Profits elude Dungsam Polymer … for now

Dungsam Cement’s under performance, so far, has dragged its sister plant under

Business: Almost three years into operation, Dungsam Polymer limited (DPL) is still running at a loss because its capacity is suppressed by underperformance of Dungsam Cement corporation limited (DCCL).

DPL was mainly established to produce and supply plastic polythene bags for the country’s largest cement plant, DCCL.  The former is supposed to supply 80 percent of its products to the latter.

DPL’s audited financial statement reveals that the company suffered a loss of Nu 28.1M (million) in 2014, about Nu 3.3M more than in the previous year.

However, DPL official believes there was no reason to worry and said the loss had increased because the company had been regularly paying its loan from last year.  In 2013, DPL didn’t start repaying its loans. “This was possible because the company’s cash flow is now improving and in two months time, we aim to break even,” an official said.

Should the cement plant run on full capacity, it would require 83,000 bags a day against DPL’s capacity of 100,000 bags a day.  However, today DPL’s total daily production is between 47,000 and 50,000.

For DPL to break even, it needs to produce 60,000 to 65,000 bags in a day.  This capacity, officials said, was met sometimes and was considered peak production so far.

In September last year, the plant was manufacturing 35,000 bags a day.  This was because DPL has been able to capture some portion of the domestic market. It has been supplying Karma Feed and some flour mills.

It also caters to 25 percent of Penden Cement’s requirement and some markets in West Bengal and Assam.  Indian states constitute about 20 percent of DPL’s market.

The chairman of Druk Holding and Investments (DHI), Dasho Sangay Khandu, said DPL was not doing very well, but its performance was much better than the cement plant.

“Polymer market is totally based on the cement plant,” he said.  But when the cement production is running below 50 percent of the capacity there wasn’t absorptive capacity for polymer, he added.  Consequently, the polymer plant is not able to enhance its capacity.

The chairman also said there has been progressive increase in sales every month and that, by next year end, DPL should be sound.

By Tshering Dorji

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