• April 20, 2023
  • HR MEET 2023

Pratik Jalan is the Executive Director of Ramesh Corp., a fast-growing business house that was established in 2020 and named after the late entrepreneur Ramesh Gupta who started a humble business four decades ago in New Road, Kathmandu.

In a short period since its inception, Ramesh Corp. has made significant strides in different business verticals ranging from manufacturing, mining, trading, financial services and real estate to IT and e-commerce. Jalan has a treasure trove of experience and a deep understanding of various areas of IT, including telecom services, cloud computing, and other technology investments and businesses. 

As the Executive Director of Ramesh Corp., he has played a crucial role in shaping the company’s growth strategy and driving its success in the marketplace. the HRM caught up with Jalan to discuss a range of topics, including the current state of the private sector, the economic prospects of Nepal, and the group’s strategies and investment plans. 

In the interview, Jalan shared his insights and perspectives on the opportunities and challenges faced by the private sector in Nepal, and the strategies of the Ramesh Corp to position itself for success in the rapidly evolving business landscape. Excerpts: 

At a time when business investments in the country have come to a grinding halt due to the economic slowdown, Ramesh Corp. has announced multi-billion investments in different verticals. What led the group to invest money at this time when others are holding back their investment decisions?
Let’s begin with the tile business and the partnership with Kajaria India. The context is tile manufacturing is a relatively new sector for investment in Nepal with imports dominating the market. The objective is to replace these imports with domestically produced tiles, creating a significant opportunity for the company while also benefiting Nepal as a whole.

Recent surveys have indicated that in Nepal, there are already seven million homes that will require renovation over time. With urbanization on the rise, the demand for tiles is expected to increase steadily. Furthermore, as the construction sector grows, this demand is also expected to increase at a steady pace.

While the market is currently down, on average, an estimated Rs 15-17 billion worth of tiles are imported to Nepal each year, with 95 percent coming from India. The plant to produce Kajaria tiles will be located in Nawalparasi and the total investment for the project is approximately Rs 4 billion.

The target is to roll out products by early 2024, with the same quality and design as those produced in India. Our aim is to ensure that Nepali consumers have access to high-quality products that meet their needs.

Ramesh Corp. is also expanding Litmus Industries with an investment of Rs 4 billion. How is this plan moving forward? How do you expect this expansion to further strengthen the presence of Ramesh Corp. in the wires and cables market?
A huge opportunity lies in the cable and wire industry, particularly in Nepal where the drive for electrification has sped up. While the potential for this market may not be immediately realized, it offers significant long-term potential. Despite the current problems, it is important to identify opportunities that can be capitalized upon for future growth. Investments in hydropower development have increased significantly and there is a need to export the surplus power.

Additionally, the wires currently strung above ground on poles throughout the country will eventually need to be replaced and moved underground, providing a significant market opportunity. This transition is already underway, and the substantial amount of wire currently imported from India can be replaced as well.

Your group is also said to be preparing to issue IPOs of Litmus Industries. Where has this plan reached?
We have planned this for the future. Our group will definitely issue IPOs to the general public. Now only our group, the trend to issue IPOs will increase in the future as Nepal’s equity market has been improving over the period of time.

What investment plans Ramesh Corp. has for its other business verticals?
Amidst the economic crisis, it is crucial for businesses to sustain themselves. Survival is the key focus in these tough times. We can hope that the cash flow will improve in the coming quarters and that the cycle of money flow will increase while interest rates decrease. Cash flow is a cyclical process, flowing from the government to the banks, to corporations, to consumers, and back into the market as consumers spend. Unfortunately, in the current situation, customers are not spending as much, leading to a lack of cash flow.

Businesspersons say the disruptions in the credit cycle have affected their business badly. Besides ensuring a sufficient flow of liquidity in the market, what other things (like legal framework) are required to bring things back on track?
The credit cycle has experienced a disruption, and its nature has changed. It has extended by two to three times recently, causing a difference in how businesses operate. In the aftermath of the Covid-19 pandemic, Sri Lanka, Pakistan, and Bangladesh experienced an increase in foreign exchange outflow due to rising petro prices, while remittances declined.

Nepal, on the other hand, currently has enough forex to handle imports for ten months, which is a healthy sign. The import halt has ended, and Nepal has entered the second phase of economic recovery. However, the recovery has been delayed, probably because of political instability. The government needs to be flexible to ensure cash flow in all sectors.

