Indian FMCG Companies Closely Monitoring Political Developments in Nepal Amid Turmoil

Indian FMCG companies are monitoring the political situation in Nepal closely. These companies, including Dabur, Britannia, Marico, Patanjali, ITC, and Reliance Consumer, have a strong presence in the country. Many of them operate through local distributors or partnerships. Some, like Dabur and ITC through Surya Nepal, have manufacturing operations there.

Reliance Consumer collaborates with Chaudhary Group for local production and distribution. Chaudhary Group is Nepal's largest multinational conglomerate. It recently formed a joint venture with Indian food company Bikaji Foods. This partnership aims to strengthen their market presence in Nepal.

Impact of Political Unrest on Business

The political unrest in Nepal has led Indian FMCG companies to advise their employees to stay cautious. An industry executive, who chose to remain anonymous, mentioned that these companies are keeping a close eye on the developments. The safety of their employees is a top priority amid the ongoing turmoil.

Nepal's Prime Minister K P Sharma Oli resigned after protesters stormed his office. They demanded his resignation following the deaths of at least 19 people during police action at protests. The unrest also saw fires set at Parliament, Singha Durbar premises, Supreme Court, political party offices, and homes of senior leaders.

Comparisons with Past Events

Indian FMCG companies faced a similar situation in Bangladesh about a year ago. Student unrest led to the ousting of the Sheikh Hasina government. Companies like Emami reported business impacts during that period. Nuvama Institutional Equities Executive Director Research Abneesh Roy noted that while Marico did not see major long-term effects, Emami experienced some impact.

Varun Beverages' PepsiCo bottler business in Nepal contributes 3% to its consolidated revenue. Recently, Campa also entered the Nepal market. Roy highlighted that most listed Indian consumer staples companies operate in Nepal through Indian entities. This could result in a slight overhang for many names.

Almost all major FMCG brands like Dabur, ITC, Marico, and HUL have a presence in Nepal. The ongoing political situation may affect their operations and market strategies in the region.

With inputs from PTI