In 2004-05, exports grew to Rs5 billion, Rs6 billion a year later before reaching its peak in 2006-07. Exports were increasing and the company, on a high, set a target of Rs15 billion for next year. What followed is, as they say, history. The fall of Chenab Group In 2006-07, the Group’s long term loan stood at Rs3.5 billion. “It was not a big issue for the Chenab Group to payback the loans to the banks,” said Latif. “The Group’s bank record was remarkable and it never delayed paying loan instalments to banks. “But, October 15, 2007 was the date when ship started sinking.” During the time, load-shedding was at a minimum. The period between October to January is considered a peak season for the textile industry. “This is the time when we have to deliver our textile orders for Christmas and the New Year. We strive to fulfil our commitments at any cost.” At the time, the Group had bulks of textile orders from world’s biggest stores. The factories suffered the first setback when they faced gas cuts from October 15, 2007 to November 1 after a fault in the Qadirpur gas fields, bringing down production. By the time supply was restored, the damage had been done. The supply chain was broken and Latif said an alternative did not exist. “We did not have an alternate source to produce steam to run our units and that delayed the shipments. “We were unable to meet deadlines and could not arrange deliveries from the market as not even a single unit in Faisalabad had 24-colour Rotary machines. “The irony is that the technology and quality assurance that helped the Group flourish became the first hurdle and the first step towards the collapse as well.” The Group tried to manage alternate sources of energy and arranged to deliver the biggest order to a leading store chain in Germany. “But we missed the orders from America and other countries, causing the Group to pay big penalties.” They say that it could not get any worse but it did for the Chenab Group. “We dispatched orders of a German company that owned 1,400 outlets in the country alone. The orders were dispatched in 107 containers and made their way from Faisalabad dry port to Karachi. Out of those 107 containers, only 37 reached Germany.” The reason was the assassination of Pakistan People’s Party Chairman Benazir Bhutto in December that year, which resulted to riots across the country. The remaining containers could not be delivered on time and the German company filed a case and won €5 million in damages. “As many as 37 containers were returned to Chenab Group after a year. We had to bear huge losses.” During 2007-08, the Group sustained Rs4 billion in losses. “We tried to convince banks to give working capital but the banks refused to deal with us,” said Latif. He said Chenab was making interest payments till 2010 but no bank was willing to issue working capital. The entire loan portfolio became Non Performing Loans (NPL). “I tried talking to banks but they refused to extend financing. Last year [2013], two banks rescheduled the loan for working capital of Rs370 million on terms that the Group will pay interest on the new rescheduled loan and 7% from the NPL capital amount. In this agreement, we would NPLs in the next 10 years.” Answering a question, he said three banks filed cases against the Group, seeking an auction. “But, we said we are ready to pay the loans if the banks re-considered their terms and conditions.” Latif added that Chenab owes the banks Rs9 billion and the value of the Group is far higher than this. “The Group needs just Rs2 billion for working capital and we can re-start from our previous position within a year but no bank is willing to come forward,” said a dejected Latif. Currently, the Chenab is operating at less than 25% capacity with 3,000 employees, supplying goods to Chen One stores and meeting requirements of a few international ones. “Textiles industries that are still surviving do business in multiple files while Chenab Group was flourishing on the back of processing industries. Exports orders of yarn and gray cloth can be managed from the market but orders comprising garments and home textile products have to be arranged from our own factories.”
Posted on: Mon, 15 Sep 2014 06:31:05 +0000
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