The grand marquee erected at the Chenab Limited premises in Faisalabad on the 8th of November 2023 was meant to symbolise a revival. The event, given the title “Chenab Rising”, marked a major debt restructuring agreement that would get the wheels over at Chenab spinning again. Chenab had once been a shining star too fast to catch.

The company had glutted on the Blitzkrieg expansion offered by the low interest rates of the Musharraf era. They borrowed hard and expanded fast. But the timing proved to be wrong.

When the dual energy and inflation crises hit the country in 2008, Chenab’s gigantic sandcastle came tumbling down. By 2011 creditors had filed suits to have the company wrapped up and reclaim their money. The factories came to a halt, the workers lost their jobs, clients looked elsewhere, and by 2017 the Lahore High Court ordered Mian Muhammad Latif to wind up the company he had built over three decades.

But Mian Latif was not ready to give up just then. He went back to the banks he owed money to and made the case that Chenab could come back from this. The courts might have called time-of-death, but Mian Latif wanted the banks to charge up the paddles and go full Victor-Frankenstein on Chenab.

The most important regard in which Mian Latif got lucky was that the bank he owed the most money to was Habib Bank Limited. HBL is Pakistan’s largest and oldest bank. In recent years, it has made a conscious effort to position itself as a natural leader of the commercial banking sector.

Part of this has been a basic philosophy: what is good for Pakistan is good for business, and what is good for business is good for the shareholders. HBL became Chenab’s most unlikely champion. The bank brought Chenab’s other creditors together, and the different financial institutions formed a consortium that helped restructure Chenab’s vast debt.

It was a simple enough concept. Either the banks could sell off Chenab’s assets and recover what they could of the money they were owed, or they could give them another chance to start manufacturing again and hopefully pay it back without having to sell anything. That is why, perhaps, the Chenab Rising event we started with seemed more like a banking convention than a textile revival.

Senior bankers, the deputy governor of the SBP, important clients, and the heads of various SAM departments of different banks were in attendance in addition to a small retinue of business journalists. Muhammad Aurangzeb, the now finance minister and then President of HBL, was front and center at the event. This would prove to be the last major initiative Aurangzeb would lead for HBL before being whisked away to Q Block.

It was also clear that Chenab Rising was a message: this is how Pakistani banks should act. The overarching feeling was hope. Two-and-a-half years later that hope seems to have been dashed.

Muhammad Aurangzeb has gone to the finance ministry, interest rates have fallen, the textile industry has seen a modicum of recovery, but Chenab Limited is still struggling. Not only are they failing to pay back their debts under the restructuring agreement, the company is operating at a level where they are unable to even make a gross profit. That means their efficiencies are so bad that they are selling at a loss.

For all intents and purposes it is a well that is draining money. And as Profit has seen over the course of this investigation, the end might be nigh for Chenab Limited. The consortium HBL had forged with other banks to renegotiate the loans is struck with internal strife.

Some of the banks feel pulled along and think it is time to wind up sooner rather than later. At the same time, Chenab is continuing to make an effort to drag this along and somehow recover their losses and turn things around. In the process of it, they might end up cannibalizing themselves.

All of this raises the question: is Chenab better dead than alive? And perhaps more importantly, even though the restructuring of Chenab’s debt might not work, was it still worth it to try? To read the full article, subscribe and support independent business journalism in Pakistan The content in this publication is expensive to produce.

But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account.

Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole. (Already a subscriber? Click here to login) Full Price Subscription Plans Click to View Not only will you be supporting independent journalism, 25% of the amount fr