ECONOMIC STATUS OF INDUSTRIAL PUBLIC ENTERPRISES IN NEPAL

Abstract

This study is based on three objectives —one general objective of evaluating the overall status of the industrial public enterprises in Nepal and two specific objectives: (a) to examine the contributions made by the industrial public enterprises to the national economy, and (b) to measure the financial performance of industrial public enterprises. Concerning the methodology, this study has used a descriptive research design to investigate the economic status of five industrial public enterprises over a ten-year period using secondary data. A convenience sampling method was used to select the sample from 44 public enterprises. Descriptive statistics such as percentages and means were used to fulfill the first objective, while financial ratio analysis was used for the second objective. The five enterprises studied are Dairy Development Corporation, Herbs Production and Processing Company Ltd., Hetauda Cement Industry Ltd., Nepal Ausadhi Ltd., and Udaypur Cement Industries Ltd. In regards to the conclusion of the general objective, the number of industrial public enterprises appears to grow during the study period, some of which are jointly owned by the government and private sector. However, regarding the first specific objective, the contribution of these enterprises to GDP and employment seems to decrease over the years. It turns out that there is a fluctuation in the contributions to income tax and VAT which amount to less than 1 percent of the total. Regarding the second objective, most enterprises seem to have net losses except for HPPCL, which has better profitability ratios. Likewise, it appears that DDC has better efficiency ratios. Other enterprises seem to have unsatisfactory financial performance. As for the challenges, pricing dilemmas, management issues, financial indiscipline, poor competition strategy, low investment in technology, and inefficient resource utilization seems to attribute to the poor performance of the enterprises. Thus, this study has highlighted the growth, composition, contributions, and performance of industrial public enterprises by addressing the sectoral and time gap.