CNI Registered

After over one year long incubation, the Confederation of Nepalese Industries (CNI) has been formally registered with the Lalitpur District Administration office with Binod Kumar Chaudhary as the President. In its publicity campaign, CNI is using the slogan “Talking Business, Talking Change” and is being projected as the national level confederation of manufacturing and service industry of the country parallel to the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). This is supported by the fact that it is led by Chaudhary, a former President of FNCCI who in recent years had gradually distanced himself from FNCCI citing differences with the new leadership in FNCCI.

There have been voices being raised against FNCCI for the domination of trading firms and district chambers in its leadership, thus sidelining the interests of the manufacturing, hotels, airlines and other service industry sectors.

However, the promotor group of CNI also includes Mohan Gopal Khetan, father of Rajendra Kumar Khetan, the second Vice-President of FNCCI. Similarly, some names in the list of CNI leadership are still in the existing executive committee of  FNCCI. They include Atma Ram Murarka, Santosh Kumar Tibrewala and Shashi Kant Agrawal.

Some of the other prominent names in the CNI list of leadership are veteran tourism entrepreneurs Tek Chandra Pokharel, MA Lari and Sridhar Prasad Acharya, former FNCCI Vice Presidents Chiranji Lal Agrawal and Bijaya Kumar Shah and bankers Himalaya SJB Rana (Chairman, Himalayan Bank Ltd.) and Dipak Bohara (Chairman, Bank of Kathmandu Ltd.).

Other leaders of CNI include Bal Krishna Shrestha (steel mill), Banwari Lal Mittal (airlines), Hulas Chand Golchha (Golchha Organisation), Jagadish Prasad Agrawal (animal feed), Mahesh Kumar Agrawal (trading), Mahesh Kumar Agrawal Mittal (tea and copper), Pawan Golyan (spinning mill), Prabin Acharya (hotel), Shiv Ratan Sarda (Sarda Group), Sitaram Prasai (tourism), Tola Ram Dugar (TM Dugar Group) and Upendra Paudel (finance company).

In its first public activity, CNI held an interaction with the US ambassador on the eve of the recently concluded US visit by Prime Minister Sher Bahadur Deuba. Though Rabi Bhakta Shrestha, the President of FNCCI, was also invited to address the meet, he was absent.

Trade Union Unity

May Day 2002 in Nepal marked the announcement of unification between the two of the largest trade union federations of the country. Nepal Trade Union Congress (NTUC) affiliated to the ruling Nepali Congress, and General Federation of Nepalese Trade Unions (GEFONT) affiliated to the main opposition party Communist Party of Nepal United Marxist Leninist, announced on the eve of the May day 2002 that they were now onwards going to work on a common agenda.

However, the unity at present is to be limited for a few activities only, says a press release jointly issued by the presidents of the two federations. These activities include implementation of the Labor Act, election of official trade unions, unity of action among the unions affiliated to the two federations, and occupational safety and health.

The unity is welcomed by the business community that was frequently facing the problem of unpredictability of the trade union movement due to its political affiliation. “Now the political influence can be expected to be less and we can hope that the labour will start talking sense”, said a leading businessman on condition of anonymity.

Devt Credit Bank 24,000 owners

Development Credit Bank Ltd. (DCBL), the newest of the private sector development banks to go public, has distributed its 30% shares (480000 unit of Rs. 100 each) to 24,450 general people following an overwhelming response to its public offer. This has earned the company the rare distinction of becoming one of the few Nepali companies with more than 20,000 shareholders. But it has also caused the cost of the fund for the company to go up because of the expenses needed to cater to the huge number of shareholders, complained Sudhir Khatri, the President of the bank, at a press meet held to inform that the shares of the bank are going to be listed in Nepal Stock Exchange Ltd.’s trading floor very soon.

Among the other companies with similarly high number of shareholders are Tara Gaon Regency Hotels Ltd. (about 42,000 shareholders) and Nepal Industrial and Commercial Bank Ltd. (nearly 30,000 shareholders).  According to the norm being followed by the Security Board of Nepal, there have to be 5,000 shareholders for every Rs. 10 million of capital issued for the general public.

The reason for the overwhelming response to the bank’s public offer is the impressive record of the bank’s performance so far, explained Khatri. According to him, by mid-May 2002, the bank collected about Rs. 1 billion as deposits and extended about Rs. 700 million as loans and advances earning an operating profit (after depreciation) of about Rs. 20 million. Khatri promised to earn about Rs. 24 million as year-end net profit for the current fiscal year out of which about Rs. 10 million will be available for distribution as dividend.

