Political unrest has hit industry

SANGAM PRASAIN

JUL 15 -
Dinesh Shrestha is managing director of Pacific Commercial Company, authorized dealer of Mahindra two-wheelers in Nepal. Shrestha, who is also an executive committee member of the Federation of Nepalese Chambers of Commerce and Industry, has interests in trading, education, manufacturing and health. Sangam Prasain of The Kathmandu Post talked with Shrestha on the business environment and Pacific's business interest. Excerpts:

The Economic Survey 2009/10 shows a rise in vehicle sales. How has your company that deals in Mahindra scooters performed?

There has been a significant rise in the sale of vehicles from four-wheelers to two-wheelers. With ever increasing population and urbanisation, owning a vehicle has become a necessity. As we don't have an efficient mass transportation system in place, people living in urban areas have no choice but to go for private vehicles. This has increased the demand for two-wheelers in major cities including Kathmandu. Hence, business has been good for every automobile company this fiscal year. In our case, we've sold around 1,500 units of Mahindra scooters in the last eight months.



How many models of Mahindra scooters are available in the market?

We are currently selling the four-stroke 125 cc Mahindra Duro, 124.6 cc Mahindra Flyte and Mahindra Rodeo. Though we've recently started selling Mahindra scooters in Nepal, our market share is between 20-25 percent in the overall scooter segment.

Due to safety features, mileage and pickup, demand for scooters has been increasing gradually. Even then, sales are relatively low compared to motorbikes; but we're optimistic that they will go up.



Your group has recently entered the FMCG sector with snacks. How is the new business going, and what are the new products you are planning to launch?

We have recently launched our FMCG products under the Mum's brand in the Nepali market. Mum's brand is a processed food and snacks from India's Amrapali Group. The response so far has been positive. With snacks and processed foods becoming popular in Nepal, we aim to expand and diversify the existing product line. We want to provide customers the finest taste with the highest quality. As the Amrapali Group has recently started juice production, we'll be launching it in the Nepali market in the near future.



The government has failed to present a complete budget once again. What impact will it have on the private sector?

It shows that the economic agenda has never been a priority for our political parties. This is the second instance that the country has missed a complete budget. When the entire industrial sector is on the brink of collapse and investors are unwilling to invest in the country, a full-fledged budget was the need of the hour.

Entrepreneurs always study the budget before making their business and expansion plans. The delay in the budget will affect the entire industrial and business sector. The private sector has suggested to the government to introduce import substitution measures among other issues to narrow the trade deficit; but with the special budget, we can't think of lessening the trade deficit.



What are the major problems that the private sector is facing and which need to be addressed immediately?

Political instability has made the business climate pessimistic and spread a sense of insecurity. As in the previous years, load-shedding and labour problems have made the cost of doing business expensive. This year, we also faced difficulties in getting loans from banks due to the liquidity crunch. Despite the central bank asking commercial banks to finance the industrial sector, no bank is willing to invest. None of the banks wants to bear losses putting money in industry in this business climate.

Mega Bank soft launching today

SANGAM PRASAIN

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JUL 23 - The much-hyped Mega Bank is making its soft launch on Friday. With Nepal Rastra Bank giving its operating license on Sunday, Mega Bank has become the 28th commercial bank in the country.

Mega Bank is the first five-star bank in the country, said its top management. Its headquarters at Kantipath has a grand look. The old British Council building has been given a complete makeover.

With a paid-up capital of Rs. 1.63 billion, the bank has been in the news for its largest promoter base. It has 1,219 promoters who have invested from Rs. 1 million to Rs. 10 million.

Mega Bank is beginning operations at a crucial time when the banking system is slowly recovering from a liquidity crunch. Real estate, one of the most attractive lending destinations for banks in recent times, is cooling down.

Chief executive officer Anil Shah said that Mega Bank would primarily focus on three sectors -- corporate banking, small and medium enterprises (SMEs) and micro finance. The bank has a specialised team for each of these three sectors.

According to CEO Shah, Mega Bank will not go for real estate and margin lending in the first quarter of its operation. "We'll not lend to real estate and do margin lending in the first quarter," he said.

Shah has an ambitious plan to open 10 branches in its first year of operation. According to him, Mega Bank will have a presence in areas where there are no other banks.

Mega Bank has identified SMEs as one of the core areas for banking. Shah, who was one of the people behind the retail banking revolution in Nepal, believes an SME revolution in the banking sector is about to come.

Mega Bank, according to Shah, will go to rural Nepal with technology as the backbone. "Our aim is not only collecting deposits from rural areas but also issuing loans," he said.

‘We will focus on rural areas’

How will Mega Bank be different from the existing ones?

Our business model is different. We'll be focusing on small and medium enterprises (SMEs) and micro finance. Our focus will be rural areas that is still out of banking services.

As a new bank, don't you think it's challenging to go rural?

Yes, it is challenging; but on the other hand, there is also great opportunity. We'll show that rural Nepal has the most potential for the banking industry for the next three-five years.

How many branches will Mega Bank open in its first year of operation?

As per our plan, we'll be opening 10 branches within the current fiscal year. In the next five years, our plan is to establish around 50 branches.