Harkirat Singh Bedi heads Dabur Nepal, a pioneering Foreign Direct Investment (FDI) in Nepal, established in 1989 and operational since 1992. From a modest Rs 53 lakh turnover in 1992, Dabur Nepal aims to achieve Rs 2,000 crore by 2025. The company plans to reinvest Rs 9.68 billion for capacity expansion and product diversification. HRM Nepal interviewed Bedi to understand Dabur Nepal’s investment journey and future growth plans. Excerpts:
Q. How would you like to assess Dabur Nepal’s 30-year journey in Nepal?
A. We have enjoyed a successful 30-year journey since our establishment in 1989 and commencement of operations in 1992. Starting with a modest turnover of Rs 53 lakhs in 1992, we aim to achieve Rs 2,000 crores by 2025. Our investment has grown from an initial Rs 8 crores in 1989 to Rs 1,400 crores, following the approval of an additional Rs 968 crores by the Investment Board Nepal.
Dabur Nepal employs approximately 1,000 people directly and supports 20,000 indirect jobs. As a leading exporter of Nepal, we have received numerous recognitions from the government. We are a major taxpayer contributing significantly to the national exchequer. Notably, our fruit juices rank among Nepal’s top five exported products.
We have established a strong presence in the domestic market with our trusted brands becoming household names. Leaders or close seconds in most categories, we offer beverages, health supplements, oral care, hair care, skin care, home care, and ayurvedic medicines.
Q. As one of the first generation FDI companies in Nepal, Dabur Nepal has witnessed Nepal’s investment regime very closely. What are the major changes you have seen in the investment regime?
A. For foreign investors, the primary concern is return on investment followed by safety and security, and ease of profit repatriation. Nepal offers promising returns in sectors like hydropower, tourism, and manufacturing, especially for early entrants. While safety and security of investments are generally not issues, challenges in dividend repatriation are frequently reported. Dabur Nepal has not encountered such difficulties due to consistent reinvestment of surplus funds for capacity expansion. Protecting intellectual property rights is another crucial aspect. Strengthening this area would encourage more foreign companies to enter the Nepali market.
Q. Dabur is going to reinvest Rs 9.68 billion for capacity enhancement and product diversification. Has the process stalled or is it moving forward?
A. We have submitted our proposal to Investment Board Nepal, which is more or less/principally approved. There are certain formalities, which need to be completed. We have planned to reinvest Rs 9.68 billion for capacity enhancement and product diversification and that is on track.
Q. As India is the largest FDI source for Nepal, what strategies could Nepal adopt to lure more investments from India in different sectors?
A. Approximately 65% of Nepal’s trade, both imports and exports, is with India, a rising economic power. Indian companies naturally seek expansion opportunities in neighbouring countries like Nepal, Bangladesh, and Sri Lanka before venturing into Western markets.
Nepal offers significant potential in hydropower, renewable energy, and tourism. While the Investment Board Nepal facilitates investments and the government supports this through initiatives like the Nepal Investment Summit, infrastructure development is crucial. Improvements in customs, dry ports, energy, and roads are essential. Despite recent power cuts, overall investment is increasing.
Nepal allows 100% FDI in most sectors, eliminating the need for local partners. Labour reforms have also been implemented. Continued reforms will further enhance Nepal’s business environment.
Q. Given Nepal’s import-dependent economy, primarily reliant on India, how do manufacturing companies like Dabur Nepal, which contribute to reducing the trade deficit through exports to India, leverage these market linkages to strengthen their business?
A. Instead of solely focusing on attracting new investments, Nepal should prioritise encouraging existing successful companies like Dabur Nepal, KNP, Berger, Surya Nepal, Asian Paints, and Unilever to reinvest and expand their operations. These companies serve as valuable ambassadors for investment in Nepal.
The government should offer incentives to these established companies to increase their capacity, diversify product lines, and explore export opportunities. For instance, if Special Economic Zones (SEZs) are designed to attract new industries, similar benefits could be extended to existing companies that continue to invest and grow.
By nurturing these established businesses, Nepal can expedite economic growth and leverage their market knowledge to tap into export markets like UP, Bihar and West Bengal. This approach is more efficient than starting from scratch with new investors.
