Chitawon Milk shuts production indefinitely

CHITWAN, Aug 26:

Chitawon Milk, the largest powdered milk producer in the country, has stopped production indefinitely.

Pasting a notice at the factory premises last week, the Chitwan-based dairy producer said it was not a position to continue production any more. It has sent its workers on unpaid leave of four months.

"Chitawon Milk will remain closed until further notice," reads the notice.

Chitawon Milk had started operation in 2010. It has capacity to produce 15 tons of milk every day by processing 150,000 liters of fresh milk.

Stakeholders say the company had to shut operation as it was failing to compete with imported powdered milk brands which are comparatively cheaper due to low customs duty.

Uday Raj Pandit, chief of Chitawon Milk, said in the notice that the company was unable to inject further capital. "We were left with no option but to shut our plant indefinitely," he said in the notice.

Chitawon Milk is jointly promoted by state-owned Dairy Development Corporation (DDC) and Chitwan Co-E. DDC owns 11 percent shares in the company, while the remaining shares are held by Chitwan Co-E - the promoter of Manakamana Darshan (P) Ltd which operates cable car service to Manakamana Temple in Gorkha.

Both DDC and Nepal Dairy Development Board (NDDB) had tried to buy stakes in the company. But it didn't materialize.

"Both DDC and NDDB had tried to buy majority shares in the company to keep it running," Pandit had told a press meet few days ago. "We won't have any option but to dissolve the company if we do not get fresh investments," he had said.

Meanwhile, employees of Chitawon Milk have denied staying on unpaid leave for such a long time. "We cannot stay in unpaid leave for such a long period. If the company is shutting down, it should pay us compensation equivalent to our salary of six months as per the Labor Act," Bishwaraj Poudel, chairman of Chitawon Milk unit of All Nepal Industrial Workers Association, said.

Management of Chitawon Milk, however, had proposed to reduce workforce by paying compensation equivalent to salary of two months.

The company has 127 employees at present.

Source: republica