New Business Age has identified top 30 Nepali business houses (families that hold a group of companies) based on criteria such as their history, speed of growth in recent years, plans for the future, range of diversification and social standing.
--BY MADAN LAMSAL AND SABIN JUNG PANDE
Most of Nepal’s prominent business groups started off trading in textiles or food grains later entering to industrial activities mainly in food processing. Similarly, the gradual opening of the economy in the 1980s led the business groups to venture into modern manufacturing activities.
The post 90 era of economic liberalisation saw a new breed of entrepreneurs joining the Nepali business landscape and existing ones rapidly expanding their portfolio in multiple areas.This period witnessed the establishment and rise of groups such as Nimbus, IME, Prabhu, Bhat-Bhateni and Muktishree. Meanwhile, businesses led by Non-Resident Nepalis (NRNs) initially opened overseas and later reinvested their hard earned money back home.
At present, the leading Nepali conglomerates have their footprints in most of the business sectors. Banking, insurance, tourism hospitality, health, education, IT and the real estate and housing business and hydropower are ubiquitous in the portfolio of almost all the top business houses.
Trading which has been their traditional area of business has expanded multifold over the decades. Their trading wings represent numerous global and regional brands ranging from automobiles, FMCG, FMCE (fast moving consumer electronics) and apparels to construction materials and equipments, industrial machines and packaging goods, among others, in Nepal. Many of the business groups have also forged technical and financial collaborations with foreign partners which have broadened their international exposure.
Benefits of Diversified Business
The multi sector presence has helped the groups in different ways as they have found the diversification of business to be the right tool to absorb market shocks. This also enabled them to endure different political regimes and business environments that were affected by the decade-long Maoist insurgency and prolonged political instability and transition, threats and extortions, bureaucratic hassles and labour disputes. A deep understanding of the business environment has become one of their main strengths to keep their business engines operational.
Often, critics have highlighted their import focused business activities among the main reasons for Nepal’s sluggish growth in exports and ballooning trade deficit. Nevertheless, it is also true that diversification or an undivided focus in export-oriented industries was quite difficult for the groups at a time when the business environment in the country was clouded by several uncertainties.
With business growth, some of the leading business houses are gradually changing their management style inducting professional managers and management institutions into their businesses. On the other hand, most of their young bloods have acquired academic qualifications from reputed international business schools and even obtained professional experience overseas.
Things are also changing with the increasing probability of future family feuds guiding business houses towards restructuring family ownership. The dismantling of Dugar Group occurred decades ago giving birth to three different business groups - HC Dugar, KL Dugar and TM Dugar. Kedia Group recently restructured its family business while it’s been quite a while since the Chaudhary Group started to manage their businesses separately. Restructuring has happened in the Golchha Organisation as well.
So far, none of the business houses have plans to go public. However, companies in banking, insurance and hydropower sectors where business houses have their investments are exceptions as such entities are mandatorily required to go public. Some businessmen say that the past experiences with the idea of going public for manufacturing, trading and service companies weren’t impressive. Also, the practice of ‘recourse lending’ by banks is discouraging for them to go public. If they do, they will have to share the profit and absorb the losses.
The Rise of the Young
One good news about Nepali business houses is that they have been successfully transitioning from one generation to the next by allowing room for incorporating new business ideas, appropriate management practices, innovative business strategies and technological advancements.
At present, most of the leading family businesses are being led by the third generation and some even by the fourth generation.
Increasing Political Connection
Decades ago, politics seemed a separate matter for business houses although it wasn’t that engagement in politics from the business sphere was completely absent.
With the shift in the political and economic landscape post 90s, things started gradually changing. Today, the proximity of various business houses with different political parties is well known while the deep seated desire among some of the key persons of the old business houses to engage in politics has become apparent too. For instance, Ravi Bhakta Shrestha from NE Group served as the Assistant Minister of Culture, Tourism and Civil Aviation in 2002. Similarly, Dr Roop Jyoti became the State Minister for Finance in 2005. In the last 10 years, Pawan K. Sharda, Bimal Kumar Kedia, Diwakar Golchha, Binod Chaudhary, Rajyalaxmi Golchha and Surya Bahadur KC have all served as members of parliament representing different influential political parties. Whether it may have erupted as a desire to contribute to the development of Nepali society after witnessing decades of continuous political quagmire or as an opportunity to influence policy development, business and politics will seemingly blend even more in the future.
Nepal’s large business houses have often made headlines for their involvement in controversial issues, which have often questioned their credibility and tarnished their reputation. They are repeatedly alleged and booked by authorities for VAT, bank and insurance fraud, credit defaults, tax evasion, unethical business practices (black marketing and selling substandard products) and involvement in crony capitalist practices, money laundering and capital flight. However, they have been managing such episodes. Often, these allegations are found to be baseless and guided by vested interests.
Expecting brighter investment prospects in the future, almost all business groups are ready to take strides in their investment portfolio whether by expanding their existing businesses or venturing into new fields. These business houses have plans to start new insurance companies, mutual funds and fintech, invest in education sector, oil and gas exploration, hydro power and thermal power plants, housing and real estate development, steel and plastic industry, agro-processing sector, pharmaceuticals and in projects that include waste management, cement, clinker and limestone quarrying.With such investment plans, they are expected to generate more employment, create further value-addition and make the Nepali market livelier.
In conclusion, it has been a remarkable journey for Nepal’s leading business houses. They have held their nerves when the going got tough. They have treaded the path of each business venture with extreme caution and precision adjusting appropriately every time the business environment altered.
The past may have been troubling but it has also offered opportunities and is expected to unlock better opportunities in the future. Their story is a testament to the fact that their success is based on the relentless hard work of yesteryears. On the other hand, their current expansion plans is an indication that they are optimistic about Nepal’s economic future.
The top 30 business houses featured in this issue are listed on alphabetical order.