Q. Given the recent expansion of your product line, what new product categories are you planning to introduce through diversification?
A. Capacity enhancement will primarily focus on our juice business, especially to meet the growing demand in the Indian market, where we supply 60-65% of the juice products from our Nepal factory. We will also expand our juice and beverage portfolio in the domestic market through various formats like tetra pack, PTE, and HDPE.
Product diversification will concentrate on our consumer care business, including health supplements, oral care, skin care, digestives, and home care. We see growth potential in oral care with value-added toothpaste, hair care with serums and hair tonics, and health supplements with flavoured honeys and variant glucose products.
We will continuously introduce new products tailored to Nepali consumer preferences, combining both Indian and locally developed products. Our recent launch of ‘hajmola titaura’ exemplifies this approach.
Q. Are there any plans to expand the market?
A. Our primary role in the juice business is to supply to India. This aligns with the Indian team’s strategy for market growth. Their aggressive focus on expanding the beverage market in India is beneficial for us as a major supplier. As India increases its juice production and portfolio, our export business will naturally grow. Their positive and aggressive approach will positively impact our position as a Dabur group vendor and supplier.
Q. What are the major hassles foreign investors face in Nepal that the Government of Nepal should address without any ifs and buts?
A. Previously, militant trade unionism and severe power shortages, often requiring costly diesel generators, hindered investments. While labour issues have largely been resolved and electricity supply is more reliable, occasional power cuts still occur. Nepal possesses a semi-skilled workforce that can be further developed.
Infrastructure improvements, including customs, dry ports, roads, and warehousing, remain essential. Addressing profit repatriation and intellectual property rights concerns is crucial to attracting foreign investment.
The government should prioritise manufacturing by offering significant incentives compared to trading activities, similar to India’s ‘Make in India’ policy. This would encourage investment in capital-intensive manufacturing, job creation, and reduced import dependency.
Nepal’s growing consumer market, driven by rising disposable income, urbanisation, and increased workforce participation, presents opportunities for FMCG companies.
Q. How do you view the mandatory 30% spending requirement for foreign workers in Nepal, and what impact might it have on attracting and retaining high-skilled expatriates?
A. The government should focus on tax collection rather than dictating how individuals spend their post-tax income. The 30% spending requirement is restrictive and can hinder talent acquisition. Nepal’s higher tax rates compared to similar economies, coupled with remittance limitations, further discourage skilled professionals from working in the country. To foster economic growth, Nepal needs access to global expertise and best practices, which are hindered by such regulations.
Q. Given the increasing need for climate adaptation, how does Dabur Nepal incorporate technology, CSR initiatives, and backward and forward integration strategies to mitigate climate risks?
A. Our agroforestry division is central to our sustainability efforts. We source many herbs locally and promote cultivation by providing saplings to farmers at discounted rates. This backward integration supports women and marginalised communities while ensuring responsible sourcing. We cultivate various herbs like akarkara, chirata, kutki, shatavari, and timur across Nepal. Our initiatives span 30 districts, impacting over 9,000 people directly and 15,000 indirectly.
We are also transitioning to renewable energy sources. Solar power is being installed in our factories, and we are experimenting with bio-briquettes. This shift away from fossil fuels aligns with our commitment to environmental responsibility.
Q. Being an MNC, could you tell us about the best management practices that you have introduced in Nepal?
A. We have the best management practices across the spectrum, which have been widely accepted and acknowledged by internal as well as external stakeholders over the course of time on several occasions. However, I would like to highlight some of the best practices that Dabur Nepal has initiated. Dabur Nepal’s HR philosophy is based on 4 pillars: Talent, Performance, Culture and HR Analytics.
At Dabur Nepal, we take immense pride in our robust and progressive HR practices, which have been consistently recognised and celebrated by both internal and external stakeholders. Over the years, our dedication to fostering a supportive and innovative work environment has earned us numerous accolades, including the National HR Excellence Award 2023, Excellence in Employee Experience Award 2022, Excellence in Industrial Relations Award 2021, and the Corporate Excellence Award in the MNC Category 2023. These awards are a testament to our unwavering commitment to excellence in human resource management.