“And this is only through retail banking. We have not been able to do the development banking in its true sense”, said Khatri blaming the security situation and thus implying that the profits would have been even better had the security situation been better. “Due to the present situation, we do not have any plan right now to go aggressively for business expansion”, he added.

Commenting about the sick units rehabilitation package of the government, Khatri termed the package “funny” for its provisions, which imply that if any unit has taken loan from a commercial bank it is entitled for the sick unit’s facility, whereas it is denied if the loan is from a development bank.

Rupee in Polymer

By the beginning of the year 2003, Nepalis are likely to start using polymer currency.

An agreement to get 50 million polymer notes of Rs. 10 denomination was signed between Nepal’s central bank, Nepal Rastra Bank (NRB) and an Australian security printer Note Printing Australia (NPA).

With this, Nepal becomes the second South Asian country after Bangladesh to have polymer notes that are being used in over 15 countries in the world. Polymer notes are capable of machine processing and difficult for counterfeiting.

The NRB-NPA contract is for Australian dollars 3 million.

NPC Reconstituted

National Planning Commission  (NPC), the central planning authority of the country, has been reconstituted with Dr. Narayan Khadka as its Vice-Chairman replacing Prithvi Raj Ligal who goes back to his earlier job of an Associate Professor of Economics in the Tribhuvan University. Dr Minendra Rijal and Dr. Prakash Sharan Mahat have been newly appointed as the members of the Commission. Two of the earlier members of the Commission Dr Shanker Sharma and Dr. Jagadish Chandra Pokharel are reappointed while Dr. Hari Shankar Tripathi, Dr. Nirmal Pandey and Dr. Bal Gopal Vaidya have retired at the conclusion of their tenure.

The change of guard in NPC however does not indicate any change in the economic outlook of the government. “Rather it is only a step in further consolidation of the power by Prime Minister Sher Bahadur Deuba”, say political observers.

Both Dr. Mahat and Dr. Rijal were appointed as NPC members also towards the end of the latest tenure of Deuba’s political mentor KP Bhattarai as the Prime Minister, but the Bhattarai government had fallen before they could take over as the NPC members. And their appointment was abrogated by Bhattarai’s arch-rival Girija Prasad Koirala immediately after he succeeded Bhattarai as the PM.

Dr. Khadka has been serving as the chief advisor to KP Bhattarai since he was serving as the Prime Minister in his latest stint. Dr. Mahat is younger brother of Dr. Ram Sharan Mahat who was the Finance Minister when the appointments were made. Young Mahat too was one of the advisors to PM Deuba still his appointment as the NPC member.

New TV Channels

Consolidating its hold in the media sector of Nepal, Kantipur Publications (P) Ltd. (KP) is to start TV services through its sister concern, recently licensed Kantipur TV Network Pvt. Ltd., beginning the test transmission from December 2002.

Available for the viewers even earlier will be Metro television from Image Channel Pvt. Ltd., another recently licensed TV network company, which is to run a Metro channel covering Kathmandu valley. The regular transmission for the same is to start by November, according to RK Manandhar, the Chairman of Image Channel.  The company has already been telecasting its programs over Nepal Television for the last four years using a time slot leased from the state run TV.

Kantipur TV network is legally a separate entity without involving KP in the new company’s ownership but its promotors include Kailash Sirohiya and Binod Gyawali who are the Managing Director and Director respectively of KP. Hem Raj Gyawali, the Chairman of KP, is also the Chairman in the new company, though, as the sources say, chairman Gyawali is not holding any equity in the new company. However, the press release issued by the network company lists senior Gyawali as one of its the six promoters.

The whole exercise seems to be aimed at establishing that the new company is not a sister concern of Kantipur Publications. Kantipur is already operating one FM radio (Kantipur FM), again as an independent company, and covers the central and eastern regions of the country. With rights now for nationwide TV service, Kantipur becomes the only private sector organisation to have an effective access over all three media.

