New Delhi, Oct. 31 (PTI): Hindustan Lever Ltd (HLL) today said the operations of its Nepal subsidiary had come under pressure and it was undertaking a restructuring exercise, including a voluntary retirement scheme to make the unit viable.
“Viability of doing business in Nepal had been severely impacted in recent times due to factors beyond our control,” HLL spokesperson said here.
Asked to comment on reports that the company was considering closing the subsidiary, the company spokesperson said that there was no decision to “shut down” Nepal unit and therefore there was no question of a “mandate” to proceed in this direction.
He said in order to retain competitiveness, Nepal Lever needs to restructure its investments in plant and machinery as also manpower numbers to reflect current business realities and added that in view of this a VRS had been worked out.
“This is the only way Nepal Lever can remain viable. In view of this, a VRS had been worked out in consultation with the unions, to streamline the operations of the company and make it viable under the prevailing conditions,” he said.
HLL sources some of its products like Lux and OK from Nepal unit which employs about 200 people at its factory in Hituada. Nepal Lever’s 60 per cent of turnover was by way of exports to India while local sales comprised rest 40 per cent.
Nepal Lever’s total turnover in August this year stood at Rs 123.6 crore.
Listing out difficulties to operate in Nepal, he said a large part of the raw material inputs used in the manufacture of personal products, soaps and detergents are sourced from India and subjected to local levies.
While such inputs used in manufacture of finished products qualify for credits while no such credit is available when manufacture takes place in Nepal, increasing the cost of goods produced there.
Apart from this, countervailing duty on MRP (maximum retail price) basis had been introduced in last year's budget levied on range of products exported by Nepal.