A project on financial performance of druk satair

MASTERS OF BUSINESS ADMINISTRATION
(MBA-Finance 1st Semester)
Corporate Finance
Submitted By:
Jigme Namgyel(05)
Submission Date: June 2017
Druk Satair Corporation Limited

Module Tutor: Dr. K.B. Singh
DECLEARATION FORM
Module Name: Corporate Finance Type of Course Work: Individual
Module Tutor: Dr. K.B. Singh Date of Submission :June 2017
I hereby declare that this academic work is my own and those derived from other sources have been
appropriately acknowledged. I understand that if found otherwise, my academic work will be cancelled and no
mark will be awarded besides the legal consequences.
Signature of the students
For Module Tutor
Marking Criteria/ Q. No. Marks Assigned Marks Secured
1. …………………………………………………………( ) ( )
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Total Marks
Comments:
DRUKSATAIRCORPORATIONLIMITE
Submitted By: Jigme Namgyel (05) MBA 1st
Semester 2

Company profile
In 1980 Royal Government of Bhutan has found Shumar Gypsum
Mines at Pemagatshel (Eastern Bhutan) and in 1983 Gypsum mining
was started with the main objective of utilizing the reserve for
economic development of the area and generating a revenue for
government.
During the 7th
five year plan government recognized the need for
private sector’s participation in industrialization of the country so government announced a
massive industrial program. So to keep in line with government’s policy of privatization of
business and industrial ventures so area of 26.77 hectares in Khothakpa, Pemagatshel was
auctioned in September 1993 for the mining.
After the auctioned of the land Gypsum mining was awarded to M/s Druk Satair Corporation
Ltd. for a license fee of Nu. 26.70 million, over a period of 10 years. The first lease was
executed in the year 2003. In July 2003 second auction for another lease of 15 years was held.
The company has offered the highest bid amount of Nu. 413.50 million And obtained the
mining rights for another 15 years which will expire on 31stDecember 2018.
Mission Statement
Company mission is to become a model mining Company in Bhutan guided by the principle of
balanced and sustainable growth. They prioritize the promotion of cultural and socio-economy
of the community. They value a performance which is for people and planet thus contributing
towards the national development goal of Gross National Happiness.
Values
Since the founding of Druk Satair Corporation Limited they have been guided by the core
values of conducting business in an ethical and socially responsible manner. Where company
Semester 3

focus on corporate governance, employees’ welfare, environment protection, careful resource
management, active participation in the community and gainful contribution to the national
wealth. So they believe that when employees, customers, and partners all work together, they
can achieve the social goals in a sustainable way.
Products
Gypsum is used extensively in cement, textile, paint, and pottery and building industry. The
mineral calcined while boiling under 200˚c loses 75% of water and product widely known by
its trade name as “Plaster of Paris” is being used in building industry as a good finishing
material. Calcined gypsum is also used by craftsman for making various decorative because of
easy molding properties to any shape. Product is also being used in hospitals for orthopedic
treatment. Some high quality is used for producing medical quality calcined gypsum and in
fertilizer industry.
Capital Structure (for FY 2014 & 2013)
Table 1: Total Capital
2014(NU) 2013(NU)
Share capital 91,308,600 91,308,600
Reserve 100,000,000 100,000,000
Retained earnings 119,884,908 132,183,599
Total Capital 311,193,508 323,492,199
Total capital for Druk Satair Corporation Limited in the year 2014 was Nu 311,193,508 and in
2013 was Nu 323,492,199 whereby there is decrease in total capital of Nu 12,298,691 in 2014
comparing to 2013.
Table 2: Composition of capital (Debt& Equity)
2014 2013
Share capital 91,308,600 91,308,600
Reserve 100,000,000 100,000,000
Retained earnings 119,884,908 132,183,599
Composition of capital (Debt& Equity) 311,193,508 323,492,199
Semester 4

