Nepal Aushadhi Limited Address: Babarmahal, Kathmandu Liason Office: Babarmahal, Kathmandu Telephone No
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Government of Nepal Ministry of Finance Singhdurbar, Kathmandu (Unofficial Translation) Annual Performance Review of Public Enterprise - 2018 Government of Nepal Ministry of Finance FOREWORD Public Enterprises are established in Nepal mainly for providing basic goods and services with ease access to the public at a fair price while maintaining a healthy competition in the delivery of such goods and services. They have been playing an important role in controlling the market monopoly, reducing artificial shortage, fair distribution of essential goods and service as well as expanding access to financial facilities. While reviewing their overall performance for the past five years, most of the financial and administrative indicators appear to be mixed. Although the overall income status of 37 Public Enterprises i.e., in operation is improving, the government has been bearing the administrative costs of some Public Enterprises through additional loan investment, as they were unable to earn even operating expenses. In particular, Public Enterprises have not been performing well enough as expected due to failure in keeping the operational expenses and management cost within certain limits, burgeoning unfunded liabilities, incapable to adopt the major principles of professionalism and market management skillfully, limited management autonomy, and a lack of effective accountability system. The role of Public Enterprises is significant in building welfare state and promoting the path towards socialism. They are noteworthy in realizing the highest wises of Nepalese people -"Prosperous Nepal, Happy Nepali"- adopted by the Government of Nepal. Therefore, the past reform initiatives have been observed as ineffective to address the problems of Public Enterprise management in order to increase its managerial and financial efficiency. Thus, it is necessary to initiate systematic and institutional reforms through formulating a new policy and legal instruments based on integrated management approach. Similarly, it is equally important to bring proper balance between administrative autonomy, control and accountability as well as restructuring them according to the federal system of government. Ministry of Finance has been publishing the report by reviewing performance status of Public Enterprises based on the statistics and information received from the Financial Comptroller General Office and the concerned Public Enterprises regarding their overall operation status. According to this, the "Annual Status Review of Public Enterprises– 2018" is being published by incorporating the overall aspects of operational status of Public Enterprises during the Fiscal Year 2016/17. Particularly, this publication incorporates the overall operational status, the analytical description on their financial and administrative aspects, key problems and challenges observed, and their agenda of reform. Finally, I believe that this review would be beneficial for everyone interested in the current situation of the Public Enterprises of Nepal. I would like to thank to all Public Enterprises for their support to provide necessary information, data and their statements as well as to the staffs involved in analyzing the data and preparing this review report. May, 2018 Dr. Yuba Raj Khatiwada Finance Minister Table of Contents Foreword Section 1 Review of Public Enterprise 1.1 Background 1 1.2 Formation and Management 2 1.3 Operational Status of Public Enterprises- Highlights 3 1.4 Ownership Structure 5 1.5 Contribution of Operating Income to Gross Domestic Production 5 1.6 Contribution to Revenue 6 1.7 Consolidated Balance Sheet 7 1.8 Market Capitalization 8 1.9 Current Status of Divested/Privatized Public Enterprises 9 Section 2 Sectoral Operation Status 2.1 Industrial Sector 11 2.2 Trading Sector 12 2.3 Service Sector 13 2.4 Social Sector 15 2.5 Public Utility Sector 16 2.6 Financial Sector 17 Section 3 Analysis of Financial Status 3.1 Total Investment Status of the Government 19 3.2 Operating Income 20 3.3 Administrative Expenses 21 3.4 Net Profit/Loss 22 3.5 Accumulate Profit/Loss Status 23 3.6 Dividend 23 3.7 Shareholders' Fund/Net Worth 24 3.8 Unfunded Liabilities 25 3.9 Human Resource Management 26 3.10 Audit Status 26 3.11 Five Highest Profit Earning Public Enterprises 28 3.12 Five Highest Loss Making Public Enterprises 30 Section 4 Major Problem, Challenge and Reform 4.1 Problem and Challenge 32 4.1.1 Structural Aspects 32 4.1.2 Institutional Aspect 33 4.1.3 Managerial Aspect 33 4.1.4 Commercial Aspects 33 4.1.5 Aspect of Fiscal Efficiency and Responsibility 34 4.2 Improvement Aspects 34 Section 5 Physical and Financial Progress Details of Public Enterprises 5.1 Industrial