Regional plantation companies are seeking government assistance to help them raise up to a billion rupees in debt urgently.
Regional plantation companies are seeking government assistance to help them raise up to a billion rupees in debt urgently. The cash-strapped RPC’s say they need the cash to help pay the higher salaries and arrears that have piled up over the years.
About 20 regional plantation companies want to raise up to Rs. 50 million each and want the government to help them secure the loans from financial institutions.
However, they say they are not demanding any free government handouts.
They say banks are not keen to lend to them readily but they need the money soon to pay festival advances to employees.
Plantation companies have been hit with rising fuel and fertilizer prices and the Economic Service Charge.
In addition employees were recently given a 22 percent wage hike sending the cash flows of some companies in to the negative.
Plantations want the government to help them place the debentures or raise banking finance.
“We have approached the Treasury Secretary and the Minister of Finance to help us with a Rs. 50 m five year debentures for the companies,” Rohan Fernando, Chairman, Planters’ Association told LBR.
Rohan Fernando, who is also a director at Aitken Spence Plantation Management, said plantations they own would have to pay Rs. 77 million in advances and wages before the Deepavali Festival which falls on Thursday, November 11.
Last year 10 out of the 22 companies recorded losses. However tea and rubber prices have improved this year. Prices at the Colombo tea auction hit a new high, with the national sales average for September coming close to the 200-rupee mark.
But some say the rise could be due to the rupee’s substantial depreciation.
Companies expect wage hikes and increase in operational costs to eat into profits.
Plantations employ around 200, 000 people and support a further half a million in indirect employment.
“If the prices are stable we should be able to come out the crisis, but definitely we need the support of the government,” Fernando said.
-LBR Newsdesk: LBOEmail@vanguardlanka.com