Wednesday, November 4, 2009

Former KSE MD to head crisis-hit Dewan Group

Loss-ridden Dewan Mushtaq conglomerate has appointed MA Lodhi as its group managing director, said a press release issued on Tuesday. Lodhi, the former Managing Director of Karachi Stock Exchange (KSE), has taken up the difficult task of steering the highly-leveraged Dewan-owned firms out of the financial crisis. From Dewan Farooque Motors, manufacturers and distributors of Hyundai and KIA, to Dewan Mushtaq Textile Mills, almost all the group companies posted losses in the last fiscal year. Analysts say Dewan Group carries a substantial amount of bank liability on its balance sheet. Its capacity to repay the debt has shrunk with accumulated losses of the last few years. I need time to diagnose the problem before becoming able to state my strategy, Lodhi told The News when asked how he intended to head the group firms. You go to a quack and he will give you medicine. But a professional doctor will ask, make you undergo x-ray and other medical tests before prescribing medicine. Let me find the problem first, he said. Lodhi s last assignment was as chief executive of the apex trade body, Federation of Pakistan Chambers of Commerce and Industry (FPCCI). He is an MBA from IBA and a chartered accountant from England. He has held senior positions in insurance, hospitality, oil and financial companies. All the Dewan companies saw a severe drop in sales, in one case a plunge of 70 per cent last fiscal 2008-09. Falling demand for the group s premium products like textile and cars amid a dismal economy battered its overall profitability and future outlook. Dewan Farooque Motors posted a staggering loss of Rs1.3 billion last year. This business has recovered a bit as the first July-Sept 2009-10 quarter loss has come down. All the textile concerns of Dewan have been hit by falling sales and shrinking margins. Dewan Mushtaq Textile Mills recorded a loss of Rs69m in 2008-09, up from Rs8.1m borne a year earlier.