--By Gaurav Aryal

 

Travel and tourism does not lure someone merely by its entertaining and fun experiences. Entrepreneurs are lured to this industry because of its lucrative business prospects that are believed to be growing in Nepal. MS (Maliram Shivkumar) Group is one of the latest national manufacturing houses to join this niche. It has decided to venture into the tourism industry by establishing luxury hotels in a tie-up with Marriot International- an US based international hotel chain.

 

Nepal Hospitality Group Pvt. Ltd, a subsidiary of the MS conglomerate reached an agreement with Marriott International to open the Fairfield by Marriott hotel in Thamel, Kathmandu. This business hotel, according to Shashi Kant Agarwal, Managing Director of the group, has an investment of Rs 600 million and informed that its construction has already kicked off.

 

Similarly, a second hotel in Naxal, also under the joint venture partnership with Marriot International is scheduled to start construction immediately after Tihar festivals. Agarwal says that this will be a luxury hotel with 250 rooms. Both of these hotels will be at par with four star hotel standards.

 

These new ventures of the group are the first initiatives towards the tourism industry and are part of the larger plan the group has. Agarwal says, “We have plans to establish hotels across the country. This is the beginning and we have decided to come up with two new hotels at the time as the political situation has shown signs of improvement.” Agarwal, who is also a traveller, says there are numerous tourism potentials in sub-sectors like eco-tourism, adventure tourism and religious tourism. 

 

Trading Transition

The journey of the MS Group started as a trading house some six decades ago by Shashi Kant Agarwal’s grandfather, Maliram Agarwal. During that time, he had a shop at Indra Chowk in Kathmandu that sold clothes in the palace of Ranas. When the market gradually expanded, Maliram Agarwal started a whole-sale garments store at Jhochhe. Garments were imported from India and  supplied to local retailers in the valley districts along with Dhulikhel, Katari, Tandi among others. The founder Agarwal used to walk for weeks to reach these places and sell goods even in credits to local merchants.

 

The local garment business slowly expanded into international trading with the beginning of third country export in Nepal. Agarwals involved in it by exporting jute and textiles. Gradually they started importing motor parts and bearings. Some were consumed in Nepal while majority of them were exported to India.

 

The group had already seen success in the trading business before moving onto the manufacturing sector. An incident during the trading days encouraged Agarwals to venture into a more stable business than trading – into the manufacturing.

 

Initiating Manufacturing 

Agarwal recalls that a ship transporting garments belonging to MS Group along with other traders of Nepal was hijacked near Hong Kong and goods never reached Nepal making a huge loss to the companies. 

 

This unfortunate incident made them settle down to a business with marginal risks. Agarwal says, “That incident was a blessing in disguise. In our corporate life-cycle, it inspired us to move towards the manufacturing business.” As a consequence, a hosiery factory was established, although of a small scale. He recollected that the hosiery factory came at a time when the group was counted as one of the leading garment trading concerns in Nepal in terms of turnover and said that the family had decided to establish a cottage industry despite it. 

 

The hosiery factory at Battisputali, Kathmandu grew well and was followed by the setting-up of Pashupati Textile factory in Patan. This manufacturing unit produced both cotton and polyester textiles and also dyed them. As the group’s turnover kept growing, it moved into steel manufacturing with Bhagwati Steel Industries in Birgunj. There were no pauses in the expansion drive. The group further established the largest sugar mill Everest Sugar Mill in Mahottari, in partnership with Everest Group. Similarly, Reliance Spinning Mill , that is now a factory that has created highest number of employment- 3400 people including 1500 women, was also established.

 

Since the group moved into the manufacturing sector, it never had to look back. As of now, the group has a total of 10 companies operating in manufacturing, housing and trading business including a couple of them in partnership with other business houses of Nepal. And, these companies register an annual turnover of Rs 12 billion. 

 

As a recent expansion to its manufacturing unit, the group is setting up a new large scale sugar mill in Siraha. According to Agarwal, the construction works have commenced and necessary machineries have been imported. He says that the mill will begin crushing in a year’s time. 

 

Along with these, the group is promoter in some banks and financial institutions but Agarwal says that the group is not directly involved in them.

 

Positioning Markets 

As the group is involved in production of diverse products, they cater to a wide range of market and target customers. Most of its steel products are targeted at local market and is purchased for constructing electricity poles, bridges, telephone towers by telecom and electricity companies. Similarly, the group also produces galvanised sheets and pipes for the local market. 

 

Likewise, sugar is sold to both bulk buyers and general public. According to Agarwal, Salt Trading, bottlers of Coca-Cola Pepsi, and Frooty, Rio and other beverage manufacturers are regular buyers. Meanwhile, 75 per cent of production of Reliance Spinning Mill is exported and the remaining is consumed within Nepal which accounts to around 50 to 60 per cent market share, claims Agarwal. The foreign markets for its products are mainly India and Turkey.

 

Agarwal says that the housing project of the group did relatively well as it was launched relatively earlier before the market was over flooded.  However the bubble burst of the housing and real estate business hit its Subsidiary Sunrise Apartments. He says that the housing still has strong brand strength in the market. 

 

Elaborating on the branding needs, he argues that other products such as sugar do not need any branding and aggressive publicity. As the market is mostly the bulk buyers, offering quality would help gain the market share. And added that sugar produced by Everest Sugar and Chemical Industry Ltd has a good recognition in  domestic and international market.