KATHMANDU: Surya Nepal Pvt. Ltd., the multinational tobacco company that has long dominated Nepal’s cigarette market, has posted its highest-ever revenue, generating Rs 32.356 billion in fiscal year 2024/25 (FY 2081/82), driven primarily by strong sales of cigarettes and other tobacco products.
Reflecting the company’s dominant market position and robust financial profile, CARE Ratings Nepal has reaffirmed Surya Nepal’s short-term credit rating at ‘CARE-NP A1+’, the highest rating for short-term borrowing. The rating indicates the company’s exceptionally strong capacity to meet its financial obligations and a very low level of credit risk. The rating was assigned for a Rs 5.75 billion short-term bank borrowing facility.
Tobacco business drives over 90 percent of revenue
More than 90 percent of Surya Nepal’s revenue continues to come from its tobacco business. Active in Nepal’s cigarette industry for over four decades, the company has established a dominant presence across both premium and economy segments through an extensive portfolio of brands.
The company’s financial performance has remained on a steady upward trajectory over the past five years. Revenue stood at Rs 28.99 billion in 2022/23, followed by Rs 28.818 billion in 2023/24. In 2024/25, revenue surged by more than 12 percent year-on-year to reach a record Rs 32.356 billion.
Popular brands including Surya Legend, Surya 24 Carat, Shikhar Filter Kings, Khukuri Filter, Pilot, and Chautari continue to command a significant share of Nepal’s cigarette market. Supported by a nationwide network of more than 150 direct distributors and a modern manufacturing facility, the company has built one of the country’s strongest distribution systems.
Although Surya Nepal also operates businesses in incense sticks and packaged food products, those segments contribute only a small portion of its overall revenue.
Debt-free balance sheet and strong liquidity
One of Surya Nepal’s greatest financial strengths is its virtually debt-free balance sheet. The company has no long-term bank borrowings, relying almost entirely on internal capital generation and retained earnings.
As of mid-July 2025, the company’s gearing ratio stood at just 0.01 times, highlighting its exceptionally conservative capital structure.
Surya Nepal held more than Rs 6 billion in liquid assets, including Rs 4.97 billion in bank deposits, Rs 1 billion invested in treasury bills, and approximately Rs 210 million in cash and cash equivalents.
Its interest coverage ratio of around 370 times further underscores its extraordinary financial strength and ability to comfortably meet debt servicing obligations.
Ownership and leadership
Surya Nepal is 61 percent owned by India’s ITC Limited, while the remaining 39 percent is held by Nepali institutional and individual investors.
As one of the world’s leading tobacco manufacturers, ITC provides Surya Nepal with technical expertise, research capabilities, and operational know-how. The company is chaired by Sanjiv Puri, who also serves as Chairman and Managing Director of ITC Limited.
Expanding beyond tobacco into hotels and honey exports
Having built a highly profitable tobacco business, Surya Nepal is now diversifying into new sectors.
The company plans to enter Nepal’s hospitality industry, with the proposed hotel investment expected to be financed entirely through internally generated funds rather than bank borrowings.
Leveraging ITC’s extensive experience in operating a large hotel network in India, Surya Nepal intends to apply the group’s hospitality expertise to the Nepali market. Financing the project through retained earnings will also allow the company to preserve its debt-free financial profile.
The company has also expanded its agriculture-based business by launching exports of premium Nepali honey under the Marani brand. By introducing high-quality Nepali honey to international markets, Surya Nepal aims to increase its contribution to Nepal’s foreign exchange earnings.
According to the rating report, these investments are part of the company’s long-term strategy to diversify revenue streams and reduce its dependence on the heavily regulated tobacco industry. The expansion into hospitality and agricultural exports is expected to transform Surya Nepal from a cigarette manufacturer into a broader, value-added business conglomerate.
Regulatory challenges remain
Despite its strong profitability, the tobacco industry faces significant regulatory and tax-related challenges.
Nepal enforces one of the world’s strictest tobacco packaging regulations, requiring 90 percent of every cigarette pack to be covered by health warnings. While the measure supports public health objectives, it also limits brand visibility for legally operating manufacturers and may encourage the growth of illicit cigarette imports.
The industry also faces steadily increasing excise duties and stringent taxation policies, adding to operating costs.
Nevertheless, backed by strong brand equity, an extensive distribution network, and a highly resilient financial position, Surya Nepal has continued to strengthen both its profitability and market standing. The reaffirmation of its ‘A1+’ credit rating signals continued confidence in the company’s financial stability and long-term business outlook.
