Recovery Improving Cash Flows
Bhutan’s ferroalloy and steel industries, based at Pasakha, Phuentsholing near the border with India, have successfully made their first quarterly bank loan repayments since the onset of the global financial crisis.
Bhutan Ferro Alloys, Ugyen Ferro Alloys and Bhutan Concast Pvt Ltd, repaid Nu 8.8 mn, Nu 8.1 mn and Nu 5.7 mn respectively on 31 March. The repayments will be disbursed among a consortium of local lending banks: Bhutan National Bank (BNB), Bank of Bhutan (BoB) and Royal Insurance Corporation of Bhutan (RICBL). The next instalment is due on 30 June.
Five local financial institutions had given a consortium loan amounting to Nu 2.5 bn to the ferroalloy and steel industries in 2006. The borrowers had also borrowed around Nu 1.6 bn from individuals.
Last year the financial institutions and the Bhutan government accepted the industries’ request to defer repayments until the global economy stabilised, on the condition that they pay at least the interest of the loans and inject equity into their projects, which accounts for 50 percent of the loan amount.
“The overall performance of the industries has been better,” the relationship manager of BNB, Pema Jamtsho told the local newspaper, Kuensel, adding that their performances would be based on the performance with the banks. “If cash flow is good, then it means they’re doing good.”
However steel industrialists pointed out that prices had yet to get back to pre-crash levels.
In 2008, the cost of finished TMT bars ranged between Nu 44 and Nu 48 a kg. Today, it is Nu 35-36.
A source at one of the ferroalloy manufacturers said the industry was doing much better compared with last year. “But the market is unpredictable and there will be highs and lows,” he added.
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