Bhrikuti Kagaj Karkhana was once the only paper production factory in Nepal, operating from the early 1980s until the late 1990s. Established with assistance from China during the Panchayat era, the factory played a pivotal role in the country’s paper industry. The name "Bhrikuti" is believed to be derived from a Nepali princess who married a Tibetan emperor in the 7th century, symbolizing the long-standing ties between Nepal and China.

During its prime, the factory met nearly all of Nepal’s domestic paper demand, significantly reducing the need for imports. This achievement had a major economic impact, as the factory not only provided direct employment to approximately 3,000 people, but also supported over 10,000 more in various industries supplying raw materials. The primary raw materials—Babiyo (Eulaliopsis binata) and paddy hay (पराल )—were readily available in the surrounding areas, providing a livelihood for many local families. Additionally, the local real estate market flourished, with factory employees renting residences nearby, contributing to the growth of hotels, restaurants, and the travel industry.

Bhrikuti Kagaj Karkhana also contributed to education by sponsoring outstanding students from Janak Secondary School (जनक माध्यमिक बिद्यालय), covering their expenses in recognition of their academic achievements.

However, following the establishment of Nepal’s multi-party system, the factory’s management began to deteriorate. The burning of raw materials during the summer months, which resulted in reduced paper production, led to significant financial losses. The management’s failure is often attributed to political interference in staffing decisions and corruption within the government’s regulatory bodies. Under a subsequent government, a privatization policy led to the sale of the factory, which was renamed "Bhrikuti Pulp and Paper." Allegedly, the factory was sold for a fraction of its actual value, with corruption and commissions involved in the transaction.

After privatization, the factory’s operations never fully recovered. Frequent strikes by labor unions, driven by political parties, disrupted production. While some of the strikes were legitimate, aiming to improve the welfare of workers, others were motivated by political interests. These challenges, coupled with political corruption and mismanagement, eventually led to the factory's closure.

The closure of Bhrikuti Kagaj Karkhana had severe economic repercussions. Nepal, which now imports paper worth more than 300 million rupees (३० करोड) daily, saw its trade deficit widen. Thousands of workers were left jobless and many were forced to seek employment abroad. The ruins of the factory, still visible along the Mahendra Highway, serve as a reminder of the once-thriving industry that was lost due to mismanagement and political interference.