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Company of the month: Chaudhary Group
NepaliTimes, Issue #408 (11-Jul-08 to 17-Jul-08)
Kiran Nepal
Nepali multinational: Chaudhary Group spreads its wings beyond Nepal
"We now have to let economic agenda take centre stage in Nepal," says Binod Chaudhary, "we are done with politics."
The 53-year-old head of the Chaudhary Group (CG) says this is the reason he agreed to become a UML-nominated member of the Constituent Assembly along with other businessmen.
"This is why my colleagues and I joined the assembly. We now want to make sure that the economy takes centre stage," Chaudhary said in an interview after being selected as the Nepali Times Company of the Month for July.
Binod Chaudhary has a lot to be proud of: a third-generation Nepali Marwari business family that has become Nepal's first multinational with over $500 million in assets and revenues that Forbes Asia recently called 'among Nepal's richest non-royals'.
Chaudhary's Cinnovation group with its hotel division has invested in tourism, manufacturing and trade, owning hotels in New York, Malaysia, Maldives and Sri Lanka. The group is still in full expansion mode with partners to set up luxury hotels in Singapore, Thailand and Bali.
But Chaudhary still sees Nepal as his base. "You have to have a certain mindset to be a global player," he says, "but our roots are here and I get the greatest satisfaction from being able to invest and create new jobs in Nepal."
Indeed, ever since taking over from his father Lunkaran Das Chaudhary and starting a department store in New Road in the 1970s, CG is now the biggest business player in Nepal literally 'Touching Life Everyday', as the company's motto has it. CG's WaiWai instant noodle is a recognised and established brand not just in Nepal but in 20 different countries. CG's trading wing sells LG electronics and Marutis.
"Entrepreneurship only really took off after the Panchayat, but even through the difficult period after 1990 there has been dramatic growth in business in Nepal," says Chaudhary, "in fact, if there were right policies and proper governance, Nepal's economy could really take off."
Chaudhary says Nepal should now concentrate on core areas like manufacturing, hydropower, financial services and tourism and would like to work to make investment possible in these sectors as a member of the CA.
In fact, CG itself is investing in a 2 million ton annual capacity cement plant. Nepal consumes 2.6 million tons of cement annually, and this is expected to grow at 15 per cent a year.
Chaudhary also sees no other alternative but to invest boldly in hydropower in a big way to reduce Nepal's growing balance of payments gap with India. His group alone is involved in studying several projects in the
5 MW-600 MW range totaling 1,700 MW. Investment in cement, tourism and hydropower alone could create hundreds of thousands of new jobs.
"If there is one job that is really easy in the world, it is to raise capital through mutual funds, venture capital. All you need is a track record and a good idea," he says. Chaudhary is confident that with proper support there is no reason why up to 10 other Nepali businesses can also expand their overseas investments.
Chaudhary is not as pessimistic as others about a new government led by the Maoists. He says the regime change is an opportunity for Nepal to be more focussed on private sector-led growth, provide an investment-friendly climate for domestic and foreign investors and allow industries to spread their wings in an unfettered way.
Chaudhary has one pet-idea that he says could immediately increase national income: train 50,000 workers waiting to go abroad in English and basic skills to double their monthly income. This, he says, will have an immediate impact on remittances.
Rahul, Nirvana and Varun Chaudhary with Dad Binod (white suit)
A real state developer - Comfort Care
Comfort Housing shows the way in managing urbanisation and creating jobs
NepaliTimes, Issue #380 (2007-12-28 - 2008-01-03)
MIN RATNA BAJRACHARYA
If there is one sector of the economy that is truly booming in Nepal today, it is the housing industry.
Construction can’t keep up with demand fuelled by remittance and urbanisation. Needless to say, most of this growth is haphazard and malignant.
Yet, there was one group of engineers and investors who felt there was a need for a paradigm shift: provide quality housing at affordable prices while at the same time steer city’s living spaces towards planned growth and create jobs. Om Rajbhandhary and his friends got together in 2001 to start Comfort Housing with this vision and launched a 76-unit development in Sitapaila.
“A developer is a contractor, consultant and client all rolled into one,” replies Rajbhandhary when asked to describe his job. As the CEO of Comfort Housing, he has to deal with everyone. The biggest challenge was to overcome the Nepali tradition of building one’s own house.
