From a single grocery store, today Ravi group runs a host of highly successful businesses in multiple areas of industry, trading and entertainment.
--BY OMPRAKASH KHANAL
Rabindra Kumar Baranwal
Chairman, Ravi Group of Companies
The business journey that started from a small grocery shop at Ghantaghar, Birgunj has come along a long way to become the Ravi Group of Companies with its leader facing a lot of ups and down over the course of three decades. The experiences have helped this group to emerge as a strong business house in the country. It was in 1986 when Rabindra Kumar Baranwal entered the family grocery business hoping to diversify it. Under his chairmanship, Ravi Group of Companies has been active in introducing new industrial technologies for commercial success. Particularly, the group has been utilising its capacities in packaging and printing industries.
Today Ravi Group of Companies runs four industries, two petrol pumps and one trading company. Similarly, a cinema company is also under the group’s umbrella. Baranwal says that he learned new lessons in doing business with each challenge he faced. “It is the patience to face the challenges that has led me to the place where I am today. It is obvious to have ups and downs while doing business,” he mentions. “To achieve success, it is important to face challenges boldly and not to avoid them,” he states. Shreeram Packaging, Printopack Industries, Print Paper Cup Industries, HB Industries, Petro Oil Store, Baranwal Oil Store, Ravi Intercontinental and Maa Radhika International Movies are the industrial and business entities of the group.
Baranwal’s Business Journey
Unsatisfied with retail trading, Barnawal started the wholesale business immediately after he joined the family business grocery shop in 1986. He went ahead with the wholesale trading of items including biscuits, confectionaries, dalmut, soap and petromax bulbs. Barnawal who stepped into the business sector with an ambition to do something new was not enmeshed by the small size of the trading business as he was gradually attracted towards big ventures. This ambition laid the foundation and structure of the business house known today as the Ravi Group of Companies.
Journey to Industrial Sector and Obstacles
“The zeal to start something big was already there. But it was difficult to move ahead all at once due to economic constraints,” Baranwal says, adding, “I continuously searched for potential areas to start big businesses and made plans for investments.”
Handing over the grocery retail business to his brother, Baranwal started importing spices from India in 1990. Meanwhile, the economic activities in Birgunj increased drastically due to the 14-month embargo imposed by India in1989. It was the time when Birjung observed a boom in business transactions as the import of goods from India and from other customs points of the country except for Birgunj and Biratnagar were blocked. Birgunj was considered comfortable and an easily accessible place for trading especially for businessmen of the western region of Nepal even after the economic embargo was lifted.
In the meantime, a businessman from Bhairahawa proposed a business partnership in the biscuit industry. “This was my first step into the industrial sector,” he recalls. Babu Biscuit and Confectionery was established in Adarshanagar, Birgunj with Baranwal’s 50 percent stake. However, the partnership did not last for more than five years as his business partner wanted Barnawal to either have a 100 percent stake or to sell his all shares in the industry. Barnawal’s ambition to run a successful industry, expanding the market of biscuits and the experience he gained during the partnership venture raised the level of his enthusiasm. Thus, Baranwal acquired all stakes and began to operate the industry on his own. However, the business which was based on older technology was not able to make a profit as expected because it lagged behind industries that were using new technologies.
After two years, he opened another biscuit factory named Babu Biscuit Product at Simara,Bara with the investment of Rs five million in order to stay put in the market competition. In a short period of time, the industry was able to produce 32 different brands of biscuits. But it became the victim of unhealthy competition and labour disputes within one and half years. The plant resumed its commercial production after an agreement with labour representatives was reached to end the two-month strike.
Maoist Conflict and Impact
The Maoist insurgency which started from 1996 largely contributed to the downturn in the Nepali biscuit industry. Barnawal mentions that the market went down by half during the time as the government restricted producers of food items from taking their products to insurgency affected hilly districts and other remote areas across the country. The government put strict restrictions on the sale of biscuits, noodles, dalmoth and snacks stating that the Maoist rebels who were waging a war against the state mostly consumed such items in the areas. Meanwhile, the cut-throat competition and the sharply increasing number of consumer schemes in the noodles market also displaced the biscuit market which was already constrained due to Terai and city oriented sales. “Almost four dozen biscuit companies in Bara and Parsa were closed at that time and Baba Biscuit was among them.”
Beginning of Hope
After the closure of the biscuit industry in 2001, Baranwal searched for a new industry for a year. One of his well-wishers suggested stepping into the printing and packaging business. Baranwal then started searching for a similar industry in Nepal and India. After studying and evaluating the market prospects for some time, Barnawal then established the Shree Ram Packaging Industry with an investment of Rs 25 million which was earlier estimated at Rs five million. Opened in 2002, the plant started producing mono cartons needed for packaging of different types of products.
