Started as a cottage industry, Classic Industries has grown by leaps and bounds over the years.

--BY NEWBIZ TEAM

Classic Industries Pvt Ltd has been producing bedding products for the past three decades. Established in 1990, the company is the leading producer of bedding products like mattress, cushions and comforters, cushions and pillows. Started as a cottage industry, Classic Industries has grown by leaps and bounds over the years.

The domestic market of bedding products is estimated to at around Rs 5 billion. Of them, around 50% is met through imports while the rest is supplied by domestic manufacturers. Classic Industries is the largest producer of bedding products in Nepal - both in terms of market share and production capacity, according to Bharat Kumar Shrestha, chairman and managing director of Classic Industries.

“About half of Nepali bedding products supplied to the market are manufactured by us,” he said, adding that the company’s annual sales is worth around Rs 900 million. Talking to New Business Age, Shrestha said there is immense space in the market for growth but entrepreneurs are hesitating because of the policy taken by the government. He said the government levies a 7.5% duty on the import of bedding products, while it was charging 15% duty on raw materials and as much as 40% on plastic-related raw materials. “This flawed policy has eroded the competitiveness of Nepali products in the domestic market,” he said.

“Most of the raw materials used by this industry have to be exported. They come from countries like India, China and Taiwan, among others. High import taxes increase our cost of production and erode our competitiveness in the market,” Shrestha said. According to Shrestha, India has been providing a subsidy of 50-60% on the import of plants and machinery. “Instead of providing subsidies, the government levies duty on such imports. We cannot compete with cheaper imported products this way,” shared Shrestha.

The price of Nepali and imported products is more or less the same. “Subsidy and tax incentives can make our products competitive in the market. The government should take the issue seriously,” he added. Classic Industries is providing direct employment to around 250 people. According to Shrestha, some 4,000 people are benefiting indirectly from his company. “We buy many things like packaging materials from local vendors. This way Classic Industries is supporting a lot of small businesses,” he said.

Talking about the availability of skilled workforce, Shrestha said he has worked hard to produce skilled workforce for the industry since 1990. “We have provided training to a lot of people. People, who learnt the art of mattress making with us, are now working successfully for different companies,” he said.   

Classic Industries has built a strong distribution network for the supply of its products to the market. “We have 30 distributors across the country and each of them has hundreds of dealers in their sales,” he said. Shrestha added that his products have been liked by consumers even though the company doesn’t spend much on marketing and promotion. “Our products come with a 15-year replacement guarantee. We can give such a long guarantee because we are confident in the quality of our products,” Shrestha said.

Classic Industries is the pioneer of mattress production in Nepal. “We started producing spring mattresses in 1990, the product was rare even in India. People used to say how we managed to produce such high quality products in Nepal,” he said. “I was happy when I got to know that we were matching the quality of Indian products despite our limited resources.”

He terms quality as the major strength of Classic Industries. “Also, we are capable of scaling up production as per the market demand. We are currently operating at 35% of our capacity,” he said, adding that Classic Industries delivered 100,000 units of mattresses for the Nepal Army during the COVID pandemic in just two months.

The company has plans to streamline its R & D activities in the coming days. “We have not been able to do as much research and development to expand our market presence due to various reasons. I think it is about time we started something on this front,” Shrestha said.

Shrestha sees a lot of opportunity for market expansion of bedding products. “Only around 10-15% of the population are using our products at present. Most of the Nepalis are using traditional mattresses made using unhygienic products and raw materials. We have been trying to replace such products. But because of the price factor, we have not been making much progress on this front,” he added.

Classic Industries has brought affordable mattresses costing as low as Rs 2,000-2,500 so that even low-income people can replace traditional mattresses. “This way we can tap the mass market,” he added.

Shrestha said the economic situation in the country has to be stable for businesses to flourish. He points out fluctuating bank rates as one of the major concerns for business people. “Credit was available at 6-6.25% last year. This year it is around 14%. It would be difficult to do business if rates fluctuate this much,” Shrestha said, requesting the government to level the playing field for all. “If the government wants to levy high tax on raw materials, it should do the same for the import of finished products,” he said, adding: “The government should adopt a policy of prioritising local products if they meet the prescribed quality standards.”