“We don’t want to live in a house made by others because we don’t trust builders,” says Rajbhandhary. But Comfort has managed to build trust. People took well to the idea of living together because it reminded them of their ancestral bahals and choks in the old city. And because of the hassles of finding cement, steel rods, getting the water and electricity supply, builders realised it was much more convenient to let someone else worry about all that.
After Sitapaila, Rajbhandhary launched the even more ambitious Comfort Housing estates in Budhanilkantha, Sitapaila and Dharan. Rajbhandhary says he’d be challenged by developing more housing areas outside Kathmandu to ease the pressure on the capital, but most clients want to buy in Kathmandu.
Comfort Housing recently ventured into a vertical living project with The Comfort Housing Tower II at Lazimpat. It was so successful that the company is building three more apartment complexes in Bijeswori, Panipokhari and Sitapaila. It was inevitable; as Kathmandu runs out of space, there is nowhere to go but up.
We ask Rajbhandhary the secret behind the success of his projects besides having the right idea at the right time. “It is the trust from our customers about our product,” he replies with conviction. “Most Nepalis save their entire lives to build a house in Kathmandu, which is why they are so attached to the property. I am lucky that people trust me to build their homes for them.”
Unlike many developers who take short cuts to make a fast buck, Rajbhandhary says he owes his success entirely to customer satisfaction. What he hopes is that other developers also take his approach of customer-first, because if they are satisfied, it also helps the community and the nation.
As he surveys the Kathmandu skyline with us from a vantage point in the city, Rajbhandhary is proud to point out his projects and how they are inducing other developers to follow the model.
“One of the areas with huge untapped potential is budget housing because that’s where most customers are,” says Rajbhandhary, “there’s urgent need for new entrepreneurs and investors.”
Living in the complex he built in Sitapalia, Rajbhandhary has observed changes in the sociological aspects of Nepali family life. He says those who were not into sports are getting into it, and many are fitter and healthier. Children and adults who could not swim have learnt to, the community gets together during festivals and celebrations.
“There is a new sense of community, and I feel proud to be a part of that revival,” says Rajbhandhary. He says there is enough profit in the housing business and plenty of land still left in Kathmandu for planned development.
The government benefits from housing business because it gets revenue during land procurement, and ownership transfer. Seventy-five percent of construction materials are locally made which pumps the money into the domestic economy through employment and taxes. A project worth Rs 400 million takes three years to build and the downstream benefits are spread out over time as well.
Rajbhandhary’s only gripe is that for all its potential and contribution to the economy, the government hasn’t yet given the housing industry the importance it deserves; for example allowing foreign investment in construction and housing.
“Nepalis won’t have to go abroad in search of work, the construction boom will provide enough employment here at home,” says Rajbhandhary. For that to happen, the government has to treat housing as a national priority, he adds, which is not possible unless the political leadership understands its importance.
Sky-high with Buddha Air
Nepal’s best-run airline marks ten years
NepaliTimes, Issue #375 (2007-11-23 - 2007-11-29)
MIN RATNA BAJRACHARYA
PLANE SPEAKING: Buddha Air’s managing director, Birendra Basnet, stepping out of one his airline’s fleet of Raytheon Beechcraft 1900Ds at Kathmandu airport on Wednesday.
Buddha Air’s Birendra Basnet still remembers the day well. It was November 1997 and his first aircraft was arriving on a ferry flight from Bombay. As he drove his car down the airport road on the straight stretch from New Baneswor, he saw a plane about to touch down. The tail stabiliser lights illuminated the blue-and-beige Buddha Air logo.
“It was the proudest moment in my life,” Basnet recalls. “I felt a great sense of accomplishment.”
Today, ten years later, that sense of accomplishment is even greater for this Budanilkantha School graduate who forayed from being a middle class farmer in Morang to becoming the owner of Nepal’s most trusted airline. Since 1997, Buddha Air’s fleet has expanded to seven aircraft, its route map now spans the country from east to west.
Asked to rank the main factors that made Buddha excel, Basnet counts them off on his fingers: “Lots of luck, lots of hard work, being realistic, having a good business plan and taking care of our staff.”
The airline selected the twin-engined turboprop Raytheon Beechcraft 1900C, but realised only later just how lucky it was with the choice. The 19-seater was the right aircraft at the right time with its performance, capacity, and Nepal’s passenger volumes.
