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Industrial sector facing biggest problem

February 25, 2014

Anand Kumar Bagaria is the Managing Director of Nimbus, an agribusiness enterprise, has been in the field of animal health and nutrition for the last 10 years. It has to its credit many firsts in the animal health and nutrition sector of Nepal. It started as a feed supplement manufacturing unit, focusing on exports to India; graduated to marketing feed supplements and veterinary medicines in the local market followed by feed grains trading by creating an effective rural distribution network.

Further, Nimbus used its rural distribution network to market veterinary medicines all over the country. It was soon followed by feed grains trading. All these activities and experience led to the path of setting up a pellet feed mill in 2004, Probiotech Industries Pvt. Ltd, is the first pellet feed mill in Nepal.

To strengthen the poultry industry Nimbus has been contributing in every possible way. It has been regularly conducting training to its poultry and livestock farmers and dealers across the country. Some National and international organizations have been collaborating with NIMBUS to provide trainings to poultry farmers. Nimbus has associated with Practical Action, an NGO in a project funded by International Finance Corporation, part of World Bank, to provide training on poultry management.

Yogesh Pokharel of The Rising Nepal talked to Bagaria to talk about the present business climate, problems and prospects. Excerpts:

With the completion of peace and constitution processes, the country was expecting to usher towards its economic development. However, the sudden dissolution of the CA without promulgating a new constitution has further pushed the political uncertainty. How the business sector taking this situation?

Business sector which was very optimistic about crossing over the Constitution Promulgation part and prepared to brace the new scenario has been forced to pause and be on the watch out for the next developments. However, we have not lost hope, but are cautious.

The government has announced the year 2012/13 as Nepal Investment Year. Do you see any possibility of attracting FDI in the country, given the changed political scenario?

In the changed scenario, it has become more difficult. I have been of the opinion that our preparations were not in sync with our intentions. However, by doing this will at least showcase our intentions. It is a preparation for the days to come.

In your opinion, what might be its impact in Nepalese industrial sector?

With the FDI inflow, technology also will be brought into the country and the inherent advantages/ resources of Nepal will be put to good use.

How is the situation of production industries in the country?

Nepalese industries have seen a large change in approach over the last 5 years or so. The fundamentals of industries have been challenged and thus a refinement has come about. We are now talking technology and efficiency. We are talking export markets in the world terms.

What are the major challenges?

There are a few problems engrossing the Nepalese industrial sector. And amongst them, the biggest is the attitude of the stakeholders at various levels. Another I see is power.

What are the major prospects?

Even if there are some problems, I see a lot of opportunities. Promotion of agribusinesses, investment in power generation, hospitality infrastructure and services, other services, medical infrastructures, roads, railways, entertainment, education, pharmaceuticals are some to name a few.

Given the right setting in between two giant and growing economies, what can be the challenges and potential of Nepalese production industries?

The challenge is to identify the right product or service. We need to identify our strengths if we are looking at these two economies as our market and develop further on those strengths.

What are your plans?

We have big plans for the coming few years. We will continue to grow in the animal nutrition sector. We intend backward as well as forwards linkages in and with the agri sector. We intend leveraging our rural distribution network, to add value to other possibilities.

We also see a potential in the home décor and furnishing sector. We would like to see ourselves in the real estate and retiling sphere too.

Recently, the government has taken few initiatives to bring the real sector into the capital market. Why do you think that the real sector is hesitating to go in the capital market?

Government has taken steps to bring real sector into the capital market? Like what?

The real sector is hesitant because of lack of incentives and also out of the fear to depart from the existing. The hesitation stems from many factors. Among them are the cost of being a PLC is high, cost of going for offering/ IPO is prohibitive, the size of PVT sector companies is generally small and in some cases purposefully kept small. Small as in not big enough to go public, tedious documentation and risk of loosing management control.

Similarly, perceived unfair treatment meted out to the transparent book of accounts, loss of flexibility in business, board is formed by the virtue of investment and not necessarily knowledgeable on the subject, valuation of the existing business is a big concern.

Just the revaluated net worth is not enough. Some method to accommodate a value for brand/goodwill/replacement cost/management setup/ future profits among others has to acceptable while considering the IPO on premium. Lately the abysmal performance of the NEPSE also has been a deterrent.