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Customs duty on plastic furniture too high Customs duty on plastic furniture is far too high, observed Alamuri Venkateswar, General Manager, sales and Marketing Nilkamal Plastics Ltd., of Japan. He said that customs duty on plastic chairs is 35% while other taxes like BTT, GST and others add up to nearly 60%. "Plastic furniture is not an up market product and the government should not tax poor man's product to such an extent", he said. He also disclosed that plastic chairs are ideally suited for the costal areas. "We sell around 10,000 chairs per month in Sri Lanka through our agents Eswaran Brothers", he said. Nilkamal with an annual turnover of Rs. 3 million is the market leader in moulded furniture and crates in India and is the only moulded furniture company in India to receive ISO 9002 certificate from TUV Germany, V. V. Parekh family are the promoters of the group. Produced in completely computerised environment in five factories in India, Nilkamal produces over 20 models ranging from garden chairs, baby chairs, centre tables and stools in a wide range of colours. D. Piramanayagam (Perry) Managing Director, Eswaran Brothers said that in the first six months of 1998 they have sold Nilkamal Products worth nearly USD 30,000. "We have also tied up with Nilkamal to distribute plastic crates to transport soft drinks and for garments and fisheries", he said. He also said that discussions are underway to set up a Nilkamal factory complex in Sri Lanka. "Our philosophy, has been that a satisfied customer is the most valuable asset and consequently the task of creating and keeping customers, has always been uppermost in our minds. To this day we have endeavoured to serve their needs by keeping our establishments stocked with a wide variety of products to make the customer's visit a worthwhile experience, at our 'One Stop' shop", he said. Eswaran Brothers also arranged a fruitful meeting with their area distributers and the Nilkamal factory officials from India and ironed out a series of their problems. The National Development Bank (NDB), in its endeavour to provide value additions to its services and customer convenience, has commenced direct import financing operations by setting up a Trade Finance unit at the head office. Although listed as new in the Bank's product list, these services are in fact an extension of the Bank's traditional financing frontiers from post-import stage to post-shipment stage. A large number of the project related facilities approved by the Bank have import components like the capital goods and working capital inputs elating to such projects. To complete the imports, customers used to be obliged to approach a commercial bank, to obtain import Letters of Credit (LCs) in favour of their suppliers, using the credit facility approved by NDB as collateral. Obviously, it was not the quickest way to do business, as delays were inevitable at each stage of the operation, since the customer had to run between two institutions to get things going. Establishing a Trade Finance Unit within the Bank was the obvious solution to overcome this problem. Now the customers of NDB can get their import Letters of Credit established through the bank within minutes of their facilities being approved. This new facility offers mutual benefits to both parties involved. For the customer, there is convenience plus the ability to enjoy a more comprehensive banking package on flexible terms. For the Bank, the activity naturally brings in additional revenue in return for the risks it undertakes under the LCs issued. Letters of Credit operations are cross-border financial transactions requiring correspondent arragements and credit facilities with banks in various overseas locations. In this respect, NDB has linked up with international banks of the highest repute and has the ability to advise a LC to an overseas supplier (known as the beneficiary in technical jargon) in any destination within the shortest possible time. The Bank has also staffed the Trade Finance unit with experienced personnel, to ensure that LCs issued are in conformity with international practice and to ensure that they are ‘constructed’ in a manner which safeguards the clients interest in the underlying commercial transaction. A Letter of Credit is an undertaking, given by the opening bank to the supplier, of payment upon fulfilment of his commercial obligations to the buyer of goods. The bank verifies fulfilment of such obligations by calling for various documentary evidence from the seller. Constructing a quality LC is a delicate ‘art’ that comes only with experience in the trade and adherence to guidelines such as Uniform Customs and Practice for Documentary Credits issued by the International Chamber of Commerce. NDB's current loan portfolio comprises of project, equipment financing, leasing and working capital related advances, and the Letters of Credit for any import associated with these facilities could be handled through its Trade Finance unit. For those needing recurrent facilities to service imports at regular intervals, the Bank offers ‘revolving’ LC and import loan facilities with various features. One might wonder whether import-financing operations are commercial banking operations confined to commercial banks only. Probably this thinking stems from the mistaken belief that all imports are trade related, and are therefore short term financial products. This is not factually correct. The funding horizon of project related capital goods imports may span several years. Then again, there are other imports, such as import of raw material inputs, that ultimately generate revenue for the repayment of term loans obtained for a project whose risks has been borne by a long term financing institution. They are definitely not short term,. In an era where boundaries within which various institutions conducted ‘exclusive’ business are fast disappearing, the National Development Bank believes that financial institutions too should look outward and face the realities of the new millennium. The Bank considers its entry into Trade Finance operations as a small step in that direction.
The Central Bank's Spot Rates for transactions with Commercial Banks announced on the morning of July 22nd, 1998 were as follows:
The approximate middle exchange rates of following currencies calculated on the basis of cross rates quoted by Gulf International Bank, Bahrain as it appeared in Reuters Financial Information System on July 22nd, 1998 were as follows:
Average rates at which the following currencies were quoted by Commercial Banks in Colombo for Telegraphic Transfers at mid-day on July 22nd, 1998 were as follows:
Average Weighted Prime Lending
Rate (AWRP) and Lowest Prime Rate (LPR) Average Weighted Deposit Rate
of Commercial Banks (AWDR)
* Ex Dividend Price |
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