At $5 million apiece, the capital investment was steep, but the airline saved on maintenance costs and reaped the benefit of being the first private domestic airline in Nepal to invest in new equipment.
The first few years were difficult. New private airlines had sprung up, Necon had just brought in used ATR42s and Cosmic was flying SAAB340s. The war intensified and tourism went into free fall. “Those were the hardest years,” Basnet recalls, “and that is when we realised our biggest asset was our staff. It was their dedication and hard work to help management overcome the crisis that saved us.”
The airline’s main mantra, says Basnet, is never to compromise on two things: staff morale and maintenance. Indeed, Buddha has the lowest crew turnover of any airline in Nepal at a time when companies are hemorrhaging pilots and staff to foreign airlines.
As other airlines folded due to poor management or low yield, by 2002 Buddha was soaring again. It inducted two more Beechcrafts and was paying creditors regularly giving the airline a lot of credibility. Today, it fully owns three of its 1900Cs.
“You need proper and transparent book-keeping. You have to strive for reliability and integrity,” says Basnet. “In the airline business, if you take shortcuts, you are gone. You have to be in it for the long-haul.”
Basnet reads a lot, and he listens to the experts: engineers, accounts people, admin staff, IT specialists. Basnet’s office has glass panels on all walls so the staff sees him and he sees the staff. His table is paperless. On a computer, he constantly monitors fleet deployment, performance, occupancy, yield.
But things don’t always go according to plan. Buddha Air dabbled with trying to help a new airline startup in India’s northeast with equipment and operations, but had to back out when the venture took too long to take off.
“We’ve now prepared a five-year strategy and we are much more focussed about what we want to do,” says Basnet. Buddha will concentrate on the domestic market which isn’t yet saturated, it is looking at bigger turboprops, an expanded fleet and after that to start connecting Nepali cities to northern India and South Asia.
“We aren’t going to expand, or add jets just for the sake of it, we will build on our strengths,” says Basnet. “But we have to keep growing, if we don’t we’ll stagnate.”
Nepal Dairy’s river of milk
Nepal’s top private dairy is preparing a new generation of entrepreneurs
NepaliTimes, Issue #397 (2008-04-25 - 2008-05-01)
SHEERE NG
Each time Nepal Dairy makes a breakthrough, the effects cause a wide ripple in the Nepali dairy industry, ultimately benefiting not only consumers and producers, but also the company’s business competitors.
But HB Rajbhandary, the company’s director, is not worried about inadvertently helping his rivals, for him the company’s business and the national interest go hand in hand.
When Rajbhandary set up first private milk company in Nepal 25 years ago, it eased the shortage of processed milk, laid the foundations for subsequent dairy businesses and provided additional income for farmers.
The supply of milk is often volatile, and in periods when there is a surplus, some companies stop buying and call for a ‘milk holiday’, which harms many producers who depend on being able to sell their milk.
Yet, Nepal Dairy, which has been selected by Nepali Times as its May Company of the Month, continued to buy even more and ventured into product diversification as a solution. Today, in retail outlets across the country, he sells ice cream, cheese, pizzas and pastries. In the process, ND has created thousands of jobs and given dairy farmers a fair price for their milk.
Since its foundation, the company continues to enjoy an annual 10 to 12 percent growth in profits. This is remarkable given the political instability of the war years.
One difficulty Rajbhandary is currently facing, and this is surprising in a country which is burgeoning with youth, is a graying workforce. Nepal’s brain drain means many young and middle-aged executives have left and there are only seniors who run the company.
In an effort to bring in new blood into Nepal Dairy, Rajbhandary recently opened his doors to college students training them in the processes of the dairy industry. He is now preparing to channel a portion of Nepal Diary’s profits into setting up a Nepal Diary Institute of Technology and Management.
This is because during the 1970s when the country experienced a shortage of processed milk, Rajbhandary– then general manager of the Dairy Development Cooperation and a PhD in Dairy technology–didn’t have the technicality to solve the problem. “I only understood things theoretically,” he says. He had to seek help from countries like New Zealand and Denmark.
Hence, in an industry where many players prefer to keep their methodology hush-hush, Rajbhandary says that helping the younger generation to get hands-on experience is a responsibility that established players should shoulder.
Asked what happens if the students decide not to work for the company upon graduation, Rajbhandary shrugs: “They will probably work for other dairy companies. Nepal needs qualified, competent young people.”
