STCBL goes into five new businesses to avoid downsizing

STCBL says that downsizing will happen if the economic environment does not improve this year

The much speculated and dreaded downsizing of staff at the State Trading Corporation Limited (STCBL) will not take place for now.

The company instead has decided to transfer its 26 sales staff into five new business areas of automatic car wash, agricultural equipment, hardware material, car rentals and pharmaceuticals.

“However, the success of even these new business ventures depends on the economic situation. If the government does not take any action or prolongs the situation then we will have to go for downsizing in the future,” said STCBL Managing Director, Dorji Namgay.

The MD said that the five new business areas had been identified in mid 2012 when the crisis had hit STCBL.

“In the latest board meeting on 24th December we approved a capital investment budget of Nu 66 mn mainly for the new businesses and also projected a sales figure of Nu 1.4 bn for 2013. Of this Nu 300 mn is projected sales from the new businesses,” said Dorji Namgay.

“Our proposal that we are capable of meeting these sales with no reduction of staff strength was graciously accepted by the board,” added the MD.

He, however, cautioned that these projected sale figures were with the assumption that the government would remove various restrictions and the situation would go back to normal.

STCBL was one of the hardest hit companies when vehicle loans restrictions and vehicle import restrictions came into place in 2012 as a response to the rupee crisis.

The company saw not only a dramatic fall in profits but also literally no business in its mainstay of vehicle sales.

The MD said that the situation is such that the company would not have made any profit in 2012 and may just break even with no profit and no loss.

Dorji highlighted the fact that STCBL was making a compromise by absorbing the 26 vehicle sales employees into the new ventures.

“These staff doesn’t meet the exact skill requirements so we have to spend some time grooming them,” said the MD.

STCBL’s main businesses are vehicle sales, spare parts and vehicle services of which the main business of vehicle sales has virtually come to a standstill.

STCBL also supplies dynamite and ICT goods and services. STCBL said that their dynamite business was doing fairly well in the face of two private competitors.

The new business ventures will be bold steps taken by the corporation given that it does not have any inherent expertise in these fields.

The automatic carwash business will consist of mechanized washing of cars which is not yet available in Bhutan.

On the agriculture equipment business, the MD said that STCBL was looking to support the government’s initiative in increasing domestic food production by supplying agricultural machines.

STCBL also aims to be the first major wholesale supplier who will exclusively supply only original hardware brands to be used for construction. Bhutan is currently flooded with poor quality hardware goods.

“Currently the procurement system is based on going for the lowest priced goods and quality is not looked at. If the government can include quality in their tenders then it will lead to supply of original goods,” said the MD.

With its venture into Pharmaceuticals STCBL is not only targeting the large volume of annual Ministry of Health tenders for drugs and medical equipment but also for the private retail market.

The MD said that pharmacies often suffered from shortages of drugs as they cannot keep them in volume. STCBL would keep large volumes of drugs and supply them to consumers through around 20 retail partners across the country.

The MD said that if this does not work out then STCBL itself would look at investing in retail pharmacy.

STCBL which is well versed in the vehicle sale business will also start leasing out all categories of vehicles for use. The main aim is the ongoing hydro projects that need heavy vehicles and trucks on lease for construction activities.

STCBL is a DHI company and has a total employee strength of 171 people.

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