According to EPardafas, the largest cement company in Nepal with Chinese investment, Hongshi Cement Industry, has reached a point where it is “drowning due to internal disputes,” and Nepalese investors have left the board of directors after the industry’s economic situation deteriorated as a result of the “arbitrary decisions of Chinese investors.”
Nepalese investors have further stated that the cement industry’s economic situation is “extremely severe” and “may sink anytime,” according to the news source. According to the article, Hongshi Cement Company was founded with a USD 350 million investment. Sharda Group and other investors, in addition to Chinese investors, also owned 30% of the cement industry.
Sharda Group Chairman Shiv Ratan Sharda and fellow investor Bishwonath Goyal were the board directors of Hongshi. However, Nepalese investors left the board of directors as a crisis gripped the cement industry owing to the alleged arbitrary decisions of the Chinese investors.
The report quoted an investor as saying that Chinese investors, for some time now, have been selling cement at a low price to capture the Nepalese market. He stressed that the amount is yet to be raised in the market and it was difficult to pay salaries to the employees, as per the news report. Nepalese investors left the board of directors of Hongshi as the financial responsibility of the industry fell on them, EPardafas reported, adding that NMB Bank has given a loan of 6 billion to the cement industry while Rastriya Banijya Bank Prabhu Bank, Everest Bank, and Nepal SBI Bank have also given huge loans to it.
As the state of the business has gotten worse, banks have reportedly begun holding serious discussions, according to EPardafas. According to the report, Chinese investors have been supplying cement at lower prices to corner the Nepalese cement industry as part of a plan to drive out competition. However, the Chinese plan has made the Hongshi cement industry’s financial predicament worse. According to EPardafas, the Chinese-invested cement sector has not paid salaries to employees or truck drivers for six months, which has led to the company’s employees beginning a protest. According to the news source, there is also a concern that the cement sector, which involves Chinese investment, has not lived up to the promises made to the community when it was founded.