Annual Report
2020
Construction Development Corporation Limited
Thimphu : bhutan
CONSTRUCTION OF 132 kV D/C TRANSMISSION LINE
CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
3
From the Acting CEO’S Desk
Company Profile
Organization Structure
Financial Trends
Board Directors
Management Team
Directors’ Report
Corporate Governance Report
Auditors Report
9.1 Independent auditors report
9.2 Minimum Audit Examination & Reporting Requirements
9.3 Financial Statements
9.4 Accounting Policies & Notes to Accounts
9.5 Notes Forming An Integral Part of the Financial Statements
9.6 Ratio Analysis
9.7 Compliance Calender & Check List
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6
7
8
10
12
14
21
28
33
39
47
64
85
87
FROM THE ACTING CEO’S DESK
It is my pleasure to present the Annual Report of CDCL for the year 2020. Unlike other years,
2020 had been a difficult year for majority of the construction companies in the nation as a
consequnce of COVID-19. Yet, with proper planning and support of the Board, Shareholder/DHI
and the Government, CDCL was able to maintain continuity of the works and kept the financial
impacts at the minimal. The COVID pandemic also proved to be an opportunity to learn and
prepare for unexpected contingencies in future.
Compared to 2019, the Company performed well financially in 2020. Despite disruption to works
due to COVID, CDCL was able to make a profit of Nu 11.281 million in 2020. The total revenue
turnover including PTDP revenue was Nu. 1,798.010 million while the revenue without considering PTDP was Nu. 942.008 million.
2020 also saw an increase in the share capital. With the injection of Nu 150 million equity by DHI
for procurement of additional equipment, the share capital of the Company increased to Nu
1,116.862 million from Nu 966.862 million in 2019.
In addition to the ongoing projects, CDCL was able to initiate a number of projects, significant
amongst them being the Aipoli Bridge in Gelephu, water supply projects at Motanga and Jigmeling Industrial Estates, Motanga Bridge in Samdrup Jongkhar, and the Marungi Bridge in
Pema Gatshel.
A major milestone was achieved in 2017 when CDCL became the first Bhutanese construction
company to foray into the construction in the hydropower sector with the start of the Head
Race Tunnel (HRT) from Adit-4 works for the 118 MW Nikachhu Hydroelectric Project. On 5th
December 2020, another milestone was achieved when CDCL successfully daylighted (break
through) the HRT from CDCL’s Face 8 side towards HCC’s Face 9 end. The break-through of Face
8 and Face 9 was achieved with perfect alignment with no deviation. As on 31 December 2020,
CDCL had completed excavation of 2899m of HRT at the Nikachhu Hydropower Project.
Despite the challenges of working under poor geology and obnoxious gaseous conditions, the
excavation of exploratory drift tunnel for the Nyera Amari Hydroelectric Project was successfully completed in October 2020. A total length of 1774.15m of the drift was excavated, which
includes tunnel lengths of 80m at Pangzam, 670.97m at Gomdar and 1023.18m at Martsala.
The construction of the 132 kV transmission line from the Nikachhu project to the Mangdechhu
HEP pothead yard, CDCL’s second transmission line project, was also successfully completed in
December 2020.
The company successfully made inroads into water supply projects and sewerage and waste
management with the execution of water supply and sewerage treatment project for the Jigme
Singye Wangchuck School of Law at Pangbisa in Paro in 2019. This paved the way to secure two
major water supply projects at the Jigmeling and Motanga industrial estates in 2020.
4
CDCL completed and submitted the design for the iconic Lungtenzampa Bridge, a bridge that
is set to become an important landmark for Thimphu city. It is expected that CDCL will be given
the work order to construct the bridge on approval of the design. Another important project in
the pipeline is the development of the Norzin Lam area - a project to facelift the Thimphu town
and make it pedestrian friendly.
Some of the significant projects that are in progress and completed during the year are as under:
• Construction of 132 kV Transmission Line, Nikachhu (completed)
• Phuentsholing Township Development Project (PTDP) at Phuntsholing
• Nyera Amari Exploratory Drift Tunneling Project, Martshalla (completed)
• HRT & Adit Project for Nikachhu Hydropower Project
• Water supply project, Jigmeling Industrial Estate
• Marungi Bridge, Pema Gatshel
• Water supply project, Motanga Industrial Estate
• Water supply and sewerage treatment project, JSW Law School
• Motanga Bridge, Samdrup Jongkhar
• Construction of Royal Guest House in Gelephu
• Redevelopment of Norzin Lam and Clock Tower in Thimphu
A number of new governance systems and guidelines to ensure smooth functioning of the
company was also introduced during the year. CDCL developed its reference rates to ensure
uniformity in bidding for projects. To further aid in the estimation of projects and to ensure
that projects did not run into loses, a costing manual was also developed. A digital strategy was
developed to maximize the commercial and operational benefits through use of technology.
It is also worth highlighting that CDCL has continued to render high quality services at competitive costs. Normally, CDCL had pursued only for projects that were beyond the competence and
capacity of the private sector. Through continued effort and zeal, CDCL has been able to brand
itself as a reputed construction company and carve out a niche market for itself and is recognized as one of the best companies for executing important works through the employment of
Bhutanese workers at all levels. In our endeavour to build a competent and vibrant indigenous
workforce, CDCL spares no effort to impart skills through hands on experience at our project
sites and trainings abroad.
Lastly, the management and employees of CDCL would like to thank our board, shareholder
& key stakeholder agencies in the government & the corporate sector for the continued support and guidance. The CDCL family would also like to reiterate our unwavering dedication, and
pledge our commitment to the service of the nation.
TashiDelek
(Karma Gayley)
Acting Chief Executive Officer
Construction Development Corporation Ltd.
Thimphu: Bhutan
5
COMPANY PROFILE
6
VISION
“To be a premiere engineering and construction company that meaningfully engages
national workforce, astutely contributes to the socio-economic development of the nation
with the highest ethical standards, and compete in the international arena.”
MISSION
The mandates of the CDCL will be pursued through the following missions:
• Take the lead in construction and engineering services with quality, timeliness and cost efficiency to contribute to the socio-economic growth of the country;
• Enhance human resource capacity by developing and promoting a committed and motivated professional;
• Set benchmarks by maintaining the highest level of safety and ethical standards in the construction industry;
• Build CDCL as the brand image for Engineering, Construction and Project Management.
OWNERSHIP
CDCL is a public sector company wholly owned by Druk Holding and Investments Ltd.
Acting CEO:
Authorized Capital:
Equity: Debt: Gross Block: Net Block: Karma Gayley
10,000,000 equity shares of Nu. 1,000 each.
Nu. 1,116.862 Million
Nil
Nu. 1493.892 Million
Nu. 767.753 Million
CORE VALUES
Excellence: The focus to strive for the highest possible standards while conducting our business, in terms of cost effectiveness, quality and timeliness of our work.
Leadership: The belief that every employee is a leader and remains focused and motivated for
work.
Integrity: The resolve to do the right thing for the company, for one’s colleagues and for one’s
stakeholders even when no one is looking.
Teamwork: The spirit and enthusiasm to work collectively across all levels and partners, building strong relationships based on mutual respect, understanding and cooperation.
Entrepreneurship: The passion for seeking constant improvement and calculated risk taking to
capitalize on opportunities that help the company achieve its objectives.
Safety: The belief in the safety of its employees, partners and the general public.
7
ALDTP Section
Asset Management
Section
Accounts
Section
Safty Unit
Procurement
Unit
ICT Unit
Administration
Section
Infra Section
Infrastructure
Division
Human Resource
Section
HR & Administration
Division
Internal Audit
Design & Engineering
Division
Western Region
Transmission
Section
Eastern Region
Central Region
Mechanical Engineering
Division
Hydropower
Construction Division
Department of Hydropower &
Mechanical Engineering
Bridge & Road
Section
Construction
Division
Department of
Engineering & Construction
Finance & Investment
Section
Finance & Investment
Division
Department of
Corporate Services
Corporate Planning &
Business Development
Company Secretary &
Legal Affairs
Chief Executive Officer
Board
Organization Structure
8
Financial Trends
Revenue
Profit After Tax
Share Capital
9
DIRECTORS’ PORTFOLIO
10
BOARD OF DIRECTORS
(Dasho Chhewang Rinzin)
(Mr. Phuntsho Wangdi)
(Mr. Choiten Wangchuk)
11
Dasho Chhewang Rinzin was appointed as the Chairman of
CDCL Board on January 1, 2015. Dasho has Master’s Degree in
Engineering. Dasho joined civil service in 1985 and his career
in the hydropower sector spans over several years. Dasho
served as the Managing Director of Kurichhu Hydro Power Corporation from January 1999 to December 2003. From
January 2004 to December 2007, Dasho was the Managing
Director of the Bhutan Power Corporation. In recognition
of his dedicated services, Dasho was awarded the Red Scarf
in 2009. At present, Dasho is the Manager Director of Druk
Green Power Corporation Ltd.
Mr Phuntsho Wangdi was appointed to the CDCL Board on March
8, 2019. He was the former Director General of Bhutan Narcotic
and Control Agency. Before BNCA, he served as the Managing
Director of National Housing and Development Corporation Ltd.
(2005-2011). He was also Thrompon of Thimphu City from 1999
until 2005. He has MSc. in Urban Development Planning from
the United Kingdom (1985-1986), Post-Graduate Studies in Development Planning from United Kingdom (1984-1985) and PG
Studies in Rural Urban Relationship, Housing, Urban Finance,
Disaster Management from Asian Institute of Technology, Thailand and PG Studies in City Planning from Tokyo, Japan.
Mr Choiten Wangchuk was appoinited to the CDCL Board on
March 24, 2010. He currently serves as the Director General of
Department of Geology & Mines, Ministry of Economic Affairs.
Prior to that, he headed the Department of Industries in the
Ministry of Economic Affairs.
He joined the Ministry of Finance in 1998 after graduating from
Sherubtse College in 1987. Since then he has taken positions of
increasing responsibility as the Director General, Department of
Public Accounts, Director for Department of National Budget
and as Chief Planning Officer of the Ministry of Finance.
Mr Choiten Wangchuk also holdes an MBA degree from University of Canberra, Australia.
Mr Lekzang Dorji was appointed as Director to CDCL Board in April
2017. He has Master’s Degree in Professional Accountancy from
and University of Canberra, Australia. He is currently the Director
of Department of Macro Economic Affairs, MoF. Prior to his current
post, he served as the Director of Department of National Budget,
MoF. He has wide range of experience in the areas of Finance, budgeting and accounting.
(Mr. Lekzang Dorji )
Mr Tenzin was appointed as Director to CDCL Board on March 8,
2019. He holds a master’s degree in Water Resources Management
from the University of Melbourne, Australia. He began his career
in Ministry of Agriculture as Assistant Engineer (Civil). Prior to his
current position, he served as the Director of DES, MoWHS. He is
the current Director General of Department of Roads, Ministry of
Works & Human Settlement.
Mr Karpo Tshering was appointed to the CDCL board in March
2020. He is currently serving full time as a Senior Manager, Corporate Services Division in Druk Holding & Investments since January
2018. He previously served as the Manager of Information Technology Unit of the same organization. He has a Bachelors degree in
Computer Science (Honours) from Sherubtse College (2005) and
Master of Computing, with specialization in Software Engineering,
from the Australian National University, Canberra (2017).
(Mr. Tenzin)
(Mr. Karpo Tshering)
Mr Karma Gayley was appointed as the Acting CEO in Febuary
2020. He has a Master Degree in Hydropower Development from
Norwegian University of Science of Technology (NTNU), Trondheim Norway and Bachelor degree in Civil Engineering from PSG
college of Technology (Bharathiar University), Coimbatore, Tamil
Nadu (India).
(Mr. Karma Gayley)
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MANAGEMENT TEAM
Phuntsho Gyeltshen
Chief Executive Officer
Karma Gayley
Acting CEO
CDCL
Sangay Dendup
General Manager
Corporate Planning &
Business Development
Parsuram Sharma
General Manager
Mechanical Engineering
Division
Dechen Wangmo
General Manager
Finance & Investment
Division
Ugyen Gyeltshen
General Manager
Hydropower Construction
Division
Kencho Tshering
General Manager
HR & Administration
Division
Tandin Dorji
General Manager
Construction Division
13
Kamala Thapa
General Manager
Design & Engineering
Division
Tshering Dupchu
General Manager
Infrastructure Division
DIRECTORS’ REPORT
HRT & Adit-4 for Nikachhu Hydroelectric Project
14
DIRECTORS’ REPORT 2020
On behalf of the Board of Directors, it is my privilege to report on the performance and achievements of the Construction Development Corporation Limited (CDCL) for the Financial Year 2020.
CDCL’s operation mainly extends to four broad verticals of the construction business: niche areas of infrastructure projects; hiring of construction equipment; supplying of ready mix asphalt
concrete; and mechanical fabrication works. The major infrastructure projects business constitutes over 75% of the entire operations of the company and priority is being placed to further
expand this business vertical.
The Directors’ Report, amongst others, presents the highlights of the company’s operational
performance, audited financial statements, and other important areas such as new initiatives,
challenges and future outlook for the Company.
1. Operational Performance
The tentacles of COVID-19’s impact reached across the globe and Bhutan too was not spared by
its menace. The closure of the international border, national lock downs and travel restrictions
impacted CDCL’s business directly through lower number of available working days, and indirectly through non-availability of skilled workers and difficulties in the import of construction
materials from across the border. Nevertheless, CDCL persevered to maintain continuity of its
works at all its sites through optimal employment of various means and resources available at
hand, and especially through the engagement of more Bhutanese workers. CDCL fared comparatively better than many of the other construction companies whose works were severely
hampered.
Apart from the ongoing projects, CDCL was also able to initiate new projects during the year.
Further, despite the COVID pandemic, CDCL was able to secure a number of projects during
the year, significant amongst them being the Aipoli Bridge in Gelephu, water supply projects
at Motanga and Jigmeling Industrial Estates, Motanga Bridge in Samdrup Jongkhar, and the
Marungi Bridge in Pema Gatshel.
A major milestone was achieved in 2017 when CDCL became the first Bhutanese construction
company to foray into the construction in the hydropower sector with the start of the Head
Race Tunnel (HRT) from Adit-4 works for the 118 MW Nikachhu Hydroelectric Project. On 5th
December 2020, CDCL successfully daylighted (break through) the HRT from CDCL’s Face 8 side
towards HCC’s Face 9 end. The break-through of Face 8 and Face 9 was achieved with perfect
alignment with no deviation. This proud moment and significant achievement for CDCL, the
daylighting of the two faces of the HRT, was graced by the Chairman of DHI, Dasho Ugen Chewang accompanied by the Chairman of CDCL and other Board Directors. As on 31 December
2020, CDCL has completed excavation of 2899m of HRT at the Nikachhu Hydropower Project.
The excavation of exploratory drift tunnel for the Nyera Amari Hydroelectric Project was also
successfully completed in October 2020 despite numerous challenges of working under poor
geology and obnoxious gaseous conditions. A total length of 1774.15m of the drift was excavated, which includes tunnel lengths of 80m at Pangzam, 670.97m at Gomdar and 1023.18m at
15
Martsala.
The construction of the 132 kV transmission line from the Nikachhu project to the Mangdechhu
HEP pothead yard was also completed in December 2020. The transmission line is in the process
of being handed over to BPC. On completion, CDCL also handed over the Bhutan Telecom Building at Khuruthang and Raven House Kitchen Project in Thimphu to its clients.
CDCL continues to lead and be at the forefront of infrastructure development in the country
and has carved out a name for itself for delivering projects on time, at cost and of quality. The
company successfully made inroads into water supply projects and sewerage and waste management with the execution of water supply and sewerage treatment project for the Jigme
Singye Wangchuck School of Law at Pangbisa in Paro in 2019. This paved the way to secure two
major water supply projects at the Jigmeling and Motanga industrial estates during the year.
There are many other opportunities in infrastructure development opening up and CDCL’s prospects of entering such niche areas of construction are expanding.
CDCL completed and submitted the design for the iconic Lungtenzampa Bridge, a bridge that is
set to become an important landmark for Thimphu city, to the relevant authorities. It is expected that CDCL will be given the work order to construct the bridge on approval of the design.
