Clove prices tumble
The price of cloves has fallen by over Rs. 100 per kg to Rs. 450/470
per kg in January. Former Chairman of the Spices and Allied Products
Producers’ and Traders Association Gulam Chatoor said that at the other
origins, Indonesia and Madagascar, clove prices have been falling and
with a very good crop in Sri Lanka, the world prices have been
declining.
“Practically all exports from Sri Lanka have been going to India
where Sri Lankan cloves enjoy a zero tariff under the Free Trade
Agreement whereas, imports into India from other origins are subject to
a 35% tariff.
India’s annual imports from all countries are around 9000/10000
tonnes. Sri Lanka’s exports have been around 3,000-4,000 tonnes”,
Chatoor said.
Fitch affirms TFI’s national rating at ‘BB+(lka)’
Fitch Ratings Lanka has affirmed Trade Finance & Investments Ltd’s (TFI)
National Long-term rating at ‘BB+(lka)’. The outlook is stable. TFI’s
rating takes into consideration its high capitalisation and good
profitability.
However, the rating is constrained by TFI’s small asset base, limited
product diversity and its narrow funding base. TFI has been in
operations for 30 years and has established a franchise in financing
(lease and hire purchase) of three-wheelers.
Three-wheelers accounted for 95% of assets financed at the nine-month
period ended December 2007 (end-9M08). Pre-tax return on assets (ROA)
was 14.7% in 9M08 (20% in FYE07) and is well above the sector average.
However, ROA has been on a declining trend on account of increasing
effective tax rates, which accounted for 58% of pre-tax income in 9M08.
TFI seeks to shift its portfolio to more leases to gain some tax
advantages.
Fitch expects spreads as measured by net interest margin (24.4% for
9M08) to tighten somewhat due to competitive pressure but to remain
high, due to the high equity base in proportion to its assets.
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