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Indian MNCs in Nepal facing severe crisis due to blockade


The revenue of major Indian multinationals in Nepal has nosedived following the blockade of key border trade points with India by Indian-origin Madhesis protesting over the country's new Constitution. Subsidiaries of Indian MNCs - such as Dabur, Unilever and ITC India - have been operating much below their capacity in the past three months dominated by protests from the agitating Madhesi community. The companies are also facing depletion of stocks and struggling to export their products. Dabur, Unilever and ITC India were among the first Indian multinationals that set up their plants in Nepal after the country opted for economic liberalisation in the 90s. Most of the industries in the southern plains, especially in the Morang-Sunsari and Bara-Parsa industrial corridors, have been affected by the protests, the report said.

Dabur on Thursday informed the BSE that its juice sales are likely to dip 10-15 per cent in October-November due to disruption of supplies from its plant in Nepal. For Dabur, operation of its Nepal subsidiary - Dabur Nepal - is crucial as Nepal is a very important source of its juice business. About 70-75 per cent of Dabur's juice production comes from its Nepal factory. Ever since the Tarai unrest started, Dabur Nepal's plant in Birgunj is catering to the needs of domestic market only. "The situation in our company is no different from that of all other industries," said Abhay Gorkhali, marketing head of Dabur Nepal, without commenting on the situation in the Indian market.

Dabur Nepal, according to Gorkhali, is facing several difficulties including unavailability of raw materials and high charge for shipping products to the market. This has made the company struggle to run in full capacity. Dabur Nepal manufactures around 30 different varieties of 'Real' juice. "We are yet to assess the impact of the ongoing turmoil. There is a remote possibility of achieving the target set for this year," Gorkhali was quoted as saying by the 'The Kathmandu Post'. Unilever Nepal, too, has a similar story.

"The company's profit has gone down 22 per cent compared to the same quarter last fiscal year," said Ravi Bhakta Shrestha, director of Unilever Nepal that manufactures and markets home care and personal care products. "There might be a negative growth if this situation continues." Surya Nepal, a subsidiary of the ITC India, too reported that it is operating at just 30 per cent of its installed capacity. "We have a policy of maintaining stocks of finished products that can meet the demand for 60 days and stocks of raw materials enough to run the factory for 60 days. Till Tihar, there was no big impact. Now, we are experiencing some difficulties," said a top official of Surya Nepal, the leading cigarette producer in Nepal

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