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How Much Do Investors Depend On Shares Of Four Government-Invested Companies?

How Much Do Investors Depend On Shares Of Four Government-Invested Companies?

How Much Do Investors Depend On Shares Of Four Government-Invested Companies?

The Nepal Stock Exchange (NEPSE), the secondary market for securities, is witnessing enthusiastic participation of general investors in the business of some government-invested companies. Some of these companies are also the long-term choice of institutional investors.

In corporate governance, state-owned companies have been able to deliver attractive returns to investors every year.

Therefore, as the share market index Nepse has been rising in recent days, there has been significant turnover of government-invested companies in the secondary market trading of securities and their share price has been increasing well.

Thus, here are four of the government investment companies that have given priority to both short-term and long-term investment of securities investors - Nepal Telecom, Salt Trading Corporation, Vishal Bazar Company and Nepal Reinsurance Company.



Nepal Telecom
After 28 years of establishment, the company was transformed into 'Nepal Telecom Company' on 22 Magh 2060 BS and re-branded as 'Nepal Telecom' from Baisakh 2061 BS.

Nepal Telecom, a 91.49 percent state-owned telecom service provider, has 4.5 percent investment in telecom employees. Similarly, citizen investment funds have 0.03% and general investors have 3.98%. The paid-up capital of the telco, which was opened for sale to the public in Falfun 2064, is Rs 15 billion.

Nepal Telecom had earned a net profit of Rs 8.55 billion last fiscal year. This is a decrease of 12.30 percent or Rs. 1.19 billion from Rs. 9.75 billion in 2075/76.

Telecom's profit has declined as sales revenue has been affected due to various facilities ranging from data to voice being provided to the users free of cost during the Covid. The company had provided services worth more than Rs 810 million free of cost to customers through calls, data and bonuses to facilitate communication during the Covid epidemic.



Salt Trading Corporation Limited
Shares of Salt Trading, which has a monopoly on salt trading in Nepal, are now considered among the 'blue chips' in the stock market. Despite the low supply, its share price has risen by more than Rs 7,000 per share in the last one year and is now above Rs 8,000.

The Salt Trading Company (STC), which trades in paper, sugar, gas, fertilizer and food grains, is owned by about 22 percent of the public and the remaining 78 percent by the government. Less than 1.5 million units are listed for trading in the secondary market.

Salt Trading Corporation Limited was established on 26 Bhadra 2020 with the objective of supplying and managing salt to the people of the country due to lack of salt in the country and transportation inconvenience at that time.

This institute was established by involving the then government of His Majesty the King, government owned institutions and the main traders involved in the salt trade at that time.

Public institutions such as Gorakhkali Rubber Industry, Food Industry, Nepal Vegetable Ghee Industry, Himalayan Food and Packing Industry, National Finance, Sagarmatha Insurance were also established with the investment of Salt Trading.

Salt Trading, which currently trades in salt, sugar, chemical fertilizers and LPG fertilizers, had made a profit of Rs. 731.4 million in the fiscal year 2075/76 with a turnover . Its paid up capital is Rs. 153.5 million.



Vishal bazar company
In the supermarket concept, the paid-up capital of the modern and organized shopping complex, which has been opened for the first time in Nepal, is Rs. 50 million. However, when the land market, which has been in dispute over land compensation for years, is re-evaluated, its paid-up capital will reach around Rs 4 billion.

At present, its capital structure is 15 percent owned by Food Corporation, 14 percent by National Trading Limited and 5 percent by Agricultural Ingredients Company Limited. The rest is in the name of traders and the general public.

The current 396 shutters in the giant market are its main source of income. However, in terms of assets, the company is worth billions. The land of Shukrapath (New Road) of Kathmandu, which has a huge market, is its main property.

A total of 12 Ropani ( local measurement unit) 4 Ana( land measurement unit), including the hall of the then Janasewa Cinema Hall, has been established as per the field book download on Shrawan 30 2042 . The Commission for Investigation of Abuse of Authority and the Ministry of Home Affairs have been claiming that the government has not received compensation for 8 ropanis and 4 annas of land and any other kind of benefit or profit.

According to the claim, the Supreme Court had ordered to maintain the shares in the name of the government after evaluating the compensated land on 14 Bhadra 2064. But that decision has not yet been implemented. For the same reason, no general meeting of the company has been held in the last eight fiscal years (2069/70).

When the same decision of the Supreme Court is implemented, the capital of this company will reach four billion. The company's earnings per share is expected to decline sharply. Despite this, its share price in the secondary market is now around Rs 2900 per share.

After the company was registered in 2026 BS as per the Companies Act 2021 BS, the then Ministry of Industry and Commerce had published a notice in the Gazette and Gorkhapatra on 19  Baisakh 2026 BS and acquired 12 Ropanis, 13 Annas ( land measurement unit) and 1 paisa of land for the establishment of the market.


The Council of Ministers decided to convert the Emergency Insurance Fund established on 31st Asoj , 2060 BS into a company in Nepal Reinsurance. Exactly three months later, the Nepal Reinsurance Company registered in the Registrar of Companies is the first and only reinsurance company in Nepal.

The company has a paid up and issued capital of Rs 10 billion and an authorized capital of Rs 15 billion. It is owned by 16 percent of the general public, 44.039% by the Government of Nepal and 39.961% by life and non-life insurance companies and institutional investors.

Even though the shares of this company, which was not very attractive even after the issuance of the IPO, were listed in the publicly issued Nepse, the price has skyrocketed contrary to the general estimate. Its turnover in the secondary market is over Rs 1,500 per quintal.




Of these four companies, the main feature of Nepal Telecom and Salt Trading is the fixed assets, which have provided a kind of security to the shareholders. Based on the current market value of these companies, according to the prevailing value of the real estate owned by them, they have assets worth billions of rupees.

Both the companies will start constructing commercial buildings of different natures on their lands in the main business centers of the urban areas focusing on the management of their fixed assets. Their income will be diversified and their income will also increase significantly.
Companies of a nature like Nepal's Nepal Telecom and Nepal Reinsurance Company already exist in India. In India, telecom company Bharti Airtel and reinsurance company General Insurance Corporation operate.

Recent financial indicators of these Indian companies have shown that their turnover and revenue have also been affected by Covid-19. Due to the impact of Covid, earnings per share (EPS) of both the companies in Nepal remained positive while the Indian companies of both these types became negative.



Other financial indicators also suggest that Nepal Telecom, the only telecommunications company listed in Nepal's second market, will be able to pay dividends to investors on a regular basis and new business income areas will be added to its business in the future as the telecom sector grows exponentially. Therefore, with efficient management, investors do not seem to have to worry much about reducing the company's net profit.

At the same time, the company has billions of dollars worth of assets, and by making proper use of its assets, it can increase its income, giving investors a fair return in the long run.

In the case of Nepal Reinsurance Company, it will be possible to earn low fee reinsurance fee by expanding services (trade) abroad as well as reinsurance business in the country and will be able to give fair return to the investors by maintaining its profit in the future as well.

However, the company is not multi-faceted in expanding its business but is limited to domestic trade. In the current situation where the interest rate of the company's other income (interest income) is also declining, investors need to be careful and focus on their investment.

Even companies like Salt Trading and Vishalbazar, if they do not add new dimensions to their business in a timely manner, will face a big challenge to maintain the current profit trend and give investors the same dividends as in the past.
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