--By Sagar Ghimire
Director, RMC group
The export of RMC cements to India comes as a respite for the economy of Nepal that has long been suffering due to the dominance of imported goods from India. Along with catering to the rising demand for building materials like cement, steels and pipes in Nepal, the RMC Group now strives to expand its market to neighbor down south. Amidst a deepening trade deficit with India, the RMC Group is now planning to export manufacturing goods to the country. The strategy is to import raw materials and export value-added products to India.
Conviction behind success
Since Nepal was completely dependent on imports for steel, Rajesh Agrawal, Director of RMC group, thought of establishing a factory to meet the growing demand of steel in the country. Despite his lack of experience and knowledge on the manufacturing industry, Agrawal did not shy away from venturing into a relatively new front.
“Promising prospects for steel manufacturers prompted me to start a factory despite my inexperience,” Agrawal says. He recalls being firm on his conviction to develop it through the learn-by-doing approach. Today, the RMC Group has leapfrogged from a small-scale firm to a big industry through this approach itself.
The company initially formed for steel drum packaging for paints is now manufacturing steels, pipes, cements and sheets. Along with catering to the rising demands for steel, the company also meets the needs of pipes and other construction materials in its backyard. Growing steadily thus, it is now eyeing a broader market in India.
“Forty per cent of our total turnover is exported to India today,” Agrawal states to The Corporate. The group has recently started exporting cement to India and is the first company in Nepal to do so.
The RMC Group was established with an investment of five million rupees and now has an annual turnover of 5 billion rupees, informs Agrawal. Apart from the manufacturing sector, the group has investments in the banking and insurance sectors as well.
Industrialisation was yet to begin in Nepal when Agrawal had begun business. Despite limitations, Nepal gradually headed towards industrialization and augmented economic growth in the country. “The steel consumption is directly related with economic development and the economic development of Nepal has increased with the consumption of our steels,” says Agrawal.
‘Ups and Downs’ in Business Environment
In the two decades of its operation, the RMC Group has experienced some ups and downs. Few years after the group established its factory to manufacture steel, the Maoist insurgency took off and posed many challenges to industrialists from running their business. “However, the business environment recovered after the Maoists came into the peace process,” Agrawal says.
Affordability of local consumers has gone up in recent times due to remittance and other sources of income. “People in villages have been switching to corrugated sheets from bricks, straw and other local materials to roof their houses,” Agrawal observes.
However, the per capita steel consumption in Nepal is still one of the lowest in the world - 30kg per person, according to Agrawal, whereas the average is more than 300kg per person in the world. Agrawal is hopeful that steel consumption will get a boost in the days to come with political stability in the country.
But despite these vicissitudes, consistent service to customers for the last 20 years has made RMC a credible brand. “The consistent quality provided to consumers has ensured the growth of our companies,” Agrawal says.
The company had begun with only 15 employees in total, but today, there are 400 employees hired by it. It has employed 80 peoples in its cement factory and has been hiring staff for administrative purposes through vacancy calls in newspapers.
“A large number of our human resources are labours and we recruit them at the local level where our factories are located through the contractors,” says Agrawal who values the labour force for the success of his company.
The RMC Group has arranged drinking water facilities at the villages of the workers of its factories in Simra and other places as a part of its Corporate Social Responsibility. It has built water tanks, provided water pipes and bored water wells as well.
Similarly, it has provided corrugated sheets, steel and other construction materials to schools at the factories’ sites.
The company is also providing medical services to the families of its workers regularly.
Competition & Promotional Activities
According to Agrawal, the RMC Group faces competition against Jagadamba Enterprises for pipes and Hulas Steel and the Biratnagar-based Arati Steel for Galvanised sheets.
The group runs TVC (television commercials) as well as media advertisements in newspapers as a part of its promotional activity. Likewise, the group comes up frequently with scratch coupons, gift vouchers and other schemes for its customers. Targeting customers at the local level to advertise its products, the group airs advertisements through FM stations all across the country.
While Director Agrawal is taking care of the companies and factories, his father Shrawan Kumar Agrawal - also Chairperson of the group - is involved in politics and social sectors. Chairperson Agrawal was a former Constituent Assembly lawmaker representing the Madhesi Janadhikar Forum-Nepal. He is currently serving as Chairperson of the Marwari Sewa Samiti, an organization for social service to the Marwari community.
Palpa Cement at the offing
The RMC group has a project in Palpa to produce clinkers and cements in the pipeline. “Clinkers are largely being imported from India for cement production, and we are planning to produce it, and cement made from it, from Palpa,” informs Agrawal. The group is already in talks with the government for building the necessary infrastructure in the proposed factory sites.
AT A GLANCE
RMC Pvt Ltd was established on 1993. Prior to that, it was a firm to trade steels by importing from Japan, Korea and India.
Rajesh Agrawal left Rajesh Hardware Pvt Ltd to his partner on 1995 and he owned RMC Pvt Ltd. His partner is still doing the business on hardware. RMC is focusing its business on manufacturing.
Award and Recognition
RMC already has the ISO 9001: 2008 certificate and the company was recently conferred with ISO 14001: 2004 certificate for its environment management system. Also, it has been awarded NS mark by Nepal Bureau of Standards & Metrology (NBSM), a National Standards Body under Government of Nepal, Ministry of Industry, Commerce and Supplies.
Involvement of the RMC group:
1. Rajesh Metal Craft Pvt Ltd
Sister concern of the RMC Group, RMC Pvt Ltd manufactures and supplies MS Black Pipes, Galvanised Iron Pipes, Galvanised Plain and Corrugated Sheets, Tubular and Telescopic Steel Poles and Fabricated Steel Structural, among others.
2. RMC Cement Pvt Ltd
RMC Cement Pvt Ltd, sister concern of RMC group, produces RMC cement from its Simara-based factory.
3. H&B Development Bank
HNB Development Bank is a leading development bank of Nepal that has a “B” class license issued by the Nepal Rastra Bank. RMC group chairperson Shrawan Agrwawal is the chairman of the H & B Development Bank.
4. Prudential Insurance Co Ltd
Prudential Insurance Company was incorporated under the Companies Act on November 30, 2000. With the approval of Beema Samiti, it commenced operation on June 20, 2002. The Chairperson of RMC Group, Shrawan Agrawal, is in the Board of Directors of the Prudential Insurance Co Ltd.
5. Palpa Cement
This is the mine based that will to produce clinker and cement. The factory will come under operation soon.
Details of major products of the RMC group:
The company has a production of RMC Cement from its factory that has a capacity of 2.4 million bags a year. The company has installed the latest PLC controlled closed circuit technology to ensure high quality and strength in the cement along with the installation of latest technology for the pollution control. It has also established fully-equipped modern quality testing laboratory to test the raw materials and finished goods at all stages.
MS Black Pipes
RMC has been manufacturing and supplying MS Black Pipe through its Birgunj based factory. It has the production capacity of 30 thousand tons per annum.
Galvanised Iron Pipes
The RMC Metal Craft Pvt Ltd also manufactures galvanised iron pipes. These are made from steel or iron pipes coated in molten-zinc.
Color Coated Sheets
The RMC Pvt Ltd has begun manufacturing and supplying the color coated sheets from last two weeks and it has the production capacity of 18 thousand ton per annum.
The production capacity of CR sheet is 30 thousand ton per annum.