Dewan Farooque Motors Limited has entered into a toll manufacturing agreement with ECO-Green Motors Limited for manufacturing EGML’s Horn-EV (200KM and 300KM range), thereby becoming the leading manufacturer of electric vehicles in Pakistan.
The production thereof is expected to commence in August 2024, according to a notice sent by the company to the Pakistan Stock Exchange (PSX) on Thursday.
“By the grace of Almighty ALLAH, we hereby announce that Dewan Farooque Motors Limited (“DFML”) has entered into a toll manufacturing agreement with ECO-Green Motors Limited (“EGML”) for manufacturing of EGML’s Horn-EV (200KM and 300KM range), thereby becoming the leading manufacturer of electric vehicles in Pakistan,” read the notice.
On Wednesday, Dewan Farooque Motors announced the resumption of commercial production for its special-purpose KIA commercial vehicle, named KIA ‘SHEHZORE’.
The company revealed that the launch ceremony for the vehicle is scheduled for June 4, 2024.
“We look forward to continue serving the people of Pakistan with high-quality products and after-sales services through our strong nationwide dealership network,” it said in its notice to PSX.
Dewan Farooque Motors, part of the Yousuf Dewan Group, was established in 1998 and entered into contracts with Hyundai and KIA to assemble, manufacture, and sell their vehicles in Pakistan. Initially successful, the company’s sales grew from Rs 5.5 billion in 2003 to Rs 10.6 billion in 2006, and it provided substantial dividends to shareholders.
However, the company’s fortunes changed in 2008, experiencing significant losses that culminated in shutting down production in 2010. By 2009 and 2010, Dewan Farooque had a negative break-up value per share, indicating severe financial distress, with liabilities far exceeding assets. Creditors initiated litigation to recover over Rs 7 billion, and the company’s financial woes prevented it from sustaining working capital or covering loan markups.
Despite attempts to restart production in 2014 and 2018, the company continued to incur losses. By 2022, net sales had plummeted to Rs 144,000 from a peak of Rs 9 billion. By the end of the 2023 financial year, the break-up value per share had further deteriorated to Rs -24.3, with shareholders’ equity at Rs -3.2 billion.
Additionally, loans to associated companies became unrecoverable as they also faced losses, further devaluing Dewan Farooque’s assets.
