Ujjwal Kumar Shrestha is the executive director of Panchakanya Group, a diversified manufacturing company that has built its reputation over 52 years by specialising in quality and reliable building materials. Beyond manufacturing, the group has ventured into hydropower, trading, construction, and limestone mining, reflecting a diversified portfolio. Shrestha entered Nepal's corporate world in April 2007, when he joined his family business as a marketing manager in the steel and plastic divisions after his return from the US. Shrestha, who believes that no job is big or small and that whatever you do, you must put your heart into it, worked in a cafe in the US. He has always believed that a strong team brings a lot of positive synergy and high consistency, which helps attain goals more competently than through individual efforts. In an email interview with the Post, Shrestha discusses Nepal's current economic situation and challenges, including the company’s plans. Excerpts:

As one of Nepal’s oldest business groups, how do you observe the business climate then and now?

Despite political instability and labour management challenges, Nepal’s business environment has evolved in the last two decades. Yet, we saw a resilient and hopeful community of businesspeople as we went through the political transitions and drafted our constitution for a stable Nepal. The policies and processes lacked appeal, but financing was accessible, and the consumer market was gradually expanding. Consumption of infrastructure products was slow but showed steady growth with increased manufacturers' capacity utilisation and a healthier competition environment.

Then, the 2015 earthquake brought devastation. However, along with the destruction, it brought opportunities to build a more robust and better Nepal through a stable government and improved infrastructure. We saw many commitments from the government for infrastructure-related projects and a surge in industrialisation and new business ventures. As always, in the private sector, without much homework, we started crowding our market to tap into the opportunity of new Nepal until Covid hit us. Covid and its aftermath have been the most significant learning curves for most of us as the pandemic and its effects took many lives and cost businesses. Yet, the crisis forced most firms to realign and innovate.

As a third-generation business leader, I believe today’s business climate faces unprecedented challenges and lacks confidence. Overcrowding in markets due to similar imports and products manufactured much above the demand have resulted in supply glut. The central bank’s abrupt and overly conservative policy precaution has severely hampered businesses with no time to align with an overbearing regulation post-Covid, which gradually was loosened, but the damage had already been done.

The volatile interest rate makes long-term planning frustrating and challenging, especially while planning and projecting your business year-on-year. This is still prevalent in doing business today. The government’s budget spending has always been poor, and it’s the same now. Persistent underutilisation of budgets hampers demand and has left Nepal behind in regional infrastructure development. Multi-party governments contribute to policy corruption and instability by creating unclear and conflicting policies. Our business community takes advantage where it fits, frustrating and damaging our economy. The cost of doing business has shot up significantly due to labour costs and delayed payments from the market and the state, creating additional financial strain.

To invigorate the business climate, it is time for the government systems to become more digitised and faceless, with less bureaucracy at every step and a focus on policy clarity.

The business community must be held accountable and motivated to contribute rather than feel beleaguered. All stakeholders must unite and bring transformational changes in Nepal, a country blessed with nature and immense human potential.

The country’s economy is not in sound health. How is the Panchakanya Group doing?

We have faced and adapted to numerous political, geopolitical, and natural disasters or the pandemic’s challenges throughout our industrial journey. Each setback has been a learning experience, helping us consolidate and sustain our operations.

The aftermath of Covid-19 severely impacted Nepal's business landscape, including our group.

While the pandemic was challenging, the subsequent financial policies deepened the difficulties. The restrictive and abrupt policy measures made navigating a strained economy even trickier, damaging businesses and slowing overall economic recovery. However, the crisis taught us invaluable lessons, compelling us to adapt and realign our strategies to survive and sustain.

In my 19 years with the group, I have never witnessed an economy as stagnant and challenging as it is today, both financially and morally. The prolonged economic slump has dampened people’s hopes and drives to grow and their vision of national prosperity anytime soon.

For the Group, sales have shrunk, and capacity utilisation has decreased significantly. Frequent and unpredictable policy changes in industry regulations and financial frameworks have kept us on edge.

The lack of political stability and the prioritisation of politics over economic development has eroded confidence in the government and its ability to foster economic growth. The road ahead is uncertain, but our resilience and adaptability, built over five decades, will guide us forward.

Since Nepal started exporting iron and steel to India, how is the demand in the Indian market? What difficulties is the company facing in the export process?

Nepal's iron and steel industry makes various products, but only a few are manufactured locally for export.

Among the prominent exports are corrugated sheets, some household items, and wire products, though the volume of other exports remains negligible. Panchakanya Stainless Steel tanks have also entered the export market, with small quantities being sent to India. Efforts are underway to expand this market and increase export volumes.

