Videocon, Sahara pull out as Nepal situation worsens

Trouble in the neighbourhood hits Indian business

The Videocon Group has suspended its operations in Nepal even as Air Sahara today cancelled its inaugural flight to Kathmandu in view of the heightened Maoist violence and rioting in the country.

"We have closed down our manufacturing operation in Nepal and we do not intend to start work for the next six months," VN Dhoot, chairman, Videocon group, told Business Standard . The company has an assembly plant near Kahmandu, which produces 20,000 colour televisions a month.

Videocon along with Colgate Palmolive India and PepsiCo India was among the very few Indian companies that continued its operations in the country, despite the Maoist threat. Colgate closed down its operations three days ago.

PepsiCo's bottling operations in Nepal is run by the Jaipuria group, which is one of PepsiCo's largest bottlers even in India. According to a PepsiCo India official, the company's operations in Nepal are still on.

The situation in the country worsened today when angry protesters set fire to the biggest mosque in the centre of Kathmandu in retaliation for the killing of 12 Nepalese nationals by Iraqi militants.

With fresh incidence of violence, Air Sahara has cancelled its inaugural flight to Kathmandu. The company has advertised heavily to promote its new service.

According to Badri Ojha, director general, the Federation of Nepal Chambers of Commerce and Industry, most overseas companies were jittery about commencing operations in Nepal.

"About a dozen companies including Indian ones which closed their operations are not looking at restarting in the near future," he said.

Many other large Indian firms like Dabur, ITC and Coca-Cola India had decided to shut their operations indefinitely in Nepal after the powerful Akil Nepal Mazdoor Trade Union Mahasangh's diktat that a dozen companies, including Indian firms, would not be allowed to operate because of their exploitation of local workers and "espionage" activities. Ojha added that nearly 2,000 locals have lost their jobs on account of Indian firms closing down.