' needs, like fuel-efficient sedans and affordable commercial vehicles."
Nadia suggested improvements for the cement division.
> "If we invest in energy-efficient kilns and alternative fuels, we can cut production costs significantly."
Yousuf nodded.
> "Let's move forward with these strategies. Quality, efficiency, and adaptability will drive our success."
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Legacy of Industrial Diversification
The strategic expansion into the automotive and cement industries diversified the Dewan Group's business portfolio, solidifying its position as one of Pakistan's largest industrial conglomerates.
At a family gathering, Salman reflected on their journey.
> "From textiles to polyester, and now automobiles and cement—we've built an empire on perseverance and innovation."
Yousuf, looking at his younger relatives, responded,
> "Our ventures are not just about business. They are about national progress. The next generation must take this vision forward."
As Pakistan's economy evolved, so did the Dewan Group. The challenges remained, but so did their commitment to growth and resilience.
Their story was far from over.
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Conclusion
This chapter encapsulates the Dewan Group's bold expansion into new industries. Through strategic partnerships, resilience, and a commitment to national development, the group transformed from a textile powerhouse to a diversified industrial giant.
But the journey wasn't always smooth—market competition, economic instability, and government regulations posed serious challenges. Yet, with innovative strategies and visionary leadership, they adapted, evolved, and left a lasting impact on Pakistan's industrial landscape.
What would the future hold for them next?