--By Gaurav Aryal
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| Moti Lal Dugar Chairman, TM Dugar Group |
T M Dugar Group of companies has a legacy of almost 140 years in Nepal. It was established by the first generation of businesspersons in the Dugar family and has carved a niche and a strong brand image for itself. The group today is far from its heyday, though it has not lost all of its charm. According to Chairman Moti Lal Dugar, the group has been hit hard by the prevailing gloom in the business environment.
Sizing down
“The organised sector is treading a path of misery. We have felt that we are less capable to work in such an environment. So, without alleging anyone, we are closing some of our ventures,” Dugar expressed dissatisfaction. Bureaucratic hassles and procedural delays have been discouraging constraints in the business. Dugar also says that it is extremely difficult to run a business in current times. The group has closed down almost half a dozen manufacturing units.
With no plans for expansion in the manufacturing sector, the group has kept itself in a ‘wait and watch’ mode and has decided to sustain those ventures that are doing relatively well. Says Dugar: “We do not have thoughts to pursue a new line of business today. We are instead concentrating on ways to sustain our ventures and even downsizing and closing some of them.” He says that doing business in current unfavourable environment is not an easy job and going for expansion at the moment would be a costly proposition.
The Hydro Hope
Despite the depressing business climate, the group sees prospects in the hydropower industry. Although Dugar did not reveal the details of the project, he says the group is soon developing three hydropower plants. “Hydropower is the only sector where the future rests,” he claims.
The group is currently waiting for the government’s approval of the projects and to sign the power purchase agreement (PPA) with the Nepal Electricity Authority (NEA). After filing an application for the PPA at NEA, things have yet to be finalised due to procedural delays. “We are ready from our side but we need the go ahead signal from the government,” Dugar shares.
Dugar expects the construction phase to begin next year. While a detailed project report has already been completed, progress has stalled at the project development stage since the past five to six years. “The response of NEA is not encouraging. They invite investors but the government monopsony --NEA--is reluctant to purchase electricity. We do not have the provisions to sell power directly to the industries by paying wheeling charges to NEA for using their transmission line.”
Initially, the group will make investments in the project solely, but Dugar is open to including locals and to inviting public shareholders once the construction begins. As the hydropower project is capital-intensive, the group has kept its doors open for external partners as well. Dugar believes that the hydropower sector of Nepal can only be developed when the government, investors, general public and the private sector can go hand in hand.
Days of Glory
Chandmal Dugar--Moti Lal Dugar’s grandfather--first initiated business in Biratnagar with the trading of agro products like paddy, jute and textiles. Business later expanded into the processing of jute and setting up rice mills in different parts of the country. The group grew further during his son’s time, but it took a new turn under the leadership of his second grandson - Tolaram Dugar. After the death of his father, Tolaram shouldered all responsibilities of the group at the age of 28. Dugar credits his brother’s contributions in taking the business to new heights. Later, when the family split in the early 90s, the group was divided into three sub groups namely HC Dugar, KL Dugar and TM Dugar. Though the group split professionally, Dugar says that family relations are still going strong and united.
Current Involvement
TM Dugar Group has specialised in manufacturing of food grains such as rice, lentils and vegetable oils. It was the TM Dugar Group that set up modern rice mills in Dhangadhi in far-western Nepal and contributed in creating and expanding the market for agro products. Today, the group has a wide array of investments in banking, hydropower, automobiles, agro solutions, life insurance, FMCG products, agro based industries and automobiles, among others. The group is a major promoter of Sunrise Bank Ltd. and Gurans Life Insurance Co Ltd.--two public limited companies in the financial sector. The group stepped into the service industry through banking and insurance about seven years ago.
The automobiles trading wing of the group imports and sells vehicles of the Japanese brand Nissan, buses and trucks from the Indian company Mahindra, motorcycles from Royal Enfield and tractors from John Deere. Similarly, Frooti and Appy are two soft drink brands that are produced by the TM Dugar Group in Nepal. In the days to come, the group plans to concentrate on the service sector. Banking, life insurance and hydropower are some of the areas of its interest, although there are hints that the group will gradually be working under the model of public limited company. “Slowly we will go into the public limited model of doing business. Old businesses will continue as they are and the new ventures will be under this new model. Sunrise Bank and Gurans Life Insurance are public limited companies whereas the hydropower companies will also go public once they enter the construction phase,” Dugar says.
Management Style
The group has provided employment to more than 600 people in its various companies. However, Dugar says that the group’s latest strategy of business constriction allows no new employees to be hired. Though the company does not have layoff plans, vacancies are not being announced after employees resign. Human resource management is done professionally through a separate team at the TM Dugar Group.
When it comes to making decisions, professionals and managers are given the right to make decisions on administrative and daily procedures. However, financial matters are left to the board to decide.
Staying cautious in a ‘wait and watch mode’, the group does not have any plans other than venturing into hydropower generation. The group has its hopes pinned on this sector and it is a matter of time before it will begin developing power plants and find itself once again in expansion mode.
| AT A GLANCE Financial Services After trading and manufacturing, the TM Dugar Group ventured into the financial service sector. The first move into this sector was with Sunrise Bank Limited, an A class financial institution, in association with other business houses of Nepal. The bank has a paid-up capital of Rs 2.015 billion and authorised capital of Rs 5 billion. Similarly, the next venture was in the life insurance business, which is believed to hold tremendous potentials. So, Gurans Life Insurance Company was established in 2008, six months after the Sunrise Bank, where the group is one of the major promoters. The company has a total authorised capital of Rs 500 million, out of which issued and paid-up capital accounts to Rs 360 million. Out of the total issued capital, 30 per cent has been allotted to the public through IPO and 70 per cent remains with the promoters. There are more than 26,000 shareholders in the company. Working Area • Banking • Hydropower • Automobiles • Agro Solutions • Life Insurance • FMCG Products • Agro Based Industries Food Grains The TM Dugar Group is an authorised supplier for the World Food Program (WFP), supplying food grains as per WFP standards for more than a decade. The TM Dugar Group also exports Nepali lentils to Bangladesh, India and other parts of the world. The group’s agro processing plants are situated in Birgunj, Nepalgunj and Dhangadhi. Corporate Social Responsibilities The group has been regularly involved in various social causes since its establishment. There are two charitable trusts - Tolaram Malchand Dugar Charitable Trust and Motilal Vivek Dugar Charitable Trust - that support people by providing food, clothes, education, scholarships, medicines and surgery expenses. Some of the CSR activities the group has conducted thus far are: • Contribution to the construction of a wing in Nandi Madhyamik Vidyalaya, Naxal, Kathmandu. • Contribution to the construction of Bhagawan Mahavir Jain Niketan, Kathmandu • Contribution to the construction of Bhagawan Mahavir Jain Niketan, Birgunj • Contribution to the construction of Aditi Sadan, Biratnagar • Contribution to the construction of Jain Swetamber Terapanthi Sabha, Birgunj • Contribution to the construction of Jain Swetamber Terapanthi Sabha, Biratnagar • Construction of Tolaram Bhanwari Devi Chikitsalaya and Research Center, Biratnagar • Construction of schools, temples, homeopathic clinics and college buildings. |
