Business News

Neco Insurance to Pay Dividend

Neco Insurance Ltd. (NIL), at its fourth AGM, has decided to distribute a 10% dividend to its shareholders from its net profit of Rs. 5.32 million in 1998/99. Presenting the annual report, chairman of the company, Punya Prasad Dahal informed that in that year the company had collected a gross premium amounting to nearly Rs. 118.65 million. Dahal also said that NIL had invested some Rs. 74 million as fixed deposit in commercial banks. It was also made known that in the first six months of the current fiscal year, until mid January 2000, NIL had collected a gross premium of Rs. 101.2 million.

Premium Structure of NIL

Price Hike in Aviation Fuel

Soon after some private airlines started offering discount on fare on certain routes, Nepal Oil Corporation (NOC) has increased the price of aviation fuel by about 25%. The step is feared to thwart the effort of the airlines to become price competitive.

State-owned NOC holds monopoly as supplier of major petroleum fuels such as petrol, diesel, kerosene and aviation fuel. The hike in the aviation fuel price comes after a similar increase some eight months back in other categories of fuel that NOC deals in.

Faced with stiff competition among themselves in certain routes, airlines including Necon Air, Cosmic Air, Buddha Air, Gorkha Airlines and Mountain Air have reduced between 10-30% of fares on those routes with the onset of monsoon season.

Meanwhile, NAOA, the association of the Nepali airlines, has demanded that NOC immediately withdraw its decision.

SAVPOT Launched

The South Asia and Vietnam Project on Tripartism (SAVPOT) was launched in Nepal by organizing a two-day workshop on June 8-9 among representatives of the management and workers of four enterprises of Nepal that are participating in the project. Hotel Soaltee, Ami Apparels Ltd., Raghupati Jute Mills, and Mahashakti Soap and Chemical Industry Ltd are participating in the project expected to run till the year 2002.

An ILO project under the funding of Norway, SAVPOT aims to promote social dialogue to deal with the new challenges of global economy. It is an action research project covering five countries from south Asia, namely, Bangladesh, India, Nepal, Pakistan and Sri Lanka and Vietnam. Under the project, the management and workers’ representatives work together to improve work place cooperation and promote social dialogue in their respective enterprises. The project intends to build on enterprise level experience into a national level one and then taking its further to the regional level.

Officially opening the first workshop, Mrs. Leyla Tegmo Reddy, the Senior Advisor at ILO Office, Kathmandu, remarked that SAVPOT project constitutes one part of ILO’s objective of promoting social dialogue. ILO has conceived social dialogue not only as an end in itself but also a means to achieve other three strategic goals. The four strategic objectives of ILO, are: the promotion and realization of fundamental principles and rights at work, creation of employment opportunities for women and men to secure decent employment and income, enhancement of the coverage and effectiveness of social security protection, and the promotion of social dialogue.

According to Lars Odegaard, the Chief Technical Advisor for the project, SAVPOT aims to provide learning environment, support structure, decent work and competitiveness to the participating enterprises. So far, 21 enterprises from the five countries are participating in the regional project. The second workshop of the project in Nepal is scheduled for September 20-21, it is learnt. Dr. Narayan Manandhar, Executive Director of Industrial Relations Forum is coordinating SAVPOT in Nepal.

Salt Trading to pay 20% Dividend

Despite a marginal increase in its sales revenue, Salt Trading Corporation Limited (STCL) registered an operating profit 33% lower during the year ending July 16, 1999 as compared to the previous year. However, the company has decided to maintain dividend payment to its shareholders at 20% of the paid up value.

The annual report presented at the 34th AGM of the company shows that the sales revenue of the company increased 6%, but other incomes declined 40% largely due to a sharp decline in interest and other income. It was despite a 14% increase in dividend income.

Company chairman Kamal Mani Dixit told the shareholders that the company has not been able to get any benefit for the last several years from subsidiary companies, causing STCL’s interest burden to be very high. Among STCL subsidiaries, National Finance Company Ltd. was the sole provider of dividend.

Primarily engaged in supplying iodized salt, STCL has a distribution chain reaching almost everywhere in the country. Through this chain, the corporation has been dealing also in other daily necessities like sugar, flour, ghee, cooking oil and tea. Vehicle tyres and tubes, cement and coal are some of the material it deals in. The corporation’s subsidiary companies are in the fields of food processing, vehicle tyre manufacturing, handicraft, finance, insurance and foreign trade. Recently, it has also entered pharmaceutical manufacturing in joint venture with an Indian company.

