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The Shareholders

Penden Cement Authority Limited


On behalf of the Board of Directors of the Company and on my own behalf, I extend a cordial welcome to all the shareholders of Penden Cement Authority Ltd. to the Twenty Eighth Annual General Meeting of the Company.


In presenting the Company’s 28th Annual Report to the shareholders, I am pleased to mention that your company’s overall performance during the year 2013 has been reasonably satisfactory considering the dual impact of economic slowdown and stiff competition from multiple North East cement brands in our market.


Profit before Tax was recorded at Nu.420 Million as against the budgeted target of Nu.428 Million. However, Profit after Tax of the Company was badly hit by the tax assessment done for the year 2010 and 2011 by RRCO Samtse, incurring additional levy of Nu.21.13 Million, which was paid out of the earning of 2013.


Despite that, PCAL managed to achieve most of our 2013 COMPACT performance target.


The comparative production and despatch figures with financial highlights are outlined below:






Clinker Production




Cement Production




Cement Dispatched




Sale of products and other income

(Nu. In mill.)



Profit before depreciation, interest & tax

(Nu. In mill.)



Less: Depreciation

(Nu. In mill.)



Less: Interest

(Nu. In mill.)



Profit before corporate tax

(Nu. In mill.)



Provision for corporate tax for the year

(Nu. In mill.)



Profit after tax

(Nu. In mill.)




(Nu. In mill.)



Transferred to general reserve

(Nu. In mill.)




(Nu. In mill.)




(Nu. In mill.)



Gross block

(Nu. In mill.)



Book value of shares

(Nu. In mill.)



Earnings per share

(Nu. In mill.)




The production of clinker during 2013 was at 238,820.00 MT (86.53%) against the budgeted target of 276,000.00 MT while the cement sold was at 348,722.00 MT (85.05%) against the budgeted target of 410,000.00 MT.

The shortfall in cement dispatch was due to muted demand as well as stiff competition in the market from multiple brands. In the domestic market, dispatch dropped by 23.750% from the earlier year due to lack of construction activities because of continuing loan restriction by the government. To make up for the loss in domestic market, PCAL had to push sales in the Indian market. Although export sales increased by 20%, but due to heavy competition PCAL had to offer bigger discounts, thereby affecting our realization.


The percentage mix between export and domestic sales volume was about 50:50.


Further, due to old Ball Mill technology of our cement mills, maintenance cycle was longer leading to expensive production disruption. However, during the upcoming fiscal, the PCAL would explore newer technology such as Vertical Roller Mills (VRM) to bring efficiencies and drive higher output in our milling operations.


The achieved clinker output was also below the target due to the kiln process problems arising out of the continuing inferior quality limestone of our mines. The ongoing mining exploration in Gaylegphu indicates a good deposit of superior limestone with Total Carbonate (TC) content in excess of 90% as against TC average of 76% of our two existing mines, which would surely improve the efficiency of clinkerization process and augment the capacity.


With the commencement of production of Dragon Cement by DCCL, more competition is anticipated in the future, which will require company to strategize and secure long term competitive advantage to bring continued value to our shareholders.

Therefore, considering the present operational challenges and keeping in mind the long term future sustainability of the company, the management has embarked upon few strategic projects, which are highlighted below.


Project Activities

Limestone Deposit Exploration:

As key part of ongoing efforts in finding another source of limestone for your company, the topographical survey and detailed geological study of limestone between Katley II and Goltey area, under Gaylephu dungkhag commenced from 19th November 2013 and is expected to complete by the end of May 2014.


As of now an area of about 100 acres is covered by topographical survey, and detailed surface geological mapping cover a strike length of about 1.2 km. Topographical survey and geological mapping is conducted on 1:2000 scales. Around 228 samples of limestone are currently being analyzed at PCAL lab, the quality of which is found to be very superior with the total carbonate content (TC) in excess of 90%.


Portland Dolomite Cement

In bringing growth and diversification through new product development, the company has developed new type of cement based on mineral dolomite and is branded as DoloCem. Strength, workability and durability related tests of this product are found positive and in conformity to Bureau of Indian Standards (BIS).


PCAL has now begun industrial production of this DoloCem and already around 30 tons have been bagged and dispatched.


The potential game changer of such cement is that it is an indigenous product manufactured using local raw material while in the manufacture of PPC and PSC, fly ash and slag as expensive additives are imported from India.


In order to achieve wide scale acceptability and application of this DoloCem, the management has already initiated dialogue with relevant authorities like Bhutan Standard Bureau and Bureau of Indian Standard (BIS) for possible certification of this product.


Therefore, to further promote this new cement, discussion with other various stakeholders will be initiated, and few promotional events organized.


HOT ESP Project

In a continuous effort to maintain the clean environment, your company has so far invested Nu.21.6 million on the installation of HOT ESP in addition to the existing NDC (Noric Dust Collector) to control the flow of dust particles into the air. Installation of HOT ESP will help trap the clinker dust which can be again feedback to the system for the production of clinker thereby improving the overall efficiency of the system.

The project is expected to complete within next 3 months.


Audit and Accounts

Like in the past, I am pleased to inform you that the observations of the Statutory Auditor on the performance of your company reflect a commendable financial and commercial discipline. There has been no serious audit observations and the points raised in Auditor’s Report for 2013 have been noted for compliance where required.


Corporate Social Responsibility

Your Company operates and manages the 20-bedded Gomtu Corporate Hospital and has incurred an expenditure of Nu. 9.55 million during the year. Your Company has spent Nu. 1.08 million towards the upkeep of the Ugyen Chholing Monastery, performing pujas and Menlam Chhenmo during the year which is for the spiritual benefit of all in Gomtu and the surrounding areas. Your company has also incurred an expenditure of Nu. 1.94 million towards games and sports activities including childrens day care program and electricity charges for the RBA staff.



Concluding my report to the shareholders at the 28th Annual General Meeting of your company, I would like to place on record my sincere gratitude to Druk Holding and Investments and the Royal Government for the continued encouragement and the support provided to us in navigating the course of the Company.


I also would like to thank the Government of India and the State Governments of West Bengal, Assam, Sikkim and North-eastern Sates of India for the support rendered. Further, our thanks also goes to various Departments of the Royal Government, Financial Institutions, Auditors, Suppliers, Stockists, Agents and our valued customers for their perpetual support and patronage of the Company.


On behalf of the Board of Directors, I would like to acknowledge the outstanding services rendered by the management team, executives, staff and employees of the company. I am confident that the management of PCAL will steer the company to yet another year of exceptional performance in all spheres of its activities despite many challenges.


As a final note, I would be retiring as chairman after the AGM, and therefore I would like to thank all the board directors and the management for the corporation and the support I received, and would like to wish all the directors, management and PCAL a very successful future.


Tashi Delek!


For and on behalf of the Board of Directors of

Penden Cement Authority Ltd.


(Sherub Gyaltshen)


Dated: 29th March, 2014



© 2007 Penden Cement Authority Ltd, Bhutan