Another important project in the pipeline is the development of the Norzin Lam area - a project
to facelift the Thimphu town and make it pedestrian friendly.
Apart from the infrastructure works and hydropower construction projects, CDCL continued
to hire out construction equipment and maintain workshop for its machinery fleet. With increasing competition, the operations of the workshops and its viability in the wider scheme of
CDCL’s future mandates are being reviewed.
Some of the significant projects that are in progress and completed during the year are as under:
•
Construction of 132 kV Transmission Line, Nikachhu (completed)
•
Phuentsholing Township Development Project (PTDP) at Phuntsholing
•
Nyera Amari Exploratory Drift Tunneling Project, Martshalla (completed)
•
HRT & Adit Project for Nikachhu Hydropower Project
•
Water supply project, Jigmeling Industrial Estate
•
Marungi Bridge, Pema Gatshel
•
Water supply project, Motanga Industrial Estate
•
Water supply and sewerage treatment project, JSW Law School
•
Motanga Bridge, Samdrup Jongkhar
•
Construction of Royal Guest House in Gelephu
•
Redevelopment of Norzin Lam and Clock Tower in Thimphu
During the year, CDCL developed and introduced a number of new governance systems and
guidelines to ensure the smooth functioning of the company. CDCL further developed its reference rates to ensure uniformity in bidding for projects and to ensure that the projects do not
run into losses. To further aid in the estimation of projects, a costing manual was developed.
A digital strategy was also developed to maximize the business benefits through use of technology. It is further to highlight that the company has started to consider its opportunities and
16
multi-faceted risks as it ventures into the next decade and appropriate mitigation measures are
being put in place to safeguard the investments of the Shareholder in the company including of
course its brand name.
It is also worth highlighting that CDCL has continued to render high quality services at competitive costs and pursued for work orders for projects that the private sector is normally not able
to undertake. The company has been able to brand itself as a reputed construction company
and carve out a niche market for itself and is recognized as one of the best companies for executing important works through the employment of Bhutanese workers at all levels.
2. Audit and Accounts
The Company was audited by M/s Menuka Chhetri & Associates, a Chartered Accountants firm
based in Thimphu. The Annual Accounts of the Company are in keeping with the Bhutan Accounting Standards (BAS) and International Financial Reporting Standards (IFRS).
Auditor’s Observation under Emphasis of Matter
The Statutory Auditor has made one observation under the Emphasis of Matter relating to
non-reconciliation of Property, Plant & Equipment Ledger Balance with Assets Register of Nu.
28,018,934.00.
It has been pointed out that the Company has maintained Property, Plant & Equipment (PPE)
Schedule showing full particulars including quantitative details and situation of PPE. However,
on the review of the Property, Plant & Equipment reflected in the ledger, it has been observed
that the amount doesn’t match with the Assets Register maintained by the company by Nu.
28,018,934.00.
The management has taken into cognizance of this observation to the Audited Accounts. The
Board has reviewed the observation and noted that this mismatch is on account of transfer of
data to the new ERP system. The Board has directed the management to address the mismatch
in the Ledger and Assets Register at the earliest.
3. Financial Performance
The highlights of the Financial Performance of the Company for 2020 (in million Nu.) vis-à-vis
the 2019 performance are as under:t
Sl. No
1
2
3
4
5
6
17
PARTICULARS
Share Capital
Reserve & Surplus
Net worth
Borrowing (Net)
Capital Employed
Gross Block of Assets
FY 2020
1,116.862
(152.121)
964.740
80.738
1270.196
1493.892
FY 2019
966.862
(136.226)
830.635
79.684
956.722
1105.359
7
8
9
10
11
12
13
14
15
Net Block of Assets
Income from Sales
Other Income
Total Income
Expenses
Profit Before Tax
Corporate Tax
Profit After Tax
Dividend
767.753
898.502
43.506
942.008
938.718
3.289
3.856
11.281
0
446.822
782.767
31.108
813.875
903.178
(89.302)
(94.483)
0
Assets
The gross block of assets of the Company increased by Nu. 388.533 million in 2020 from Nu.
1,105.359 million in 2019 to Nu. 1,493.892 million in 2020; mainly on account of capitalization of
the corporate office building and construction equipment purchased for Gyalsung Infra.
Loan/Short Term Borrowings
During the year, the Company availed an overdraft (OD) facility of Nu. 80.738 million on the
strength of the company’s fixed deposits of Nu. 92.530 million in line with prudent management of its funds
.
Revenues and Expenditures
The total revenue turnover including PTDP was Nu. 1,798.010 million while the revenue without
considering PTDP was Nu. 942.008 million.
The total revenue without PTDP increased by Nu. 128 million from Nu. 813.875 million in 2019 to
Nu. 942.008 million in 2020, which translates to a 15% increase over the previous year. However, total expenditures in the FY 2020 also increased by Nu. 35.54 million to Nu. 938.718 million
compared to the expenditure of Nu. 903.178 million in 2019. The expenditures also include the
write-off of mostly dead stocks and inventories amounting to Nu 34.281 million.
The sales turnover increased by 15% compared to total expenditure increase of 3%.
Profitability of the Company
The Company made a profit after tax of Nu 11.281 million in 2020.
4.
Dividend
Though the company made a PAT of Nu 11.281 million, no dividend is proposed due to erosion
of equity by Nu. 152.121 million as of 31st December 2020 due to accumulated losses from earlier
years of operation.
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5.
Bonus
No bonus is proposed for the FY 2020.
6.
Human Resource Development
Effective HR management is paramount to ensuring smooth functioning of the company and in
the transformation of the employees into a dedicated, competitive and resourceful workforce
that is competent to meet the emerging challenges. It is equally important to make the work
place and remuneration attractive so that employment with the company is sought after by
competent individuals and existing employees continue to remain with the company.
CDCL continued to recruit people with experience and credentials to help the Company to further grow as a vibrant and premier organization. CDCL has 257 regular and 89 contract employees. The company has also extended employment opportunities to more than 700 project
based workers across the country. CDCL recruited 31 new employees during the year while 19
employees separated from the company.
CDCL is one of the major agencies supporting human resources for the nationally important
Gyalsung project, which is led by CDCL’s Chief Executive Officer as Project Director, a proud
moment for CDCL to contribute in this endeavour. There are 29 employees from CDCL on deputation to the Gyalsung project led by the CEO and 5 General Managers as below:
•
•
•
•
•
•
•
•
Chief Executive officer
General Managers
Engineers
Architect
Managers
Surveyor
Accountant
Other (Supervisor/Technicians /drivers)
1
5
6
1
5
1
1
9
While the Company provided for opportunities to its employees to upgrade themselves and
acquire new skills through seminars, workshops, trainings and study tours, both within and
outside of the country, such initiatives had to be curtailed to a large extent during the year due
to the Covid-19 pandemic. All trainings, both Ex-country and in-country, had to be postponed
due to restrictions in view of Covid 19 pandemic and as measures to contain the spread of this
pandemic.
7.
Challenges and Future Outlook
CDCL continues to be at the forefront and perform well when compared to its counterparts in
the construction industry. However, there is no room for complacency. The company needs to
upgrade its competence further and adopt technologies to mechanize its operations.
CDCL aspires to be selective in the construction works and explores for more complex and
major development projects beyond the reach of private companies, such as hydropower projects, power transmission projects, major bridges, water supply and sewerage systems, road
19
tunnelling works and other such niche areas of construction. The Company was nominated to
execute part of HRT Package in the Kholongchhu Hydroelectric Project which is set to start very
soon. The Company also plans to compete for the 20% off-loading scope under the two other
Packages of Dam and Power House construction with the Kholongchhu project and efforts are
underway to collaborate with the successful bidder for these scopes.
Bridge construction is another area that CDCL is continuing to build its expertise in as CDCL
strives to execute complex bridge projects without relying on outside expertise. While achieving
complete competence might take some time, CDCL is focused on this with initiatives planned to
build further competence in bridge design and construction.
To enhance professional competence to remain competitive in the market, the Company is continuing to imbibe professional ethos of commercial private construction entities and gradually
moving away from the traditional complacent culture of a public sector company. In this regard, a study on rationalization of employees and institution of guidelines for change management has been incorporated as targets in the Compact FY 2021.
Acknowledgement
In the capacity of the Chairman, I would like to acknowledge the considerable support being
provided by the Shareholder and the Government to CDCL as it forges ahead with its huge mandates at the forefront of the construction industry. The support of the Shareholder has made
the task of the Board and the management that much easier.
I would also like to acknowledge the contributions made by the Board and the Board Sub-Committees in providing guidance and directives to the Company. The Board convened six meetings
and fourteen Board sub-committee meetings and has complied with all the requirements of the
Companies Act of Bhutan.
On behalf of the Directors, I would also like to acknowledge the commendable performance of
the Acting Chief Executive Officer, the senior management and employees of CDCL despite the
disruptions to the operations and projects brought on by the pandemic. I am confident that the
management and staff of CDCL will continue to work with utmost zeal and take on the mandates and challenges with dedication and enthusiasm. Towards this, I must also acknowledge
the continued support being rendered by the Chief Executive Officer despite his very important
engagement with the Gyalsung project.
I would like to assure the management and the employees of CDCL the full support of the Board
in all their endeavors.
TASHI DELEK
(Dasho Chhewang Rinzin)
For and on behalf of the Board
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CORPORATE GOVERNANCE
De-laungching of Bailey Bridge
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CORPORATE GOVERNANCE
Introduction
The Board of Directors and the Management hereby declares that the provisions of the Companies
Act of the Kingdom of Bhutan 2016 and DHI Corporate Governance Code in currency have been
complied with. The company further declares that all activities and transactions were not only
in sync with the Companies Act and CG Code, but other laws as well.
CDCL continues to accord utmost importance to good corporate governance. The company
had made sincere efforts to inculcate best international practices to ensure that the organization is managed professionally in the most transparent, accountable and efficient manner.
Board of Directors
The CDCL Board consists of eight Directors including the CEO and Acting CEO. The Board is the
apex authority in the hierarchical structure of the company. The Board formulates the longterm vision and provides strategic direction to the company to achieve its goals and mandates.
Composition of the Board & Nature of Directorship:
Appt.
Date
& Term
Name
Designation
Address
Position
(CDCL)
Nature of
Directorship
Dasho Chhewang
Rinzin
Managing
Director
Druk Green Power Corporation
Thimphu, Bhutan
Chairman
Independent
Mr Lekzang Dorji
Director
General
Dept. of Macro Economic Affairs
Ministry of Finance
Thimphu, Bhutan
Director
Independent
Mr Karpo
Tshering
Sr. Manager
Druk Holding & Investments Ltd.
Thimphu, Bhutan
Director
DHI Nominee
Director
24th March
2020
1st Term
Mr Phuntsho
Wangdi
Former
Director
General
Independent
8th March
2019
2nd Term
Mr Tenzin
Director
General
Dept. of Roads
Ministry of Works & Human
Settlement, Thimphu
Mr Choiten
Wangchuk
Director
General
Dept. of Geology & Mines
Ministry of Economic Affairs
Thimphu, Bhutan
Mr Phuntsho
Gyeltshen
Chief Executive
Officer
Mr Karma Gayley
Acting CEO
Bhutan Narcotic Control Agency
Thimphu, Bhutan
Construction Development
Corporation Ltd., Thimphu, Bhutan
Construction Development
Corporation Ltd., Thimphu, Bhutan
Director
1st Jan, 2015
4th term
14th March
2017
3rd Term
8th March
2019
2nd Term
Director
Independent
Director
Independent
CEO
Executive
2015+
ACEO
Executive
2020
24th March
2020
1st term
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Board Meetings
CDCL held six Board meetings in 2020. The details of the meetings and Board Directors’ attendance are as follows:
Details of the Board Meeting and Attendance of the Board Directors
Board
Meeting
No.
23
Date
61
14/02/2020
62
09/03/2020
63
23/04/2020
64
26/06/2020
65
10/09/2020
Members Present
1.
2.
3.
4.
5.
6.
7.
1.
2.
3.
4.
5.
6.
7.
1.
2.
3.
4.
5.
6.
1.
2.
3.
4.
5.
6.
1.
2.
3.
4.
5.
6.
7.
Dasho Chhewang Rinzin
Mr Lekzang Dorji
Mr Chencho T. Namgay
Mr Phuntsho Wangdi
Ms Sonam Choiden
Mr Tenzin
Mr Phuntsho Gyeltshen
Dasho Chhewang Rinzin
Mr Chencho T. Namgay
Mr Lekzang Dorji
Mr Phuntsho Wangdi
Mr Tenzin
Ms Sonam Choiden
Mr Karma Gayley
Dasho Chhewang Rinzin
Mr Choiten Wangchuk
Mr Karpo Tshering
Mr Phuntsho Wangdi
Mr Tenzin
Mr Karma Gayley
Dasho Chhewang Rinzin
Mr Lekzang Dorji
Mr Phuntsho Wangdi
Mr Karpo Tshering
Mr Choiten Wangchuk
Mr Karma Gayley
Dasho Chhewang Rinzin
Mr Phuntsho Wangdi
Mr Tenzin
Mr Choiten Wangchuk
Mr Lekzang Dorji
Mr KarpoTshering
Mr Karma Gayley
Apologies
Mr Phuntsho Gyeltshen
1. Mr Lekzang Dorji
2. Mr Phuntsho Gyeltshen
1. Mr Tenzin
2. Mr Phuntsho Gyeltshen
Mr Phuntsho Gyeltshen
66
26/11/2020
1.
2.
3.
4.
5.
6.
7.
Dasho Chhewang Rinzin
Mr Phuntsho Wangdi
Mr Tenzin
Mr Choiten Wangchuk
Mr Lekzang Dorji
Mr KarpoTshering
Mr Karma Gayley
Mr Phuntsho Gyeltshen
Board Committees
The company has four functional Board sub-committees, namely, Board Human Resource Committee; Board Project Committee; Board Procurement/Tender Committee; and Board Audit
Committee, which is mandatory under DHI Corporate Governance Code. The Nomination &
Governance Committee is constituted as and when required, particularly for the appointment
of the chief executive officer.
The sub-committees review strategic plans and important documents of the company and submit its recommendations to the Board.
The sub-committees and the frequency of its meetings during the FY 2020 are as mentioned
hereunder:
Committee
Frequency
of
Meeting
Board Human Resource
Committee
4
Board Project Committee
3
Board Procurement Committee
2
Board Audit Committee
5
Members
No. of
Meetings
Attended
Mr Phuntsho Wangdi (Chairman)
Mr Tenzin
Mr Karpo Tshering
Mr Karma Gayley
Mr Tenzin (Chairman)
Mr Lekzang Dorji
Mr Choiten Wangchuk
Mr Karma Gayley
Mr Tenzin (Chairman)
Mr Phuntsho Wangdi
Mr Karpo Tshering
Mr Karma Gayley
Mr Choiten Wangchul (Chairman)
Mr Lekzang Dorji
Ms Karpo Tshering
4/4
4/4
3/4
3/4
3/3
2/3
2/3
3/3
2/2
2/2
2/2
2/2
4/5
3/5
4/5
24
Remuneration of Board Directors
The remuneration of independent and non-executive Board Directors includes only the sitting
fees. No honorarium or annual salaries were paid. However, the training fees and expenses for
the Board directors’ trainings, if any, were borne by the Company. Per diem for attending meetings to Directors not stationed in Thimphu were also borne by the company.
The details of Board Directors’ remuneration during the FY 2020 are as under:
Board Member
Board sitting fees
Travel
2020 (Nu)
2020 (Nu)
Dasho Chhewang Rinzin
64,000
Lekzang Dorji
56,000
Phuntsho Wangdi
Tenzin
Choiten Wangchuk
Karpo Tshering
80,000
80,000
56,000
72,000
Total
408,000
17,720.00
The remuneration of Executive Director/CEO/ACEO is as reflected hereunder:
Acting Chief Executive Officer
Chief Executive Officer
2020(Nu.)
2020 (Nu.)
2,027,767
2,696,449
Contribution to GPF
133,668
183,948
Leave Encashment
LTC
Travel Administration
Total
74,260
15,000
66,800
2,317,495
102,191
15,000
38,750
3,036,338
96,000
16,000
Particulars
Salary including Allowances
Board Sitting Fees
25
Annual General Meeting
The Annual General Meeting (10th AGM) was convened on 17th March 2021. The representatives of Shareholder/DHI, and the Board and Management Team of CDCL attended the AGM.