Dixit told the shareholders that during the year the workers of two subsidiaries (in sugar and handicraft) were retrenched while the pulses processing unit was merged with the flour mill company. He expressed hope that the flour mill will be able to yied dividend to the shareholders from the current fiscal year. Similarly, a management change has been effected in the vegetable ghee subsidiary (Nepal Vegetable Ghee Industry Ltd.) with hopes to make it profitable from the next fiscal year. Financial restructuring effected this year in Gorakhakali Rubber Udyog Ltd. (the tyres making subsidiary) has cost STCL some Rs. 20.68 million in terms of lowered face value of the shares in the subsidiary.

STCL Operating Highlights

(Rs. in million)

Financial Highlights

NICB Shares Enlisted

Nepal Stock Exchange Ltd. has enlisted 5,000,000 units of ordinary shares of Nepal Industrial and Commercial Bank Ltd. (NICB) paving the way for their trading in the stock exchange.

The shares have a face value of Rs. 100 and the company had allotted 1750,000 units of them to 42078 shareholders in February this year.

Promoted by a group of industrial and business houses along with state-owned commercial bank (Rastriya Banijya Bank), NICB has its headquarters in Biratnagar and has Rs. 1,725.05 million in deposits as of the quarter ending April 11, 2000, according to the bank's latest unaudited quarterly report.

Necon Goes Varanasi

Necon Air has begun its flights to the Indian city of Vanarasi from June 15.

The airline flies to the holy city thrice every week on Sunday, Tuesday and Thursday.

The only private sector airlines to fly international routes, Necon Air also flies to Patna.

Nepal Battery Loses in Supreme Court

The Supreme Court has rejected to issue an interim order against a recent verdict of the labour tribunal.

In a case related to Nepal Battery Company Ltd. the tribunal headed by Kashi Raj Dahal, now the spokesman of the Supreme Court, had asked the government to review the rules, if any, that allowed foreigners to work in Nepal without work permit (Business Age Vol.2, No.6). It had also asked the company management to revise up the salary and facilities of the complainant employees to make it proportionate with the increase in the salary and facilities of other categories of the employees of the company.

The decision of the Supreme Court comes after the company had filed a writ petition against the tribunal’s decision last month.

Airbus Woos RNAC

Airbus Industries (AI), the European consortium that manufactures Airbus, has started wooing Nepal’s national flag carrier Royal Nepal Airlines Corporation (RNAC) to buy Airbus instead of Boeing that RNAC is said to be planning to acquire.

Flying to London, Paris and Frankfurt, RNAC’s existing Boeings make stop-overs for refueling. AI argues that with Airbus, RNAC will be able to fly non-stop to any European destination. AI dominates about half of global airlines sale with the other half of the cake shared by US company Boeing Corporation. According to AI’s forecast the South Asian region would need about 330 more aeroplanes – to replace almost all the planes flying in the region due to aging, and also to account for growing traffic.

AI claims that its aircraft already form the backbone of airline fleets in Biman (Bangladesh), Air India and Indian Airlines (India), Pakistan International Airlines (Pakistan), Srilankan (Sri Lanka) and Thai International (Thailand). Thus, RNAC is the only major international airline in this region that does not fly Airbus.

Headquartered in Touloune, France, the Airbus Industrie is owned by four leading European areospace companies – Aerospatiale Matra Airbus of France and DaimlerChrysler Aerospace Airbus of Germany both holding 37.9 percent share each, and BAE Systems of Britain and CASA of Spain holding 20 percent and 4.2 percent shares respectively.

Shree Distillery gets ISO 9002

Shree Distillery Pvt. Ltd. has received the international standard mark ISO 9002 on the entire production , sales and distribution process of the company, becoming the first Nepali as well as South Asian liquor manufacturer to receive the coveted international standard mark.

According to Hari Rai Sampang, general manager of the company, efforts for over a year and a half had been put in to gain the recognition during which KPMG, ISO Quality Registrar based in Bompay, India audited the production and distribution process which was approved by American National Standard Institute, American Society for Quality.

Sampang also said that since the recognition could be suspended if the company was to violate the ISO 9002 norms, the distillery has now added responsibility of producing quality liquor and maintaining the quality at all times.

Involved in liquor production since the last 15 years, Shree Distillery has been with technical assistances from T & A McClelland Limited and Morrison Bowmore Distillers of Scotland is also producing and distributing Mount Everest Whiskey, King’s Pride Whiskey and Gorkhali Rum.

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