How Nepal’s richest man lost $300 million in one month
With hindrances in supply chain and inability to sell commodities, Nepal’s Binod Chaudhary lost $300 million in a span of a month.
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A day late is a dollar short. And for businesses maneuvering in the coronavirus-stricken economy, the initially-ordered weeks of closures are now infiltrating month-long margins and earnings slumps are just as exponential.
Billionaire businessmen are no different. Their businesses are also prone to financial trends or global health emergencies – like the new virus that attaches itself to healthy cells in respiratory organs causing an illness which still does not have any clinically proven vaccine.
Binod Chaudhary, the sole billionaire in Nepal, has experienced a significant dent in his fortune as economies around the world inches closer to another recession.
Out of the 2,095 billionaires in the world, more than half (51%) are now poorer than they were last year, according to Forbes’ 2020 Billionaires List.
In early March, the 64-year-old Chaudhary’s net worth was $1.7 billion, according to estimates from Forbes. By April, his net worth decreased to $1.4 billion.
With new investments in energy and education sectors, Binod Chaudhary’s net worth was in a growth trajectory. But that was before the covid-19 pandemic shook the foundations of almost all industries.
To prevent a deadly outbreak of covid-19, the government of Nepal enforced a country-wide lockdown on March 25. Just two days prior, the second case of the virus was found, after confirming the country’s first case in January.
Chaudary owns CG Corp Global, a conglomerate with more than 40 subsidiary companies. Its cash cow CG Foods, makers of Wai Wai, and CG Beverage have been hit hard by the pandemic.
CG manufactures 40,000 tonnes of packaged noodles in an average year, or 2,100 packets per minute. The company has three manufacturing facilities to make the noodles in Kathmandu, Nawalparasi and Bardiya.
This might invite some difficulty in daily life and affect our regular routine,” Nepal Prime Minister KP Oli said while announcing the lockdown order in March. “But to defeat potential infections, we don’t have any other option.
The operations in CG’s manufacturing plants have slowed down considerably. The possibility of an extension of the lockdown is almost inevitable.
Although international data firm Nielsen suggests demand for processed packaged and “comfort” food is rising as people are staying at home more, many are opting for healthier or cheaper in-home options.
The Retailers Association of India has asked the Indian government for assistance as some stores have reported over 80% reduction in sales. CG Group also has factories in India, Serbia and Bangladesh.
There has been no indication if any such financial stimulus to Nepalese businesses are in the pipeline. However, the government is acting on borrowing more debt from the international agencies. Chaudhary, a member of parliament with Congress, and other businessmen are in the waiting game right now.
With one recovered, Nepal currently has eight active coronavirus cases.
Amidst growing concerns, the government suspended international flights in a year when the nation was originally preparing to welcome thousands of tourists.
Alongside subsiding plans of “Visit Nepal 2020,” CG Group’s tourism arm is also having to face challenges.
With a non-existing international and intra-country tourist population, hotels and resorts look somewhat of a ghost town. CG Hospitality has about 130 hotels and resorts in its portfolio.
Nepal’s national flag flies at Jumeirah Lakes Towers, the only hotel in UAE to do so.
“With the launch of this major hotel operation, CG Hospitality’s distinguishing luxury and ethical benchmarks have been infused into the UAE with the iconic hotel setting new benchmarks in ‘Business Luxury’ in the region’s hospitality sect,” Chaudhary had said in a statement.
Now, the tourism industry, which accounts for 10% of the world’s GDP, could lose about 50 million jobs as an effect of the covid-19 pandemic, according to the World Travel and Tourism Council.
The full magnitude of the impact covid-19 will have on the world economy remains to be seen.
Among numerous other hotels, CG Hospitality operates the locally-popular Summit Hotel in Lalitpur and a Radisson-brand hotel in New York’s JFK Airport. The company also operates a travel management company, which offers safari tours, and works in partnership with Mumbai-based luxury hotel chain Taj Group.
Chaudhary also spearheaded and opened a five-star hotel in Dubai earlier this year. CG Hospitality owns 50% of Jumeirah Lakes Towers, a 200-room hotel with a rooftop pool bar overlooking Dubai’s dozens of skyscraper