Creating employment opportunities in remote Nepal

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Dipesh Khetan has been a Social Entrepreneur for the last 3 years. His company Natural Resin sources resin from the most remote forest areas of Nepal; some of which are accessible only by foot taking up to 6-8 hours of strenuous walks in mountainous areas.  The start up was selected by RockStart Impact, a Netherland based incubator company in Nepal  and attracted interest of foreign investors.

In our candid conversation with Dipesh, he shared his entrepreneurship journey, its ups and downs and future plans for his venture.

Please tell us about your product. What exactly is Resin? How is it used? Where is it used?

Resin is sap extracted from Pine trees. It is naturally given by the trees and can be extracted for 30-40 years from a single tree. This sap is then taken to our processing unit from which Gum Rosin and Turpentine oil is extracted which are raw materials to 100+ Industries like paper, paint, pharma, etc.

How did you get the idea of starting resin extraction business?

I did my MBA in Entrepreneurship from NMIMS in Mumbai. One of my batchmates from my MBA course was dealing with resin as a family business back in India and he pointed out that Nepal has very rich forest reserves. I studied the product and its business dynamics carefully and realized that it is a very impactful business in every aspect.  We employ local villagers around the forest area hence we create local employment reducing migration. We work on natural product/s and the process of extraction does not cause any damage to the tree hence, it is completely environment friendly and since we do 100 % export, our business improves  country’s Forex  ratio.

Tell us about your journey of becoming a Social Entrepreneur

During my MBA days I didn’t even think of Nepal as a viable place for starting a business as there was 18 hours of load shedding and scarce internet connectivity. But when I learnt about Resin and its potential I was very excited to explore it as a business. Immediately after my graduation, I came back to Nepal, took my car and drove across the country from east to west meeting locals and having conversations with various government departments. I had absolutely no knowledge or connection for this business. Now we are present in 6 districts working with over 50 communities employing 150 people for extraction and 50 full time staff. We plan to grow to 700 people by 2020. So it’s been a challenging but a fulfilling journey.

What are the challenges that you faced when you were starting out your business?

The very fact that I was new to this field and I had start from scratch there was lot of trial and error. The main challenge was that no one had enough data about the communities and the availability of the pine trees.

Getting the communities to work with us was our next big challenge. You have to build a relationship with these communities, these relations are trust based and can be developed only through conversations. We did not want to involve money as a motivator for them.

There is a lot of paper work involved with government. It’s not easy to get permissions to work in the forests. I am glad that it’s difficult or else there wouldn’t be any trees in the first case.

What social issue are you trying to solve?

While I took this car journey across Nepal that I mentioned earlier l visited lot of villages around the forest area and what shocked me most was that some of villages had only women. There were no men residing as all of them had traveled oversees to find work.  Nepal has a huge migration issue.

My company currently employees 150 workers, many of them are from different districts of Nepal but at each step of resin extraction we create income generation opportunities for locals. We send empty tins to the forest areas and since there are no roads, there is work like transportation work to and from the forest area, meals to be cooked for the workers, accommodation to be provided for the workers and once the tins are filled with resins it needs to be transported back from the forest areas to the road head.  These areas provide huge income opportunity for them.

According to our calculation, we give indirect income opportunity to 20 people when we employ 1 person to work for resins extraction, which is huge. The forest worker himself can earn up to Nrs 20,000 per month depending on how hard he works.  We also pay royalty per KG to the local community as per government norms .

So if we generate say Rs 100 around 60-70 is given back to the community. It’s a huge boost to the local economy.

What about competitors?

We have no issues on selling our product, there is enough market for it but we have competition in the forest area. Government is also involved in extracting resin and there are other private players. All the forest areas connected with roads are already taken so we work in the most remote forests.

What are your future plans?

We want to employ 700 people in the next 5 yrs. So we have plans for rapid expansions. Apart from that we want to diversify to other products  like ayurvedic medicines. There are upto 150 products that can be sourced from the forests. Currently we are working on exporting these ayurvedic medicines too.

How are you funded?

We have been bootstrapped for a long time but later we raised money from the banks, however, currently the market is not doing very well.  The interest rate was 8 % when we took our loan but now it’s raised to 12%. We are talking with few VC’s and other funders to payout the bank loan for our expansion plans.

What are your key needs apart from funds?

We need to recruit good people who can mobilize communities. I have been doing it myself but for aggressive expansion we need trust worthy people who can help us onboard more communities and people.