Ritu Singh Vaidya is the Managing Director of United Traders Syndicate (UTS)—the authorized distributor of Toyota in Nepal. UTS is a member of Vaidya’s Organisation of Industries and Trading Houses (VOITH) which has varied business interests in Nepal. She also heads the heavy equipment business of VOITH representing brands like XCMG and Escorts Extreme in Nepal. Madan Lamsal, Editor-in-Chief of New Business Age, talked to Vaidya on a wide range of business and economic issues. Excerpts from the interview:
VOITH is involved in a variety of business activities. What is your focus more on?
I am more focused on automobiles, which means Toyota. We are also trying to introduce electric vehicles. I’m also focusing on my heavy equipment business for the past three-four years. We have a separate company for that. Now, we are representing XCMG and Escorts Xtreme Backhoe Loader. We are distributing Escorts Extreme backhoe loaders in Nepal.
So you are trying to bring in electric vehicles?
We haven’t bought a Toyota EV yet. But as you can see, Toyota has launched some 30 EV models that are ready to go into production. As you know, Japanese automakers, especially Toyota, don’t do anything in haste. Durability, reliability, all those things are very important for them. Unless they are satisfied with everything, they don’t go into production. But now Toyota is ready with 30 EV models.
Do all of them come to Nepal?
Eventually, yes. But it will take some more time.
What about the pricing?
Nothing is fixed yet.
VOITH grew up with Toyota in Nepal. How is the Toyota brand doing here?
For the past many years, we have been the leaders in the Japanese segment. You cannot compare Toyota with Indian brands because of prices, features, and many other things. Talking about market share, Nepal is a completely India-dominated market. We are an under-developed country, and price is a major concern here, not reliability and durability. Even if they wanted to, many people cannot afford Toyota vehicles. The Japanese segment is very small, but we are the leaders in that. Our share is about 4-5 percent of Nepal’s automobile market. We are satisfied with the way the brand is growing in Nepal. If our GDP size grows and people become wealthier, we will grow faster.
How is Toyota doing in the pick-up and microbus segments?
This segment has been affected by the pandemic. Speaking of microbus, many routes remained closed due to the pandemic that affected the market. It’s not possible to have growth when there is no passenger traffic. So the microbus segment witnessed a slowdown in sales. Our product in this segment is safe, reliable, and best suited for long-distance routes. The segment will grow once people start traveling because our models have no competition. Likewise, the Hilux is undisputed leader in its segment.
Do you also have plans to introduce electric buses?
Toyota doesn’t make electric buses. We are working with a company to see whether electric buses are viable in Nepal. We did a survey for a government project to study the feasibility of operating electric vehicles. The problem is the massive difference in prices between normal buses and electric buses. While buses running on fossil fuel are available for around Rs. 2.5-3 million, electric buses cost Rs. 40-50 million each. For the price of an electric bus, you would have a fleet of buses. Would you put in that kind of money?
Do you have any plan to build an assembly plant here?
Yes, we do have a plan for that. But we will never do anything in haste. We are very much of the Toyota mentality that whatever we do should be sustainable, and beneficial to society and to us, of course, as businesspersons. It’s not just about making money.
The government has announced subsidies to encourage electric vehicles. Would not that help to set up an assembling plant?
I think the government has subsidized some things. There were some provisions in the budget too. The problem is, the scale of the economy is not so large. We need to see whether it will be beneficial to bring semi-knockdown products or do production here. If you are doing production here, we will need a secondary market because only Nepal may not be sufficient. We are definitely looking into options.
Could you please elaborate more on the activities of VOITH?
We are focused more on the automotive business. Of late, we have also started a heavy equipment business. Personally, I am also involved in venture capital funds. At the same time, we have started a joint venture with a Chinese company for cement manufacturing. Huaxin Cement has already started production. We have invested Rs. 15 billion in the project. We have also invested in limestone mining in Nuwakot. A new hotel is also in the plans. But we are a bit skeptical as we feel there is an oversupply of hotel rooms at present. We have big plans for the hospitality sector. Now, we want to look at a very niche market.