Table 2 gives us the overview of total composition of capital having equal amount of share
capital and reserve of Nu 91,308,600 and Nu 100,000,000 for both the year but decrease of Nu
12,298,691 in retained earnings in 2014.
Table 3: Debt-Equity Ratio
2014 2013
Total Liabilities 520552322 441749772
Total Equity 311193508 323492199
Debt-Equity Ratio 1.67 1.37
Lower values of debt equity ratio indicates less risks and if the debt equity ratio is high it’s
unfavorable as it signifies business being more dependent on external investors with high
risks. If the ratio is equal to 1 means assets of the company is financed by debt and
shareholders but if its more than 1 it signifies more assets are financed by the debt comparing
to shareholders and vice versa. With regard to DSCL its debt equity ratio is more than 1 so
more financing of assets are done through debt whereby company is having high risks.
Table 4: Debt Ratio
2014 2013
Total Liabilities 246902137 185783781
Total Assets 558095645 509275980
Debt Ratio 0.44 0.36
Debt ratio is always shown in decimal as it calculates the total liabilities over total assets.
Lower ratio is always favorable for business comparing to higher ratio. Lower the debt ratio it
indicates the stable and sustainability of the business with less debt but each company has its
own benchmarks for debt. Company having debt ratio of .5 is considered to be less risky to
insolvency which means company’s assets are more than liabilities. And if company has ratio
of 1 it shows company’s assets and liabilities are equal which means to clear the liabilities
company have to sell all its assets having high risk of shutting down of business.
Semester 5

Therefore for DSCL there debt ratio for year 2014 is less than .5 which means their assets are
more than liabilities having very low risks.
Table 5: Interest coverage Ratio
2014 2013
Profit Before tax 200,954,000 173,637,213
interest expenses NA NA
Interest coverage Ratio
Analyzing a coverage ratio can be tricky because it depends largely on how much risky the
investor is willing to take. However there is no interest expenses reflected in report so could
not find the interest coverage ratio.
Dividend (for FY 2014 & 2013)
Table 6: Dividend paid
2014 2013
Dividend
paid 135,549,575 61,908,836
Above table represents the total amount of dividend paid to the shareholders for both the
years.
Table 7:Dividend per shares
2014 2013
Dividend paid 135,549,575 61,908,836
Number of shares 9,792,249 922,379
Dividend per shares 13.84 67.12
Table 8: Earnings per Share
2014 2013
Profit after tax 133,664,209 112,945,349
Number of shares 9,792,249.74 922,379.33
Earning per shares 13.65 122.45
In the year 2014 DSCL have issued a shares of 9,792,249 and paid Nu 135,549,575 where
they have paid 13.84 for each shares and earned Nu 13.65 whereas in 2013 they have issued
Semester 6

922,379 and paid Nu 61,908,836 and paid 67.12 for each shares and earned Nu 122.45, which
indicates they have made more profit in 2013.
Table 9: RPS
2014 2013
Retain Earning 119,884,908
132,183,5
99
Number of shares 9,792,250 922,379
RPS 12.24 143.31
RPS is found by dividing retain earning and number of shares issued by the company. So in
2014 RPS has decreased due to issue of more number of shares.
Capital Investment (for FY 2014 & 2013)
Table 10: capital Investment
2014 2013
Tangible assets 60,337,347 61,627,060
Intangible assets 110,266,666 137,833,333
Capital work in progress 1,115,555 485,013
Investment 2,800,000 2,800,000
Pre-payments and advances 61,791,474 53,099,173
Capital Investment 236,311,042 255,844,579
Capital investment of the DSCL has decrease by Nu 19,533,537 in 2014 comparing to 2013
which means company has invested less in business in 2014.
Working Capital (for FY 2014 & 2013)
Table 11: Total of current assets & Composition
2014 2013
Inventories 16,893,727 14,779,369
Trade receivables 44,356,798 46,562,511
Cash & Cash equivalent 139,966,215 151,675,424
Pre-payments and advances 24,907,998 9,257,391
Current tax assets 92,842,551 27,102,617
Other current assets 2,817,314 4,054,089
Total of current assets &
Composition 321,784,603 253,431,401
Semester 7