For instance, the auto sector is a significant contributor to the state coffers but relies entirely on bank financing which has been tightened. Additionally, investments in the stock market and real estate sector have also been tightened; the reduced loan-to-value ratio has affected the real estate sector and tightened margin lending has impacted the stock market. While the working capital loan guidelines may be beneficial in the long run, they have hampered the flow of money in the market in the short run.

Interest rates and liquidity are two distinct areas that require different approaches. I feel that ensuring adequate liquidity in the financial system should be a top priority for authorities to avoid a crunch situation that causes significant disruptions in the market.

Despite being an import-based economy, Nepal’s economy can recover faster than other South Asian economis because it is less dependent on global markets. The stock market, for instance, is not significantly impacted by global market trends. Additionally, Nepal’s currency is pegged to the Indian currency, which has its benefits in terms of exchange rate stability and controlling inflation. However, there may also be disadvantages of pegging. For now, the benefits have outweighed the disadvantages for Nepal.

I think maintaining adequate liquidity in the market is essential for ensuring economic stability and growth. By prioritizing liquidity, authorities can help businesses access the funds they need to operate and expand, which can ultimately benefit the economy as a whole.

The business climate of the country has deteriorated in the last three years. What do you think will it take for the government to instill confidence in industrialists and investors?
Governments in many South Asian countries have prioritized business and the economy, but political stability remains a challenge in Nepal. The cabinet has been reshuffled multiple times in less than three months, which hinders the stability of both politics and business. It is crucial to note that politics and business go hand in hand, and stability in one sector is crucial for the success of the other.

Unfortunately, due to political instability in Nepal, many young people are leaving the country in search of better opportunities abroad, where political stability is guaranteed, and better opportunities are available. The lack of political stability in Nepal has also made it difficult for businesses to operate smoothly, affecting the overall economy.

The 57th annual general meeting of the Federation of Nepalese Chambers of Commerce and Industries is electing the new leadership. What is your expectation from the new leadership of FNCCI?
The new FNCCI leadership must work to align the private sector with the government. Collaboration has been a common agenda for both sides. Without effective collaboration, it can take much longer for Nepal to come out of the current crisis.

In Nepal, businesses have investments in multiple sectors. Is it that difficult for businesses to focus on one particular sector? 
There is a significant difference between imports and exports in Nepal. To sustain in the market, diversification is crucial. Since the market in Nepal is limited, every business must diversify its products or services to remain competitive. Practical limitations have made it necessary for Nepalese businesses to diversify to remain profitable.

Diversification can also help reduce the country’s reliance on imports and boost exports, thus contributing to the overall growth of the economy. Without diversification, it will be difficult for businesses in Nepal to sustain themselves in the market and continue serving the needs of the country’s growing population.

Ramesh Corp. has also made equity investments. What are the plans of the group to expand investments in startups and growth-stage businesses in the coming days? 
We believe in contributing to society and are committed to supporting youths with new and innovative business ideas. Currently, we invested in one company, and by the end of 2023, there are plans to invest in 3-4 other companies. The group’s investments in these companies will not only provide financial support but also help nurture and develop new ideas and innovations, ultimately contributing to the growth and development of the country.

As a corporate house led by young people, how do you envision the future of Ramesh Corp. 5-10 years down the line?
We started during the Covid-19 pandemic, and subsequently, the group had to navigate through the economic recession. Although the last two and a half years have not been easy, the experience we’ve gained has been valuable. The group has had to challenge its own boundaries to overcome the challenges faced, which has provided an opportunity to create more employment opportunities for people. The group is committed to giving back to the nation and contributing to its growth and development.

Despite the difficult journey, Ramesh Corp. is determined to continue expanding and creating opportunities that will benefit not just the group but also the wider community.

We’ve diversified our business portfolio by venturing into tile manufacturing, IT services, and cable production. We have been partnering with foreign IT sector companies to bring their services to Nepal, while also expanding its offerings by venturing into cable production. We are constantly seeking ways to remain relevant in the market and diversification efforts have been crucial in achieving this goal.

To maximize growth potential, Ramesh Corp. plans to merge the new and old sectors of its business, leveraging its experience and expertise to drive success. This approach will allow us to remain competitive and continue serving the needs of our customers while expanding to new markets.

 

Source : https://thehrmnepal.com/ceo-speak/nepals-economy-can-recover-faster-than-other-south-asian-economies/