Unrest in Nepal forces Indian FMCG giants to halt or delay ops

Bengaluru | New Delhi: Indian fast-moving consumer goods (FMCG) companies have suspended their operations in Nepal in the wake of escalating civil unrest and violent youth-led protests across the Himalayan nation. Some of them have also paused their upcoming projects there.

Biscuit and bakery products maker Britannia Industries has indefinitely suspended all manufacturing operations at its Simara plant in Bara district of Nepal. "The safety of our people is of utmost importance, and we have temporarily halted all our operations to ensure the same," a spokesperson at the Bengaluru-based company said.

Set up in 2017, the Britannia unit has an annual capacity of 14,000 tonnes of biscuits and bakery items, catering primarily to the local population. It employs about 350 workers and is responsible for producing nearly 80% of Britannia's products sold in Nepal.

According to a report from brokerage Sharekhan, Britannia Nepal generates annual revenue of ₹170-180 crore.

The subsidiary in FY2024-25 made its first dividend transfer of ₹26.8 crore to the parent company, along with royalty payments of 6.9 crore, taking the total contribution to ₹33.7 crore in the year, as per Britannia's annual report.

Snacks maker Bikaji Foods International, which signed a strategic joint venture deal with Nepal's Chaudhary Group in July, expects the project to be delayed, chief operating officer Manoj Verma said, citing "the current unrest and disturbances" in the neighbouring country.

The equal joint venture between the two entities has been signed to facilitate manufacturing, trading and marketing and build a manufacturing facility in Nepal.

"Zero investments for Bikaji have been made thus far. The project (factory) was anyway expected to take 10-12 months for completion," he added.

Dabur, which has a subsidiary in Nepal, said it has asked employees in Kathmandu to work from home.

"We are closely monitoring the evolving situation in Nepal. Sales teams have also been advised to prioritise safety and adhere to local curfew directives," a company spokesperson said. Nepal contributes about 3% to Dabur's consolidated sales.

Other FMCG companies are closely monitoring the situation and are on high alert.

Close to a dozen Indian companies have operations in Nepal, spanning packaged goods and hospitality sectors. The closure of plants and disruption in supply chains are expected to be a major blow to local consumers while also triggering uncertainty within Nepal's food processing sector.

The shutdown of local supply markets amid the continuing unrest in Kathmandu and other cities is expected to strain businesses operating in the country.