In 2022, the government introduced an incentive scheme to promote exports, mainly targeting steel and cement industries with an 8 percent export incentive. This policy generated significant enthusiasm among manufacturers. Cement exports to India have been highly successful due to Nepal's abundant raw material, making production and export viable. However, steel exports have faced challenges. For instance, following the introduction of the incentive, only three truckloads of steel rebars were exported in 2022.

The challenges in exporting steel and iron products stem from several factors. Nepal relies heavily on raw material imports from India and third countries, making production costs high. Additionally, the industry is hindered by poor electricity infrastructure, unreliable supply, rising labour costs, fluctuating interest rates, and unstable government policies, all of which making large-scale exports unfeasible.

Under the Nepal-India trade treaty, Nepali products receive preferential treatment for export to India, provided they meet the requirement of at least 30 percent local and Indian value addition if the raw material originates from third countries. Furthermore, certain products must obtain Bureau of Indian Standards (BIS) certification to qualify for export. While exporting to India is generally hassle-free, the competitiveness and cost-efficiency of Nepali industries remain critical factors. Unfortunately, these industries face numerous uncertainties, limiting their ability to capitalise on export opportunities.

As a multiple manufacturing group, how is the company working on environmentally sustainable manufacturing practices? What are your plans for that?

Panchakanya Group has always been and will remain deeply committed to integrating environmentally sustainable practices into its manufacturing processes. We focus on minimising our environmental footprint throughout every stage of our product life cycle while maintaining operational efficiency.

We have consistently adopted green, clean, and lean practices across all our manufacturing units in Nepal, such as energy-efficient technologies. We use advanced process equipment to reduce energy consumption and greenhouse gas emissions, maximise raw material usage, and minimise waste.

We have adopted an online automatic air-oil lubrication system that drastically reduces lubricant consumption, minimises discharge, and ensures eco-friendly operations. We adopt an automatic excess oxygen control system. This technology optimises combustion, reduces pollution, and minimises material wastage.

Our commitment to the "3R Policy" (Reduce, Reuse, Recycle) ensures maximum production efficiency while minimising waste. Additionally, we practice zero air, water, and electricity leakage in our manufacturing processes. We use only premium raw materials such as prime billets and virgin plastic to enhance output, improve quality, and reduce process losses and waste.

In October 2024, we achieved a significant milestone by becoming Nepal’s first company to receive the GreenPro Type-1 Ecolabel for Panchakanya Steel. This certification recognises products that meet the highest standards of environmentally friendly practices. We take pride in being the greenest manufacturing facility, reducing our carbon footprint through green initiatives and planting over 4,500 trees in and around our industrial complex in Kotihawa, Bhairahawa.

We aim to expand and enhance our green movement through several initiatives like expanding our existing 194 kW solar facility to over 1MW across plants and offices, planting more trees in available spaces to support the environment, adopting eco-friendly raw materials and energy solutions, encouraging digital practices to reduce paper usage and achieving zero water wastage by reusing recycled water.

We aim to explore alternative fuels and the latest technologies to minimise environmental impact further, reduce waste, and increase efficiency.

How does the company align with the UN sustainable development goals?

Panchakanya Group has significantly aligned its operations with the UN SDGs. Key initiatives include creating jobs to combat poverty, ensuring productive and decent employment opportunities at its units, promoting sustainable consumption and responsible production, investing in environmentally friendly technologies, and prioritising the development of green products. These efforts showcase the group’s commitment to sustainability and corporate responsibility.

Further reinforcing its dedication, the Panchakanya Group contributes to five significant causes through its CSR arm, the Panchakanya Foundation. These initiatives include environmental protection, education, skill development, health and sanitation, and preserving culture and heritage.

Why is there not a single woman on your company’s board?

Panchakanya Group is deeply committed to fostering diversity and inclusion at all levels of its organisation. It takes pride in the rich diversity represented across its workforce, encompassing gender, culture, and religion.

As a family-owned business, the group has been evolving, transitioning from traditional, family-centric management practices to a more professional and structured approach to governance. While the current leadership framework, shaped during the early stages of the company’s foundation and growth, does not yet include female representation at the board level, the group acknowledges the importance of gender diversity in leadership roles.

We are optimistic about embracing broader inclusivity, including more excellent female representation in decision-making. This commitment reflects its forward-thinking approach to fostering a culture that supports equal opportunities, aligns with global best practices, and promotes sustainable and inclusive growth for all.