Among the other promoters of the network company, is Jeewa Lamichhane of Mahaji Films fame (that produced the much talked about movie called Filim). He made his fortune from business in the independent republics formed after the disintegration of the Soviet Union, and is the MD in the new company. Also included in the team is Dr. Upendra Mahato, another businessman who made similar fortune from the former Soviet Republics. The other promoter of the network is Ganesh Kumar Agrawal, a renowned garment exporter of the country. Dr. Mahato's previous venture in the media industry of Nepal had ended in vain. The two dailies Shree Sagarmatha and the Everest Herald collapsed within a year of their beginning under the weight of their political affiliation with CPN-UML.

As revealed in a press meet by the company, Kantipur TV is to run 24 hour programs and go for satellite transmission in the second year of operation. Within five years, it will cover 45% of the country’s territory and 70% of the population, states the press release.

Success of Kantipur TV will establish Hem Raj Gyawali, a retired bureaucrat, as the unrivalled tycoon of Nepal’s media industry.

Changed Telecom Tariff

In its efforts to rationalize its tariff structure, state run monopoly Nepal Telecommunications Corporation (NTC) is reducing both monthly rental and call charges for cellular mobile phones from mid June. At the same time NTC is also to increase rental for the fixed telephone lines while reducing the charges for international calls, as permitted by the regulatory body Nepal Telecommunications Authority.

Accordingly, the monthly rental for mobile line is being slashed to Rs. 500 from Rs. 700. The call charge is now Rs. 4 for outgoing (earlier Rs. 6) and Rs. 2 for incoming (earlier Rs. 3).

In fixed line telephone rates, the Authority has allowed NTC to reduce the highest charge of Rs. 150 to Rs. 90. The calls that cost Rs. 135 now will be reduced to Rs. 75. However, the present rates are unchanged for calls to SAARC countries.

The rentals for basic telephone is to be increased from Rs. 150 per month to Rs. 200 increasing the number of free calls from 100 to 175. Instead of the earlier arrangement of counting three minutes for a call, now every two minute will be taken as one call. But the 3% service charge on domestic and international calls will be removed. For domestic trunk calls, the highest rate is to be reduced from Rs. 12 to Rs. 9 per minute.

NLIC’s 2nd Year

Nepal Life Insurance Company Ltd. (NLIC) completed the first year of its operation by collecting over Rs. 72.5 million as premium from 8,600 policies insuring a value of nearly Rs. 1220 million. The figure shows that the company has exceeded its initial premium collection target for the first year which was set between Rs. 50 and 70 million as company’s General Manager GS Pangti had told us last year.

According to the company sources, the company right now has branches in Kathmandu, Biratnagar and Birgunj and plans to open new offices in Nepalgunj, Butwal and Pokhara in the near future.

Promoted by a team of Nepali investors led by the Triveni Group, NLIC is the first company in Nepal doing life insurance business only. At present there are four Nepali companies in life insurance while an American company is entering this market by establishing a branch. Among the four, state-owned RBS and private sector NLGI are both in life and non-life insurance.

According to the Insurance Board, the regulating body of this sector, the gross premium collection in Nepal in life insurance in the year 1999/2000 was 484.26 million for 2000-2001, the Board is yet to release the figure, but it is expected to go up by over 10% and reach nearly 550 million.

Necon Air An Unhappy Landing

The first casualty of the ongoing recession in the Nepali tourism industry is likely to be Necon Air Ltd. As indicated by the 9th annual report being presented to the company’s AGM on June 21.

As mentioned in the report, the company has slipped further down to a Rs. 243.79 million net loss in the fiscal year that ended on mid-July 2001 from Rs. 59 million loss in the year previous to that.

With the further reduced tourist arrivals this year, the company is not expected to record any profit in the current year. However, Chairman Dip Mani Rajbhandary has expressed hope in the report that with the revised airfare effective from the third quarter of this fiscal year, the company will be able to record profit in the coming year (2002-03).

The company early this fiscal year had tried some efforts in merging with other airlines, and though the effort was abandoned soon after, it  is still flying two Beech Aircraft leased from Shangri-la Air. But the exercise too seems to have boomeranged as it has caused the aircraft lease expenses to go further high this year. The expenses under this heading in 2000-01 were Rs. 73 million more than in 1999-2000.

Similarly, the pilot training and customization expenses on account of new ATR crafts acquired that year had cost the company additional Rs. 44 million. Among the other major reasons for the loss in 2000-01 was Rs. 22 million in additional expenses in payment to the civil aviation authority for the increased charges and the revised Finance Bill 2000 which imposed 10% VAT and 1.75% local development taxes on import of aircraft spare parts, states the annual report circulated to the company shareholders. 

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