Table 12: Total of Current Liabilities & Composition
2014 2013
Liability for lease right 31,576,800 31,576,800
Trade and other payables 49,800,359 25,988,909
Provisions 127,981,655 60,691,864
Total of Current Liabilities &
Composition 209,358,814 118,257,573
Above two tables shows the total of current assets and liabilities DSCL is having. Total
currents assets for year 2014 has increased comparing to 2013 which means company is
having more current assets which can be easily converted to cash. And even total liability has
increased in 2014 indicating company has more short term debt.
Table 13: Working Capital
2014 2013
Total Current asset 321,784,603 253,431,401
Total Current Liabilities 209,358,814 118,257,573
Working capital 112,425,789 135,173,828
Since working capital measure the operation efficiency and short term financial needs of the
company and showing positive working capital indicates company having enough funds to
meet the short term financial needs. DSCL has a positive working capital of Nu 112,425,789
for year 2014 it indicates that company is having a good financial health to meet the short term
liabilities.
Table 14: Current ratio
2014 2013
Total Current asset 321,784,603 253,431,401
Total Current Liabilities 209,358,814 118,257,573
Current ratio 1.54 2.14
Semester 8

If the current ratio of a company is 1 or more it indicates that current assets is more than
current liabilities and has a low risk of liquidity. And if ratio is below 1 means company is
having high risk of insolvency with more liabilities. Therefore with regards to DSCL, since
company has higher ratio than 1 there current assets is more than liabilities they have low risk
of solvency.
Other key Ratios (for FY 2014 & 2013)
Table 15: Return On Investment
2,014 2,013
Profit after tax 133,664,209 112,945,349
Total assets 558,095,645 509,275,980
ROI 24% 22%
Return on investment is calculated to find the profit or loss generated on investment upon
amount of money invested. ROI is expressed in percentage and it’s important for taking
financial decision and it also help in finding the company’s profitability and efficiency on
investment. Since DSCL has positive growth in return on investment in 2014 comparing to
2013 indicating company is gaining a good return on Investment with growth of 2% from
2013.
Table 16: Return on Equity
2,014 2,013
Profit After Tax 133,664,209 112,945,349
Share capital 91,308,600 91,308,600
ROE 1.46 1.24
Return on equity is an important measures for finding the profitability of company. Higher the
value of ROE its shows the efficient of company to earned more return from the investments.
So for investors they usually check the ROE of the company before they invest in company.
So DSCL has earned more return on equity in 2014 of Nu .22 per shares, which means DSCL
is earning good profit from the equity.
Semester 9

Table 17: Proprietary Ratio
2,014 2,013
Share capital 91,308,600 91,308,600
Total Assets 558,095,645 509,275,980
Proprietary Ratio 0.16 0.18
Proprietary ratio measures the financial position of the company, so if the ratio is high it
indicates that company has enough capital to pay the creditors whenever there is demand of
repayments by the creditors and vice versa. Therefore DSCL has 16% of contribution from
shareholders and 84% of contribution from creditors.
Share Price Information
Company Name Druk Satair Corporation Limited
Symbol DSCL
Current Market Price Nu 30 per shares
Date and Time 06/06/2016, 1410 hours
Year Paid Up capital P/Shares Face value Market price EPS
2013 91,308,600 913,086 100 300 122.45
2014 91,308,600 9,130,860 10 30 13.65
Appendix
Semester 10

Semester 11

References
(2016, MAY 30). Retrieved from http://www.accountingformanagement.org/proprietaryratio/
Druksatair. (2016, june 1). Retrieved from http://www.druksatair.bt/
RSEBL. (2016, may 06). Retrieved from www.rsebl.org.bt: http://www.rsebl.org.bt/
RSEBL. (2016, MAY 30). Retrieved from http://www.rsebl.org.bt/upload/audit/DSCL%20Audited
%20Financial%20Statement%202014.pdf
Semester 12

A project on financial performance of druk satair

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