The Natural Resources Development Corporation Limited’s (NRDCL) profit after tax (PAT) halved from Nu 15.07mn in 2015 to Nu 7.83mn last year.
According to NRDCL General Manager, Sonam Chophel, profit for the financial year was affected because of the write-off provision of stock (stone) amounting to Nu 3.69mn, impairment of assets (crushing plant) amounting to Nu 3.94mn, and 10% provision for non-moving raw materials amounting to Nu 2.30mn.
More than Nu 6mn was also charged on the corporation as compensation for terminating a stone quarry contract. The total expense for 2016 was Nu 409.79mn compared to Nu 406.55mn in the previous year.
Also, cash outflow of Nu 12.22mn last year is attributed to capital investment mainly in logging machineries. The company foresees overall cash outflow this year as well because of major increase in capital investment such as purchase of logging machineries, and establishment of joinery units. To meet the year’s fund requirements, the company plans to avail loans from financial institutions.
Currently, the company has two pending court cases slapped against it by contractors due to premature termination of quarry contracts in the year 2015. As the compensation amount payable to the contractor is not certain, the company has created a contingent liability amounting to Nu 29.73mn.
“If the payment of compensation is finalized during the year, huge impact on cash flow is expected and the company is expected to face liquidity constraint,” said the Sonam Chophel.
NRDCL is engaged in marketing of stone and boulders and has exclusive rights to operate stone quarries in Forest Management Units, if required. From March 2008, the corporation took over extraction and marketing activities of river stone nationwide.
Stone or boulder extraction in 2016 was 5.42mn cubic feet (cft) against a target of 2.54mn cft and disposal was 5.44mn cft against a target of 3.62mn cft.
In 2016, a total revenue of Nu 15.22mn was earned from sale of stone compared to Nu 9.85mn in 2015.
Due to continued losses, the operation of the Ngangshing plant at Pemagatsel was studied in detail and finally terminated; the plant has been put up for sale. Further, the stone crushing plant at Phubana at Paro, which was set up to supply stone chips to the Royal Academy construction project, was also sold to the project since it was operating on loss.
The General Manager said the company is now left with two stone crushing plants at Bhur in Gelephu and Kencholing in Trashiyangste which despite all efforts to operate at break-even points, continue to operate on loss.
NRDCL maintained 3,389ha of plantations across the country and raised 444,328 seedlings against a target of 500,000 seedlings. More than 230,400 seedlings were disposed against the target of 150,000. These include seedlings which were used for NRDCL’s planned plantations and plantation maintenance works as well as those supplied to customers. More than Nu 10mn was spent in creating and maintaining plantations last year.
NRDCL also carries out sand extraction across the country to meet the demands of the public and construction industry. A total revenue of Nu 69.31mn was earned from sale of sand last year while in 2015, sand sale yielded Nu 55mn.
Sha region, the main supply source of sand for western and central parts of the country was maintained uninterrupted throughout the year through sand dredging. As sand sources are depleting with less natural deposits occurring annually and reduction in the number of extraction sites, the company procured and installed a new sand dredging machine at Wangdue to supplement sand supply. NRDCL plans to procure more dredging machines in the coming years.
Pema Seldon from Thimphu