Our HR Philosophy envisions the four pillars of success. Our HR strategy is built upon four foundational pillars that guide our approach:
First is talent, we prioritise attracting, developing, and retaining top talent by offering career growth opportunities, continuous learning, and a supportive work environment. Our talent management framework is designed to identify and nurture potential leaders within the organisation, ensuring a steady pipeline of skilled professionals.
Second is performance, performance management at Dabur Nepal goes beyond traditional metrics. We focus on aligning individual goals with our broader business objectives, providing regular feedback, and fostering a culture of continuous improvement. Our performance appraisal system is transparent, fair, and geared towards recognising and rewarding excellence.
Third is culture, our organisational culture is deeply rooted in our values of trust, integrity, and innovation. We strive to create an inclusive and collaborative environment where employees feel valued and motivated. Initiatives such as employee wellness programmes, diversity and inclusion efforts, and community engagement are integral to our cultural fabric.
And fourth is HR Analytics, leveraging data-driven insights, we continuously refine our HR strategies to meet the evolving needs of our workforce. HR analytics plays a crucial role in identifying trends, predicting future workforce needs, and making informed decisions that enhance both employee satisfaction and organisational performance.
At Dabur Nepal, HR is not merely a support function; it is a vital business driver. Our HR Department operates with a formal methodology that involves: Continuously analysing the external and internal business environment to align HR strategies with overall business goals. Developing and implementing HR strategies that are closely integrated with business objectives, ensuring that our human capital is prepared to meet current and future challenges. Regularly communicating and collaborating with all business units, including sales, finance and commercial, marketing, supply chain, and more, to ensure HR initiatives are effectively supporting their specific needs.
We’re bringing back the human touch. In today’s rapidly evolving technological landscape, Dabur Nepal remains committed to maintaining the human element at the core of our HR practices. We have implemented personalised employee engagement programmes, one-on-one coaching sessions, and initiatives that foster empathy and understanding. By prioritising the human touch, we have created a workplace that values individuality and promotes a sense of belonging.
In this spectrum, Dabur Nepal has significant achievements and recognitions over the years. Our efforts in transforming HR practices have not gone unnoticed. The National HR Excellence Award 2023 and other prestigious accolades reflect our leadership in setting industry standards for HR excellence. These awards underscore our commitment to creating an environment where employees thrive, and where HR is a strategic partner in driving business success.
In conclusion, we can say that Dabur Nepal remains dedicated to evolving our HR practices to meet the changing needs of our employees and the business landscape. Our achievements are a reflection of our relentless pursuit of excellence, and we continue to strive for even greater heights in the future.
Q. As a foreign investor, what message would you like to convey to other foreign investors who are thinking of investing in Nepal?
A. There are lots of opportunities in Nepal. If you come early, there can be good returns on investment. You have the same set of challenges that you would have anywhere else. The government is investment friendly. A big investment summit was organised recently. There are effective investment facilitation agencies, such as Investment Board Nepal, Department of Industry, which are very supportive.
There is an institutional mechanism in place today, that can handhold and facilitate you throughout the entire process. Obviously, there are challenges but such challenges are anywhere. If you want to come in for the long run, Nepal offers a lot of opportunities, especially, in hydropower, tourism, manufacturing considering the expanding gross domestic product size, a huge youth bulge, increasing disposable income, aspirational economy, rapid urbanisation, consumerism and remittances among others.
For consumer goods, a lot of categories can grow here. Rise of e-commerce, alternative channels and rapid digitalisation have opened up various avenues. Along with digitalisation, barriers of entry have come down. Earlier, big companies had to advertise in mass media, which was too costly. Today, you can build your brand even through digital, which is relatively cheaper. A lot of new things are happening. Low barriers of entry made it more democratic in terms of playing filed. Based on Dabur’s experience, even market linkages are improved. The way roads are being built have made market accessible. Earlier, lots of markets were inaccessible and the cost of distribution has comedown heavily. Road construction and overall connectivity opened up market opportunities and goods and services are cheaper as compared to earlier. We’ve dealt with the Investment Board Nepal; they’ve been very helpful.
At the end, I want to say that sometimes there was an overlapping function of the Investment Board Nepal and Department of Industry. I suggest the Government of Nepal to provide a single window clearance or a single licensing and approving authority with a very clearly defined responsibility, it will be easier for all concerned.
