Inner-View

Why is it that Jyoti Group has not come up with any new venture for the last several years?

We felt that this is a time to consolidate our business rather than spread thin our resources and capability. We shut down some small, infeasible activities. At the same time we modernized and expanded our other units. Our steel rolling mill, the oldest in the country, is now also the largest and the most modern. Our oxygen plant capacity was expanded many fold. Our wire unit, spinning mill were upgraded in capacity and efficiency. We have taken up interests in carpets, garments, insurance, financial services. Perhaps nothing was very big or advertised dramatically but they make business sense for us. Similarly in our trading activities we expanded our branch network and increased our market share in most products. We also have a few industrial projects under construction, they fit with our overall business plan. In today’s highly competitive world we have to take this path of steady, selective and manageable growth. So in fact our total business volume has grown – not shrunk.

Jyoti Spinning Mill was initiated with much hype and general investors had responded to it very positively. What has gone wrong with the company that it has been in the red for so many years?

In terms of productivity and operational efficiency, it is one of the best factories in the country. But you are right that in the important area of profit or dividends we have not been successful so far. This was our first foray into textile sector, so learning the business took time. Those days licensing was still there, some of the conditions put us at a handicap. Just when we had got our product mix right, a government policy of suddenly allowing imports of yarn from India by paying dollars put us against artificial and impossible competition. We lost heavily. We are still carrying this burden. We faced the situation that we got one of the lowest or no protection, but no industry in Nepal can compete with Indian dollar prices in any product. But I do not want to just complain. I can tell you that our family is working extremely hard because more than our money, our name is also involved. The situation is improving though we have a long way to go still. We will work hard and sincerely until no options are left. This is serious dedication when we could have gone for much easier way out, I know that on this score every stakeholder trusts us.

During the last couple of years, you had personally been very strongly arguing for special package for revival of industrial and business sectors in the country. How is the situation now, in your evaluation?

The state of economy is really sad. I say sad because when you look around in the world you see how many opportunities we have lost and how much time we have squandered. Our country is small, basically peaceful and mostly has the right set of policies. It should not be difficult to manage our development. If not spectacular growth, at least steady and perceptible improvement in different facets of our national life should have been possible. But we are losing the sense of judgement between right and wrong in all spheres. We are losing a sense of balance in our values. We are slipping into a stupor. We have not yet matured any system of politics in these fifty years. First we must do that. A good leadership and faith in future can turn the country around.

How do you view the outcome of the recent India visit of the Prime Minister?

If you read the newspapers, there seem to have been more talk before and after the visit than during the actual visit! We should not forget that there are two sides in every talk. We should also be prepared for what the other side has to say. If talks are successful both sides gain, if the talks are not successful both sides are to blame. But after the visit, openings have been created in most of the issues Nepal wanted to raise. This is also an achievement. Now we should prepare united as a country to take these openings to a fair conclusion. As far as the business issues are concerned, limited agenda has been addressed. Here also we have work to do in the coming days. I did not think that this visit had business as the main agenda, so I did not have unrealistic expectations.

You are also actively involved in SAARC Chamber of Commerce and Industry. How hopeful are you in the success of the efforts towards SAFTA when SAARC itself is now almost defunct?

SAARC has been slowed by politics between some of its members. It is our regional politics that is to blame for the state of affairs. But that does not mean that we should give up the concept of regional grouping which is SAARC. Without SAARC our region will become even more marginalised in the world. The cost of non co-operation is enormous. So no matter how slow the progress and how difficult it appears, we have to root for SAARC. That’s why I am still in SAARC Chamber in spite of occasional thoughts – what am I doing here?

Some businesspersons have been complaining that the present FNCCI leadership has not been functioning as expected. As a past President of FNCCI, what is your comment?

On balance, FNCCI has worked as well as is possible under the circumstances. The complaints usually grow as the election nears. FNCCI has a diverse membership, it is not possible to satisfy everyone every time on every issue. I measure FNCCI performance by the sincerity and dedication the members put in, not merely by the benefit they directly derive. Sometimes an individual member’s interest is in conflict with the interest of the economy. At other times what members want is not in keeping with the requirements of a modern globally turned economy we want for Nepal for future. FNCCI leadership has a difficult task in these times. I would be very worried if FNCCI were to become a place only to further personal interest and if there were a lack of integrity among its leadership. Happily it is not so.

You are currently leading the team that is working for the amendments in FNCCI Constitution. Would you mind sharing with us the major points that are being changed?

