KATHMANDU: Hongshi Cement, one of the largest cement manufacturers in Nepal, has reached a stage of drowning due to internal disputes, EPardafas reported.
Nepali investors reportedly left the company's board of directors after the economic situation of the company was in crisis due to arbitrary decisions of Chinese investors.
Hongshi Cement was started with an investment of $350 million. Sharda Group and others had a 30% stake in the company in addition to Chinese investors including Hongshi Holdings Group of China.
Sharda Group Chairman Shiv Ratan Sharda and fellow investor Bishwonath Goyal were the board directors of Hongshi.
An investor was quoted as saying that Chinese investors, for some time now, have been selling cement at a low price to capture the Nepali market. He informed that the amount was yet to be raised in the market and it was difficult to pay salaries to the employees, as per the news report.
Nepali investors left the board of directors of Hongshi as the financial responsibility of the industry fell on them, adding that NMB Bank has given a loan of Rs 6 billion to the company while Rastriya Banijya Bank, Prabhu Bank, Everest Bank, and Nepal SBI Bank have also provided huge loans to it.
Banks have started holding serious discussions as the condition of the company has worsened, said the report.
Chinese investors have been selling cement at cheaper rates to capture the Nepali cement market, the report said, adding that it is part of a strategy to remove other companies from the market. However, the Chinese strategy has weakened the financial situation of the Hongshi cement industry.
Meanwhile, the company's employees have started protesting since they have not received salaries for six months.
There is also a complaint that the Chinese-invested cement industry has not fulfilled its commitment made to locals at the time of its establishment.
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Published Date: January 23, 2023, 12:00 am
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