Four Board Directors; Dasho Chhewang Rinzin, MD, DGPC; Mr Lekzang Dorji, Director General,
Dept. of Macro Economic Affairs; Mr. Phuntsho Wangdi, Former Director General, Bhutan Narcotics Control Agency; and Mr. Tenzin, Director General, Department of Roads were retired and
reappointed as Directors on the Board of CDCL.
Extraordinary General Meeting
No Extraordinary General Meeting (EGM) was held in 2020.
Risk Management and Internal Control Systems
CDCL continues to accords utmost priority to the risks associated with the company, both at
the enterprise and project levels. A risk management policy named as Enterprise Risk Management Policy was adopted in April 2017 to deal with the risks associated with the Company. In
compliance of the risk policy, a comprehensive risk register had been developed that identifies
the risks associated with the undertakings of the company. The risk register is updated on regular basis to take into account the new contingencies and probable risks that might emerge in
course of the company’s operations.
The auditors, both statutory auditor and internal auditor, acts as a vital body to ensure that
the rules and regulations and internal control mechanisms are complied with. The audit of the
Company for the FY 2020 was conducted by Menuka Chhetri & ASSOCIATES, a chartered accountants firm based in Thimphu, Bhutan.
With construction works as the mainstay activity of the company where accidents are prone, a
safety manual was developed to ensure that working conditions are safe and hazard free.
The Board through its Audit Committee also plays an important role in the management of the
risks of the company. The Board Audit Committee also ensures that proper checks and balances
are put in place and that the functions of the Company are carried out with the frame work of
the rules and regulations of the Company and laws of the nation.
Corporate Social Responsibility
CDCL strongly believes that the company’s primary goal is to serve the nation and benefit the
citizens at large. In the quest to make profit, many organizations lose sight of their responsibility to the society. Companies, especially the large corporations, should do its due to uplift the
nation and its citizens. Further, it is necessary to introspect and ensure that its operations are
not detrimental to the environment, nor averse to the public interest.
Since its inception and more so after the Company ventured into civil construction works in
2011, CDCL has taken upon itself the sacred mandate to create a national workforce that is both
skilled and qualified. CDCL is the only construction firm in the nation where cent percent of
26the
employees, from management and engineers to the workers on the ground, are Bhutanese.
Apart from employing engineers, VTI graduates and unemployed youths, the company also organizes trainings and workshops on various arts of construction and operation of construction
machineries.
As part of corporate social responsibility, the company continues to organize Heavy Machines
Operators Training from time to time to provide hands on job training to the aspiring youths.
In 2020, the company donated five deep freezers to the Thimphu Thromde that would be used
at the crematorium in Thimphu.
Disclosure of material related party transactions between the company, its subsidiaries or
associates or affiliates and a director or key management person.
This requirement had fully been complied, as there had been no material related party transactions either at Board Directors or senior managerial levels.
Policies and Practices of CEO and Board Evaluation
CEO Evaluation
The Board assesses the performance of CEO annually. The assessment is carried out in terms of
short-terms objectives of annual compact carrying 80% weightage and leadership quality carrying 20% weightage. As a long-term performance appraisal system, the Board assesses the CEO’s
performance in terms of his terms of reference.
Performance Based Variable Pay (PBVP) for the CEO is linked to his performance and computed
in concurrence with his/her annual assessment score. A minimum of 85% annual performance
rating has to be achieved to be eligible for reappointment.
Board Evaluation
The evaluation of the performance of the Board and its committees is undertaken annually.
The process also includes self-assessment by individual director. The key parameters consist
dedication and preparedness for the meetings, professional and ethical attributes, teamwork
and contributions in the meeting.
The assessment is rated in an ordinal scale of 1 to 10 where 1 is the lowest score and 10 being
the highest rating. The Chairman of the Board and the CEO of the company carry out the performance evaluations of the Board of Directors.
Compliance Statement
The Board of Directors hereby declares that the provisions of the Corporate Governance Code, and
other policies and guidelines in currency instituted for CEO and Board evaluation have been complied with. Further declared that, all substantive provisions of the Companies Act applicable to the
company have been fully complied with.
27
INDEPENDENT AUDITOR’S REPORT
S/Jongkhar Bridge Constructed by CDCL
28
Report on the Audit of the Financial Statements
To the Members of the Construction Development Corporation Limited:
Opinion
We have audited the financial statements of the Construction Development Corporation Ltd.
(The Company), which comprise the statement of financial position as on December 31, 2020,
and the Statement of Comprehensive Income, Statement of Changes in Equity and Statement
of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the financial position of the Company as at December 31, 2020, and of its financial performance
and its cash flows for the year then ended in accordance with Bhutanese Accounting Standards
(BAS).
Emphasis of Matter
We draw the attention of the shareholders in respect of the following observation,
Non-Reconciliation of Property Plant & Equipment Ledger Balance with Assets Register of Nu.
(3.2.13)
The Company has maintained Property, Plant & Equipment (PPE) Schedule showing full particulars
including quantitative details and situation of PPE. However, on the review of the Property, Plant
& Equipment reflected in the ledger, we have observed that the amount doesn’t match with the
Assets Register maintained by the company by Nu. 28,018,934.37.
Table below depicts the difference amount between the Assets Register and
Ledger or the amount shown in the Financial Statement
SL No.
Particulars
Amt. (Nu.)
1
Amount Reflected in the Asset Register (A)
795,772,860.53
2
Amount Reflected in the Ledger & Financial Statement (B)
767,753,926.16
Difference Amount (A - B)
28,018,934.37
In the financial statement/GL, the Property Plant & Equipment is shown at Nu. 767,753,926.16 but the
Assets Register reflected an amount of Nu. 795,772,860.53 resulting into difference of Nu. 28,018,934.37.
The management must reconcile the Property, Plant & Equipment figures in the Financial Statement
with Assets Register.
Our opinion is not modified in respect of this matter.
29
Responsibilities of Management and Those Charged with Governance for the
Financial Statements.
Management is responsible for the preparation and fair presentation of the financial statements
in accordance with BAS, and for such internal control as management determines is necessary
to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to
liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements.
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the planning and performance of the audit. We also:
i. Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide basis for our opinion. The risk
of not detecting material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions misrepresentations,
or override of internal control;
ii. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for purpose of expressing an
opinion on the effectiveness of the Company’s internal control;
iii. Evaluate the appropriateness of accounting policies used and the reasonableness of Accounting estimates and related disclosures made by management;
iv. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue
as going concern. If we conclude that material uncertainty exists, we are required to draw attention in our audit report to the related disclosures in the financial statements or, if such
30
Responsibilities of Management and Those Charged with Governance for the
Financial Statements.
Management is responsible for the preparation and fair presentation of the financial statements
in accordance with BAS, and for such internal control as management determines is necessary
to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to
liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements.
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the planning and performance of the audit. We also:
i. Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide basis for our opinion. The risk
of not detecting material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions misrepresentations,
or override of internal control;
ii. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for purpose of expressing an
opinion on the effectiveness of the Company’s internal control;
iii. Evaluate the appropriateness of accounting policies used and the reasonableness of Accounting estimates and related disclosures made by management;
iv. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to contin-
31
ue as going concern. If we conclude that material uncertainty exists, we are required to draw
attention in our audit report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However, future events or conditions may
cause the Company to cease to continue as a Going concern; and
v. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We are also required to provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
As required by Section 266 of the Companies Act of Bhutan 2016, we enclose the Minimum
Audit Examination and Reporting Requirements as Appendix-I with statements on the matters
specified therein to the extent applicable.
Further, as required by Section 265 of the Act, we report that:
(a) We have obtained all the information and explanation, which to the best of our knowledge and beliefs were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the
company so far as appear from our examination of the books.
(c) The Statement of Financial Position, Statement of Comprehensive Income, State
ment of Changes in Equity and Statement of Cash Flows dealt with by this report
are in agreement with the books of accounts.
(d) In our opinion, the company has complied with other legal and regulatory require
ments.
32
For Menuka Chhetri & ASSOCIATES
Chartered Accountants
Firm Registration No.:331825E
Address: 5th Floor, MKTS Building,
Opposite Clock Tower, Norzin Lam, Thimphu
Menuka Chhetri
Managing Partner
Membership No.: 534365
Place: Thimphu, Bhutan
Date:
33
MINIMUM AUDIT EXAMINATION AND REPORTING REQUIREMENTS
Our audits was carried out by applying the International Standards on Auditing (ISA) as adopted and issued by the Accounting and Auditing Standards Board of Bhutan (AASBB).
The statutory audit report was prepared under the Companies Act of Bhutan 2016 and other
relevant Acts and regulatory norms in examining the accounts of the company containing inter
alia, the following:
General:
a) The Companies audited adhere to the Corporate Governance Guidelines and Regulations as
applicable to them.
b) The governing board/authority pursue a prudent and sound financial management
practice in managing the affairs of the company.
c) The financial statements are prepared applying the Bhutanese Accounting Standards
issued by the Accounting and Auditing Standards Board of Bhutan (AASBB).
d) Proper books of accounts have been maintained and financial statements are in
agreement with the underlying accounting records.
e) Adequate records as specified under Section 228 of the Companies Act of Bhutan 2016 have been maintained.
f) The mandatory obligations social entrusted are being fulfilled.
g) The amount of tax is computed correctly and reflected in the financial statements.
1. The Company has maintained Property, Plant & Equipment (PPE) Register showing full particulars including quantitative details and situation of PPE. As per the information provided by
the company, they had conducted the Physical Verification of the Assets once during the F.Y
2020.
2. The fixed assets of the Company have not been revalued during the year under audit.
3. The company had conducted physical verification of the inventories as on April-May 2020.
Thus, considering the size and frequency of moment of inventories, the verification conducted
once in the second quarter of year is not adequate. Thus, any shortage or damage at the yearend could not be accounted since the physical verification was not conducted at the year-end.
4. As explained to us, inventories have been physically verified by the management only once
during the F.Y 2020 and could not conduct at the yearend because of the travel restrictions and
prevention to control the spread of COVID 19. Thus, board directives to conduct physical verification twice in a year has not been complied.
5. In the absence of audit evidence as mentioned above, we are unable to comment on the
adequacy of frequency of such verification/ estimation.
6. In absence of adequate physical verification of inventories conducted by the management,
we are unable to comment on the year end discrepancies between physical stock and book
records, if any and adjustment thereof in the books of accounts.
7. The inventories records are adequately maintained by the Company. The method of valuation of inventory for the company is adequate and commensurate with the size and nature of
business.
34
8. As explained to us the Quantitative reconciliation of the inventory has not been carried out
at the end of Financial Year 2020.
9. The Company has identified Obsolete, damaged, and surplus goods during the Financial
Year 2020 in the month of April – May.
10. In view of the above, no obsolete or slow inventories have been disposed off in 2020. The
written off Nu. 30,990,291.25 during the year 2020 will be disposed off in 2021.
11. The obsolete/ slow moving written off is Nu. 30,990,291.25 during the year 2020.
12. The Basis of Valuation of Stock is adequate and no deviation from the preceding financial
year has been observed.
13. According to the information and explanations given to us, the Company has not taken
secured/unsecured loans from companies, firms or other parties and/or from the companies
under the same management.
14. The company has not granted any loans to other parties which are ultra-vires to the Articles of Incorporation and other relevant Acts and regulations.
15.
Advances granted to officers/staff are generally in keeping with the provisions of service rules and no excessive/frequent advances are granted and accumulation of large advances
against any particular individual is avoided.
16. In our opinion and according to the information and explanations given to us in course of
the audit, the Company has generally established reasonably adequate system of internal controls to ensure completeness, accuracy and reliability of accounting records, to carry out the
business in an orderly and efficient manner, to safeguard the assets of the Company as well as
to ensure adherence to the applicable rules / regulations and systems and procedures. However further steps need to be taken to improve the internal control processes.
17. In our opinion and according to the information and explanations given to us, there is a
reasonable system of authorisation at proper levels and an adequate system of internal control
commensurate with the size of the company and nature of its business, on issue of stores and
allocation of Materials and labours to Jobs.
18. In our opinion and according to the information and explanations given to us, having regard to the exception that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate
system of competitive bidding, commensurate with the size of the Company and the nature of
its business, for the purchase of goods and services including stores, raw materials, plant and
machinery, equipment and other assets.
19. As explained to us, the Company has entered into transactions for purchases and sales of
goods and services during the year in pursuance of contracts or arrangements entered into with
the company in which the director(s) are directly or indirectly interested at the prices which are
reasonable considering the prevailing market conditions.
35
20. During the course of our examination of the books of account carried out in accordance
with the generally accepted auditing practices, we have neither come across any personal expenses (other than contractual and/or as per customary business practices), which have been
charged to the Statement of Comprehensive Income nor have we been informed about such
cases by the management.
21. According to the information and explanations given to us and also as examined by us,
there was no cases, where any items of inventory, which are unserviceable or damaged.
22. The Company, in general, has an adequate system of ascertaining and identifying unserviceable or damaged inventories and loss, if any, on the sale of the same, which needs to be
duly accounted /charged in these accounts. Company does not have any polices or manual to
address the above issues.
23. As the Company is engaged in the construction activities the Company is maintaining reasonable records for construction activities.
24. The Company is maintaining reasonable records for sale and disposal of realizable scrap.
The written off death stock of 2020 is yet to be disposed.
25. According to the records maintained by the company and produced to us, the Company
has generally been regular in depositing rates and taxes, provident fund and other statutory
dues with the appropriate authorities. In our opinion, the provision for Corporate Tax is adequate and that necessary adjustments have been made to compute amount of tax required
under the Rules on the Income Tax Act of the Kingdom of Bhutan - 2001.
26. According to the information and explanations provided to us and so far it appears from
the examination of the books, there were Nu.226,193.91 undisputed amounts payable in respect of rates and taxes, provident fund, and other statutory dues as on the last day of Financial
Year 2020.
i.
ii.
TDS
Salary Tax
Nu.210,008.91
Nu. 16,185.00
27. According to the information and explanations provided to us, the company has a reasonable system of allocating man hours utilised to the respective jobs, commensurate with the size
and nature of its business.
28. In our opinion, there is a reasonable system of price fixation taking into account the market
conditions and the cost of purchase of stores, spares and fuels, etc. and hiring charges are fixed
with the approval of the management.
29. According to information and explanation given to us, the Company does not have a policy
of credit rating of customers as most of its revenue is based on contracts obtained through
tendering process.
36
30. Since the Company is not earning revenue through commission agents, this clause is not
applicable.
31. The Company, in general, has a system of following up with debtors and other parties for
recovery of outstanding dues. It was stated to us that Debtors and other parties which are few
in numbers are being monitored for payment without actually doing the age wise analysis of
outstanding claim. As explained to us, age wise analysis of debtors is regularly carried out and
follow up actions undertaken, however the system needs to be further strengthened and improved to recover the dues older than one year.
32. In our opinion, and on the basis of information and explanations given to us, the management of liquid resources, particularly cash/bank etc. are, in generally, reasonably adequate and
excessive amounts are not lying idle in non-interest-bearing accounts. However, the system of
imprest cash management at the project sites need to be improved upon. The Company has not
withdrawn any excess amounts as loans leading to avoidable interest burden on the company.
33. In our opinion and to the extent our examination reveals, the business activities carried out
by the Company are lawful and intra-vires to its Articles of Incorporation.
34. We are given to understand that capital investment decisions are made with prior approval
of the Board and investments in new projects are made only after ascertaining the technical
and economic feasibility of such new projects.
35. The present system of budgeting, in our opinion, is generally reasonable.
36. Since the Company is engaged in the construction activities, no input output relationship
can be established. The Company does not have a system of standard costing but operational
variances are analysed at periodic intervals against budgeted norms.
37. In our opinion and to the extent revealed by our examination, the details of remuneration,
commission and other payments made in cash or in kind to the Board of Directors including
the Managing Director or to any of their relatives by the Company, directly or indirectly, are
disclosed in Note 31. (II) of the Notes to the Accounts.
38. In our opinion and on the basis of examination of books and records, generally the directives of the Board issued have not been complied with in few areas.
