The Natural Resources Development Corporation Limited (NRDCL) and the Wood Crafts Centre Limited (WCCL) will be amalgamated in the form of a takeover of the latter by the former.
The Druk Holding and Investments’ (DHI) general counsel, Sonam Lhundrup, said that the decision was arrived at based on a study that found that the amalgamation would reduce operation and administrative costs.
For instance, there would be only one chief executive officer (CEO) after the merger. The NRDCL post-amalgamation is expected to function more efficiently.
Sonam Lhundrup said that the merger would help DHI strategically realign WCCL’s business activities in the wood-based industry under the single umbrella of NRDCL. The two companies are subsidiaries of DHI.
WCCL will cease to exist from the effective date of amalgamation, tentatively April 1. NRDCL, he said, will continue to exist with all the assets and liabilities of WCCL transferred to NRDCL at book value.
NRDC’s asset size and net worth upon amalgamation will be Nu 1.12 billion, according to him. NRDCL’s net worth as of December 31 last was Nu 774 million.
The amalgamated company will have more than 650 employees (about 550 in the present NRDCL and 100 in the WCCL) if there is no retrenchment.
With respect to the employees, the general counsel said that the human resource (HR) integration would be carried out through appropriate organisation restructuring and job mapping.
“In compliance with the directives of the DHI Board and consistent with the prevailing national concern on unemployment issues due to the Covid-19 situation, all the employees of WCCL are given the opportunity to continue their employment with NRDCL post-amalgamation. The amalgamation process is not expected to result in the retrenchment of employees,” he said.
The general counsel said that since the business combination was under common control and ownership, all the assets, liabilities and reserves of WCCL as the transferor company would be recorded by NRDCL.
Sonam Lhundrup said that there would be significant changes in terms of management and utilisation of timber resources in the country.
“We’re looking at a bigger game-changing strategy to develop the construction industry. NRDCL shall consider factory-based production of fixtures, fittings, and value-added timber products to meet the demands of the construction industry,” he said.
NRDCL after the merger is expected to reduce dependence on labour with the deployment of modern technologies to increase efficiency as against the current norm of cost-intensive carpentry works. This is one of the advantages of forming a bigger company through amalgamation.
The general counsel said that NRDCL would play a critical role in the pricing and price stabilisation of timber-based construction materials through the adoption of technology and best practices. This is also expected to minimise the wastage of timber.
“It should set industry benchmarks and reinforce the mandate of making timber resources affordable, available and accessible to the general public,” he said.
WCCL was incorporated on November 30, 1992, under the Company’s Act as a furniture-making company. It was officially taken over by DHI as a sole shareholder on January 1 2015.
The erstwhile Forestry Development Corporation Limited (FDCL) was restructured as NRDCL in November 2007 through an executive order of the prime minister with a mandate to manage sand, stone and other natural resources in addition to timber.
DHI was incorporated under the Companies Act 2000 with DHI as the sole shareholder.
As per the Companies Act 2016, the board of each amalgamating company shall resolve that in their opinion the amalgamation is in the best interest of the company.