While the government’s investment arm’s dividend decreased, its tax contribution increased

Business: Although the Druk Holding and Investments’ (DHI) contribution to the government coffer in the form of dividend and taxes increased by Nu 220M to Nu 5.35B last year, many of its cash cow companies’ did not perform well.

Dividend has declined from Nu 3.76B in 2013 to Nu 3.69B last year and corporate income tax increased to Nu 1.66B from Nu 1.36B.

However, in the consolidated accounts, profit has slumped by 29 percent from Nu 6.1B to Nu 4.3B mainly because of a sharp increase in expenditure on account of Dungsam Cement and another sharp increase in direct cost of sales for energy, as per the DHI annual report.

As tax payable of a profitable company cannot be offset against the losses of another, there was an 8.7 percent increase in tax despite the decreased profit.

But DHI’s standalone accounts saw a profit of about Nu 3.8B, a growth of 22 percent because of increased dividend from Druk Green Power Corporation (DGPC) and reduced cost of finance.

DGPC’s profit after tax also decreased from Nu 5.2B in 2013 to about Nu 5B.

The four-hydropower plants under Druk Green collectively generated 7,147 million units (MU) of electricity in 2014, a decrease of 5.10 percent on account of lower hydrology last year.

The decrease in overall energy generation and higher domestic consumption resulted in a decreased electricity export revenue by 8.30 percent to Nu 10.6B from Nu 11.6.

The Bhutan Power Corporation (BPC) saw a four percent increase in its post tax profit of about Nu 1B because of 7 percent increase in electricity sales.

Drukair’s revenue dropped by eight percent to Nu 2.97B last year because of increased operating expenditure. The airline suffered a loss of Nu 130M, a decline in profit by 204 percent.

The loss was attributed to increase in the competitive sectors resulting in fare reduction to protect market share. However, the company lost about 52,555 customers. Drukair was also encouraged to venture into new routes and to invest in both new and leased aircraft. The company also faced a toll on attrition of experienced pilots and new pilots had to be hired from the international market that led to increased overhead costs.

The Natural Resource Development Corporation’s (NRDCL) profit after tax also substantially dropped by 77 percent to Nu 7M in 2014 from Nu 30M triggered by a slow down of the construction sector.

Dungsam also incurred a loss of Nu 1.1B last year. As the company is financed at a 50:50 Debt-Equity ratio, its loss is attributed mostly towards finance costs.

DHI infra also saw its profit drop by 42 percent from Nu 5.8M to Nu 3.4M.

Bank of Bhutan Limited (BoBL), however, achieved a net profit of 750M, an increase of 11.5 percent compared with 2013.

Bhutan Telecom (BT) also recorded a profit growth of about 20 percent to Nu 474M.

The total penetration of BT services as of December last year stands at 72 percent.

By Tshering Dorji