Our plans for the hospitality sector are ready. But we have put the Kathmandu and Lumbini projects on hold for the time being. Nepal has very few thriving sectors, and hotels are one of them. Let’s see how things move ahead.
Huaxin Cement was facing some problems in getting electricity from the grid. What is the situation now?
We built our own transmission line. We have our own setup, so we don’t have that problem now.
There is stiff competition in the cement market. How is Huaxin faring?
Huaxin’s biggest advantage over its competitors is its proximity to Kathmandu. Kathmandu alone accounts for 60% of the market. I think it will enable us to offer the most competitive prices.
Could you elaborate more on the venture capital funding that you are doing?
When investing in such projects, you have to study other people’s projects and see whether it is feasible to invest in them. You have to look at the balance sheet, operation models, manpower and a lot of other things. We have already invested in such projects. One is a medical-related company. I am also involved in a microfinance institution promoted by the Women Entrepreneurs Association of Nepal (WEAN). Coming from a financial background and running a business of this scale, I steered the institution to ensure maximum benefits for women. Many people have a misconception that the banking business is easy, you just invest and get a return. But a bank is like any other company. If you don’t run it properly, it doesn’t give you any benefits. Now, we have merged Wean Microfinance with Nepal Sewa. It's a matter of pride to be a part of that microfinance institution. It is more than just a business for me.
You have worked in both Nepal and India. What is the working culture like in these two countries?
In India, especially in bigger cities like Delhi, Mumbai, Chennai, etc., the level of education is high. As you can see, top companies are coming to India for recruitment. Education is a very strong part of the fabric of society. In Nepal, unfortunately, it’s a bit lacking. That is why most investors find themselves involved at every level to get their work done. In India, you can hire a lot of people more capable than you. The importance that Indian society is giving to education, discipline, go-getting, and professionalism, especially as you keep going higher and higher, is something that we miss here.
Is our social structure one of the reasons behind this?
The fact is that the focus on education came here a bit later compared to India. There is a generation that went without education. It is said that educating a woman educates a society. Even if my grandmother was not a working woman, she was an educated woman. The result is, her children were much better educated than her. They had a new outlook on life because they were educated. We have got that platform. Talking about Nepal, we are taking schools to villages now. There are schools, but there are no teachers. If there are teachers, there are no classrooms. If there are classrooms, there are no bathrooms. This has been a challenge for a very large population of Nepal. Kathmandu and a few bigger cities have better educational facilities.
Our youth are heading to job markets abroad, and our corporates aren’t getting the right workforce. What do you think is the reason behind this?
Education is obviously one of the reasons. The other is the brain drain because of the lack of opportunity. If you are, say, a double PhD, what is the opportunity for you here? You will teach in some colleges. That’s it. But if you apply to any other country, you have a lot of opportunities.
I think we are stuck on the basics at the moment. The brain drain of the skilled workforce is one of the reasons that we aren’t getting the desired growth. When I was growing up in India, the country wasn’t very commercialized compared to today. But people were educated. Talking about my family, my uncle is a petrochemical engineer. He spent his entire career in oil-rich countries due to a lack of opportunity at home. This is the same situation that we are facing here today.
How are you managing the required skilled human resources?
Somehow, we are finding the right person so far. But the turnout of people is low here. In India, if you are looking for an engineer, you have thousands of people to choose from. But you have limited choices here. Many times, you have to compromise because you know the choice is not the best. It is difficult to find skilled manpower in Nepal. That is why we train a lot of people. If somebody is a learner and has the education that we are looking for, we train them and make them capable.
What is the employee turnover rate in your organization?
I must say, we are lucky as very few people are leaving our organization. We consider our employees' family members. I feel we are a big family, and people around me know this. We try to address all the needs of our staff members. If somebody is feeling the pinch, we address it if it is a justifiable thing. That’s our policy here.
Many see it is difficult to raise capital for investment in Nepal. What are your experiences?
So far we haven’t faced much of a problem. If you run a project successfully, banks approach you because their focus is always on secured lending. But if they know you are a defaulter, they will avoid you. So, I think, lending or borrowing is not a problem. The problem here is money recovery. I have faced this in heavy equipment and similar business. Sometimes we do face problems like the ones we are seeing today. Banks want to invest, but they don’t have the money.