39. Although the Company is not a listed entity, furthermore, we are given to understand by
the management that the officials of the Company are refrained from transmitting any sensitive
information which are not publicly available, unauthorized to their relatives/friends/associates
or close persons which will directly or indirectly benefit themselves. We have however relied on
the management assertion on the same and cannot independently verify the same.
40. According to the information and explanations given to us, the company maintains proper records for Inter Unit Transactions/services and arrangement for services made with other
agencies engaged in similar activities
41.
37
According to the information and explanations given to us, proper agreements are exe-
cuted and that the terms and conditions of Lease are reasonable and the same are applied if
machinery and Equipment are acquired on lease or leased out to others.
COMPUTERISED ACCOUNTING ENVIRONMENT
1. The Company has introduced ERP system from 1st January 2018. In our opinion, organizational and system development controls and other internal controls appears to be generally
adequate relative to the size and nature of computer installation.
2. In our opinion, the Company appears to have taken adequate measures and back up facilities commensurate with the size and nature of computer installation.
3. The Company has a Disaster Recovery Plan (DRP) in place commensurate with the size and
nature of business of the Company.
4. The operational controls in the Company are generally adequate to ensure correctness and
validity of input data and output information.
5. According to the information and explanations given to us, measures to prevent unauthorized access to the computer installation and files are adequate.
GENERAL
1. Going Concern Issues:
On the basis of the attached Financial Statements as at 31st December, 2020 and according to
the information and explanations given to us, the financial position of the company is healthy
and we have no reason to believe that the Company is likely to become sick in the near future.
2. Ratio Analysis: Financial and Operational Results of the Company has been given in Annexure to this report.
3. Compliances with the Companies Act of Bhutan, 2016
According to the information and explanations given to us by the management and based on
a Compliance Checklist completed by the Company Officials, the Company has generally complied with the provisions of The Companies Act of Bhutan, 2016.
Our observations in this regard are given below: a. The Company has filed annual return as required by Section 267 of the Act.
b. The Company has held annual general meeting as required by Section 177 of the Act.
c. The Company is following the accrual basis of accounting as required under Section 235(b)
of the Act.
d. Following statutory registers have been maintained by the Company depicting certain prescribed particulars as required to be disclosed under the Act.
38
i.
ii.
Register of Directors
Register of charges [Section 228(c)]
4. Adherence to Laws, Rules and Regulations
The audit of the Company is governed by the Companies Act of Bhutan, 2016 and the scope of
audit is limited to examination and review of the financial statements, as produced to us by the
management. In the course of audit, we have reviewed compliance to the Companies Act and
its Articles of Association and as explained to us, the Company has been generally complying
with appropriate laws, rules and regulations, systems, procedures and practices.
For Menuka Chhetri & ASSOCIATES
Chartered Accountants
Firm Registration No.:331825E
Address: 5th Floor, MKTS Building,
Opposite Clock Tower, Norzin Lam, Thimphu
Menuka Chhetri
Managing Partner
Membership No.:534365
Place: Thimphu, Bhutan
Date:
39
FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2020
(Amount in Nu.)
Particulars
Note No.
December 31, 2020
December 31, 2019
764,045,469.67
3,708,456.49
72,470,159.57
62,224,332.08
40,132,581.46
77,793,289.43
442,055,860.34
4,767,039.49
193,007,250.50
60,113,408.60
25,084,999.80
71,534,822.78
1,020,374,288.70
796,563,381.51
127,061,699.83
205,183,703.92
391,699,655.37
388,790,574.05
21,410,407.86
307,167,615.14
121,683,612.03
98,829,959.22
262,547,795.98
336,860,996.47
63,688,657.08
494,298,135.85
1,441,313,656.17
1,377,909,156.63
2,461,687,945.12
2,174,472,538.36
1,116,862,000.00
(152,121,792.06)
966,862,000.00
(136,226,070.13)
964,740,207.94
830,635,929.87
95,284,718.00
7,698,749.47
6,834,256.67
195,638,435.25
73,785,666.00
4,499,957.63
8,391,371.68
39,409,484.00
305,456,159.39
126,086,479.31
ASSETS
Non-Current Assets
Property, Plant and Equipment’s
Intangibles
Capital Work- in- Progress
Long Term Financial assets
Deferred Tax Asset
Other Non-Current Assets
1a
1b
2
3
4
5
Current Assets
Inventories
Investments
Trade Receivables
Accrued Income
Cash and Cash Equivalents
Other Current Assets
6
7
8
9
10
11
TOTAL ASSETS
EQUITY AND LIABILITIES
Share Holder Equity
Paid up Share capital
Retained Earnings
12
13
Non-Current Liabilities
Long Term Employee Benefits
Deferred Tax Liability
Grant Asset
Other Non-Current Liabilities
14
20
21
15
40
Current Liabilities
Short Term Borrowings
Trade Payables and Other Payables
Income Tax Payable
Other Current Liabilities
16
17
18
19
TOTAL EQUITY & LIABILITIES
80,738,603.03
405,488,777.80
3,856,930.87
701,407,266.09
79,684,067.79
356,001,133.09
782,064,928.30
1,191,491,577.79
1,217,750,129.18
2,461,687,945.12
2,174,472,538.36
The above statements of Financial Position should be read in conjunction with the
accompanying notes.
For Menuka Chhetri & Associates Chartered Accountants
Chairman
Firm Registration No. 331825E
CA. Menuka Chhetri (Partner)
Membership No. 534365
Place:- Thimphu, Bhutan
Date:
41
On behalf of Board
Acting Chief Executive Officer
Dasho Chhewang Rinzin
Karma Gayley
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED
DECEMBER 31, 2020 (Amount in Nu.)
Particulars
Notes
December 31, 2020
December 31, 2019
898,502,255.93
43,506,501.75
782,767,280.78
31,108,190.90
942,008,757.68
813,875,471.68
600,108,492.89
214,602,066.17
47,083,187.69
1,058,998.09
75,866,088.77
547,462,974.41
174,288,326.84
115,946,494.66
4,447,596.00
61,033,013.60
Total
Profit / (Loss) on Operations before Tax
Tax Expense:
938,718,833.61
903,178,405.51
3,289,924.07
(89,302,933.83)
Tax for prior years
Deferred Tax Income/(Expense)
Provision for Current Tax
11,848,790.19
(3,856,930.87)
INCOME
Turnover
Other Income
22
23
Total
EXPENDITURE
Direct Cost
Personnel Cost
Other Operating Costs
Finance Cost
Depreciation and Amortization
24
25
26
1
27
(12,747,934.00)
7,567,561.29
Total Income Tax
7,991,859.31
(5,180,372.71)
Profit / (Loss) after Tax
Other Comprehensive Income
11,281,783.38
(94,483,306.54)
(27,177,505.00)
(12,382,219.00)
(27,177,505.00)
(12,382,219.00)
Actuarial Gain / Loss on valuation of
Employee defined benefit schemes
Tax expense on prior years
Less: Tax on Other Comprehensive
Income at 30% payable by corporate
entities under local tax rules.
Net Other Comprehensive Income
42
Total Comprehensive Income - Balance
(15,895,721.62)
(106,865,525.54)
carried over
Basic and Diluted Earnings per Share
(14.68)
(108.94)
(Nu)
The above Statements of Comprehensive Income should be read in conjunction with
accompanying notes.
For Menuka Chhetri & Associates
Chartered Accountants
Firm Registration No. 331825E
CA. Menuka Chhetri
(Partner)
Membership No. 534365
Place:- Thimphu, Bhutan
Date:
43
On behalf of Board
Chairman
Acting Chief Executive Officer
Dasho Chhewang Rinzin
Karma Gayley
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2020
(Amount Nu.)
Particulars
Share Capital
Retained
earnings
Balance as on 1 January 2019
981,019,000.00
(22,389,699.91)
Adjustment of land (14,157 Equity share)
(14,157,000.00)
- Adjustment on account of prior expenses & income
- Operating Profit/(Loss) after Tax
- Other Comprehensive Income
(6,970,845.00)
(94,483,306.54)
Balance as at 31 December 2019
966,862,000.00
Balance as on 1 January 2020
966,862,000.00
Equity Injection
150,000,000.00
Balance as at 31 December 2020
For Menuka Chhetri & Associates
Chartered Accountants
Firm Registration No. 331825E
-
Total Shareholders’
Equity
958,629,300.09
(14,157,000.00)
-
- Adjustment on account of prior expenses & income
- Operating Profit/(Loss) after Tax
- Other Comprehensive Income
Accumulated
other comprehensive
income
(12,382,219.00)
(6,970,845.00)
(94,483,306.54)
(12,382,219.00)
(123,843,851.45)
(12,382,219.00)
830,635,929.55
(123,843,851.45)
(12,382,219.00)
830,635,929.55
150,000,000.00
-
11,281,783.38
1,116,862,000.00
(112,562,068.06)
(27,177,505.00)
11,281,783.38
(27,177,505.00)
(39,559,724.00)
964,740,207.94
On behalf of the Board
Chairman
Acting Chief Executive Officer
CA. Menuka Chhetri
(Partner)
Membership No. 534365
Place:- Thimphu, Bhutan
Date:
Dasho Chhewang Rinzin
Karma Gayley
44
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2020
(Amount in Nu.)
Particulars
December 31,
2020
December 31,
2019
A. Cash Flow from operating activities:
Net Profit / (Loss) before taxation
Depreciation and Amortization
Profit on sale/disposal of Property, Plant and
Equipment
Interest Paid on Bank Overdraft
Interest Received on Fixed Deposits
Interest on Gratuity fund
Doubtful Advance & Written off / written back
Grant Asset depreciation reversal
Provisions of Loss
Operating profit before working capital
changes
Adjustments for Changes in working capital
Changes in Trade Receivables
Changes in Accrued Income
Changes in Inventory
Changes in Investments
Changes in Other Current Asset
Changes in Trade and Other Payables
Changes in Other Current Liabilities
Changes in Short Term Borrowings
Changes in Deferred Tax Assets
Changes in Deferred Tax Liability
Changes in Income Tax Payable
3,289,924.07
75,866,088.77
(106,865,525.54)
61,033,013.60
457,451.43
1,058,998.09
(9,739,207.18)
(6,258,466.65)
36,204,593.59
(1,557,115.01)
(38,291,334.94)
61,030,932.17
(5,161,368.12)
4,447,596.00
(7,808,827.79)
(129,151,859.39)
(51,929,577.58)
(5,378,087.80)
(106,353,744.70)
187,130,520.71
49,487,644.71
(80,657,662.21)
1,054,535.24
(15,047,581.66)
3,198,791.84
3,856,930.87
(16,669,120.31)
(164,350,754.61)
31,933,687.33
11,732,201.71
(251,406,337.52)
267,604,861.89
230,029,715.07
(3,901,903.19)
(3,111,509.73)
(4,456,051.37)
(3,764,871.76)
Cash Generation from Operations
Income Tax Paid (including TDS)
(143,790,089.97)
93,639,917.51
Net Cash Generation from operating
Activities (A)
(82,759,157.80)
39,284,805.66
45
(54,355,111.85)
B. Cash flow From Investing Activities:
Changes in long term financial investment (Fixed
Deposits)
Interest Received
Net transfer of Property, Plant and Equipment
Changes in Capital Work-in-Progress
Changes in Grant Asset received
Change in Other Non-Current Assets
(2,110,923.48)
4,949,957.42
15,997,673.83
(398,457,749.27)
120,537,090.93
(6,258,466.65)
7,808,827.79
(6,800,219.00)
(75,993,107.84)
8,391,371.68
-
Net Cash deployed in Investing Activities (B)
(270,292,374.64)
(61,643,169.95)
(1,058,998.09)
21,499,052.00
150,000,000.00
(15,895,721.93)
156,228,951.25
(4,447,596.00)
3,632,599.00
(14,157,000.00)
(6,970,845.00)
39,409,484.00
310,773,283.23
17,466,642.00
(42,278,249.22)
63,688,657.08
(4,891,722.29)
68,254,069.96
Cash & Cash Equivalents at the end of the year
21,410,407.86
63,362,347.67
Cash & Cash Equivalents include
Cash in hand
Balance with Scheduled Banks
21,410,407.86
442.35
63,688,214.73
Cash & Cash Equivalents Reported
21,410,407.86
63,688,657.08
C- Cash flow From Financing Activities:
Interest Paid
Changes in Long Term Employee Benefits
Net Increase in Share Capital
Decrease in Retained Earnings
Changes in Other Non-Current Liabilities
Net Cash Generation from Financing Activities (C)
STATEMENT OF CASH FLOWS
Net Increase/(decrease) in Cash & Cash Equivalents (A+B+C)
Cash & Cash Equivalents at the beginning of the
year
46
For Menuka Chhetri & Associates
Chartered Accountants Firm Registration No. 331825E
CA. Menuka Chhetri
(Partner)
Membership No. 534365
Place:- Thimphu, Bhutan
Date:
47
On behalf of Board
Chairman
Acting Chief Executive Officer
Dasho Chhewang Rinzin
Karma Gayley
ACCOUNTING POLICIES & NOTES TO ACCOUNTS
A:
I.
General Information:
Reporting Entity:
Construction Development Corporation Limited (CDCL) has its genesis in the erstwhile Mechanical Division of the Department of Roads under the Ministry of Works and Human Settlement (MoWHS). On 1st July 2006, it was delinked from MoWHS to function as a self-sustaining
commercial unit under the ministry. Subsequently, in 2010, CDCL was incorporated under the
Companies Act of the Kingdom of Bhutan 2000, thereby becoming a full-fledged state-owned
enterprise. After five years of operations as an SOE, the Ministry of Finance handed over the
ownership of CDCL to Druk Holding and Investments (DHI) in January 2015 as DHI Owned Company (DOC).
After reviewing the similarity in mandates of CDCL and DHI INFRA Ltd. (another DOC mandated
to take up infrastructure projects) and confirming the opportunity to optimize the resources at
the Holding Level, DHI INFRA Ltd. was amalgamated with CDCL on 30th September 2016. The
primary objective of amalgamation was to achieve synergetic benefits, which arise, when the
two companies can achieve more in combination than when they are individual entities.
The main objective of CDCL is to set benchmarks in the construction industry with regard to
delivery of projects on time, quality of construction within budget. Currently it is engaged in
construction of the infrastructure projects like bridges, roads, hiring of equipment and now
embarking into hydropower construction, transmission lines, and Phuntsholing Town Development Project (PTDP)
The company has currently three main regional offices at Hesothangkha, Gelephu and Lingmethang apart from fleet offices, workshops and stores, and head office based in Thimphu.
These financial statements relate to the year ended 31 December, 2020.
This note provides a list of the significant accounting policies adopted in the preparation of
these financial statements to the extent they have not already been disclosed in the other
notes. These policies have been consistently applied to all the years presented, unless otherwise stated.
B:
Disclosure of Significant Accounting Policies:
I.
Basis of Preparation:
i.
Compliance with complete Bhutanese Accounting Standards (BAS/BFRS)
The financial statements of the Company has been prepared in accordance with Bhutanese
Accounting Standards (BAS) Phase I, Phase II and Phase III standards wherever applicable and
also generally accounting practices.
The ‘Accounting and Auditing Standards Board of Bhutan’ (AASBB), has decided to adopt Bhutanese Financial Reporting Standards (BFRS) in phase manner with minor changes. As per road-
48
map issued by AASBB, a total of 18 standards are to be implemented in first phase (Phase I)
commencing in 2013 for a period of 3 years, 9 standards will be implemented in second phase
(Phase II) and 10 standards in third phase (Phase III) in the year 2016 and 2018 respectively
within the period of two years. The Company did early adoption of BFRS 9 and BFRS 15 from 1
January 2015. The Company in compliance with the Companies Act of Kingdom of Bhutan, 2016.
The preparation of financial statements is in conformity with BAS that requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the Company’s accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements are:
• Property, Plant and Equipment: critical judgments are expected for period of use,
condition of the asset, technological advances, regulation, and residual values.
• Actuarial Valuation of Employee Benefits: expected uptake of the gratuities and the discount rate used in the valuation.
• Revenue Recognition: Revenue from construction contracts are recognised overtime using
a method that depicts its performance. The input method of BFRS 15 is followed for measuring the revenue from contracts. Further, accounting estimates are used to ascertain the
total revenue and cost of the project.
