Chenab Limited (PSX: CHBL) is now on its way to achieving its lost glory.
Chenab was once Pakistan’s largest exporter of home textile products. The firm faced a complete meltdown after the industrial crises of 2008-10 for reasons beyond its control.
Lenders to the company led by Habib Bank Limited (PSX: HBL), facilitated the implementation of a comprehensive rehabilitation plan in line with the vision of the State Bank of Pakistan (SBP) to revive sick industrial units to re-contribute to the economy.
To showcase its revival, Chenab Limited organized an event with the theme “Chenab Rising”. The event was attended by Saleem Ullah, Deputy Governor – State Bank of Pakistan along with Presidents and representatives of more than 20 Banks. Participants at the event appreciated the regulator’s vision to revive the stressed/closed units.
They also commended the positive role played by HBL in converting this vision into reality. Due to these efforts, Chenab Limited successfully delivered Rs. 2.5 billion in revenue in the first 18 months of operation, employing 3,000 people, with the potential for further growth.
Speaking on the revival of Chenab Limited, Mian Muhammad Latif, Founder & Chairman-Chenab Limited, said,
At one point I did feel the fear of losing it all but there was always a firm belief that we can revive Chenab back to its optimal value certainly, this required sacrifices which we all were ready to undertake for the greater cause of revival. Chenab’s revival is a testament to the power of perseverance and determination. It is also a reminder that even in the darkest of times, there is always hope. I encourage all entrepreneurs to never give up on their dreams, no matter how difficult things may seem. I am grateful to our banking partners especially HBL for believing in our dreams and helping us to get back on our feet”.
Speaking about this success story, Muhammad Aurangzeb, President & CEO HBL, said,
The revival of Chenab stems from the Bank’s strategy of ‘Growing Pakistan’s Economy’, a pillar of which is corporate restructuring. Through these capacity-building efforts, the Bank continues to deliver against its sustainable banking practices in the process of becoming More Than Just a Bank”.
The Fall
Prior to today’s rise, some would argue that Chenab tried to grow too quickly with too much debt during the Musharraf years of easy money, and plummeted badly following the 2008 financial crisis.
Chenab Limited had revenues of more than Rs. 9 billion in 2006-07 and hoped to reach Rs. 15 billion the following year. However, a variety of challenges caught the Group off guard and plunged it into chaos.
The first setback occurred when the companies experienced gas cuts from October 15, 2007, to November 1, 2007. The damage had been done by the time the gas supply was restored. Long story short, the Group suffered losses of Rs. 4 billion in 2007-08; even the banks refused to lend a helping hand.
The company began losing its international customers due to a crisis, wherein a substantial number of 200-300 containers became stranded in Pakistan, leading to delayed deliveries.
In 2010, Chenab experienced a 2.6 percent decline in its revenue, followed by a significant drop of more than 50 percent in 2011. The company’s financial woes continued into 2012, with a 40.4 percent decrease in revenue. In 2013, their revenue took another hit, decreasing by 16.7 percent.
Legal actions were taken by banks to recover their outstanding debts from the company. After a prolonged legal battle, there are now signs of a positive change on the horizon for Chenab. Presently, the company is actively working on restructuring its debt, and within the past eighteen months since the factory’s reopening, it has managed to repay more than 10 percent of its debt to its creditors.
