The Business | EDITOWRednesIdaAy , FebL ruary 190, 26020 Is ChenOne, parent company Chief Editor about to make a comeback? Part I Irfan Athar Qazi Chenab Group, the retailer’s parent conglomerate, appears to be in the process of securing a restructuring E-mail: [email protected] agreement with its lenders. But will it be enough to revive the flagging retail chain and its textile export operation? BY HASSAN NAQVI vation and growth It is hard to think of it Shahkot in Nankana Sahib district. The than doubled its revenue, ending financial [email protected] this way now, but Chenab was once one of spinning unit is located in Toba Tek Singh. year 2007 with Rs8,161 million in revenue, n some ways, the story of Chenab Pakistan’s most innovative textile compa - “We [initially] produced textile goods for which represents an average annual growth Group, the textile manufacturing con - nies. When it opened its flagship store for the local market. In 1985, we initiated ex - rate of 15.7 percent. That growth, however, Tijarat House, 14-Davis Road, Lahore glomerate that is also the parent com - ChenOne in Lahore in 1998, that was the porting goods started from the Far East was fueled largely by debt. 0423-6312280, 6312480, 6312429, 6312462 panIy of the retail brand ChenOne, is not first time that Pakistani consumers had the from where we moved to Europe and then In 2001, the company had just under unique. Like many of Pakistan’s upper mid - opportunity to shop for home textiles at a USA and we exported goods to around 42 Rs700 million in long-term debt. By 2007, Cell # 0321-4598258 dle-market companies – the ones just on the store that was more than just a glorified countries,” said Mian Kashif Ashfaq, CEO that number had ballooned to Rs3,322 mil - cusp of being large but not quite – Chenab warehouse: it showcased the company’s of ChenOne, and part of the second genera - lion, a nearly five times increase. tried to grow too fast with too much debt products on actual furniture and in settings tion of the family to enter the business. Yet cash flows were not keeping pace: during the easy money era of the Musharraf that allowed customers to visualise what It was the entry of that second genera - Chenab Ltd’s net income in 2007 was just 1st Floor Ahmed Plaza near Zong Office years, and crashed hard after the financial they would look like in their own homes, tion into the business that catalyzed some Rs75 million, even less than the Rs131 crisis of 2008, and has yet to recover since. creating the first aspirational home brand of the most innovative changes in the way million it earned in 2001. Yet the group Susan Road, Faisalabad, Ph: 041-8555582 Yet unlike some of the other financial car - in Pakistan, similar to companies like Bed the group does business. “In 1997, I joined kept expanding, particularly its retail chain, casses of the 2008 crash, the owners of Bath & Beyond in the United States. as a director and we established the first which opened up more stores throughout Chenab have continued to try to revive their The Chenab Group itself started off in store of ChenOne,” Kashif said. The retail urban Pakistan, particularly in the smaller ISLAMABAD / RAWALPINDI business. 1975, when Mian Muhammad Latif and his chain currently has 48 stores, including metropolitan areas of Punjab, where it took N-125 Circular Road, Ph: 051-5551654, And in recent weeks, some favourable three younger brothers decided to make the some overseas stores in the United Arab to developing not just its own stores, but 5532761, Cell # 0300-8567331 rulings in the ongoing bankruptcy pro - transition that many of Punjab’s large rural Emirates and one in Saudi Arabia. In addi - large shopping malls and complexes under KARACHI ceedings for the company at the Lahore landholding families were making between tion to their core business, the group also the name ChenOne Tower. 3rd Floor Kehkashan Mall 172-I Block II PECHS High Court seem to indicate that it may be the 1950s and 1980s: moving their main owns some other smaller business, includ - The first ChenOne Tower opened in Opp Rehmania Masjid Main Tariq Road on track for a revival. Try out our new fea - source of wealth away from farming the ing CGI Ltd UAE, InterFab in Australia, 2005 in Multan, followed by another in Ph: 021-34524550, Cell # 0300-8251534 ture: Listen to the full article below The cotton – and other crops, such as sugar – Chenab Fibres Ltd, ChenSoft, Chenab Sargodha, which finally opened in 2009. group has submitted an ambitious revival and towards setting up the industrial units USA, ChenOne Worldwide, House of What is interesting is that ChenOne devel - plan to its creditors and many of them, led that would process and sell a finished Chenab and the ChenOne