Although these estimates are based on management’s best knowledge of current event and
actions, the actual results ultimately may differ from those estimates.
All assets and liabilities have been classified as current or non-current as per the Company’s
normal operating cycle and other criteria. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current
or non-current classification of assets and liabilities.
ii.
Current and Non-Current Classification
The standalone balance sheet presents current and non-current assets, and current and non-current liabilities, as separate classifications. For this purpose, an asset is classified as current if:
• It is expected to be realised, or is intended to be sold or consumed, in the normal operating cycle; or
• It is held primarily for the purpose of trading; or
• It is expected to realise the asset within 12 months after the reporting period; or
• The asset is a cash or equivalent unless it is restricted from being exchanged or used to
settle liability for at least 12 months after the reporting period
xlix
All other assets are classified as non-current.
Similarly, a liability is classified as current if:
It is expected to be settled in the normal operating cycle; or
• It is held primarily for the purpose of trading; or
• It is due to be settled within 12 months after the reporting period; or
• The Company does not have an unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period.
• Terms of a liability that could result in its settlement by the issue of equity instruments at
the option of the counterparty does not affect this classification.
All other liabilities are classified as non-current.
iii.
Historical Cost Convention
The financial statements have been prepared on the historical cost basis except for certain
financial instruments that are measured at fair values at the end of each reporting period, as
explained in the accounting policies below.
• Certain Financial Assets and Liabilities; and
• Defined Benefit Plans – plan assets measured at fair value.
Historical cost is generally based on the fair value of the consideration given in exchange for
goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date, regardless of
whether that price is directly observable or estimated using another valuation technique. In
estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date.
II.
Offsetting
Financial assets and financial liabilities or income and expenses are offset and the net amount
reported in the Statement of Financial Position and Statement of Comprehensive Income
when, and only when, the entity has a legal right and is allowed by the standard to offset the
amounts and intends either to settle on a net basis or to realize the assets and settle the liability simultaneously.
l
III.
Functional and Presentation Currency
Items included in the financial statements of the company are measured using the currency of
the primary economic environment in which the company operates. The functional currency of
CDCL is Bhutanese Ngultrum (Nu) which is also the presentation currency.
iv.
Use of Estimates
The preparation of Financial Statements in conformity with BAS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, the disclosures of contingent assets and contingent
liabilities at the date of financial statements, income, and expenses during the period. Actual
results may differ from these estimates. Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in future periods which are affected.
IV.
Foreign Currency Translation: -
Foreign currency transactions that are completed within the accounting period are translated into Bhutan Ngultrum using the exchange rates prevailing at the date of settlement. Monetary assets and liabilities in foreign currencies at balance date are translated at the rates of exchange ruling at balance date.
Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
Non-Monetary assets and liabilities denominated in foreign currencies that are measured at fair
value are retranslated to the functional currency at the exchange rate at the date that the
fair value was determined. Non-monetary assets and liabilities denominated in a foreign
currency and measured at historical cost are translated at the exchange rate prevalent at
the at the date of the transaction
V.
Property, Plant and Equipment:-
The cost of an item of property, plant and equipment (PPE) is recognized as an asset if, and only
if, it is probable that future economic benefits associated with the item will flow to the Bank
and the cost can be measured reliably.
PPE is initially recognized at cost. The company follows cost model, PPE is stated at cost less
accumulated depreciation and wherever applicable accumulated impairment losses. The initial
cost of PPE includes purchase price, taxes and duties, labour cost, direct financing costs, direct
overheads for self-constructed assets, borrowing costs, other direct costs incurred up to the
date the asset is ready for its intended use including initial estimate of dismantling and site
restoration cost.
51
Capital Work In Progress is stated at amounts expended up to the date of the Statement of
Financial Position. Expenditure on material, labour, contract expenses and directly attributable
cost such as employee costs and overheads, project management expenses incurred during
construction period for executing the particular project are included in CWIP till these are capitalized. Indirect expenditure and overheads incurred is expensed off and are not capitalized.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Company and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognized. All other repairs and maintenance are charged to
the Statement of Comprehensive Income during the financial period in which they are incurred.
Gains and losses on disposal of an items of PPE are determined by comparing the proceeds
from disposal with the carrying amount of PPE and are recognized net within “other income /
other expenses” in Statement of Comprehensive Income.
VI.
Intangible Assets
Intangible asset is an identifiable non-monetary asset without physical substance. It includes
computer software etc.
Intangible assets acquired separately are measured on initial recognition at cost. Intangible
assets with finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Cost includes
expenditure directly attributable to the acquisition of the intangible asset.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognized in
the Statement of Comprehensive Income when the asset is derecognized.
VII.
Depreciation and Amortisation Methods, Estimated Useful Lives
I.
Freehold land: Freehold land is not depreciated.
II.
On other tangible and intangible assets
a.
Depreciation is provided on a pro rata basis on the straight line method to allocate the
cost, net of residual value over the estimated useful lives of the assets.
b.
Where a significant component (in terms of cost) of an asset has an estimated economic useful life shorter than that of its corresponding asset, the component is depreciated over its
shorter life.
c.
Useful life of assets are determined by the Management by internal technical assessments which is as follows:
52
Asset Category
Useful Life in No. of years (%)
Software Application
6.67 Years (15%)
Building & Structures
33.33 Years (3%)
Furniture and Fittings
6.67 Years (15%)
IT Equipment
6.67 Years (15%)
Machinery & Equipment (10 Years)
Machinery & Equipment(15Years)
Machinery & Equipment (6 Years)
Office Equipment
10 years (10%)
15 years (6.67%)
6 years (16.67%)
6.67 Years (15%)
Tools and Plant
6.67 Years (15%)
Semi-Permanent Structure
Asset value between 1000 to 4999
10 Years (10%)
100% and carried at value 1
The cost and the accumulated depreciation for property, plant and equipment sold, scrapped,
retired or otherwise disposed-off are eliminated from the financial statements and the resulting
gains and losses are included in the Statement of Comprehensive Income.
VIII.
Impairment of Non-Financial Assets
The carrying amounts of the Company’s tangible and intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication
exists, then the asset’s recoverable amount is estimated in order to determine the extent of the
impairment loss, if any.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater
of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset or
the cash-generating unit for which the estimates of future cash flows have not been adjusted.
For the purpose of impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely independent of the cash
inflows of other assets or groups of assets (the “cash generating unit”).
An impairment loss is recognised in the Statement of Comprehensive Income if the estimated
recoverable amount of an asset or its cash generating unit is lower than its carrying amount.
Impairment losses recognised in respect of cash generating units are allocated to reduce the
carrying amount of the other assets in the unit on a pro-rata basis.
In respect of other asset, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
53
does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
IX.
Non-current Assets Held for Sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount
will be recovered principally through a sale transaction rather than through continuing use. This
condition is regarded as met only when the asset (or disposal group) is available for immediate
sale in its present condition subject only to terms that are usual and customary for sales of such
asset (or disposal group) and its sale is highly probable. The company must be committed to the
sale, which should be expected to qualify for recognition as a completed sale within one year
from the date of classification.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower
of their carrying amount and fair value less costs to sell. Non-current assets are not depreciated
or amortised.
X.
Inventories
Cost of inventories have been computed to include all costs of purchases (including materials),
cost of conversion and other costs incurred, as the case may be, in bringing the inventories to
their present location and condition.
Inventories are stated at the lower of cost or net realisable value. Cost is determined using the
weighted average method.
XI.
Operating Segment
BFRS 8 ‘Operating Segments’ requires a disclosure of operating results segment wise for the
entity, whose debt or equity instruments are traded in public market or in the process of listing
its securities in public market. Since the company’s equity is not listed in public market, the standard is not applicable to the company. Further, the company is having the revenue mainly from
only one segment i.e. construction activity, hence, the BFRS 8 is not applicable to the company.
XII.
Investments and Other Financial Assets
i.
Initial Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Trade receivables are initially measured at transaction price. Regular
way purchase and sale of financial assets are accounted for at trade date.
54
ii.
Classification and Subsequent Measurement
For the purpose of subsequent measurement, financial assets of the Company are classified in
the following categories:
• Financial assets measured at amortized cost;
• Financial assets measured at fair value through other comprehensive income (FVTOCI); and
• Financial assets measured at fair value through profit and loss (FVTPL)
The classification of financial assets depends on the entity’s business model for managing the
financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.
Financial assets measured at amortized cost:
A financial asset is measured at amortized cost if both the following conditions are met:
i. The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows; and
ii.
Contractual terms of the asset give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost
using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising
from impairment are recognized in the profit or loss. This category generally applies to trade
and other receivables, bank deposits, security deposits, investment in Government Securities,
bonds, cash and cash equivalents and employee loans, etc.
Financial instruments measured at fair value through other comprehensive income
A financial instrument shall be measured at fair value through other comprehensive income if
both of the following conditions are met:
i. The objective of the business model is achieved by both collecting contractual cash flows and selling financial assets; and
ii. The asset’s contractual cash flow represents SPPI.
Financial instruments included within FVTOCI category are measured initially as well as at each
reporting period at fair value. Fair value movements are recognized in other comprehensive
income (OCI). Currently, the Company does not have any asset classified under this category.
55
Financial instruments measured at fair value through profit and loss
Fair value through profit and loss is the residual category. Any financial instrument which does
not meet the criteria for categorization as at amortized cost or fair value through other comprehensive income is classified at FVTPL. Financial instruments included within FVTPL category
are measured initially as well as at each reporting period at fair value. Fair value movements are
recorded in statement of profit and loss.
iii.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with
its assets carried at amortized cost and FVOCI debt instruments. The impairment methodology
applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by BFRS
9 Financial Instruments, which requires expected lifetime losses to be recognized from initial
recognition of the receivables.
iv.
De-recognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognized only when:
• The rights to receive cash flows from the asset have been transferred, or
• The Company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more
recipients.
When the Company has transferred an asset, it evaluates whether it has substantially transferred all risks and rewards of ownership of the financial asset. In such cases, the financial asset
is derecognized. When the Company has not transferred substantially all the risks and rewards
of ownership of a financial asset, the financial asset is not derecognized.
When the Company has neither transferred a financial asset nor retains substantially all risks
and rewards of ownership of the financial asset, the financial asset is derecognized if the entity
has not retained control of the financial asset. When the entity retains control of the financial
asset, the asset is continued to be recognized to the extent of continuing involvement in the
asset.
XIII.
Financial liability
i.
Initial recognition and measurement
Financial liabilities are initially recognised at fair value plus any transaction cost that are attributable to the acquisition of the financial liabilities except financial liabilities at fair value through
profit or loss which are initially measured at fair value.
56
ii.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in following categories:
• Financial liabilities through profit or loss (FVTPL)
• Financial liabilities at amortised cost
Financial liabilities through FVTPL
A financial liability is classified as at FVTPL if it is classified as held‑for-trading, or it is a derivative
or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair
value and net gains and losses, including any interest expense, are recognised in profit or loss.
Financial liabilities at amortised cost
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and any gain or loss on de-recognition are recognised in profit or
loss.
Interest bearing loans and borrowings are subsequently measured at amortised cost using the
EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised
as well as through the EIR amortisation process. For trade and other payables maturing within
one year from the balance sheet date, the carrying amounts approximates fair value due to the
short maturity of these instruments.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to
the end of financial year which are unpaid. Trade and other payables are presented as current
liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
iii.
De-recognition
A financial liability (or a part of a financial liability) is derecognized from the Company’s Balance
Sheet when the obligation specified in the contract is discharged or cancelled or expires.
XIV.
Changes in Accounting Policy (Accounting Policies, Changes in Accounting Estimates
and Errors- BAS 8)
Changes in accounting policy are applied retrospectively. Comparatives are restated and the
effect period(s), not presented, is adjusted against opening retained earnings of the earlier year
presented. Policy changes made on the adoption of a new standard are made in accordance
with that standard’s transactional provisions.
57
The cumulative amount of the change is included in the income statement for the period in
which the change is made except as specified in certain standards (transitional provision)
where the change during the transition period resulting from adoption of the standard has to
be adjusted against opening retained earnings and the impact disclosed.
Where a change in accounting policy has a material effect in the current period, the amount by
which any item in the financial statements is affected by such change should be disclosed to
extent ascertainable. Where such an amount is not ascertainable, the fact should be indicated.
Requires retrospective application of changes in accounting policies by adjusting the opening
balance of each affected component of equity for the earliest prior period presented and the
other comparative amounts for each period presented as if the new accounting policy had always been applied, unless transitional provisions of an accounting standard require otherwise.
Material prior period errors are corrected retrospectively by restating the comparative amounts
for prior periods presented in which the error occurred or if the error occurred before the earliest period presented, by restating the opening statement of the financial position.
XV.
Cash and Cash Equivalents
In the Statement of Cash Flows, “cash and cash equivalents” includes cash in hand, deposits in
current accounts with banks and other short-term highly liquid investments with original maturities of approximately three months or less. Bank overdrafts are shown within borrowings in
current liabilities in the Statement of Financial Position.
XVI.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. Tax is
recognized in the income statement except to the extent that it relates to items recognized in
Other Comprehensive Income. In this case, the tax is also recognized in Other Comprehensive
Income.
i.
Current Income Tax
The current income tax charge is calculated on the basis of the tax laws enacted in Bhutan at
the date of Statement of Financial Position.
Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
ii.
Deferred Income Tax
Deferred income tax is recognised, on all temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. Deferred income
tax is determined using tax rates (and laws) that have been enacted at the Statement of Fi-
58
nancial Position date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
XVII.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all
the risks and rewards of ownership to the lessee.
All other leases are classified as operating leases.
• Rental income from operating leases is generally recognised on a straight-line basis over
the term of the relevant lease. Where the rentals are structured solely to increase in line
with expected general inflation to compensate for the Company’s expected inflationary
cost increases, such increases are recognised in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised on a straight-line basis over the lease
term.
• Rental expense from operating leases is generally recognised on a straight-line basis over
the term of the relevant lease. Where the rentals are structured solely to increase in line
with expected general inflation to compensate for the lessor’s expected inflationary cost
increases, such increases are recognised in the year in which such benefits accrue. Contingent rentals arising under operating leases are recognised as an expense in the period in
which they are incurred.
XVIII.
Employee Benefits:
i.
Retirement Benefits
Under Defined Contribution Scheme
Where employees belong to a defined contribution benefit plan managed by a separate entity,
the company has no legal or constructive obligations to pay further contributions if the fund
does not hold sufficient assets to pay all employees the benefits relating to employee service in
the current and prior periods.
Recognition and measurement of defined contribution plans:
The Company recognizes contribution payable to a defined contribution plan as an expense in
the Statement of Comprehensive Income when the employees render services to the Company
during the reporting period. If the contributions payable for services received from employees
before the reporting date exceed the contributions already paid, the deficit payable is recognized as a liability after deducting the contribution already paid. If the contribution already paid
exceeds the contribution due for services received before the reporting date, the excess is
recognized as an asset to the extent that the prepayment will lead to, for example, a reduction
59
in future payments or a cash refund.
Under Defined Benefit Scheme
The company makes retirement payments based on the final salary and years of service such as
gratuity, separation costs and leave encashment at the time of retirement. The liability for such
payments is accrued on the basis of an actuarial valuation.
• Changes in service cost and interest are charged to the Statement of Income
• Changes to actuarial valuation of the liability are charged to Other Comprehensive Income
Recognition and measurement of Defined Benefit plans:
The cost of providing defined benefits is determined using the Projected Unit Credit method
with actuarial valuations being carried out at each reporting date. The defined benefit obligations recognized in the Statement of Financial Position represent the present value of the
defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined
benefit asset (negative defined benefit obligations resulting from this calculation) is recognized
representing the present value of available refunds and reductions in future contributions to
the plan.
ii.
Other Benefits
Other benefits such as leave encashment and bonus are accrued at year end without actuarial
valuation.
XIX.
Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the Company has a present obligation as a result of past event;
it is more likely than not that an outflow of economic resources will be required to settle the
obligation, in respect of which a reliable estimate can be made. Provisions are generally determined based on best estimate required to settle the obligation at the financial position date.
