--By Gaurav Aryal
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| Khagendra Sitaula Managing Director, Sitaula Group |
Sitaula family when it started its business from a general store in Aathrai, Tehrathum, had little idea that its business would turn into a group of companies. In the course of 45 years, the general store has expanded into a business house with a dozen companies in its portfolio. Khagendra Sitaula, Managing Director of the group is content with the pace of the growth but promises to take it further to the next level.
Hari Bhakta Sitaula, eldest son of the family started a general store in their place of origin, Aathrai in 2025 BS. The urge to expand the business did not stop and they carried their profession with them when they moved to Dharan. During a decade (2028-2038 BS), their business took the shape of a wholesale store that supplied goods to neighbouring three districts. In 2037 BS, Khagendra Sitaula, younger brother of Hari Bhakta Sitaula joined the business to support his brother and it is also the same year when the family moved to Biratnagar and started international trading.
Khagendra Sitaula recalls that the trading business was doing well propelling a healthy growth for the family business. This inspired them to begin agency trading. They had acquired local agency for various multinational companies including Nestle and GlaxoSmithKline. Then, the family decided to abandon the business in Dharan and concentrate in Biratnagar in 2038. Trading business kept on further growing and there was no turning back for two brothers.
The Expansion
Sitaula brothers did not want to confine themselves only to the trading industry. Thus, they invested in dairy and cattle farming in Biratnagar. This new expansion encouraged them to move into the manufacturing sector. Then, a towel manufacturing factory was set-up in Biratnagar that exported its products to USA. The factory was installed in partnership but the majority stakes were held by Sitaulas. However, the factory was not there to stay for long. When the USA scrapped quota system, the wise brothers handed over the factory to somebody else before it was too late.
Meanwhile, a new expansion project was added to the family business portfolio. They established a three star hotel, Hotel Xenial Pvt Ltd in Biratnagar realising the need of a quality hotel in the industrial town. By then, the business had grown into a group of companies but was operating as a family business that has remained intact till date.
Meanwhile, their younger brother, Dinesh Sitaula joined the business in 2045 upon completion of his higher studies. Then, Khagendra Sitaula moved to Kathmandu for expanding their horizon in the capital city. One of his significant moves in Kathmandu was acquiring 51 per cent stakes of Nepal Foundry Industries Ltd when the government decided to privatise the factory.
Amid these expansions, agency trading too kept on increasing leaps and bounds and moved into food and beverage sector with special focus on alcoholic beverages. Around 2059 BS they had distributorship of well known brand names like Royal Stag and Chivas Regal. In the meantime, various trading companies were also established.
At present, various companies of the groups are concentrated in Kathmandu and Biratnagar. 13 companies under the group are managed by three brothers as a family business. Moreover, relatives of Sitaula family are also in the business but outside the group.
New Moves
Tourism is the latest move of the group. The group has decided to venture into this sector with long term plans. As a journey to this new sector, the group is starting a new travel agency, Complete Holidays Pvt Ltd, within a couple of weeks. According to Sitaula, this company will be dealing with tour packages for both inbound and outbound tours among various other travel services. He says that this latest move is being made with an aim to concentrate and expand into the service industry.
Similarly, the group is simultaneously expanding into the manufacturing sector too. Sitaula reveals that the group has already acquired license for operating a liquor manufacturing unit and he says that the production will begin within the next two years. Likewise, the trading wing is soon launching unique products, Bio Whiskey and Bio Vodka as a national distributor next week. These products are being bottled in Nepal by Biotech Spirits Nepal.
Sitaula says that the group wants to focus on manufacturing, food and beverages and tourism in the future and the group is planning new ventures like hotels and food processing factories. He adds, “We must identify a particular industry that would be sustainable for us as a business group. Food and beverages, food processing and tourism are the viable industries for Nepal.”
