Carpet Exports

While the industry as a whole may be declining, the entrepreneurial type business firms manage to maintain a sales growth or at least the relative position they previously had in comparison to the competitors.

The case in point is that of Nepali carpet industry which has declined a lot over the last couple of years. Comparison between the twelve months that end on mid-July 1999 and December 2000 show that while some of the export units have maintained their position among the top ten exporters, two have also registered an absolute sales growth.

Some well-known companies (e.g. Karma Tara, Senon Carpet, Snowlion) do not figure among the top exporters in either of the periods compared. More interestingly, a couple of top-ranking companies of one period have lost the position in the other - not only from the berth of the top ten, they do not even figure among the top twenty.

Nepal Rastra Bank's plan to hand over the management of the country's two largest but "technically insolvent" commercial banks to foreign consultant companies has been blocked for at least one of the two banks.

According to the reports, the team assigned to select one of the four short-listed consultants for Nepal Bank Ltd. has rejected all the aspirants that included Ernst & Young (Sri Lanka), PricewaterhouseCoopers (India), ICC Bank (UK) and Development Partnership (Ireland).

Nepal Rastra Bank had earlier planned to conclude the procedures by the end of April so as to hand over the management of Nepal Bank Ltd. and Rastriya Banijya Bank to the consultants sooner then July 16 when the new fiscal year begins. As the program has to be carried together in both of the banks, this development will mean that handing over of management to the foreigners will not be possible even by September later this year, the date fixed after revising the schedule following other earlier delays due to legal problems related with Nepal Bank Ltd. in which private sector holds majority shares.

It is claimed that rejection of all the short-listed candidates is a result of clashing interest of the Board members of Nepal Bank Ltd.

When business resumed on June 12 following a prolonged public holiday after the Royal Palace massacre of June 1 evening, the stock exchange lost only 4.2 points in the all-inclusive NEPSE index, reinforcing a belief that Nepali stock exchange is impervious to factors outside the market. Or, looking at it in a slightly different way, it also indicates that the market expected normalcy to be maintained despite the fears of a cataclysm rumoured immediately after the news of the gory incident broke out.

However, the decline, that was normal when viewed against the trend before the royal palace incident, continued also on June 13 when the market closed with NEPSE 333.18, losing 4.87 over the previous day's close. But it has been showing slow but steady upward trend in the following weeks.

The 10 days long closure of business affected the unorganized sector (grocery stores, street vendors etc) as the consumers were suffering cash shortage due to the unusually long closure of the banks. As the holidays were for state mourning, hard hit were meat, liquor and restaurant sales. Tourism was hit still harder by the rumours of imminent disturbances, which actually happened for a couple of days leading the authorities to enforce curfew in Kathmandu and Lalitpur for two days. Big hotels had to cancel booking for conventions, while the "Festival of Life" campaign of Nepal Tourism Board aimed at attracting Indian tourists, suffered a heavy setback. This is despite a healthy occupancy in one of the five-star hotels that happened to house most of the foreign journalists who were in Nepal to report about the aftermaths of June 1 incident. Another aspect of the story was the stoppage of work at the customs checkpoints bringing exports and imports to a virtual standstill for many days.

Even after the resumption of work from June 12, business was subdued and normalcy returned only after about a week.

On the flipside, sellers of caps are reported to have done brisk business during hours when curfew was lifted. Though barbers too were busy shaving off the hair from the scalp of those who wanted to show their respect to the demised king, the service was mostly free of charge on the call of the barbers' association, it is reported.

The joint-venture company between Khetan Group of Nepal and Spice Cell of Modi Telestra India is named Spice Cell Nepal (P) Ltd. Rajendra Khetan, Managing Director of Khetan Group says, now the operation of the services are expected to begin within three months.

Initially planned to begin operation by February-March, 2001, the project was delayed after the employees union of Nepal Telecommunication Corporation, a state-owned entity that operates both fixed and mobile telephone services, approached the Supreme Court challenging NTA’s decision to grant license to private sector operator for cellphone services.

Though the case is still not disposed off, the hearings so far have sufficiently indicated that there will be no problem for the new company, it is learnt.

Pant: New CEO, Nabil

The first joint venture commercial bank, Nepal Arab Bank Ltd. (Nabil), is now fully under Nepali management following the expiry of Technical Service Agreement (TSA) that it had with National Bank of Bangladesh (NBB). 

The development comes after about two years of NBB selling its financial stake in Nabil to an Irish company, NB International, in May 1999. However, Nabil's TSA with NBB was continued till May this year as per the conditions of the agreement. With the termination of the TSA, Nabil saves about US $ 25,000 per annum in the technical service fee plus salaries to the two senior management personnel deputed by NBB.

In operation since July 1984 with Emirates Bank International (Dubai) holding 50% shares initially, Nabil provides the second instance of a joint-venture bank's management coming to entirely Nepali hands. The first such thing happened three years ago with Bank of Kathmandu that was initially set up under joint venture with a Thai bank which later withdrew due to financial crisis in Thai economy.

After about three years of efforts, the bank meant to cater exclusively to the cottage and small industries sector has started operation from June 19, 2001. Established with the initiation of Federation of Nepalese Cottage and Small Industries (FNCSI), the new development bank is named Nepal Cottage and Small Industries Development Bank Ltd. (NCSIDB) and is owned 10% by Nepal Rastra Bank and 14% by FNCSI.

In an attempt to rehabilitate their company from its perpetual sickness, the shareholders of Butwal Dhago Karkhana (BDK), a yarn manufacturing company, have approved the proposal to hand over the management to Salt Trading Corporation (STC), a trading company that is gradually evolving as a major investment and management house with increasing involvement in industrial management.

According to the proposal of STC presented to the recently held Special General Meeting of BDK, the new management promises to increase the daily production to 9MT/day from the present 5MT/day by investing additional Rs. 44.5 million to streamline productivity. The installed capacity of the factory is 10 MT/day.

BDK had gone into commercial production about 11 years ago and it is mainly owned by the government and state enterprises including Janakpur Cigarette Factory, Birganj Sugar Factory, Himal Cement and Nepal Industrial Development Corporation. From the private sector, Mutual Trading Concern of Khetan Group is a major shareholder in BDK.