These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. If the effect of the time value of money is material, provisions are discounted using
a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost
A contingent liability is a possible obligation that arises from past events whose existence will
be confirmed by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources embodying economic benefits will be
required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Information on contingent liabilities is disclosed in the notes to the financial
statements, unless the possibility of an outflow of resources embodying economic benefits is
remote.
60
Contingent assets where it is probable that future economic benefits will flow to the Company
are not recognised but disclosed in the financial statements.
XX.
Capital Management Policies
For the purpose of the Company’s capital management, capital includes issued capital, and Retained Earnings attributable to the equity holders of the parent. The primary objective of the
Company’s capital management is to maximise the shareholder value. The Company manages
its capital structure and makes adjustments in light of the changes in economic conditions and
the requirements of the financial covenants. To maintain or adjust the capital structure, the
Company may adjust the dividend payment to shareholders, return capital to shareholders or
issue new shares.
In order to meet the capital requirements, the Company borrows funds from the Financial Institutions. Such borrowings are repaid as per the terms and conditions attached with the loan.
The Company complies with all externally imposed requirements, if any.
XXI.
Borrowing Cost
General and specific borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
XXII.
Revenue Recognition
CDCL’s operations consist largely of the execution of all kinds of construction and civil engineering projects lasting anywhere from a few months to three or four years. For reporting of
projects, CDCL recognise revenue on performance obligation recognised over a period of
time on stage of completion based on the estimated final profit. This means that income is
reported in line with production, based on degree of completion.
Provision is made for guarantee work based on historical experience and identified risks. The
guarantee period is normally from three to five years. For projects that are expected to make
a loss, the whole loss is recognized in the income statement as soon as it is identified. Costs
related to tenders and other costs related to obtaining projects are recognized as expenses as
they are incurred. The stage of completion is determined on the basis of the work completed
and is normally calculated as the ratio of accrued expenses to date to estimated total expenses
for the project. Accrued expenses to date are equal to book expenses adjusted for time lag in
invoicing (Accrued but not recorded). Income to date is equal to total anticipated expenses
61
plus project contributions multiplied by the stage of completion.
Accrual accounting is used for both income and expenses. Non-invoiced earned income is
booked under accrued income (Work done, but not invoiced). Unearned invoiced income (preagreed payment plans) is booked under trade receivables (Work invoiced in advance / not recognized). Only one of these items may be applied per project. If the item “Work invoiced in advance” is a larger negative amount than invoiced trade receivables for the project, the surplus
is recorded as advance payment from customers (Other current liabilities). Each project thus
shows either a net receivable from the customer or a net debt to the customer. Cost accruals (Accrued, not recorded) are entered under Trade payables, while provisions for guarantee
work on completed projects are entered separately.
2. Revenue comprises the fair value of the consideration received or receivable for the sale
of goods and in the ordinary course of business. The Company recognises revenue when the
entity satisfies a performance obligation identified in the contract by transferring a promised
good (i.e. an asset) to a customer and the amount of revenue can be reliably measured and it
is probable that future economic benefits will flow to the company. An asset is assumed to be
transferred to customer when (or as) the customer obtains control of that asset. Incremental
cost incurred by the company for obtaining as contract with customer is recognised as assets
if the recovery of such cost is expected. Such assets are amortised on a systematic basis that is
consistent with the transfer to the customer of the goods or services to which the asset relates.
The following specific recognition criteria must also be met before revenue is recognized:
Hire charges of Machinery/Equipment are accounted for on the basis of actual hour of usage.
Workshop charges are accounted for on the basis of repair work done.
Sales of Mining and Crushing unit products (stone aggregates) are accounted for on volume
basis.
Income from Civil Projects is recognized on the basis of certification of the work done jointly
by Client and CDCL.
XXIII.
Other Income
Other income comprises interest income on funds invested. Interest income is recognized on
a time proportion basis using effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument
or a shorter period, where appropriate, to the net carrying amount of the financial asset.
XXIV.
Earnings Per Share
The Company presents the basic and diluted EPS data for its equity shares. Basic earnings per
share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equities shares outstanding during the period.
Earnings considered in ascertaining the Company’s earnings per share is the net profit for the
period. The weighted average number of equity shares outstanding during the period and all
periods presented is adjusted for events, such as bonus shares, other than the conversion of
62
potential equity shares that have changed the number of equity shares outstanding, without a
corresponding change in resources. For the purpose of calculating diluted earnings per share,
the net profit or loss for the period attributable to equity shareholders and the weighted average number of share outstanding during the period is adjusted for the effects of all dilutive
potential equity shares.
XXV.
Dividend
Dividend income is recognized when the right to receive payment is established. Dividends (including Interim Dividends) to ordinary shareholders is recognized as a liability and deducted
from shareholder’s equity in the period in which the dividends are declared by the Board of
Directors and approved by the ordinary shareholders. Dividends for the year that are approved
after the reporting date are disclosed as an event after the reporting date.
XXVI. Comparative Information
Where necessary, certain comparative information has been reclassified in order to provide a
more appropriate basis for comparison. 2018 comparative information has been updated to
comply with the introduction of Bhutanese Accounting Standards (BAS/BFRS). The previous
year’s figures have been regrouped/rearranged wherever considered necessary, to conform to
this year’s presentation.
63
Asset
Category
¬Building &
Structures
Cost
Net Book
Value
Depreciation
1.1.2020
Addition
Adjustment *
31.12.2020
1.1.2020
Addition
Adjustment *
31.12.2020
31.12.2020
134,438,397.42
267,984,983.15
2,368,936.17
400,054,444.40
23,330,700.66
14,177,548.38
1,239,596.43
36,268,652.61
363,785,791.79
17,440.12
682,559.88
Building
Structure (10
years)
700,000.00
700,000.00
17,440.12
Furniture &
Fixtures
11,856,381.01
4,503,069.55
119,425.00
16,240,025.56
5,359,942.25
3,044,495.47
94,220.53
8,310,217.19
7,929,808.37
ICT Equipment
23,028,625.61
1,738,721.27
44,950.00
24,722,396.88
12,675,482.57
2,559,857.82
53,394.46
15,181,945.93
9,540,450.95
Machinery
& Equipment
(10 Years)
657,902,840.44
63,777,307.00
2,354,827.00
719,325,320.44
443,972,896.04
31,721,607.90
2,354,826.00
473,339,677.94
245,985,642.50
Machinery
& Equipment
(15 Years)
10,121,768.05
21,751,246.60
-
31,873,014.65
1,089,976.65
1,586,523.86
2,676,500.51
29,196,514.14
Machinery &
Equipment (6
Years)
107,798,326.75
36,001,962.53
227,355.00
143,572,934.28
55,368,935.63
18,252,024.78
140,710.02
73,480,250.39
70,092,683.89
Office Equipment
1,872,126.81
947,573.28
4,900.00
2,814,800.09
577,537.06
530,649.90
4,898.00
1,103,288.96
1,711,511.13
Tools &
Tackles
112,588,031.86
1,036,695.89
635,937.02
112,988,790.73
101,717,198.97
2,925,303.04
488,732.93
104,153,769.08
8,835,021.65
Tools & Tackles 1 year
-
16,190.00
16,185.00
5.00
16,185.00
16,190.00
(5.00)
10.00
Land
25,885,538.00
-
25,885,538.00
-
-
25,885,538.00
Asset held
for sale
12,747,365.45
4,092,660.00
8,654,705.45
12,090,871.24
3,836,103.15
8,254,768.09
399,937.36
Total
1,098,239,401.40
9,865,175.19
1,486,831,975.48
656,183,541.06
8,228,671.52
722,786,505.81
764,045,469.67
398,457,749.27
74,831,636.27
Note 1b: Intangibles
Asset
Category
Software
Total
(Amount in Nu.)
Cost
31.12.2020
Addition
7,120,281.00
7,120,281.00
-
Net Book
Value
Depreciation
Adjustment *
58,480.00
58,480.00
31.12.2020
7,061,801.00
7,061,801.00
31.12.2020
2,353,241.51
2,353,241.51
Addition
1,034,452.50
1,034,452.50
Adjustment *
34,349.50
34,349.50
31.12.2020
3,353,344.51
3,353,344.51
31.12.2020
3,708,456.49
3,708,456.49
64
NOTES FORMING AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
Note 2: Capital Work- in- Progress
Particulars
(Amount in Nu.)
2020
Restated 2019
Mangdechu Work- in- Progress
Tobjikha Relocation
11,144,077.00
480,518.86
Memelhakha Asphalt Plant Demarcation WIP
-
2,161,546.80
Head Quater Corporate Office Construction WIP
-
145,733,799.99
Stock Asset
61,326,082.57
44,631,384.85
Total
72,470,159.57
193,007,250.50
Note 3: Long Term Financial Asset
Particulars
Fixed Deposit with Banks -Long Term
Investment in Corporate Bonds
Accrued Interest on Fixed Deposit (LT)
Total
2020
Restated 2019
48,987,499.00
46,612,128.00
11,500,000.00
11,500,000.00
1,736,833.08
2,001,280.60
62,224,332.08
60,113,408.60
Note 4: Deferred Tax Assets/(Liability)
Particulars
2020
Deferred Tax on Provision for Gratuity
29,110,313.70
21,230,845.80
Provision for Transfer Grant
1,076,692.50
774,679.80
Provision for Repatriation
1,076,692.50
774,679.80
379,992.90
381,059.10
Deferred Tax on Provision for Leave
3,018,247.50
1,923,735.30
Provision Bad debt
5,167,930.79
-
302,711.57
-
40,132,581.46
25,084,999.80
Provision for Carriage Charges
Provision for doubtful advance
Total
65
Restated 2019
Note 5: Other Non- Current Assets
Particulars
2020
Restated 2019
Gratuity Fund with RICL
77,793,289.43
71,534,822.78
Total
77,793,289.43
71,534,822.78
Note 6: Inventory
Particulars
2020
Restated 2019
Consumables
98,568,176.59
61,131,689.55
Spare parts
28,186,834.24
56,336,769.31
306,689.00
4,215,153.17
127,061,699.83
121,683,612.03
Sale Product
Total
Note 7: Investment
Particulars
2020
Fixed Deposit with Banks - (Not available for immediate
use)
Restated 2019
-
92,530,294.00
11,570,066.92
6,299,665.22
Short Term Investment with Bank
193,613,637.00
-
Total
205,183,703.92
98,829,959.22
Accrued interest
Note 8: Trade Receivables
Particulars
Outstanding more than six months
Outstanding less than six months
Total Receivables
Less: Provision for Doubtful Receivables
POL Passbook Security
Retention Money
Retention Money Receivable from ADB
Receivable from DHI
Security Deposit
Total
2020
102,942,265.40
54,608,111.44
157,550,376.84
(17,226,435.96)
140,323,940.88
8,356,282.17
91,082,282.96
146,733,460.36
5,203,689.00
391,699,655.37
Restated 2019
56,725,258.91
53,563,678.42
110,288,937.33
(17,226,435.96)
93,062,501.37
6,378,753.33
74,149,478.90
79,008,987.25
4,217,390.13
5,730,685.00
262,547,795.98
66
Note 9: Accrued Income
Particulars
Accrued Income from Project
Total
2020
Restated 2019
388,790,574.05
388,790,574.05
336,860,996.47
336,860,996.47
2020
Restated 2019
Note 10: Cash or Cash Equivalents
Particulars
Cash -in-hand - As certified by management
-
442.35
Bank balances in Current Accounts
21,410,407.86
63,688,214.73
Total
21,410,407.86
63,688,657.08
Note 11: Other Current Assets
Particulars
Advance TDS & CIT
Advance to Employee
Advance to Supplier
Pre-Paid Expenses
Mobilization Advance
EMD paid
TA Advance
Material Advance paid to Contractor (PTDP)
Retrieved Material-Project
Advance Paid to Contractor (Grant)
Advance Paid to Consultant (Loan)
Receivable RRCO
Total
67
2020
24,453,853.66
1,879,404.04
75,160,704.03
4,593,932.49
7,000,091.65
150,671.50
48,598,299.74
4,535,853.99
140,800,804.54
(6,000.50)
307,167,615.14
Restated 2019
14,655,872.11
957,784.30
71,637,170.69
3,225,376.04
21,990,587.99
130,000.00
39,601.50
74,697,350.00
4,535,853.99
293,466,922.00
5,362,261.14
3,599,356.09
494,298,135.85
Note 12: Equity Share Capital
Particulars
2020
Restated 2019
10,000,000,000.00
10,000,000,000.00
1,116,862,000.00
966,862,000.00
1,116,862,000.00
10,966,862,000.00
AUTHORISED SHARE CAPITAL
10,000,000 Equity Shares of Nu.1,000 EACH
ISSUED, SUBSCRIBED AND PAID- UP
966,862 Equity Shares of NU.1,000.00 each, fully
Paid-up and allotted
(Previous Year - 993,061 Equity Shares of NU.
1,000.00 each, fully Paid-up and allotted)
Total
Note 13: Retained Earnings
Particulars
Retained Earnings
Total
2020
(152,121,792.06)
(152,121,792.06)
Restated 2019
(136,226,070.13)
(136,226,070.13)
Note 14: Long term Employee Benefit:
Particulars
Provision for Retirement Benefits (Gratuity)
2020
Restated 2019
79,569,086.00
61,888,571.00
Provision for Transfer Grant
2,779,409.00
2,313,706.00
Provision for Repatriation
2,779,409.00
2,313,706.00
1,121,306.00
1,121,306.00
Provision for Leave Encashment
9,035,508.00
6,148,377.00
Total
95,284,718.00
73,785,666.00
Provision for Carriage Charges
68
Note 15: Other Non- Current Liability
Particulars
Loan - Corporate Building
Total
2020
195,638,435.25
195,638,435.25
Restated 2019
39,409,484.00
39,409,484.00
Note 16: Short Term Borrowings
Particulars
Bank overdraft
Total
2020
80,738,603.03
80,738,603.03
Restated 2019
79,684,067.79
79,684,067.79
Note 17: Trade Payables and Other Payables
Particulars
Sundry Creditors
Security deposit
Other party Liability
Liability for Audit Expenses
Liability for Audit Fees
Retention Money
Retention Money Payable to Afcons
TA /Overtime/Leave Payable
Personal Income Tax
Other recoveries & remittance
Stale Cheque
Other payables
Salary Payable
Accrued Expenses
Stock received but Not billed
Total
2020
71,330,051.42
1,302,452.77
50,000.00
150,000.00
7,790,238.96
146,733,460.36
860,762.32
16,185.00
158,257.75
301,103.70
36,309,786.95
304,845.02
138,754,730.60
1,426,902.95
405,488,777.80
Restated 2019
60,922,824.00
4,384,170.77
0.22
458,425.75
96,050.00
7,872,640.54
79,008,987.25
1,381,178.60
1,834,903.68
469,772.57
70,500.75
14,440,141.79
7,423,603.30
171,322,307.93
6,315,625.44
356,001,132.59
Note 18: Income Tax Payable
Particulars
2020
Tax on Operating Income
Total
3,856,930.87
3,856,930.87
69
Restated 2019
-
Note 19: Other Current Liabilities
Particulars
2020
Tax deducted at source
210,008.91
Advance from Customer & Other
324,336,471.84
Mobilization advances
126,598,456.13
Advance From DHI
46,770,061.35
Liability for in house Insurance
148,135.00
2% Equity payable to Consultant (PTDP)
276,150.95
Advance Received from ADB (Grant)
153,073,032.28
Advance Received from ADB (Loan)
Provision for Leave Encashment
1,025,317.00
Provision for Gratuity (Current)
17,465,293.00
Provision for Transfer Grant (Current)
809,566.00
Provision for Repatriation (Current)
809,566.00
Provision for Carriage Charges (Current)
145,337.00
Provision for Bonus & PVBA
8,634,285.00
Provision for Doubtful Advance
1,009,038.57
Provision for Salary Incremental Index
215,882.00
Auction sale Proceed
Provision for loss from project (Nikachu HRT and ADIT 4) 19,880,665.06
Total
405,488,777.80
Restated 2019
200,590.26
105,621,771.18
168,778,881.54
123,336,670.69
148,135.00
293,466,922.00
5,362,261.14
264,074.00
8,880,915.00
268,560.00
268,560.00
148,891.00
16,867,946.99
278,750.00
58,172,000.00
356,001,132.59
Note 20: Grant Asset
Particulars
2020
Restated 2019
Asset Grant (Contractor)) - CDCL
683,169.46
893,183.13
Asset Grant (Consultant) - CDCL
499,628.71
600,457.00
Asset-PIU (DHI) - CDCL
5,651,458.50
6,897,731.55
Total
6,834,256.67
8,391,371.68
Note 21: Deferred Tax Liability
Particulars
2020
Deferred Tax Liabilities on depreciation
Total
7,698,749.47
7,698,749.47
Restated 2019
4,499,957.63
4,499,957.63
70
NOTES FORMING AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
Note 22: Turnover
Particulars
Hire Charges
RA income
Income from Design
Income from Asphalt Plant
Workshop Income
Income from Bridge Launching
Sale of Aggregates – Kilikhar
Sale of RMC
Income from PIU (PTDP)
Income from Other Projects
Total
(Amount in Nu.)
