Dewan Farooque Motors to resume vehicle production from February

KARACHI: Dewan Farooque Motors Limited (DFML) is expected to resume vehicle production from February 2018 as it has received approval for its Brownfield plant from the Engineering Development Board (EDB), according to a stock exchange notice the company sent on Friday.

Initially, the company will re-launch its popular Shehzore’s one-ton single rear-wheel truck. Later, it will roll out passenger cars and a Sports Utility Vehicle (SUV).

The company’s share price hit the upper limit during trading on Friday, ending at Rs38.62, up Rs1.83 from its last closing price of Rs36.79.

Industry officials say the company’s focus is on its one-ton truck amid high demand of commercial vehicles in the country.

In mid-2016, the company applied for resuming vehicle production by sending its application to the Board of Investment (BoI) and the EDB.

Later, in September 2016 it announced that it would start production of vehicles by the end of October 2016.

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Dewan Farooque Motors is returning to the arena with a toll manufacturing agreement with Daehan-Dewan Motor Company Private Limited – a joint venture between Dewan Yousuf Companies and the Laos-based Kolao Group.

DFML’s share price

DFML’s plant has remained idle for a long time, but its share price has seen an extraordinary run in recent months. In just one month, DFML’s share price has witnessed an increase of 52.2%, going up to Rs38.62 from Rs25.37 on December 19, 2017.

A similar situation was also seen in mid-2016 when the company’s share price witnessed a 100% return in just five months. After noticing the activity, the Securities and Exchange Commission of Pakistan (SECP) issued a notice to the company in May 2016, asking it to explain the cause behind the surge.

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Later, DFML issued a notice to the Pakistan Stock Exchange (PSX), saying that the company has nothing to do with the share price movement.

In Pakistan, where the auto industry has always been dominated by Japanese players, DFML has partnered with Korean brands like Hyundai and Kia to produce its first car on January 15, 2000. The company received extraordinary response especially for its Hyundai Santro and Hyundai Shehzore, a one-ton truck.

The company’s sales grew well until 2008, but it has been on a downhill ride since then. This was a time when local banks were cash-strapped due to the global financial crisis of 2008.

After a gap of three years, DFML produced a few hundred cars in fiscal year 2014 and 2015 based on its old inventory. However, the company remained in desperate need for a partner with whom the company now plans to resume full-scale vehicle production.

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