This is another delicate task. But I have tried to do my work diligently in hammering out suggestions, which are possible under today’s power balance among the members. At the same time, I hope that we will make some changes in the forward direction. The new generation of members has different ideas and expectations, we have to realize this and try to accommodate them. The actual outcome depends on the General Assembly, so I can not say now.

That was our major proposal and a lot of debate went into it. We have proposed the selection of vice-president who would take over the position of president after the expiry of the tenure of the serving president. But the idea did not receive the expected support. The general meeting is coming up and we will see how the issue develops. Our constitutional amendment is done through a majority. And it depends on what the majority of the members think. We, the Working Committee, have also submitted other recommendations. One is regarding elections. The other pertains to the power and authority of the president and how check and balance can be maintained. Also, we have suggested that in order to bring all the members under the umbrella of the Federation, three councils are set up and members serve terms of office in the council. These issues will call for a lot of debate before coming to any concrete decision.

How is your comment on the on-going uproar about the poor health of the banking sector and the alleged role of some sections of the business community in this?

Yes, our banking sector is caught between the old ways and modern requirements. The older banks served the country well in the early days, we must laud their service. But they must change and adapt now. At the moment, the older banks are inflexible, unbusinesslike and indecisive. Now to make things worse, a slowdown by the employees seems to be going on. This has caused losses and sufferings to all customers. When banks stop caring about customers, the reason for their existence goes away. Strikes and slowdowns in basic services, especially government owned, should be banned. No doubt genuine grievances of employees must be addressed but they must be settled only by dialogue.

I have read some reports in the papers stating that the loans to business community is a major factor in the poor health of the banks. This is missing the main point. Banks exist to make loans to business people and make the economy run. All business will not always be profitable all the time, some ventures may even collapse – this is the law of nature. The true problems are the loans made or taken under undue political influence or corruption. Bad management or outside interference is where the problem is.

Trade unions were there earlier, and now even the Trade Union Act has been formed. But our thinking is that whenever we talk about trade unions we tend to link them with political parties. We still exist within that framework. Only after we are able to break though this and change our general concept will trade unions be able to perform positively. If trade unions remain affiliated to political parties, then I don’t think they will be able to work in a positive manner. Another aspect is that trade unions around the world are not getting stronger but weaker. At a time when changes are rapidly taking place, it will not be possible in an organized sector to work in a flexible manner staying within the realms of trade unions. So the necessity of trade unions is actually not increasing. And the membership in trade unions is also decreasing.

These days we constantly hear calls from the private sector for good governance and transparency. The call seems to be directed more towards the government, as the private sector itself does not seem to be ready yet for maintaining transparency in its business. What is your comment?

Good governance is like climate. In a polluted climate everyone falls sick or wears a mask. It is true that all of us in the private sector also are not ready for complete transparency. But until we clean up the climate, clean up taxation system, attack corruption, remove arbitrary powers, provide quick judgements on complaints or disputes – things will not improve. FNCCI has started work in the area of good governance too. Some colleagues and I are handling it. There was a tremendous response to a program we organized recently. Government also has a project on the subject. All these are positive signs.

When you talk about good governance in relation with the private sector or within a company, you will have to first consider the management and secondly, the ownership. As our economy becomes more stable and mature, family business and partnerships will gradually be converted into limited liability companies. And then good governance will play a key role. Good governance is also essential when we run a business by borrowing money – either in the form of bank loan or as shareholders' money. Good governance is not only an idea but has become an essential element for growth and development. The role of the board of directors, managers, shareholders, etc have to be defined since they fall under the purview of good governance. People have perhaps not felt the need for good governance in Nepal as yet because there are not too many public limited or organized companies. But if we are able to adopt few aspects of good governance in our companies at present, it will go a long way in ensuring good governance in future. We must remember that good governance in a country like our’s is more essential in the government. Because even if a private company lacks good governance, how many people are going to be affected? But the government’s way of governance is going to influence the day to day life of all the people in the country.

Send your feedback to the editor: bizage@ecomail.com.np
1999 © Mercantile Communications Pvt. Ltd. P.O. Box 876, Durbar Marg, Kathmandu, NEPAL. Tel : 977 1 220 773, 243 566 . Fax: 977 1 225 407. Reproduction in any form is prohibited without prior permission. No part of the articles which appear in the internet version on BUSINESSAGE may be reproduced without the permission of Mercantile Communications Pvt. Ltd. For reprinting rights, please write to us. Send us your feedback:contact us . CLICK HERE FOR PAST ISSUE. This site is best viewed at : 800 X 600 resolution

"Good governance is like climate"