‘There is no control over labour’

‘There is no control over labour’
ekantipur, 26-Dec-08

Sanjiv Keshava is managing director of Surya Nepal Pvt. Ltd. He has been with ITC of India, which owns 59 percent of Surya Nepal, since 1989. Before he came to Kathmandu in May, he set up ITC's Wills Lifestyle business. He talked to The Kathmandu Post about the company's garment business, labour and power problems and expansion plans. Excerpts:

Besides cigarettes, you are also involved in garments. Tell us about it.

We have a garment factory in Biratnagar. We export garments to India, which at the moment is the biggest market for us. We have also started exporting to Europe and the U.S.A. We also manufacture garments for the domestic market. We have two brands here - John Players and Springwood. It is very difficult to find out our share of the Nepali market because there is so much inflow from China and Thailand. That is really the unbranded segment, and we don't have statistics on that. According to our estimates, we have a 5 percent market share.

It's doing well because our factories are managed wonderfully. We have invested in technology. We provide continuous training to our labour force to upgrade their skills. We concentrate on high productivity. We have 330 workers directly employed and 300 who are contracted.

What are your expansion plans?

We have also entered the match sector - Teer. We have set up different standards for quality matches. We do not have the capacity to sell all over Nepal. And we are examining other sectors - food and personal care which includes cosmetics. We are examining a whole host of product categories to see their viability. That is still under consideration. There are many categories under food. We had a plan to get a hotel. We are still looking around for one.

You are at present facing a lot of problems with labour.

The major issue is that there is no control over labour. We are probably the highest payers in the country as far as labour is concerned. If you examine all the other industries, the average labour payout for skilled factory labour is almost Rs. 20,000 a month. That is a huge amount. Despite that the government announced minimum wages, and all our workers came back and wanted a minimum wage increase across the board. As you know, the Simara factory was closed for six days over the same issue.

The demands were unreasonable and illegal because we are already paying above the minimum wage table. It's a minimum wage revision. For workers earning below the minimum wage, the table has been increased. But for a person who is already earning Rs. 15,000 to 20,000 per month, why should he get a minimum wage revision? He is governed by the long-term agreement that the company has signed with him. And he is already getting an increment every year - a natural increase in the salary. Despite that they put forward various demands. They shut down the factory. Negotiations are still on. We are not going to give in to the minimum wage demand. We are looking at signing a new long-term agreement with labour. Labour is the biggest challenge at the moment.

How does it affect you expansion plans?

Definitely, it will slow down the entire expansion plan because unless this issue is resolved I don't think any investment is going to come to Nepal. The government needs to have some control over labour, they need to have some discipline, they need to have good arbitration, strengthen existing laws and create an investment friendly climate. It is one thing to say come and invest, but why should anyone invest when they are held to ransom?

You are also facing problems with power.

There is no power. Power is a major mismanaged issue. That puts a huge financial burden on us because we run on capital power. The differential in diesel generated power and hydropower is huge. Unless the government looks into this very seriously, there is no scope for any industrialisation happening in Nepal.

People who work in your marketing section are sought after. Why is this so?

I think it's the way we operate, the training we provide our people. The systems and processes we have are extremely strong. That is a very sought after quality. At the end of the day, an organization only consists of human resources.

How has working in Nepal been like?

It is a very rewarding experience. Nepal has its problems like any other country, but it also has its potentials. There is a lot that can be done to exploit that potential. It's a land with water and natural resources. I think all these can be worked with to create wealth. It's got tourism which is a major industry.

How do Nepali professionals compare with others you have worked with?

Perhaps the level of exposure and education here is not as high. India is a far more industrialised country. To that extent, the exposure to the global market is higher, there is more investment in technology and infrastructure is far more developed. There are very well educated Nepali resources available. I think your management and engineering schools are doing a wonderful job.