DHI grows in billions but slightly dips in income

The Druk Holding and Investments (DHI), declared a net worth growth of Nu four billion from Nu 60.41bn in 2010 to Nu 64bn in 2011, but there has been a decrease in income by 2.43% owing to the decline in the profit made by two portfolio companies, Druk Green Power Corporation Ltd (DGPCL) and Bhutan Power Corporation Ltd (BPCL).

The DGPCL reported a drop in energy generation from 7, 304.55 gigawatt (GWh) in 2010 to 7,046.58 GWh. In terms of revenue, it translates to a drop from Nu 11,811.46mn to Nu 10,948.33mn in 2011.

The slight decrease is attributed to poor hydrology in 2011 and outages of machines at Tala Hydropower Plant (THP) and Chukha Hydropower Plant. Also the increased domestic consumption and royalty revenue of Nu 137.76mn directly paid to the finance ministry have added to the decrease.

The BPCL made a net profit before tax of Nu 1,353.196 mn in 2010 and Nu 1,209.013mn last year. The 10.66 percent decrease in profit is attributed to the huge increase in the depreciation expenses for the year comparatively and also the marginal increase in the expenditure without proportionate increase in the revenue.

Until the additional power generation is available, the company report states that the constraints in lean flow generation especially during winter where the demand is at its maximum, is likely to continue.

“This decline I would like to point out is not due to operational inefficiency or reduction in productivity,” the DHI Chairman Om Pradhan stated in the report.

The Natural Resource Development Corporation Ltd. (NRDCL), under DHI, which deals with energy and resources, declared 21.91% dividend in 2010 which has reduced by 52.53% to 10.4% last year. As per their annual report, the net worth of the company decreased from Nu 495.182mn in 2010 to Nu 493.726mn in 2011. In that, the total income in sales had decreased by Nu 43.008mn.

The income figure of 2011,  Nu 328.405mn is due to the disposal of timber through an allotment system at approved rates which earlier was disposed through auction. The actual volume of timber was lesser than the targeted amount due to non approval of operational plans in some areas by the Department of Forest and Park Services. Around 178,582 cubic feet (cft) of timber was lost.

The crushing plants which could not be established as planned due to clearance problems, is one of the many reasons for the decrease as cited in the report.

Three companies under DHI declared profits in their annual report.

The Bank of Bhutan (BoBL) registered a total income of Nu 1,757.69mn and a net profit of Nu 644.39mn for the financial year of 2011. In 2010, the total income was Nu 1,467.31mn and a total of Nu 510.78mn was the net profit. Interest expense on deposits decreased by 4.78% while the total operating expenses increased by 36% mainly due to losses in foreign exchange amounting to Nu 91.33mn during that year.

The bank recommended declaring a dividend of 70 percent of the paid-up capital for the financial year of 2011, as stated in BoBL’s annual report.

Drukair Corporation Ltd. (DCL) declared total revenue of Nu 2,261.29mn in 2011 from 1,704.36mn in 2010. Earnings from all sources like the traffic revenue, other operating revenue, non operative revenue and lease earning has increased. There was also a substantial amount of increase in the total expenditure.

Bhutan Telecom Ltd (BTL), during 2011 is stated to have reached greater heights. The operating income last year was Nu 1,833.67 mn as against Nu 1,563 mn in 2010. The operating expenditure increased by 26 percent as a result of the growth as well as the company-wide salary revision.

Further an amount of Nu 216.103mn is proposed to be transferred to the Reserve and Surplus. The dividend recommended to be paid to its shareholder (DHI) for 2011 is 50 percent.

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