2020
118,155,092.67
657,561,250.27
22,738,678.61
16,976,328.00
12,613,191.98
14,232,160.15
4,692,082.50
42,182,563.47
9,350,908.28
898,502,255.93
Restated 2019
104,411,919.38
523,364,740.23
10,364,621.80
58,217,471.44
16,340,734.36
11,163,607.44
4,035,335.00
2,341,337.25
44,445,735.85
8,081,778.03
782,767,280.78
Note 23: Other Income
Particulars
2020
Restated 2019
Interest on Fixed deposit, Bond and Fixed Term Annuity
Interest on Gratuity Fund
Fines & Penalties
Profit on sale of assets & consumables
Other income - YELP
Sale of Documents
Discounting Income
Rental Income
Sale of spare parts
Foreign Exchange Rate Fluctuation
Previous Liability Written Back
Insurance Claim Received
Dep.- Reversal of Grant Asset
9,739,207.18
6,258,466.65
157,745.59
12,061,433.39
1,184,709.00
4,205,299.65
90,418.75
8,252,106.53
1,557,115.01
7,808,827.79
5,773,690.80
231,260.90
5,161,368.12
7,825,588.55
55,400.00
823,305.82
492,960.00
2,349,977.00
3,486.60
582,325.32
Total
43,506,501.75
31,108,190.90
71
Note 24: Direct Cost
Particulars
Equipment / Machinery (HSD)
Equipment / Machinery (Lubricant)
Consumption of spare parts
Registration /Insurance Equipment / Machinery
Repair & Maintenance Equipment / Machinery
Gas & Utilities
Hire charge/Transportation
Project Expenses
Stock Adjustment/COGM
Muster roll payment
Over Time payment
Insurance-Office, Building & Warehouse
Consultancy fees
Expenses -Bridge launching/ de-launching
Total
2020
40,695,876.34
4,896,092.04
23,715,995.63
3,855,699.00
2,370,080.63
1,420,704.93
29,722,779.15
449,613,402.47
5,075,006.48
25,708,543.74
5,534,313.30
6,386,992.68
1,113,006.50
600,108,492.89
Restated 2019
51,700,925.00
7,110,829.76
34,395,959.44
5,761,354.38
3,772,614.98
1,929,754.47
16,229,879.91
386,696,207.94
851,669.95
30,360,530.13
7,112,304.45
340,473.00
1,200,471.00
547,462,974.41
Note 25: Personnel Cost
Particulars
Salaries and Wages
Salary Arrear
Bonus
Leave Encashment
Travelling Expenses
Leave Travel Concession
PBVA
Staff Welfare
Staff insurance
Contribution to Provident Fund
Gratuity Paid
Salary Incremental index
Allowances
Total
2020
99,471,530.00
209,086.00
10,978,289.00
7,954,057.80
5,035,892.67
8,634,285.00
1,038,941.00
15,037,540.70
13,265,341.00
215,882.00
52,761,221.00
214,602,066.17
Restated 2019
76,352,670.00
1,932,047.00
8,819,230.99
5,019,248.00
12,106,101.65
4,682,841.42
5,568,272.72
185,812.00
9,373,361.86
10,931,791.20
39,316,950.00
174,288,326.84
72
Note 26: Other Operating Costs
Particulars
Advertisement
Assets Written Off
Auction fees/Expenses
Auditors fees
Audit Expenses
Bank charges
Board Sitting Fees
Board Meeting Fees
Board Training Expenses
Books and Periodicals
Brand and Management Fee
Consultancy Fees
Corporate Social Responsibility Expenses
Donation
Electricity
Water & Sewerage
Fines & Penalty
General charges
Hospitality & Entertainment
HRC Meeting Expenses
Insurance
Lease Payments
Liveries (OHS)
Office Rent & house
Postal Charges
Gifts &Present
Printing & stationaries
Medical Expense
Recreational Expenses
Registration & Taxation
Pool vehicle POL
Registration, Insurance & Taxes Pool
Repair and Maintenance
Pool vehicle
Building
Furniture
Computers and Peripherals
Office Equipment’s
Tools & Tackles – CDCL
73
2020
Restated 2019
439,305.36
57,796.72
150,000.00
50,000.00
2,794,307.40
300,333.00
692,024.00
30,035.00
447,051.21
2,001,131.21
93,921.60
222,875.00
5,832,939.17
198,029.80
8.63
209,640.01
142,945.00
2,033,314.19
23,553.00
865,795.75
3,985,176.39
625,000.00
60,195.50
25,960.00
1,764,477.09
81,110.00
56,220.00
2,877,149.35
1,018,335.00
535,515.37
576,846.73
89,760.00
98,600.00
300,000.00
1,359,009.63
594,280.00
295,905.00
504,890.28
62,591.00
589,307.72
3,020,842.81
327,680.67
335,000.00
6,311,572.70
138,964.11
1,275,779.64
335,617.19
612,952.00
2,167,425.96
943,033.00
601,590.05
4,198,338.01
2,245,313.33
45,648.41
96,640.00
1,459,921.00
17,360.00
43,455.00
34,800.00
4,533,857.61
868,469.00
774,989.16
1,357,174.10
1,050.00
563,588.05
29,900.00
86,095.00
1,198,771.24
845,626.10
2,700.00
902,794.84
37,895.00
34,625.00
Seminar & Workshop
Telephone/Internet/ fax
HR Training
Royalty
Rimdo Expense
Mining Expense
Restoration Expense
Research & Development
Provision for Bad Debt
Debtors and Creditors Rectification
Inventories written off
Hiring - Pool Vehicle
Loss on sale of Asset
Loss from HRT & ADIT IV adjusted
Security Service
Total
1,610,605.95
786,129.00
25,901.05
1,073,044.00
28,088.00
1,009,038.57
10,392,958.20
34,281,952.53
5,513,928.21
457,451.43
(38,291,334.94)
304,000.00
47,083,187.69
906,225.16
1,882,015.24
9,391,358.02
1,105,017.00
536,049.94
1,583,529.64
179,788.00
17,047,133.26
45,622,000.00
50,000.00
115,946,494.66
Note 27: Deferred Tax Income/(Expenses)
Particulars
Deferred Tax Income /(Expenses)
Total
2020
11,848,790.19
11,848,790.19
Restated 2019
7,567,561.29
7,567,561.29
Note 28: Fair Value Measurement
i.
Fair Value Hierarchy
This section explains the judgments and estimates made in determining the fair values of the
financial instruments that are (a) recognized and measured at fair value and (b) measured at
amortized cost and for which fair values are disclosed in the financial statements. To provide
an indication about the reliability of the inputs used in determining fair value, the Company has
classified its financial instruments into the three levels prescribed under the accounting standard.
Level 1: This hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques, which maximize the use of observable market data and rely
as little as possible on entity-specific estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in level 2.
74
Level 3: If one or more of the significant inputs is not based on observable market data, the
instrument is included in level 3.
ii.
Financial instruments by category
Particular
Note As at 31.12.20
As at 31.12.2019
Financial assets
Long Term Financial assets
Investments
Trade Receivables & Other Receivables
Cash and Cash Equivalents
3
7
8
10
62,412,991
205,183,704
391,699,655
21,410,458
674,947,892
60,113,409
98,829,959
269,207,651
63,688,657
336,860,996
16
17
80,738,603
405,488,778
79,684,068
356,001,133
Financial liabilities
Short Term Borrowings
Trade Payables and Other Payables
Note 29: Financial Risk Management
The Company’s activities expose it to credit risk, liquidity risk and market risk (i.e. foreign currency risk, interest rate risk and price risk)
This note explains the sources of risk, which the entity is exposed to, and how the entity manages the risk and impact of it in the financial statements
i.
Credit Risk
Credit risk is the risk of financial loss of the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally form the Company
receivables from customers and loans. Credit arises when a customer or counterparty does
not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade
receivables) and from its financing/ investing activities, including deposits with bank and other
financial instruments.
ii.
Liquidity Risk:
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated
with financial liabilities that are settled by delivering cash or another financial asset.
The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have
sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
75
Exposure to Liquidity Risk
The table below provides details regarding the remaining contractual maturities of financial liabilities at the reporting date based on contractual undiscounted payments.
Particulars
As at 31 December 2020
Borrowings
Trade and other payables
As at 31 December 2019
Borrowings
Trade and other payables
Total
iii.
Less than 1 year
80,738,603
405,488,778
486,227,381
Less than 1 year
79,684,068
356,001,133
435,685,201
Period
1-5 years
1-5 years
-
> 5 years
> 5 years
-
Total
80,738,603
405,488,778
486,227,381
Total
79,684,068
356,001,133
435,685,201
Market Risk
Market risk is the risk of loss of future earnings, fair value or future cash flows that may result
from a change in the price of a financial instrument. The value of a financial instrument may
change as a result of changes in the interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that effect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including
investments and deposits, payables, and borrowings.
a.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market interest rates. The Company exposure to the risk
of changes in market interest rates related primarily to the Company’s short-term borrowings
with floating interest rates. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.
The Company has only fixed rate borrowings and are valued at amortized cost. Further fixed
deposit with banks and other investment made by the Company also bears fixed rate of interest. Interest income and interest expenses, are therefore not subject to interest rate risk as
defined in BFRS 7, since neither the carrying amount nor the future cash flows will fluctuate
because of a change in market interest rates.
Note 30: Capital Management
a.
Risk Management
The company’s objectives when managing capital are to:
76
i.
Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and
ii.
Maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the Company is based on management’s judgment of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. The Company
manages its capital structure and adjusts in light of changes in economic conditions and the
requirements of the financial covenants. The funding requirement is met through a mixture of
equity and short-term borrowings.
The Company’s policy is to maintain a stable and strong capital structure with a focus on total
equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business. The Company will take appropriate steps in order to maintain, or if necessary adjust, its capital structure.
Note 31: Other notes to accounts:
I. The company was functioning as a separate autonomous entity of the Department of Roads,
Ministry of Works and Human Settlement from July 2006. After the company has been corporatized in 2010, allotment of shares has been made to Ministry of Finance, RGoB in 2011
who holds 100% of the shares. However, the company was transferred to DHI from January,
2015 by the Ministry of Finance along with full ownership of the company. DHI has injected
additional equity of Nu. 204,260.000.00 in the year 2016 and the Equity of Nu.200,000,000.00
was also transferred to CDCL upon the amalgamation of CDCL and DHI- INFRA. DHI owns 100%
of shares of the Company. DHI has injected additional equity of Nu.150,000,000.00 in 2020.
The authorized share capital of the Company is Ngultrum Ten Billion (10,000,000,000.00) divided
into Ten Million Equity (10,000,000) equity shares of Nu. One Thousand (1,000) each. The paid up
share capital of the Company is Nu. 1,116,862,000 divided into 1,116,862 shares of Nu. 1,000.00 each.
II.
Particulars of Managerial Remuneration:
Particulars
Salary including
Allowances
Contribution to
GPF
Leave Encashment
LTC
Foreign Travel
77
Acting Chief Executive Officer
2020 (Nu.)
Chief Executive Officer
2019 (Nu.)
2020 (Nu.)
2019 (Nu.)
2,027,767
1,357,288
2,696,449
2,019,429
133,668
83,959
183,948
132,611
74,260
51,310
102,191
91,391
15,000
15000
15,000
15,000
-
-
-
3,763,030
Medical Expenses
-
-
-
-
66,800
154,770
38,750
85,703
2,317,495
1,662,327
3,036,338
2,720,438
96,000
2,000
16,000
88,000
Travel Administration
Total
Board Sitting Fees
III.
Restatement of account:
Restatement of account – 2018
Adjustment on account of change in accumulated depreciation adjusted in retained earnings
of 2019 is now restated in the depreciation of 2018.
Particulars
Property plant and Equipment
Depreciation
Restated 2018
476,740,712.00
72,765,352.84
Restatement
-22,389,688.00
22,389,688.00
2018
499,130,400.00
50,375,664.84
Restatement of account – 2019
Particulars
Current Asset
Trade Receivables
Current Liabilities
Provision for Bonus
Provision for Loss (HRT & ADIT IV)
Income
Income from PTDP
Bills less verified by Client
Expenses
Expense for PTDP
Bonus for 2018 paid in 2019
Loss less provisioned in 2019(HRT &
ADIT IV)
Restated 2018
Restatement
262,547,795.98
-6,659,855.14
8,819,231.00
8,819,231.00
29,242,000.00
29,242,000.00
2018
269,207,651.12
44,445,735.85 -1,043,059,813.87
-6,659,855.14
-6,659,855.14
1,087,505,549.72
-1,043,059,813.87
8,819,231.00
8,819,231.00
1043059814
-
29,242,000.00
29,242,000.00
-
a. Bills receivable for the construction work of PHPA II is restated as the client has ver
ified less amount by Nu.6.659 million. The amount is reduced from the income of 2019.
b. The provision for the loss of HRT & ADIT IV is provisioned to the extent of loss approved.
Additional provision of Nu. 29.242 million is restated in the account of 2019 as the loss was
provisioned less during the previous year.
78
c. Bonus of Nu. 8.819 million is restated in the account of 2019 as the Bonus for 2019 is paid in 2020 without making provision in the account of 2019.
d. Nu. 1,043.059 million is reduced from the income and expenditure of 2019 on account of net- off of PTDP revenue & expenditure.
IV.
Revenue recognition of PTDP Revenue:
The company is implementing a project of DHI with special arrangement of cost plus 2.5% supervision fees on total cost of the project as envisaged in the letter issued by DHI. Though the
works worth Nu 943.810 million was executed in 2020, only the PIU Cost and 2.5 % of supervision
fee amounting to Nu 44.303 million is taken as revenue.
The details of PTDP revenue is as stipulated in the table below:
Description
Amount
Income
Income from PDTP
943.81
Total Income
943.81
Expenditure
Payment to Consultant
58.697
Payment to Contractor
840.81
PIU Expenditure
V.
19.215
Total Expenditure
918.722
Profit
25.088
Contingent Liabilities:
The Company has Outstanding Bank Guarantees amounting to Nu. 135,793,316.12 as at
31.12.2020
VI.
The Company has already initiated the process of availing confirmation from various
parties having debit balances in the books as the date of the financial position. Pending completion of the same, including reconciliation process, any further adverse adjustments to be made
in these accounts are not presently ascertainable at this stage. Directors are of the opinion that
effect of process may not be significant and material in relation to these financial statements.
79
VII.
The estimated amount of contracts remaining to be executed on capital accounts and
not provided for in the accounts is Nu. Nil (Previous Year Nu. Nil), Net of advance
Nu. Nil (Previous Year Nu. Nil).
VIII.
Fixed Deposits, reflected under Long –term financial assets include the following fixed
deposits under lien against the overdraft facilities.
The total sanction overdraft limits and fixed deposits under lien, as at 31 December 2020 are
summarized below.
As at 31 December 2020
Name of the Bank
Druk PNB limited
Sanctioned Overdraft Limits
(Nu.)
80,738,603
Fixed Deposits under lien
(Nu.)
92,530,294
80,738,603
92,530,294
Total
IX. Long Term Employee Benefits (BAS 19):
The company has early adopted of BAS 19 Employee Benefits, which is in the second phase of
Bhutanese Accounting Standards. As the Accounting Standards Board has not pronounced BAS
19 the Company has applied the most recent version of the equivalent IAS 19, IAS 19 (Revised
2011), which applies for financial periods commencing on or after 1 January 2013. Employee retirement benefits are valued on an actuarial basis as it better reflects the estimated liability at
balance date. Assets and obligations for the retirement benefits are netted off.