Sector Dairy Development Corporation 60 Herbs Production and Processing Company Ltd. 65 Hetauda Cement Industry Ltd. 70 Janakpur Cigarette Factory Ltd. 75 Nepal Aushadhi Ltd. 79 Udayapur Cement Industry Ltd. 84 Nepal Orind Magnesite Pvt. Ltd. 89 5.2 Trading Sector Agricultural Inputs Company Ltd. 93 National Seeds Company Ltd. 98 National Trading Ltd. 103 Nepal Food Corporation 108 Nepal Oil Corporation Ltd. 113 The Timber Corporation of Nepal Ltd. 118 5.3 Service Sector Industrial Districts Management Ltd. 122 National Construction Company Nepal Ltd. 126 Nepal Transit and Warehousing Company Ltd. 131 Nepal Eng. Consultancy Service Center Ltd. 135 Nepal Airlines Corporation 139 National Productivity and Economic Development Centre Ltd. 144 Civil Aviation Authority of Nepal 149 5.4 Social Sector Cultural Corporation 155 Gorkhapatra Corporation 160 Janak Education Materials Centre Ltd. 165 Nepal Television 169 Rastriya Aawas Company Ltd. 174 5.5 Public Utility Sector Nepal Water Supply Corporation 180 Nepal Electricity Authority 185 Nepal Doorsanchar Company Ltd. 190 Vidhyut Utpadan Company Ltd. 195 Rastriya Prasaran Grid Company Ltd. 200 5.6 Financial Sector Agricultural Development Bank Ltd. 205 Rastriya Beema Corporation 210 Rastriya Beema Company Ltd. 215 NIDC Development Bank Ltd. 220 Rastriya Banijya Bank Ltd. 225 Deposit and Credit Guarantee Corporation Ltd. 230 Nepal Stock Exchange Ltd. 236 Citizen Investment Trust 242 Jalvidhyut Lagani Tatha Bikas Company Ltd. 248 Nepal Bank Ltd. 253 Section 6 Profile of organization /Company owned by Nepal Government or Public Enterprises of Nepal Government or organizations operated in partial share investment of both 6.1 Share structure of organizations partially owned by Nepal Government or Public Enterprises owned by Nepal Government 6.1.1 Financial Sector Sana Kisan Bikash Bank Ltd. 258 National Co-operative Bank Ltd. 259 Nepal Grameen Bikas Bank Ltd. 260 6.1.2 Industrial Sector Biratnagar Jute Mills Ltd. 261 Morang Sugar Mills Ltd. 262 Seti Cigarette Factory Ltd. 263 Nepal Foundry Industry Ltd. 264 Nepal Tea Development Corporation Ltd. 265 Gorakhkali Rubber Udyog Ltd. 266 Nepal Metal Company Ltd. 267 Butwal Spinning Mill Ltd. 268 Raghupati Jute Mills Ltd. 269 6.1.3 Service Sector Nepal Railway Company Ltd. 270 Bishal Bazar Company Ltd. 271 Sajha Pasal Sewa (Co-operative) Limited 272 Sajha Yatayat 273 Salt Trading Corporation Ltd. 274 6.1.4 Public Utility Sector Butwal Power Company Ltd. 275 Himal Hydro and General Construction Ltd. 276 6.2 Share structure of organizations having share ownership of National 277 Cooperative Development Board Sajha Prakashan 278 Sajha Swasthya Sewa 279 Sajha Bhandar Ltd. 280 Section 7 Profile of government owned development committees involving on income- oriented Activities Review of development committees 281 Nepal Intermodel Transport Development Committee 282 Radio Broadcasting Service Development Committee 283 Town Development Fund 284 Taragaon Development Committee 285 Singhadurbar Baidhyakhana Development Commitee 286 Law Book Management Board 287 Trade and Export Promotion Centre 288 International Convention Centre Development Committee 289 Cotton Development Committee 290 Kalilmati Fruits and Vegetables Market Development Board 291 Cattle Feed Production Development Committee 292 Section 8 Profile of enterprises incorporated under special Act Employees' Provident Fund 293 Annex -1 Glossary Tables Table 1 Highlights on Operational Status of Public Enterprises 4 Table 2 Contribution of Public Enterprises in Revenue 6 Table 3 Consolidated Balance Sheet 8 Table 4 Market Capitalization Status of Listed Public Enterprises 9 Table 5 Financial Status of Privatized Public Enterprises 10 Table 6 Total Investment Status Over the last Five Years Period 20 Table 7 Operating Income Status Over the last Five Years Period 21 Table 8 Status of Administrative Expenses Over the last Five Years Period 22 Table 9 Net Profit/Loss Status Over the last Five Years Period 22 Table 10 Accumulated Profit/Loss Status Over the last Five Years Period 23 Table 11 Status of Dividend Received Over the last Five Years Period 24 Table 12 Status of Shareholders' Fund/ Net Worth Over the last Five Years Period 25 Table 13 Status of Unfunded Liabilities Over the last Five Years Period 25 Table 14 Status of Employment Over the last Five Years Period 26 Table 15 Audit Status 27 Table 16 Financial Status of the Highest Five Profit Earned Public Enterprises 29 Table 17 Financial Status of Five Highest Loss Making Public Enterprises 30 Table 18 Summary of Financial Efficiency of Government Owned Public 37 Enterprises Table 19 Fixed Assets and Liabilities of Government Owned Public Enterprises 39 till July 15, 2016 Table 20(a) Details of Government's Investment, Loan and Dividend Received from 41 Public Enterprises (As per PEs Record) Table 20(b)