- Cites shortage of dollars and commodities as main reasons
- Customers who are unable to make these payments in advance are advised to provide collateral instead.
Alarmed by the growing shortage of raw materials needed for manufacturing, due to the severe shortage of foreign exchange in the country’s banking sector, Sri Lanka’s largest cable manufacturer, ACL Cables PLC, has decided to sell all of its products spot, as a survival strategy to stay afloat by prioritizing the long-term interests of stakeholders in the midst of the looming crisis.
âDue to the current shortage of foreign currency in banks, we are struggling to source adequate quantities of raw materials from foreign suppliers. The restrictions imposed by all the banks under the guise of a currency shortage will very soon translate into a shortage of raw materials and there are signs of shortages since the stocks of raw materials are barely sufficient to meet the demand for the next two months, ACL Cables PLC Executive Director Daya Wahalatantiri briefed the company’s key stakeholders in a letter released last Thursday.
While acknowledging the negative impact of this decision on some clients, he defended the decision to implement strict cash management practices, while noting that it is vital for the company to overcome the impending crisis, by responding to the broader needs of a larger part of the economy as a well-functioning cable manufacturer in the country, in order to serve the long-term interests of all stakeholders.
âThe company has decided to sell all cables for cash, so that we can convert the limited inventory we have on hand into cash and meet the monthly cash needs to purchase more materials from available sources, pay salaries and meet commitments to banks. and the revenue collection authorities in priority, âthe letter said.
Customers who are unable to make these payments in advance are advised to provide securities instead, which will be viewed favorably by banks in the absence of cash payments.
Meanwhile, ACL Cables pointed out that the shortage of foreign exchange is only one of the problems faced by the manufacturing sector at large, including the rapid rise in commodity prices, the depreciation of the rupee and the abnormal shipping rates and delays. Therefore, the letter pointed out that some manufacturing industries are in a “very serious situation”, as well as ACL Cables.
ACL Cables currently has 45 percent of the local cable market and ACL Group of Companies collectively holds 70 percent of the country’s cable market. In addition, it supplies about 80 percent of the cable requirements of duty-free projects owned by foreign investors registered with the Board of Investment.