Dev Bajpai, chairman of Unilever Nepal Limited, a multinational company operating in Nepal, has highlighted that Nepal’s regressive tax policies and expenditure reduction measures are eroding investor confidence in the country.
Unilever Nepal Limited, a prominent manufacturing company in Nepal owned 80% by Hindustan Unilever, specializes in beauty, personal care, and household products.
In the company's annual report, Bajpai criticized the "inverted duty structure," a system that imposes higher customs duties on raw materials than on imported finished goods, calling it a regressive taxation system.
“We sincerely request the Government of Nepal to introduce robust policies against the inverted duty structure and implement supportive customs rates for local businesses,” Bajpai stated. He argued that the current taxation system is hampering the growth of Nepal’s local economy. He also criticized the policy of forcefully collecting revenue, saying it adds an undue burden on genuine businesses.
In addition to the inverted duty structure, Bajpai identified other challenges, such as Nepal’s import-focused policies, trade barriers, advertising restrictions, capital market limitations, non-investment-friendly regulations, and intellectual property policies. He noted that Unilever Nepal is collaborating with the government to address these issues.
The manufacturing sector’s contribution to Nepal's economy has been in long-term decline, according to Unilever Nepal. Bajpai emphasized the need for a targeted strategy to revive the manufacturing industry and bridge the gap between government policies and sector-specific performance.
Decline in Business Performance
Unilever Nepal Limited, known for offering the highest dividend per share among publicly listed companies, reported a decline in turnover for the last fiscal year. According to the company’s 2023/24 annual report, turnover dropped by 2.8%.
In FY 2023/24, the company’s annual revenue exceeded NPR 8.24 billion, down from over NPR 8.48 billion in FY 2022/23. The company attributed this decline to reduced demand, driven by factors such as price hike, shifting consumer preferences, limited credit availability, and lower consumer income. “Our performance did not meet internal expectations,” Bajpai said, “But we are actively working to regain consumer trust.”
Bajpai expressed optimism that remittances, government spending on infrastructure, and public welfare programs would stimulate consumption. In anticipation, Unilever Nepal has increased brand promotion spending to strengthen its market presence.
Despite the decrease in turnover, Unilever Nepal reported higher profits last year, attributing this growth to product diversification, quality-aligned price adjustments, localization, and effective pricing of household and skincare products.
In FY 2022/23, the company posted a net profit exceeding Rs 1.83 billion, marking an increase of over 6.5%. Unilever Nepal reaffirmed its commitment to maintaining its reputation for distributing the highest dividends per share in Nepal’s stock market.
Unclaimed Dividends
Speaking at the company’s 31st Annual General Meeting on Monday, Chairman Bajpai reiterated Unilever Nepal’s leadership in distributing the highest dividends among listed companies and vowed to uphold this practice.
At the meeting, shareholders approved a cash dividend of Rs 1,714 per share from FY 2023/24 profits. Bajpai pointed out that due to consistently high dividends in recent years, some shareholders have yet to claim their full dividends. He urged shareholders to promptly demat their shares to protect their dividends, as unclaimed dividends are transferred to the Investor Protection Fund after five years. As of July 15, Rs 30.52 million in old dividends remained unclaimed.
Unilever Nepal’s dividend distributions have seen consistent increases over recent years. From FY 2021/22 profits, the company distributed a cash dividend of Rs 1,215 per share, with the lowest dividend of Rs 100 per share issued from FY 2019/20 profits.
Although Unilever Nepal continues to set a high standard in dividend distribution, shareholders at the AGM requested that the company consider issuing bonus shares along with cash dividends. Bajpai responded, stating that the focus on cash dividends reflects the company’s commitment to safeguarding the interests of ordinary investors.
A shareholder also requested that dividends approved on the eve of Tihar be deposited in shareholders’ accounts the next day.