Baranwal is credited for introducing and commercialising the new concept of colourful packaging cartons for edible oil and ghee. He supplied different types of colourful cartons to various ghee and edible oil industries of Birjung. The new business, however, was not an easy venture for Baranwal in the early days. The packaging industry in its first year registered a loss of Rs 2.8 million forcing him to sell his personal vehicle to add investment to make it sustainable. Though he faced a severe scarcity of money, hard work and sincere practice paid off within two years.
After six years of starting the carton industry, Baranwal established the Printopack Industries at Adarsanagar, Birgunj investing Rs 40 million in 2008/09. The packaging plant has received investment totaling over Rs 300 million to date. The company has been continuously updating the manufacturing technology so as to manufacture better products which is the main reason for the increasing investment. Currently, the industry can print 50,000 sheets of paper per day. It produces covers for notebooks, mono boxes and non woven bags used as packaging for rice and lentils.
This year, Print Paper Cup Industries in Birgunj with an investment of Rs 40 million has been added to the portfolio of the Ravi Group and Companies which produces paper cups. According to Baranwal, it is the first fully automated packaging plant in Nepal that is running at full capacity. He claims that the industry uses edible paper and ink to manufacture paper cups and thus the products are not harmful to human health.
The group is planning to establish a duplex board industry investing Rs One billion. Similarly, it has also planned to double the capacity of Petro Pack Industries by adding a cutting machine with modern technology.
Likewise, the group is preparing to start a well-equipped modern petrol pump at Simara. According to Baranwal, the petrol pump with an estimated investment of Rs 30 million is currently under construction and will start operating within the next six months. The group’s first petrol station - Baranwal Oil Store - has been operating in Chandranigahapur, Rautahat.
Ravi Group and Companies employs 250 people altogether. Its HR strategy is focused on increasing the productivity of staff by providing them a handsome level of salary according to their job responsibilities along with various incentives such as residence facilities, transportation, communication and allowances.
The group has been deploying an effective strategy to provide quality products to its clients. “It is important to provide goods and services to clients in a timely manner in order to move ahead. Equally important is to maintain the quality as well as the affordability of products,” Baranwal stresses.
Problems to Overcome
Baranwal states that despite the strong market potential, it is becoming harder to compete with Indian products due to government policies. He says that 75 percent of the mono carton market has been occupied by Indian products. According to him, a customs duty of up to 28 percent is levied on the import of duplex (paper), ink and glue that are the raw materials used to manufacture mono carton.
However, domestic pharmaceutical companies are required to pay just one percent in customs duty to import readymade mono cartons. “48 pharmaceutical companies of Nepal have been importing mono cartons worth billions of rupees at present,” says Baranwal, adding, “If the government provides a customs charges waiver on the import of raw materials, domestic industries will have good market opportunities to sell their products.” The current arrangement for customs valuation is also not pragmatic, according to Barnawal. “The customs valuation for the paper which is used as raw material is Rs 80 to 96 per kg while it is Rs 72 per kg for readymade mono cartons,” he says.
The group’s new manufacturing unit Print Paper Cup Industries is also not weathered from the unpragmatic arrangement in customs valuation. The customs valuation of readymade paper cups imported from India is Rs 72 per kg while it is Rs 128 for papers that are used as raw material to manufacture paper cups in Nepal. “It increases the cost of production as customs valuation on import of readymade products is significantly lower than raw materials,” he says, adding, “It is also due to the unchecked entry of smuggled foreign goods in the country that has been affecting the market.” He cites the market of plastic cups as an example which has become unstable due to the products that are being smuggled into the country despite the fact that the government has prohibited the import of plastic cups. “Also, the prolonged political instability and frequently occurring strikes has also made it difficult to import raw materials and increased the transportation costs of producers,” he explains.
Baranwal says that that the printing and packaging market will increase automatically with the expansion of industries in the country. “It is possible only when Nepal is politically stable,” he opines “There is no doubt that the market will grow with the improvement in the political scenario, electricity supply and transportation. Nevertheless, the government needs to take a proactive approach in the improvement drive,” he adds.
The group’s chairman Baranwal has been the president of Birgunj Barnawal Samaj since 2005. Under his leadership, the organisation has been operating an inn which is located at Adarshanagar, Birgunj. Barnawal alone has contributed 40 percent for the construction and operation of the inn. Similarly, he is constructing a guest house in the memory of his late father Surendra Prasad with an investment of Rs 10.5 million. Chairman Baranwal who allocates 10 percent of his income to social activities is associated with different social organisations. Currently, he is also serving as the treasurer of Birgunj Chamber of Commerce and Industries (BiCCI).
• Production of packaging and printing items. Trading.
• Packaging and printing industries poses strong business potential with the increasing manufacturing activities. Growing activities in trading.
• Unpragmatic government policies in import of raw materials that has caused unhealthy competition with Indian products.