COVID-19 impacts revenue for foreseeable future but DHI looking at ways to help the economy

Karpo Tshering, Senior Manager, Corporate Service Division, Druk Holding & Investments (DHI)Limited said that while DHI and its companies are impacted by the COVID-19 pandemic in varying degrees they have not had to resort to laying off of employees.

Activities have been reprioritized and optimized for the financial year by reorienting attention to those activities that can be accomplished under the new normal, while certain activities had to be deferred.

He added, “Further, companies have also been mandated to revisit their strategic plans and five-year investment and financing plans, and based on which some of the activities have been frontloaded and some new initiatives have been explored to up-lift the economy immediately upon easing of the COVID situation.”

 He said that businesses overall have been affected for all companies under DHI. The worst affected being Drukair, Construction Development Corporation Limited (CDCL), Dungsam Cement Corporation Limited (DCCL) and other manufacturing companies according to the senior manager.

Reprioritization of works and reduced spending of controllable budgets such as Human Resource (HR) training, travel and other administrative expenses are being implemented.

He added that based on the ground situation, planned activities are being reviewed, and those activities not affected by the pandemic are being front-loaded and in certain cases new activities have been identified for implementation.

He said, “In most companies, implementation of their digital strategies and going online to provide services are being given impetus.”

 He stated that while they acknowledge that the interest waiver on loans have benefited DHI companies as well most of their companies, especially those service-oriented companies including Bank of Bhutan Limited (BOBL), Bhutan Power Corporation (BPC), Druk Green Power Corporation (DGPC), DrukAir and Bhutan Telecom Limited (BTL) have provided relief measures in keeping with the overall national level directives which has impacted DHI’s profitability.

 He said certain sectors such as airline, manufacturing, and domestic energy sales have been adversely impacted by the pandemic.

He said that in the overall scheme of things, for DHI and its companies, the adverse impacts of the pandemic would outweigh the relaxations, and it is likely to continue to negatively impact the overall revenue of DHI for the foreseeable future.

 He stated, “The downturn in activities have affected the overall revenue generation, which has put stress on the cash generation and may lead to cash flow constraints for some companies.”

“Considering this, including the companies themselves, DHI has also been engaged in

resourcing companies with working capitals to keep the businesses afloat,” he added.

 In line with it manufacturing segment companies have their cash blocked in finished goods stocks and are in need of additional working capitals for raw material purchases reportedly. Similarly, power sector companies have deferred payments of electricity and demand charges for industries at expense of their own cash flows.

 He said, “Many of the companies have their asset utilization rates reduced, although they are available, as the COVID situation has slowed down their businesses and therefore, there has not been any form of relief in terms of ways for revenue generation for the companies.”

 He concluded to say, “We understand that the situation will persist for some time and being able to work optimally under this new normal is important.”

 He said that Company specific internal policies are put in place to respond to situations of lock-down, especially for continuity of critical installations and important service facilities including assessment and stocking of critical spares.

He said, “Subject to appropriate safety measures, facilities are being operated and we are tapping into all the support provided by the Government to enable both domestic and cross-border business transactions.”

Karpo said, “The Group is also exploring and evaluating projects that could be undertaken soon to help jump start the economy.”

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