MIRA INFORM REPORT

Report Date :

19.07.2013

IDENTIFICATION DETAILS

Name :	DRUK AIR CORPORATION LTD.
Registered Office :	Nemeyzampa, Paro.
Country :	Bhutan
Financials (as on) :	31.12.2011
Date of Incorporation :	27.02.1983
Legal Form :	Public Limited Company
Line of Business :	Providing various type of Air Services, Like Passenger, Cargo etc.
No. of Employees :	700

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail: infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – March 31^st, 2013

Country Name	Previous Rating (31.12.2012)	Current Rating (31.03.2013)
Bhutan	B2	B2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

BHUTAN - ECONOMIC OVERVIEW

Bhutan's economy, small and less developed, is based on agriculture and forestry, which provide the main livelihood for more than 40% of the population. Agriculture consists largely of subsistence farming and animal husbandry. Rugged mountains dominate the terrain and make the building of roads and other infrastructure difficult and expensive. The economy is closely aligned with India's through strong trade and monetary links and is dependent on India's financial assistance. The industrial sector is technologically backward with most production of the cottage industry type. Most development projects, such as road construction, rely on Indian migrant labor. Model education, social, and environment programs are underway with support from multilateral development organizations. Each economic program takes into account the government''s desire to protect the country's environment and cultural traditions. For example, the government, in its cautious expansion of the tourist sector, encourages visits by upscale, environmentally conscientious tourists. Complicated controls and uncertain policies in areas such as industrial licensing, trade, labor, and finance continue to hamper foreign investment. The import of equipment and fuel to build hydropower plants is leading to large trade and current account deficits, though new hydropower projects and electricity exports to India are creating employment and will probably sustain growth in the coming years. GDP has rebounded strongly since the global recession began in 2008.

Source : CIA

Company Identification Details

Enquired Name	:	Druk Air Corporation Ltd.
Correct Name of Company	:	Druk Air Corporation Ltd.
Registered Office	:	Head Office Druk Air Corporation Ltd. Nemeyzampa, Paro.
Telephone No.	:	(975) 8 271 856 / 57 / 58
Fax No.	:	(975) 8 271 861
Email Id	:	reservationparo@drukair.com.bt
Corporate / Sales Office	:	Airport Office Nemeyzampa, Paro. Phone: (975) 8 271 423 Email: parostation@drukair.com.bt Branch Office Druk Air Corporation Ltd. Chang Lam Plaza Building, Thimphu. Phone: (975) 2 322 215 / 323 420 / 322 825 Fax: (975) 2 322 775 Email: drukairthimphu@druknet.bt
Industry	:	Air Lines
Nature of Activity	:	[Royal Bhutan Airlines] is the national carrier of the Royal Government of Bhutan, operating to seven cities in six countries. The airline operates two A319. Paro is the only airport in Bhutan which is located in a deep valley at an elevation of 7300 ft above sea level. The surrounding hills are high as 16,000 ft and approach into Paro airport is entirely by visual flight rules. Due to the difficult operating conditions, operations with the Dornier 228 caused many delays and diversions. With the growth of traffic and the expansion of flights, the need for a larger aircraft became necessary. After conducting numerous tests taking into account the difficult operating conditions the British Aerospace BAe 146-100 was selected and started operations in November 1988. Within a short span of its introduction the network of Druk Air increased to link Paro with New-Delhi, Bangkok and Kathmandu. From two destinations in 1983 today Druk Air operates from Paro seven times a week to Bangkok where five flights goes via Kolkata and two flights through Gaya (flights via Dhaka and Yangon are currently suspended), thrice to Kathmandu and Delhi. Further, owing to much increase in the commercial demand, Druk Air and the Royal Government of Bhutan considered it necessary to upgrade the Druk Air fleet with newer generation commercial aircraft with increased capacity and performance abilities. The management thus, met up with compatible manufactures that could serve Paro airport and finally brought it down to two manufactures, Boeing and Airbus. After both having done demonstration flights at Paro International Airport, decision was finally made to purchase two Airbus A319. With the purchase contract agreement signed and payments finally made, Druk Air purchased

Official Company Data

Legal Form	:	Public Limited Company
Corporate Identity Number (CIN)	:	B 2415
ROC Code	:	Paro, Bhutan
Registration Date	:	27.02.1983
Issuing Authority	:	Ministry of Finance & Commerce
Authorised Capital	:	1000.00 Lacs 499.08 Lacs
Paid-up Capital	:
Employee	:	700
Business Activity / Product Description	:	Various type of Air Services, Like Passenger, Cargo etc.
Auditor	:	AUDITORS S. Chetri & Co., Bhutan.
Bankers	:	Bhutan Bank Ltd., Paro, Bhutan Bhutan SBI Ltd., Paro, Bhutan

Financial

Board of Directors

Name	Designation
Mr. Yonpo Jigme Ythintey	Chairman
Mr. Phensentsho Wazgdi	Director
Mr. Karmadamcho	Director
Mr. Karmadupchan	Exe. Director

Shareholding Pattern

Shareholders Name

All Share hold by Govt. Royal Govt. of Bhutan

Litigation Search (Last 3 Years)

Party Name	Supreme Court of Bhutan	High Court of Bhutan
M/s. Druk Air Corporation Ltd.	No record found	No record found

Adverse Media Search (Last 3 Years)

News Paper	Status
Bhutan Times	No record found
Bhutan Samachar	No record found

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.59.71
UK Pound	1	Rs.90.59
Euro	1	Rs.78.22

INFORMATION DETAILS

Report Prepared by :

PRL

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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