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NEPAL LEVER |
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NEPAL LEVER |
Partner In Progress In the midst of manifold
problems gripping the industrial sector, Nepal Lever Ltd increases its dividend By A CORRESPONDENT Nepal Lever's domestic sales have gone up
by 21 percent, although overall exports are down. Despite such a difficult situation, the
good news is that Nepal Lever has increased its dividend. According to the company, the
board of directors at their recent meeting recommended a dividend of Rs. 55 per share, an
increase from Rs. 50 per share last year. Despite the lower profit, the decision reflects
continued confidence in long-term growth prospects, especially in the domestic market.
Nepal Lever reported a turnover of
Rs. 1.54 billion and after-tax profits of Rs. 68 million last fiscal year. While the
domestic business maintained its growth momentum, achieving a 21 percent increase in
turnover to Rs. 704.3 million, the export turnover was lower by 27 percent, at Rs.836.7
million. According to the company, the after-tax profit has dropped to Rs. 68
million, mainly because of a slowdown in exports. The domestic business growth of 21 percent
required heavier market investments in an intensively competitive environment. Higher
interest burden is attributed to the accumulation of the dues with the government on
account of duty drawback on exports and VAT refunds exceeding Rs. 200 million. The export business of the company was
adversely impacted by changes introduced in the last Indian budget, wherein the advantage
of lower countervailing duty for the company's customers in India was withdrawn. According
to the company, the disadvantage of non-refund of excise duty for raw and packaging
materials source from India continues. Amid higher excise duties in the export of
the raw materials, the export of the company's toothpaste became uncompetitive. "Even exports of soaps are becoming
increasingly uncompetitive, given the package of tax incentives available to new
investments in India," said M.K. Sharma, director, Nepal Lever Limited and vice
chairman, Hindustan Lever Limited. "Besides, the extraordinary delays in settlement
of duty drawback claims and several unanticipated ad hoc and arbitrary tax decisions
by the revenue administration are imposing additional burden on the company in
general and the exports business in particular. This coupled with the impact of
export tax is threatening to render the exports business unviable in the longer run,"
he added. In line with its stated strategy of
focusing on developing the local market, the company has continued to invest heavily in
expanding the domestic business. "Had it not been for the disturbances in the last
two months of the fiscal year, which affected markets across the country, the domestic
business would have grown further at much higher rates to tack more than 30 percent
growth rates achieved in earlier years," said Sandip Ghose, managing director of
Nepal Lever. Nepal Lever launched many products and
re-launched existing ones, offering a wide variety of choice to the consumers.
"The company now has a comprehensive portfolio of products, which are of truly
international standards," said Ghose. Some of the new launches were Wheel
Detergent Bar, Vim Dishwashing bar and Lifebuoy Active and the core brand like Lux,
Close-Up and Pepsodent went through comprehensive re-launches. For the first time, leading
Nepalese film star Karishma Manandhar appeared in
advertisements endorsing the brand. The company also re-launched Close-Up with fluoride
and Pepsodent with Superior Germicheck Plus Formula, in line with the company's
objective of customizing its product range to cater to local needs. "We will produce quality products at
competitive prices to cater to the interest of the local customer," said Ghose.
"Our new products are competitive in quality and reasonable in the price. This is the
reason why most of our products are leading the market." Close-Up continues to be the undisputed
leader market leader in Nepal and Pepsodent has more than doubled its market share in the
past year. The company recently launched a new variant of Lifebuoy with Active B that is
effective against germs. Despite the deteriorating law-and-order
situation in the country, Nepal Lever has made every effort to expand its reach. The
company organized a series of interesting experiments in order to tap markets in the
remote corners of the country. "We take the deteriorating situation
as a challenge as well as opportunity to expand the market base. Hindustan Lever has faced
the situation like in Nepal in the several parts of the India. We were actively marketing
during the violence in Punjab and have been working in the Assam," said Sharma. Nepal Lever also is involved in various
social projects. The company has initiated an ambitious program of contacting
schoolchildren throughout Nepal to impart the oral health education, in collaboration with
a leading NGO. "We have organized several dental camps and a mobile medical unit is
being operated in Hetauda by the Company's Employees Trust to provide emergency service to
residents of Makwanpur district," said Ghose. The company is participating in a
major initiative for the restoration of heritage sites in collaboration with the Kathmandu
Valley Preservation Trust. "We will continue with our strategy
for aggressive development of the local market by introducing consumer-relevant product
innovations and building a robust distribution infrastructure in the country," said
Ghose. Expansion of Nepal Lever's activities will
also generate more jobs. "We will participate in the process of income and employment
generation and remain totally committed to improving the quality of life in Nepal. To
fulfill our endeavor we need the support from all sections of the society," said
Sharma. In the course of expansion, the company has
trained large number of workers in rural parts of the country. "Through the training
imparted to its 100 percent local force, the company is developing technically skilled
manpower in the country," Sharma said. "Similarly, the creation of ancillary
units is raising overall technological capabilities," he added. As Nepal and India are working to find an
amicable solution to their trade disagreements, there is a hopeful sign that the renewal
of trade agreement between Nepal-India will once again support the drive of Nepal Lever to
export its products in India. "Nepal India-Chamber of Commerce and
Industry and Confederation of Indian Industry have already urged the government of two
countries to agree on proposal to allow the entry of products like ours in the Indian
market as in previous years," said Ghose. Obstruction in the export and disturbances
in the domestic sector has hampered the overall production. With a gradual improvement in
law and order inside the country and a narrowing of the gap between Nepal and India
on trade policies, there are hopeful signs of a return to normalcy in the coming years. |
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