Nepali Times Asian Paints
Interview
"No excitement in the market."



Keeping ahead of the competition, Shekhar Golchha has his eye on the bigger, longterm prize for the Golchha Organisation. Nepali Times caught up with this busy managing director to talk about Dasai-Tihar consumerism, corporate responsibility, his views on Nepal signing up with the WTO and survival of the fittest.

Nepali Times: Are Nepali consumers consuming?
Shekhar Golchha:
Right now the overall business is suffering and there is no excitement in the market. The breakdown of the ceasefire has spoilt the consumers' mood. For example, people postpone buying decisions because electronic goods and automobiles are not basic necessities. During tough times, like at present, they are not psychologically comfortable.

But then, I also see this as an opportunity for people who can sustain and keep a positive attitude towards business. We will probably become stronger because when there is a market shakedown. Those who are not focused and cannot sustain their ventures will fold up. It leaves great opportunities for established businesses. This is the time to really grow for those who can take risks. I will not roll back any of my expansion programs. In fact, we just launched a big consumer scheme.

Which of your businesses is in best shape?
Motorcycle sales are still holding. There is no problem with that segment although the overall market has fallen, we have significantly improved our market share. Last month was very good for us. Even our consumer electronic business is sustaining, but the growth that is generally expected during this season is missing.

Should customers postpone buying decisions at this time?
During tough times, people tend to save more, thinking that if the situation deteriorates they will need their savings. Businessmen postpone their investment plans. Cash flow becomes sluggish.

But there is huge liquidity in the market and shares are being snapped up.
Shares are a different story. Bank shares are doing well, but I don't think it's the same for others. There may be liquidity but people are not willing to spend. Cash is not moving the way it should.

Is the growth of the middle class making a difference on volume?
Definitely. Consumer electronics, even motorcycle sales, are on the rise despite the overall dip in the market. Goods that were deemed luxuries in the past have now become essentials. The moment people have some disposable income, consumer electronics is one sector that benefits the most.

But isn't unbridled consumerism bad for the environment?
All right, let's talk about, say, motorcycles. The total annual revenue the government gets out of this business is Rs 1.4 billion. Should we limit the number of motorbikes or do we start building infrastructures like flyovers and new roads? Only rich countries can think in terms of stopping vehicle growth. Can we think in terms ending a source of such profitable revenue? What are you going to offer as a substitute to the middle class when there isn't a mass transportion system?

How do you view Nepal's entry into WTO?
I feel it happened at the wrong time. The WTO could be great for Nepal because we want to attract foreign investment. But, in today's law and order situation, do you think any foreign investment is going to come into the country? Even the existing foreign investors are packing up. Now, with WTO you are also removing protection for domestic industryies. We need to be competitive both domestically and internationally. Why should we make our consumers suffer? The whole reason we signed on is for foreign investment. But if that's not going to come, then what is the point? We are heading towards disaster.

How will consumers suffer with the WTO?
We are neither as competitive nor as progressive as industries elsewhere. We are probably making consumers pay for our inefficiency. Since our cost of production is higher and the economy of scale is less, consumers pay for the deficit. The industries run because the government protects them. The WTO will remove those barriers. We will be forced to become more competitive. Our cost of production will have to match international rates if we are to survive.

But isn't being competitive better for industry and better for consumers?
I would not say that we know all the tricks of the trade. The WTO is a huge thing to study. Principally, we need to be watchful and so does the government. In the broader view, if the law and order situation gets better, consumers and the country are going to benefit from the WTO.



LATEST ISSUE
638
(11 JAN 2013 - 17 JAN 2013)


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