From rxpgnews.com
Another Indian investor wants to quit Nepal
By Sudeshna Sarkar, IANS,
Apr 22, 2007 - 6:13:15 PM
Kathmandu, April 22 - Yet another Indian investor is trying to pull out of a joint venture in Nepal in which the other partners are the kingdom's government and an influential Marwari group.
Orissa Industry Ltd entered Nepal almost three decades ago to set up the Nepal Oriental Magnesite Industry - in collaboration with the government of Nepal and the Khetan Group, who have other business ventures ranging from banks to beverages.
While the state holds 75 percent shares, the rest are held equally by the Nepali and Indian partners.
However, stiff competition from China combined with the political turmoil and violence in Nepal has made the Indian company decide to sell its shares.
Though NOMI has two production facilities, one for dead burnt magnesite and the other for manufacturing talc, the first has remained closed for nine years.
'We were using old technology that was not economically viable,' the board of NOMI told IANS. 'The cost of fuel was very high and we could not compete with the much cheaper product from China.'
Like all mining industries, NOMI was also affected during the Maoist insurgency when the government banned private organisations from keeping explosives due to the fear they could fall into rebel hands.
But though Orissa Industries wants to sell its shares, according to the agreement with its partners, it can't offload them to a third party. The buyback offer has to come from either the state or the local partner.
The Indian company says it invested nearly Nepali Rs.40 million and should be paid that in lieu of its shares.
However, Nepal government has not accepted the figure and negotiations are on to reach an understanding.
Orissa Industries is one of several Indian companies that decided to quit Nepal due to labour and other problems.
Aarti Strips and Colgate Palmolive are among the big names that found it impossible to do business in Nepal.
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