In your opinion, how good is the business environment in Nepal?
I think we are all blocked by that same wall. If we are the blocks in that wall, we should ask ourselves what our contribution is. Am I also part of the problem? Show me a country in South Asia where you don’t have red tape and corruption, and where you don’t have to maneuver things to get your job done. It may be less in certain countries, and more in others. I think things are still easier here because of the size of our economy. It’s easier, even if compared to India. In our small economy, people know you, they are reachable, and your reputation travels fast. But if you have a bad reputation, it travels first.
The other thing is that people here are not conniving and cutthroat. As you see in India and China, there is cutthroat competition in every sector. Ours is a laidback society, and nobody is out to cut you out. The problem is, ours is a copycat economy. If you do something, many others will do the same. We need to be innovative. But again, I think society is not yet ready for that. Innovative ideas are accepted only when you have well-educated people around you.
But, even still, there are problems in doing business in Nepal. What are those problems?
What I believe is that, as an entrepreneur, you have to show the ability to solve your problems. If you are starting something new, it’s not going to be on your platter. You will have to create it. You will have to do everything. To be an entrepreneur, you should have to take on challenges. Otherwise, do more secure things, like getting a good job. If you are doing something, you have to do people management, money management, corporate arrangements, PR activities, and a lot of other things. You have to do everything. It shouldn’t be a problem.
Coming back to your question, there certainly are some problems that are beyond our ability to resolve. One is the dysfunctional policy of the government. For example, the government announced certain facilities for hybrid cars but rolled them back two days later. It changed the emission standards from Euro 3 to Euro 5 without giving stakeholders the time to adapt. There is no predictability in the government’s rules and regulations. There will be no such problems if the government gets organized. I think we need a Lee Kuan Yew or a Manmohan Singh. Then we can catch up in no time. I wish the government did everything in a planned way.
So what can the government and the private sector do to make things better?
I will start with the government because I think if the head is organized, the body is organized. I think the government should focus on planning, - both short-term and long-term. The focus should also be on improving the system. We cannot blame only the government for corruption because when somebody is taking money, somebody has to be offering. But if the hands taking the money are tied, it will be resolved gradually. When it comes to offers from our side, we try to avoid it as much as possible. I think the problem of corruption will be eliminated once our education level increases.
Every year, there is a cash crunch in the banking system. I know how much money my business needs in a year because I make cash flow projections. I don’t know why the government can’t do the same. There has to be a plan, and there have to be priorities. They started making periodic plans seven decades ago.
The private sector should be more responsible for society. Everyone does business for a profit. But it shouldn’t be at the cost of people and society. Business should be beneficial to the people. I am always looking for business that employ a lot of people. Because we need a lot of them now. Instead of focusing on just one or two fields, like hotels and cement, I think business should diversify.
Many say the private sector is promoting crony capitalism in the country. What is your view?
I think global capitalism is also to blame. Nobody is happy with a few crores today. If you are looking at thousands of crores, you should ask yourself if your economy is supporting it or if you are going to practice crony capitalism and do something to bring in money by yourself. The basic question that we have started asking is, why do you need so much money for yourself alone? If my company grows and everybody around me grows, and I will feel happy. But if I am growing and everybody else is suffering, it is wrong.
You were born and brought up in India and are now doing business in Nepal. How difficult is it for women to come out of their homes and start business?
My parents were very supportive. We are three sisters, and all of us are successful. We have certain circles in our lives-home, work, and society. If all our circles were perfect, our lives would be perfect too. To be honest, I don’t find it difficult. You have to juggle the roles, you have to prioritize things. I get busy with office work all day. But I do manage time to go shopping for households, do gardening, and exercise in the morning.
Any suggestions for women looking to start a business?
My suggestion starts with the parents: give them a good education so that they can think for themselves. They can then decide for themselves what they want to do. Be confident in whatever you are doing, be honest, and show full dedication. If you are not very exposed in life, your ideas are very limited.