Text by Ujeena Rana
What started as a modest confectionary business took a colossal size and diversified into dairy, automobiles, packaging, plastics, steel, cement, and hospitality industries. In the years since it was first introduced, Laxmi Group has gained access into a multitude of industries in the country, thus becoming a part of the Nepali lifestyle.
From a sweet maker to a conglomerate is the story of the Laxmi Group. Today, the Group has Sujal Foods, Sujal Dairy, Jaya Packaging, Sujal Plastics, Laxmi Intercontinental, Jaimalaxmi Intercontinental and Jaimalaxmi Trading as its subsidiaries. The idea, apparently, is to keep expanding and diversifying in the years to come.
Entrepreneurship in the genes
It all started with a grandmother who used to make selroti and sweets at melas and during special occasions in the village. Possibly, it was this seed of entrepreneurship that was passed onto Ganesh Bahadur Shrestha (Anjan Shrestha’s father) and his elder brother Buddhi Bahadur Shrestha which propelled the brothers to open a sweet shop, Laxmi Mithai Bhandar in their house in Pokhara in 1973.
“At that time, my father was faced with two options: either migrate to the Terai for better opportunities or establish something in Pokhara. He sought his elder brother’s advice on this,” Anjan Shrestha, Executive Director of Laxmi Group reminisces. Both brothers came to the conclusion that employment alone won’t yield much savings. Also, they each had a family of their own and the responsibility to provide a better future for the children. This presented the necessary incentive to push the entrepreneurial cart forward. Hitherto, Ganesh Bahadur Shrestha was employed in government service and Buddhi Bahadur Shrestha was with Siddhartha Highway Project.
The Shresthas had already dabbled in pustakari making. “We used to make pustakari at home,” recalls Shrestha. Anjan’s father and uncle were later introduced to hand-operating machine and therefore the duo thought of expanding the product range courtesy of the technology. “That time our equity investment was less than 100 dollars,” informs Shrestha. He adds, “I still remember we had this small confectionary factory at home.”
Whatever they earned was invested back into the business. “We were not focused on buying land or property. We had one confectionary factory unit at home, one in the Pokhara Industrial Area but in 1984, we decided to consolidate all the factory units. After the merger, we came up with advanced products in confectionary,” he informs. That was also when the Shresthas decided to go into chocolate confectionary. Until 1989, they were involved in sugar confectionary only. “We launched Chocofun, a chocolate enrobed wafer, which in later days proved to become the flagship brand for the company,” he states.
The decision, in fact, proved to be a lucrative bait for the Shresthas because it catapulted their position in the confectionary business in the country. The company claims that Chocofun is a dominant player in the confectionary market with overwhelming market share.
Laxmi Group owns an army of companies and the story of each of their beginning is interlinked with the other. Dates are stored in his mind in a labyrinth of numbers.
In 1991, the family thought of diversification. “At this time, we were the largest confectionary in the country. We had arrived in the national arena,” he informs. Orange ball, Rimjhim ball, Sujal gum, Bubbly bubble gum, Lofty toffee, Swastik toffee, Chocofun, Smart Lollypop, Craveall are the products from Laxmi Group. Shrestha believes when the company was basking in success, “We were the undisputed leader in the confectionary department; we could easily compete with the international brands”. And that’s when they decided to diversify into unchartered lands.
“The family reckoned that we won’t experience exponential economic growth if we are contained in one industry only,” he states. Moreover, the second generation was ready to join the family business along with the old guards.
“At that time, Dairy Development Corporation (DDC) Pokhara unit was on the verge of being privatised. After ten years of rigorous effort and five tender processes, we finally got the project in 2003,” he narrates. This cemented their presence in the dairy industry.
Shrestha calls it the demand of time which encouraged the family, in later days, to meditate on something other than manufacturing. In fact, during the insurgency when the country was crippled with dormancy and the manufacturing industry faced harsh blows, the Shresthas made up their mind to dive into trading.
The auto industry
They were toying with the thought earlier on, but the insurgency acted as a catalyst to prepone their decision to get into trading. The Shresthas were looking into some options and decided on the automobile sector. “We saw immense prospects and a generous future for the auto industry in Nepal,” he states. In 2006, we got the opportunity to become dealers in Kathmandu for Hyundai Motors. “The parent company was pleased with our unparalleled performance and in 2009, we were awarded with the sole distributorship for Hyundai in Nepal,” states Shrestha, with a touch of pride.
When asked, Shrestha shied away from revealing the annual turnover of Laxmi Group and Laxmi Intercontinental. He excused himself saying, “No one actually reveals numbers in Nepal.” Nonetheless, he revealed that Hyundai motors enjoys one-third market share in the passenger car segment because of its design philosophy, durability and safety.