It is this ability to look beyond his company’s welfare to the national interest that sets Rajbhandry apart from many of his peers. He hopes that if the training produces good managers, he can split the company into separate units such as fast food and bakery sections, and expand each one under separate management.
The institute will also train dairy farmers to diversify their products to encourage entrepreneurship in the countryside. Rajbhandry says ND will help with distribution.
At 75, Rajbhandary has the energy, drive and vision of a man half his age. But he is determined to pass the torch to the new generation. When Nepali Times commented that he will be missed, he laughed and said, “Maybe there are people who want to see younger faces.”
Company of the Month: Nabil Bank
Nabil goes rural
It’s not just profits that is driving Nepal’s first joint venture bank to venture out to the villages
NepaliTimes, Issue #384 (25-Jan-08 to 31-Jan-08)
When Nabil Bank opened in 1984, it was the first foreign joint venture in Nepal’s banking sector and enjoyed first player advantage. But it didn’t last. Soon, there were other multinationals: Grindlays and Indosuez overtook Nabil.
Nabil had transformed the way banking was done, providing a breath of fresh air for those used to the shoddy and indifferent service at the public sector banks. But by the 1990s there were others who offered the same service.
Nabil didn’t exactly go into decline, but it seemed to have lost direction. That was when the board decided to make some course corrections and one part of that effort was to induct management talent from India. Then, three years ago, it brought in Anil Shah, the man who pioneered consumer banking at Standard Chartered. It turned out to be the right decision at the right time.
Shah has gone about systematically re-inventing the Nabil brand, overhauling everything from the mission statement to giving the bank a new strategic direction in rural banking.
“We didn’t want to be an also-ran,” Shah said in an interview this week after Nabil was selected as the Nepali Times Company of the Month for January. “We brainstormed about what we wanted to be and everyone agreed we had to be Nepal’s bank of first choice.”
Indeed, ‘Nepal’s Bank of 1st Choice’ has now become Nabil’s slogan and was the product of an exercise to draft a new mission statement that involved the entire staff.
”Everyone participated in the process, so it is a vision that we all own. Our mission statement is not a destination, it is a journey,” says Shah listing the bank’s stakeholders: customers, shareholders, regulators, the community and staffers.
Besides being profitable and efficient, Nabil wants to be a model for transparency among Nepali banks and has tried to go beyond tokenism in its corporate social responsibility credo by sponsoring female literacy programs and a glaucoma initiative at Tilganga Hospital. Staffers, who call themselves ‘Nabilians’, say there is a greater sense of team spirit in company in the past three years and there is a realization that their company has a goal beyond day-to-day banking to contribute to the nation’s economy and to serve the community.
Some of Shah’s acronyms seem to come straight out of the formula of management gurus. For example, for staffers he has simplified corporate goals into CRISP where C is for ‘corporate focussed’, R is for ‘result oriented’, I is for ‘innovations’, S for ‘synergy’ and P for ‘professional’. The team-building is showing dramatic results in the bottom line. Nabil shares have soared from Rs 815 in 2005 to Rs 4400 today. Net profits are up by 48 percent.
Nabil’s management has tried to find the middle ground between the efficiency of a multinational joint venture and a Nepali bank. This hybrid formula, they hope, will position the bank to adjust to the post-2010 era from when foreign banks will be allowed in without restrictions according to a WTO membership timetable. Nabil has taken a strategic decision to target rural customers. Among the reasons is a crowded urban market, the injection of remittance money into the countryside, and the fact that the default rate is virtually zero in the districts.
Two months ago, the bank launched the first phase of its rural banking drive by opening a dozen new semi-urban branches in the districts. By next year, Nabil will have 30 branches in even more remote areas. “Of Nepal’s 27 million people 20 million live in rural areas, you can’t be a national bank by ignoring that,” says Shah, who admits he got the inspiration from Maoist leader Pushpa Kamal Dahal who was asked by journalists after joining the peace process if he’d ever go back to the jungle. “We were never in the jungle, we were in the real Nepal,” Dahal had said.
Shah says it is not enough in a country like Nepal for banks to be profitable and pay taxes. “There is a higher calling, we have to ask ourselves, are we helping make a difference. And the way we do that is by taking financial services to rural areas and make that a catalyst for economic growth and employment generation,” says Shah. “In 1984, Nabil brought international banking to Kathmandu. In 2007 we took banking to rural Nepal.”
