Chitwan Milk, the largest milk powder plant in Nepal, has closed down after years of losses. The factory was forced to pull down its shutters after it became unable to compete with imported products in the market.  

The sudden closure of the plant based in Thimur has left more than 100 workers out of a job. The management has posted a notice at the factory saying that the plant has been closed from August 17 until further notice.

Employees said they were not informed about the management’s sudden decision. With the closure of the plant, milk holidays are likely to reappear in the district.

“We have decided to close the plant as loans from the banks have been increasing. Our product has not been able to compete in the market resulting in losses for the last five-six years,” said the notice signed by the factory chief Uday Raj Pandit. “The investors are unable to inject further capital to operate the plant,” the notice said.

For a long time, demand for powder milk has not increased in the market; as a result, the factory continued to suffer losses. The plant, operated under the public-private-partnership model, was established on April 9, 2010.

It was established with the objective of producing 150,000 kg of powdered milk and 50,000 litres of dairy products like curd, paneer and ice cream daily. However, the plant never went into full fledged operation.

The factory had been collecting 70,000 litres of milk from 19 different dairy producers and state-owned Dairy Development Committee (DDC). The collection had dropped to 25,000 litres daily in the last few years. Initially, it had employed 200 people. However, the factory was downsized and its workforce slashed to 127. DDC and Chitwan Cable Car Operators have invested Rs650 million in Chitwan Milk. DDC has an 11 percent share. As of now, investments in the mill have totalled Rs1 billion.  

Employees have demanded that the plant be brought back into operation. The plant employees said that they had not been paid for the last three months. “We were not informed about the management’s move to shut down the plant,” said Biswo Raj Poudel, chairman of the All Nepal Industrial Trade Union. “Workers have not been paid for the last three months,” he said, adding that the union was ready to hold a discussion with the management to resolve the issue.

“Although we have appealed to the local administration to hold talks under its aegis, it has not paid any attention to our appeal,” said Poudel.

As per the Labour Act, employees should be given one month’s severance pay before closing down any factory. However, after the union demanded two months’ salaries and perks, the management decided to close the plant as per the Labour Act.

“The management and the local authorities should not force farmers to go for a milk holiday by closing the plant,” said Gopal Lamichhane, an employee of the plant. “We are willing to get our salaries after three months, but the management should not shut down the factory.”   Rajesh Babu Shrestha, executive director of the factory, said that they had proposed that the government invest 80 percent and the private sector the rest to resume operations. “It’s the country biggest powder milk producing plant. It’s a national asset. We have closed the plant to save operating costs until another management takes over.”