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Corporate Focus

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--By Gaurav Aryal
 
If the Nepali government allows Nepali ventures to invest in foreign land, Lomus Pharmaceuticals and the group of companies would be one of the top industrial houses to rejoice. Prabal Jung Pandey, Executive Director of the group says that he would be happy when his group would go beyond borders. He wishes to take Lomus Pharmaceuticals Pvt Ltd, the group’s flagship company and one of the leading pharmaceutical companies of Nepal, beyond borders.
 
As a move towards this goal, the company is determined to increase the volume of its pharmaceutical products export to existing markets along with exploring new territories. According to Pandey, the company is exporting its products to four countries in Africa. “We will be exporting to Commonwealth of Independent States (CIS) countries soon. Necessary registration procedures have been completed and we are looking forward to exporting in large quantities,” he shared. 
 
Pandey thinks that once the company starts mass export of products, of the current production plants capacities would not be enough. He opines that establishing plants in other countries would be helpful to supply products to meet the demand. However, existing laws restrict Nepali companies from investing in foreign land. “The government should now think that the capable industries in Nepal should be allowed to invest in other countries. If someone is capable of investing abroad, and if s/he is working here successfully and if the profits come back to the country, there is no harm in allowing someone to invest abroad,” Pandey said arguing against the government’s restriction that is hindering the company’s expansion plan. 
 
He says that Lomus Pharmaceuticals has reached almost a saturation point in the Nepali market and with very little room for expansion. He further claims that the company leads Nepal’s pharmaceutical market with four per cent of the market share. 
 
Prabal Jung Pandey, Executive Director, Lomus Group
Prabal Jung Pandey
Executive Director
Lomus Group
Group’s Inception
Lomus Pharmaceuticals is the first manufacturing venture of the group, started by Pradeep Jung Pandey, Vice President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and father of Prabal Jung Pandey. Pandey gives credit to his father for establishing the company and taking it to the pinnacle. 
 
The company was established with its first factory at Gongabu in Kathmandu, 25 years ago. In its initial days, it used to produce around 40 pharmaceutical products. And, the group kept on taking gradual and careful steps for its expansion and growth. With a special focus on expanding the market, it kept on increasing the production capacity. A decade ago, a big move was made to establish a 15000 square feet production plant at Gothatar, one of the largest pharmaceuticals production units of the country.
 
Pandeys always have had the belief that one should not be investing in a new venture unless the existing one is sustainable. “We do not believe in jumping into many ventures at once. We try to stabilise the existing one and keep it expanding so that it is self sustaining,” Pandey added.
 
The Expansion 
The Pandey family came with its second venture 11 years ago - Cosmos Cement Industries Pvt Ltd. The company could not pick up immediately because of the ongoing armed conflict and the Madhesh movement that followed, recalls Pandey. The company was virtually in a status quo for almost five years after its establishment. The company is currently producing cement by grinding clinkers. However, it has plans to come up with its own clinker producing unit by utilising local raw material – limestone.
 
Pandey reveals that as prerequisite of setting up a clinker production unit, two limestone mines are being excavated in Udaypur district. A feasibility study for setting up the plant has been completed and the essential land for it has been acquired after carrying out IEE and EIA. Likewise, another clinker producing unit is under construction in Janakpur. Initially this plant will be producing 700 tonnes of clinkers daily. Pandey says that once the unit completes its trial phase, its capacity will be increased gradually and is expected to reach 1200 tonnes per day within a year. He says that the plant will be catering to the high demand of cement in the eastern part of the country. Targeting this market, around nine months back, a cement factory with a production capacity of 400 tonnes per day was installed in Biratnagar. Similarly, one factory is under operation in Janakpur. The current expansion is being made with a total investment of Rs 1.5 billion.
 
When the second generation businessmen in the Pandey family joined the business, set-up by their father, they took the business to new and varied sectors so that the three brothers can look after one of the sectors each. Now the group is involved in banking and financial sector, mining, cement production and pharmaceuticals.
 
Pandey says that the group is willing to take pharmaceuticals and cement production companies to the next level in the near future. He reveals that the group is also planning to come with Ayurvedic medicines soon. These medicines will be branded uniquely and will be sold in the global market. Currently the group is employing 300 people in its group of companies other than financial institutions.
 
Branding Consolidation 
The parent company of the group, Lomus Pharmaceuticals has become a well known brand name in the pharmaceutical industry. Pandey says that the recognition the company has got is because of the quality that the company has promised and delivered in its range of products. He says that the company does not compromise on quality and believes that products should be easily available at affordable price.
 
Similarly, Tej Cement is a popular brand in the eastern Nepal. Popularity of this brand has encouraged the company to expand its production unit and add new factories. However the group has not yet given serious thoughts of branding the entire group under a consolidated name. Pandey hints the possibility of it in the future but not anytime soon.
 
Pandey shares that all of the companies under the group are growing annually at a healthy rate of 20 per cent in average. The group registers an annual turnover of Rs 3 billion per year. He is quite  satisfied with this progress but sees room for improvement. He adds, “I will be the happiest entrepreneur if we can make our name popular worldwide. I dream of making Lomus an international company and a brand name recognised everywhere.”

Core Sectors of the Group
 
Pharmaceuticals
Pharmaceutical is one of the core areas of the group and the parent business for it. Lomus Pharmaceuticals Pvt Ltd is one of the market leaders in Nepal’s pharmaceuticals market. This company produces 400 products. However, its factory is operating for just 12 hours a day due to power supply problem. Apart from supplying its products to the general medicine market, the company also supplies to government.
 
Cement and Mining Industry Cement production is one of the strong sectors of the group. The group has allocated two mining companies for its cement industries. Cosmos Quarries Pvt Ltd and Udaypur Mineral Tech are taking up the responsibility of limestone mining. However, the group is open for exploring new area for mining. Pandey sees potentials in copper and iron mining but transportation and electricity are the pre-requisites which he expects that the government should ensure.
 
Financial Sector
The group has presence in the banking and financial sector with three companies as one of the promoter shareholders. International Leasing and Finance Company Limited had a plan for upgrading to a commercial bank but could not do so in the lack of legal provision to do so. However, it has now plans to go for merger.
 
Pandey says that merger talks are going with few financial institutions and he expects that these talks will conclude within the next five months. Apart from it, the group is involved with Citizens Bank International and Shikhar Insurance Company Limited. Similarly, the group has a presence in merchant banking sector through its Lomus Investment Co Pvt Ltd.

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