Prime Involvement
The major sectoral involvement of the group is doing fairly well, according to Sitaula. He says that the Hotel Xenial is performing well and Nepal Foundry Industries this year has declared to distribute 25 per cent dividend to its shareholders. He also claims that it is one of the best performing privatised company. The company is soon going for Initial Public Offering (IPO).
Sitaula explains the reason behind the group’s specialisation on trading as relatively safe area of investment compared to the manufacturing. He adds that the turnover in trading is quite good and is a sustainable business.
Apart from these, the group is also into the financial sector. One of its investment companies, Sitaula Investment Company has more than five per cent promoter shares in Lumbini Bank Limited. He says that the group is interested in infrastructure sector and owns some stakes in some of the infrastructure development projects.
Along with trading and manufacturing, the group believes it must involve in other sectors with competitive advantages for its strong presence. Therefore, the group has invested in Chirayu Hospital.
The Satisfactory Growth
Sitaula is very much content with the growth the group is achieving annually. He says that despite the overall problems of the country and economy, the achievement of group has been significant. According to Sitaula the growth rate hovers around 15 to 20 per cent annually. And, the group registers annual turnover of around
Rs 2 billion.
He believes that the business environment of Nepal is not bad as everybody is surviving and there are prospects for being hopeful. Sitaula is hopeful about the bright future to be ascertained by technology transfers and the gradual increase in positive attitude among workers and people in general.
Though the group is happy with the level of progress it is making but has dreams to reach a significant position among Nepali business houses in the future. He says that the fate of the business will largely depend on the situation. “We are hopeful to move ahead and reach somewhere soon,” Sitaula expresses desire.
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| Companies of Sitaula Group • Nepal Foundry Industries Ltd • Hotel Xenial Pvt Ltd • Sitaula Dairy Farm Pvt Ltd • Sitaula Investment Pvt Ltd • Robin Investment Pvt Ltd • Robin’s Mart Supermarket Pvt Ltd • Robin Traders Pvt Ltd • Robin Export Import Marketing Pvt Ltd • Robin Energy International Pvt Ltd • Robin Enterprises Pvt Ltd • Nirmal Traders • Robin Trade Centre Pvt Ltd • Complete Holidays Pvt Ltd Target Markets The trading companies of the group are targeting general public as their market especially for beverages, liquor and food products. Similarly, for the tourism, the group is targeting mainly Indian, Chinese and Eastern Europe as its prime market. Management The group has created employment opportunity for 250 people in all its companies. Sitaula says that all of them are happy employees. He further adds that the group has not experienced any strikes by workers and any sort of negotiations as of now. The group believes that the facilities employees are entitled must be provided earlier if possible rather than being late. Three brothers in the family have divided their responsibilities. Khagendra looks after the business in Kathmandu while his younger brother looks after enterprises in the eastern region and his elder brother looks after the overall business as a guardian. He says that the group is strengthening its managerial practices and corporatize the group to make it future-proof and meet the demand of time and space. Being future-proof The group’s transition from a small business into a medium-sized group of Nepal carries a huge value to the Sitaula family. They believe that it has not only encouraged them but also created a strong platform for future growth and development. So, the founders of the group are concentrating on finding viable business options so that the future generation in the family can adopt entrepreneurship as their career. Khagendra Sitaula says, “We must develop business is such a way that it would be suitable also for the coming generations and develop a corporate structure and culture to encourage them into the field where we laid foundation stone.” Competition and Challenges Sitaula says that there are not many challenges in Nepal as compared to other countries because of low level of competition here. “The competition level is still quite low in Nepal. It is still easy here as the competition is not yet too tough. Competition was almost non-existent 20 years back, it grew a little a decade ago and today it is still growing but is yet to reach a cut throat level,” he says. It is natural that when the competition increases, it would be challenging for companies to be more innovative and gain competitive edge. To address the growing challenges amid increasing competition, the group is in a mode to identify sectors with higher level of business viability for the future. |