Foundation. oped its retail chain significantly before by Habib Bank, appear to be on board with good. Until it was shut down in 2017 as part of Ideas by Gul Ahmed. ChenOne started in giving the group one more try at reviving Mian Latif’s family was large landhold - the bankruptcy proceedings, Chenab Ltd 1997 and Gul Ahmed did not launch Ideas PSX and its fortunes, agreeing to a restructuring of ers in Toba Tek Singh, a district roughly derived about 70 percent of its revenue until 2003. its debts on relatively favourable terms, in halfway between Faisalabad and Multan. from home textiles – both its export busi - This despite the fact that even at its a bid to allow the company some financial In 1975, they set up Chenab Textile Indus - ness as well as through ChenOne stores lo - peak, Chenab Ltd was one third the size of bond yields breathing room to resuscitate and then tries, moving the family from growing cot - cally – and about 30 percent from apparel. Gul Ahmed in terms of revenue and thus The Pakistan Stock Exchange (PSX) index bottomed out grow its operations. Whether the plan will ton and ginning it towards spinning cotton Growth in the Musharraf years In 1999, had fewer resources to deploy in the cash- at 28,765 on August 16, 2019 and soared to 43,219 on Janu - work, however, depends not just on yarn and weaving it into cloth. when Gen Musharraf took power in a mili - intensive project of launching a retail chain ary 13, 2020. There were three factors that triggered the whether the banks will allow the company Over the years, the group diversified its tary coup, the Chenab Group was still a in Pakistan. The political connection Like market rally – falling 10-year bond yield, currency appreci - to restructure its balance sheet, but also activities and in April 1985, it created its lower middle-market business in terms of many wealthy landowning families in ation and current account deficit reduction, and political sta - whether its majority owners – Mian first corporate entity called the ‘Chenab size. Punjab that transitioned towards becom - bility. The first and foremost factor was bond yields. The Muhammad Latif and his family – have Fabrics and Processing Mills Ltd’. In And ChenOne at the time only had three ing industrialists, Mian Latif’s family has 10-year PIB yield in secondary market declined from 13.5 learned the right lessons from their mis - March 1991, it was converted into an un - stores, though its fourth store opened up in strong political connections. Mian Latif percent on August 21, 2019 to 12 percent on September 20, takes. In Chenab Group’s tale is the story listed public Ltd company. Thereafter, in Karachi that year. During the Musharraf has family members who have served in 2019 and bottomed out at 10.9 percent on December 12, of how even a relatively innovative, fast- 2000 the company’s name was changed to Administration, however, as the govern - elected office and are currently members 2019. The stock market rally started in September and con - growing company can lay the seeds of its its present name Chenab Ltd. Chenab – ment privatised the banks and encouraged of political parties. Mian Latif’s younger tinued till mid-January. Stocks valuation is based on future own demise if it tries to grow with too like many of the nation’s largest textile private sector lending, particularly for in - brother is Chaudhry Muhammad Ashfaq, cash flows discounted on 10Y yields. Lower the yield, much borrowed money. companies – is headquartered in the dustrial growth projects, the Chenab Group currently Central Vice President of the higher is the valuation. Intuitively, when bond yield comes And it is also the cautionary tale of how Nishatabad area of Faisalabad. The cloth- started expanding aggressively. For the fi - ruling Pakistan Tehreek-i-Insaf’s (PTI). down, institutions shift capital from bond to stock markets. a perfectly functional export-oriented busi - processing unit and stitching units are lo - nancial year ending June 30, 2001, Chenab Ashfaq is also a former member of the The short-term rates do not really matter for stock market ness can suddenly find itself debilitated cated at Nishatabad and the weaving units Ltd, the group’s main publicly listed com - National Assembly and a former member movement. This is evident from the fact that 3-12-month T- owing to a lack of financing once the banks are located at Sheikhupura Road, Kharian - pany, had revenues of Rs3,406 million. of the Punjab Assembly. Bills rates have largely remained unchanged in the past six decide to cut it off. The early years: inno - wala, in Sheikhupura district, and in Over the next six years, the company more To be continued months.The second factor was the stability in the currency market.