With old and new players in the game, the auto industry, undoubtedly, witnesses stiff competition. So what does one do to outdo the others in the race. According to Shrestha, what sets Laxmi Intercontinental apart is its world class showroom giving customers a unique buying experience, sales skills of the people on the floor so that buyers show appreciation and interest in Hyundai vehicles and after-sales service as it is not just about purchasing. “We have created state-of-the-art service centers,” he elaborates.
He underlines that branding and promotion strategies help but word-of-mouth is still the strongest marketing tool.
The colossal size of Laxmi Group
The conglomerate does not identify with any particular business as its central business. The group is invariably diversifying. They are also involved in the business of auto components like tyres, tubes, lubricants and battery; infrastructure business with plans for steel and cement, and the hospitality vertical with a resort hotel business. Besides, Laxmi Group is one of the major partners in Nidaan Hospital.
Anjan Shrestha credits the dedication and devotion of his father and elder uncle for the humongous size the company has shaped into. The ability and openness to learn, the craving to do more, the focus and prioritisation on innovation and the appetite for risks is what Shrestha imbibes from the two cofounders of the Laxmi Group.
Along with the teachings from the first generation, Shrestha wants the third generation in the family to add knowledge and competency in the list of virtues to inculcate in order to take the group forward.
A day after giving the final paper for his SLC exams, Anjan Shrestha joined the family business. He however formally joined office when he completed the first year of intermediate level. “I used to look after sales and marketing,” he recalls.
NADA Auto Show
NADA Auto Show is promoted as an opportunity for every auto brand to showcase their current and upcoming models for the benefit of prospective auto buyers. The exhibition of the best models of automobiles allows visitors to understand products firsthand while being able to compare multiple brands on a single platform. “It is an opportunity no auto brand wants to miss out on. It is the kumbh mela for auto aficionados,” states Shrestha, who is also the past president of NADA.
The event has played a crucial role to boost business of auto dealers. “When I was the President, we wanted to take NADA out of Kathmandu but because of the unavailability of space, we had to axe the plan,” he shares. Irrespective of the current difficulties standing in the face of NADA Auto Show, he is confident that the event’s grandness will only increase in the coming years.
The Future of EVs
Despite the fact that the major rallies for environmental sustainability around the world push for ‘no fuel, go green’ rhetoric, auto industry pundits predict that electric vehicles (EVs) will not rule the roads any time soon. The idea for e-topia will take some time to materialise. For one, EVs are expensive. Eco-friendly lifestyle does not come cheap.
Battery technology is expensive which translates to exuberant figures tagged with the product. “Battery production and electric vehicle production has not been on mass scale as anticipated,” comments Shrestha. “EVs in Nepal have a great future, but as of now, EV sales has hit a standstill. It suffers from sluggish growth,” he remarks. “With Kona and IONIQ combined, we only sold 120 units till date. Demand is there. People’s growing interest is there. Customer inquiries are there. We are now expecting battery prices to lower,” he adds.
Besides, there is the issue of charging. Charging stations are not ubiquitous even though a few of the electric vehicle distributors in Nepal have installed some. To promote EV market and to allow customers to have confidence, Hyundai Motors Nepal are installing charging stations at malls and theaters in Kathmandu. “Labim Mall already has benefitted from our charging station. We have installed charging stations at six hotels in Pokhara. Our two service stations in Pokhara have charging stations. Chitwan, Kurintar, Butwal will have charging stations shortly,” he shares.
The government, on its part, has exempted road tax for EVs. Hyundai Kona EV with 64 kWh comes at around Rs. 65, 96, 000 whereas, Hyundai Creta SX(O) of 1591 cc costs around 61,96,000. Since the cost is not par on with conventional cars, EVs are not necessarily the first option for a car buyer.
Auto industry in Nepal
The private sector is already contributing to the auto industry by making most of the major international brands in the world available in the country. “We are doing as best as we can in terms of showcasing, buying experience, after-sales. The government should review and revise its perception of automobiles,” he throws the ball in the government’s court.
Earlier, there was paradox at play: are automobiles objects of luxury or a necessity. The long-standing argument was because the government had placed automobiles under luxury items which resulted in the 200% import tax. “Now, you can’t debate on it; it is a necessity,” he challenges.
Anjan Shrestha in an interview in 2016 was quoted saying that nearly 30% of the government’s revenue comes from the automobile sector. Now, the government has started another debate since the Central Bank has listed automobile sector as unproductive. “What are the parameters for announcing vehicles as unproductive?” he quizzes. “It is absolutely productive,” he asserts. “If public transportation was safe, reliable, effective and efficient, there would not have been individual vehicles,” he points out.