(a)
Defined Contribution Plan
Qualifying employees are members of the defined contribution plan managed by the National
Pension and Provident Fund. The company matches the employee contributions to the plan.
The only liability on the Company is to make the monthly contributions. The total cost of contributions for the year was Nu. 15,037,846.70 for 2020
(b)
Defined Benefit Plan
Employees are entitled to a lump sum payment on retirement, based on the years of service.
The company obtains actuarial valuation report from RICB for the purpose of valuation of leave
encashment and gratuity. Necessary provision as per actuarial valuation report has been made
in the financial statement.
However, matching investment to the extent of liability provided for has not been made by the
company
80
X. Disclosure of Provisions:
No additional provision has been provided in 2020.
(Amount Nu.)
Provision for doubtful debts
Opening balance
Additions during the year
Closing Balance
Provision for doubtful advance
Opening balance
Additions during the year
Closing Balance
Provision for loss
Opening balance
Additions /adjustment during the year
Closing balance
Provision for Post Employee Benefit *
Opening Balance
Closing Balance
2020
2019
17,226,436.00
17,226,436.00
2020
1,009,038.57
1,009,038.57
2020
53,930,000
-38,291,334
19,880,665
2020
77,204,215
106,504,289
179,303.00
17,047,133.00
17,226,436.00
2019
2019
53,930,000
53,930,000
2019
63,924,287
77,204,215
*Post Employee Benefit*: Gratuity, Leave, Repatriation allowance, Transfer Grant and Charges
XI. Following are the Inter related transactions DHI owned Company as at 31.12.2020:
Description
DOC
Amount
Intragroup deposits
I_BTL
5,713,501.77
Intragroup trade receivables
I_BTL
13,400,000.00
Communication; internet and telephone charges
paid to BTL
I_BTL
1,620,988.95
Service Revenue from DHI Group companies
I_BTL
-58,533,534.62
Balances with BoBL
I_BOBL
17,750,726.03
Bank Charges and fees for other financial services
paid to BoBL
I_BOBL
95,563.01
Intragroup deposits
I_BPC1
474,838.71
Electricity Charges - paid to DHI Group companies
I_BPC1
5,832,939.17
Service Revenue from DHI Group companies
I_BPC1
-56,523,653.67
Intragroup deposits
I_BPC1
37,371,537.11
Intragroup trade receivables
I_DACL
3,593.25
Intergroup trade payables
I_DACL
-8,545.60
81
Flight tickets and other services purchased from
Druk air
Inter group Commission and Brokerage Income
I_DACL
102,436.00
I_DACL
-3,593.25
Intergroup trade payables
Cost of material sold by DCCL to DHI Group companies
Intragroup trade receivables
I_DC01
I_DC01
-2,271,994.14
18,822,181.53
I_DG01
1,157,502.60
Service Revenue from DHI Group companies
Intergroup trade payables
Intergroup Advance
Equity Shares held by DHI
Inter Group Lease Rent
Intergroup Corporate Guarantee Fees
Inter group Brand management Fees
Intragroup trade receivables
Intergroup trade payables
Cost of construction material sold by NRDCL to DHI
Group companies
Inter Group Service Revenue for vehicle
Vehicles
Plant and Machinery
Intergroup trade payables
Cost of construction material sold by STCBL to DHI
Group companies
Running & Maintenance of Vehicle-Intergroup
Running & Maintenance of Vehicle-Intergroup
Running & Maintenance of Others-Intergroup
Intragroup deposits
Inter Group Service Revenue for vehicle
Intragroup trade receivables
Running & Maintenance of Others-Intergroup
Inter Group Consultancy Fees
Intergroup trade payables
I_DG01
I_DI01
I_DI01
I_DI01
I_DI01
I_DI01
I_DI01
I_NRDCL
I_NRDCL
I_NRDCL
-11,407,340.42
-238,063.58
-237,440,067.63
-1,116,862,000.00
160,116.10
238,063.58
208,987.63
23,125.08
-1,288,374.78
3,940,102.74
I_NRDCL
I_STCBL
I_STCBL
I_STCBL
I_STCBL
-90,614.81
4,632,613.00
8,486,060.00
-10,391,040.78
27,023,607.27
I_STCBL
I_STCBL
I_STCBL
I_STCBL
I_THEL
I_TTPL
I_TTPL
I_TTPL
I_TTPL
1,246,644.14
4,811,859.14
280,690.00
300,000.00
75276.5
25,000.00
1,200,000.00
-25,000.00
32,924,203.79
82
Note:
I_BBPL
I_STCBL
I_TTPL
I_DI01
I_WCCL
I_NRDCL
I_BOBL
I_THEL
I_SMCL
I_DACL
I_BPC1
I_BTL
I_DC01
I_DG01
Bhutan Board Product Ltd.
State Trading Corporation Ltd.
Thimphu Tech Park Ltd.
Druk Holding and Investment Ltd.
Wood Craft Centre Ltd.
Natural Resources Development Corporation Ltd.
Bank of Bhutan Ltd.
Tangsibji Hydro Energy Ltd.
State Mining Corporation Ltd.
Druk Air Corporation Ltd.
Bhutan Power Corporation Ltd.
Bhutan Telecom Ltd.
Dungsam Cement Corporation Ltd.
Druk Green Power Corporation Ltd.
XII. While transitioning to the applicable IAS, considerations have been made in respect of
appropriate provisions, to the extent possible, while drawing up these financial statements,
considering the current level of operations carried out by the Company, its share holding pattern and nature of transactions transacted by the Company at this stage only as of the date of
adoption of this financial statement by the Board of Directors. The applicability of the other
provisions/sections will be reviewed at each year-end by the Board of Directors of the Company
for its compliance.
XII. EARNING PER SHARE:
Particulars
1) Overall Profit / (Loss) after Tax
2) Weighted Average Shares (Refer Note Below)
3) Basic and Diluted Earnings Per Share (1/2)
2020 (Nu.)
-20,448,950
1,082,752
-14.68
2019 (Nu.)
-101,352,219
980,980
-108.94
Note: Calculation for Weighted Average of Shares Outstanding for 2020
Particulars
Shares O/s as on 01.01.2020
No. of Shares Cumulative
Issued
Shares
966,862
Fresh introduction – 24.3.2020
Shares O/s as on 31.12 .2020
Weighted Average No. of shares
83
150,000
1,116,862
1,116,862
No. of Days
O/S
83
Weighted
Shares
80,249,546
281
313,838,222
1
1,116,862
1,082,752
XIV. Inventories written off
Old and obsolete inventories which has been carrying in the books of account since the time
company delink from the Ministry is written off after approval of the board. The Inventories
were physically verified and found to be unserviceable.
Sl. No
1
2
Description
Amount
Old and obsolete
spare parts and
30,990,291
miscellaneous
item
Sand Dust &
5% wastage of
aggregate
Total
3,291,661
Location
Remarks
Regional offices and
Phuentsholing Liaison
office
Kilikhar Quarry
Kilikhar Quarry is closed
now. Amount is the worth
of remnants of unsold
sand dust and 5 % wastage for the whole mining
period
34,281,592
XV. Adjustment Provision for loss of Nikachu HRT and ADIT 4 Project:
The loss of Nikachu HRT ADIT IV Project amounting to Nu. 38.29 million is adjusted from the loss
provisioned in the year 2019
XV. Events after the reporting period (BAS-10):
There are no significant events occurred after the reporting period having material impact on
the financial affairs of the Company.
XVII.
Interest waiver from Government because of pandemic:
The company received interest waiver of Nu. 4.966 million and 0.635 million for the loan availed
for corporate building construction and overdraft account respectively from the Druk PNB. The
table below depicts the interest waiver for the year.
Over draft account -110960000057
Description
OD sanctioned as at 31.12.2020
Actual Interest for the year 2020
Interest Waiver for the year 2020
Interest paid during the year 2020
Amount
80,738,603.03
1,573,659.97
514,661.88
1,058,998.09
84
Corporate Building Loan - 110NH0001773
Loan availed
100,000,000.00
Loan balance as at 31.12.2020
86,716,153.00
Actual Interest for the year 2020
7,293,149.06
Interest Waiver for the year 2020
4,966,648.98
Interest paid during the year 2020
2,326,500.08
Accrued Interest 31.12.2020
108,922,282.25
XVIII. Provision For Tax:
The company has provisioned tax of Nu. 3.856 million for the financial year 2020
XIX.
Comparative Information:
Where necessary certain comparative information has been reclassified in order to provide a
more appropriate basis for comparison. Prior year figures have been restated, regrouped or
re-classified to comply with BAS.
XX.
Authorization of Financial Statements:
Financial Statements for 2020 was authorized for issue by the Board of Directors as on March
5, 2021.
85
RATIO ANALYSIS
RATIO
Profitability Ratio
Net Profit Ratio
Return on Assets
Return on Equity
BASIS
Profit before Tax
Sales
Net Profit after Tax
Net Block of Fixed Assets
Net Profit after Tax
Shareholder’s Equity
2020
2019
0.004
-0.114
0.01
-0.21
0.012
-0.114
0.71
0.82
1.17
1.75
1.21
1.13
1.1
1.03
0.96
1.07
0.24
0.22
Operational Efficiency Ratio
Capital Turnover
Fixed Assets Turnover Ratio
Sales
Capital Employed
Sales
Net Block
Liquidity Ratio
Current Ratio
Liquid Ratio
Operating and Maintenance
Expenses
Employee Remuneration to
Sales Ratio
Employee Remuneration to
Sales ratio (without Gyalsung
Infra)
Current Assets
Current Liabilities
Current Assets - Inventory
Current Liabilities
Expenses ( Direct Cost + Personnel
Costs + Other Operating Costs)
Sales
Personnel Costs
Sales
Personnel cost (Over all – GI)
Sales
0.22
86
For Menuka Chhetri & Associates
Chartered Accountants
Firm Registration No: 331825E
CA. Menuka Chhetri
(Partner)
Membership No. 534365
Place: Thimphu, Bhutan
Date:
87
COMPLIANCE CALENDAR AND CHECKLIST
COMPLIANCE CALANDAR
SN
1)
6)
7)
ACTIVITY
Submission of Annual Return
i) Duly filed form as per schedule XII
ii) Balance sheet
iii) Profit & Loss Account
iv) Cash Flow statement
v) Auditors Report
vi) Directors report
Annual General Meeting
Notice calling General Meetings
Payment of Dividend
Presentation of B/S, P & L and Cash
Flow Statement at every AGM
Filing of Documents with Registrar
Appointment of Auditors
8)
Board Meetings (2020)
2)
3)
4)
5)
Section
267
Remarks
Submitted to Registrar on
21/7/2020.
177
185
204
Convened on 24th March 2020.
Notice sent on 4th February 2020.
No dividend declared
244
Presented during the AGM.
267
251
1st Board Meeting
2nd Board Meeting
3rd Board Meeting
4th Board Meeting
5th Board Meeting
Complied.
Menuka Chhetri & ASSOCITES
Seven Board meetings held in
2020.
61 BM 14 Feb 2020.
62 BM 9 March 2020.
63 BM 23 April 2020.
64 BM 26 June 2020.
65 BM 10 Sept 2020
6th Board Meeting
66 BM 26 November 2020.
146 & 149
9)
10)
Appointment of CEO
Appointment of Company Secretary
210
213
No
Reappointed
11)
Statutory Record and Inspection
228
Record maintained and inspected
88
COMPLIANCE CHECKLIST
Check List for Compliance to Provision of the Companies Act of Bhutan, 2016
No. Section
INCORPORATION OF A COMYES
PANY & SECURITIES
1
28
Changes to Articles/ Approval YES
2
47
Change of Name / Approval
3
123
Increase or consolidation of
share capital
YES
4
124
Reduction of share capital
YES
5
82
6
107
7
217
8
221
9
241
242
243
245
10
267
11
177
12
180
89
NO NA REMARKS
Article 5 has been amended.
NO
The share capital increased
by Nu 150 million through
capital injection by DHI.
Reduction in share capital
by Nu 14.157 million through
transfer of land to DHI.
License Copy and Share Certificate filing
Public offer of shares & Debentures- ROC Approval
MANAGEMENT & ADMINISTRATION
Registered office of Company
(Postal Address & Contact
YES
Number)
Publication of name of Company (Letter Head, Seals and YES
Sign Board)
Financial Year of Companies
YES
as of 31 Dec
Extension up to 15 months ROC approval
Extension up to 18 months Authority’s approval
Financial statements to folYES
low BAS
Annual Return Submission
- On / before 31st May for
YES
listed; others 31st July
Annual General Meeting
YES
(Minutes)
Extraordinary General Meeting (Minutes)
NA
NA
NA
NA
Annual return submitted to
ROC.
NO
13
185
Notice for calling general
meeting
187
Listed Co.- written as well as
in media
YES
NA
Public Co./ Private Co.- Written Notice
YES
YES
14
190
Chairman of meeting (CEO
cannot chair)
15
192
Representation of corporations at meeting (appointed
by Board Directors)
16
193
Ordinary and special resolutions (minutes)
17
195
Minutes of Annual General
Meeting and Board Meetings YES
(maintained ss.195-198)
18
199
Declaration and payment of
dividend (199-209)
19
232
Books of account to be kept
by company (location & time
period)
YES
Board's report (signed by
Chairman)
YES
20
NA
YES
NO
21
252
Appointment and removal of
Auditors re - appoint annually YES
(251-259)
22
260
Resignation of Auditors from
office (Annual Resignation)
23
266
Auditing standards (Audit using Auditing Standards issued YES
by AASBB)
Menuka Chhetri & Associates Statutory Auditor.
NO
90
24
133
(Minimum No. & retirement
on rotation) Number of
directors
25
139
Additional directors
26
140
Consent to act as directors
YES
27
141
Certain persons not to be
appointed as directors
YES
28
142
Resignation by a director
YES
29
143
Removal of directors
30
146
Board meetings (4 meetings
for public Cos & 2 Meetings
for pvt cos.)
YES
31
152
General powers of Board
YES
32
156
Restriction on powers of
Board
YES
33
210
Appointment of Chief Executive Officer (Max 5 years
terms & 2 consecutive terms
only)
YES
34
414
Appointment of selling or
buying agents
(govt. Approval obtained or
not)
91
2 Directors retired and
2 new Directors were
appointed. Mr. Choiten
Wangchuk and Mr. Karpo
Tshering were appointed
as Directors to the CDCL
Board.
YES
NO
Mr. Chencho T Namgay &
Ms. Sonam Choiden.
NO
6 Board meetings convened
in 2020.
NA
35
157
No loans to directors (only
for Public co.)
NO NA
36
53
Inter - corporate investment
(investments to be disclosed)
apply old rule
NO
37
158
Contracts in which directors
are interested
NO
38
39
161
Companies to have secretaries
YES
Standard of care required by
directors (Reckless decision)
YES
STATUTORY RECORD AND
INSPECTION
YES
YES
40
228
Statutory record and inspection
41
(a)
Register of buy-back of
shares
NA
42
(b)
Register of transfers
NA
43
(c)
Register of charges
(d)
Register of inter corporate
loans
NO
44
(e)
Register of inter corporate
investments
NO
45
(f)
Register of contracts in
which directors are interested
YES
46
(g)
Register of directors
YES
YES
Company maintains a file
for the same specifying the
conflicts of BOD if any.
92
47
(h)
Register of directors’ shareholding
For Menuka Chhetri & Associates
NA
For Construction Development Corporation
Limited
Chartered Accountants
Firm Registration No: 331825E
CA. Menuka Chhetri , Managing Partner
Membership No. 534365
Name: Kinley Dorji
Company Secretary
Signature/Seal
Name of the inspector/auditor
Note: This compliance checklist is to be used by all concerned until new one is adopted
by registrar of companies.
93
Registered Office: Namtog Lam, Khangulu,
Thimphu 11001, Bhutan
Post Box No.: 573
Tel: +975-2-324569/323702
Email: company@cdcl.bt
Website: www.cdcl.bt
Facebook: https://www.facebook.com/CDCLimited