Emami plans to set up manufacturing plant in Nepal in 2-3 years
Informist, Thursday, Jun 27, 2024
--Emami official: Plan to set up mfg plant in Nepal in 2-3 years
By Avishek Rakshit
KOLKATA – Emami Ltd is considering setting up a plant in Nepal in two-three years to scale up its revenues from the Himalayan country, a company official told Informist.
"Nepal being an important market for Emami, we are contemplating setting up a manufacturing facility there in two-three years, which will be beneficial for the business," a company spokesperson said, without divulging the details of the plan and its progress.
This would be Emami's second plant outside India. Of the 70 countries where Emami exports its products, the company has a plant in only one – Bangladesh. For the rest of its export markets, it either outsources manufacturing to local companies, as in West Asia and Europe for the Crme 21 brand, or exports products directly from India and other locations. In India, the company has seven manufacturing facilities.
Currently, Emami exports its products to Nepal from India. During the year ended March, Emami's sales to the southeast Asian region, of which Nepal is a part, accounted for 23% of its total revenues from international operations. Apart from localised manufacturing in Bangladesh, the company exports hair oil, pain relief ointments, and men's grooming range to this region.
In the consumer goods universe, several companies from India, including Emami's direct competitor Dabur Ltd, have already forayed into local manufacturing in Nepal. The south Asian region accounts for 23% of Dabur's annual revenues from international operations. The company manufactures beverages, beauty and healthcare products in Nepal.
Through its subsidiary Surya Nepal Pvt Ltd, ITC Ltd set up a manufacturing unit in Nepal long back in 1986. The unit makes cigarettes, incense sticks, matchboxes, and confectionery products. The company has a reach across 5,000 wholesalers and over 100,000 retailers in Nepal.
While Nepal is a priority market for Emami, direct exports hit the company's export income from that country in 2022-23 (Apr-Mar) due to Nepal's forex and liquidity crisis. On the other hand, Surya Nepal, which manufactures and sells locally, registered 13% revenue growth at 49.5 bln Nepalese rupees and 8% net profit growth at 10.9 bln Nepalese rupees during the year. In its annual report for 2022-23, Dabur said it registered strong topline and bottomline growth across products in Nepal.
Growth of the consumer goods industry in the Himalayan country has been outpacing the growth of the sector in India for some time. Officials from the consumer goods industry said that revenue growth for the overall consumer goods industry in Nepal last year was as high as 18-20%, compared to moderate to high single-digit growth in India. Moreover, Nepal is expected to sustain the growth momentum in the coming years, which makes the country a lucrative market for Indian companies.
Nepal also allows 100% foreign direct investment, except in sectors such as defence, 100% repatriation of funds, a tax holiday for a host of sectors and locations, and charges a corporate tax rate of 25%, according to Investment Board Nepal, which facilitates investment proposals in the country.
At 1128 IST, shares of Emami were down 0.3% at 702.8 rupees on the National Stock Exchange. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
