Flame Tree Group (FTG) has secured Sh905 million ($8.5 million) credit line from SBM bank to improve working capital and fund growth even as the firm froze repayment of maturing loans in the wake of coronavirus.
Chief executive Heril Bangera says in the latest annual report that the firm had to make critical decisions in a relatively short time due to Covid-19 to secure the viability of the 14 companies operating under FTG.
“We are proud of the agreement we signed with SBM, and the confidence they have put in our Group. “This has increased our funding capacity by 60 percent,” said Mr Bangera.
The firm says the new line of credit will provide funding to the group’s working capital, letters of credit and asset financing.
FTG is involved in a range of activities such as manufacturing of plastic water tanks, mobile toilets, septic tanks, pipes, paints, fibre glasses, cosmetic products and synthetic hair.
Mr Bangera says the firm has received loan repayment moratorium of “several months,” initiated budget cuts and postponed projects that were to happen by June due to the disruptive Covid-19.
“In view of the pandemic, a moratorium of several months for all due payments from April has been received from SBM and other banks,” said the firm.
Mr Bangera said this would help protect liquidity, continuous supply of raw materials and ensure the survival even with low income in the coming months as Covid-19 hits businesses. FTG has seen a mixed impact from the pandemic and prevention measures such as curfews, social distancing and closure of schools.
The firm says it has posted increases in sales of water tanks and hand sanitisers as government calls for handwashing to lower risk of spreading the virus.
In addition, the fall in fuel prices triggered by coronavirus has gifted FTG with a decrease of the price of plastic raw materials in the international market.
But on the negative side, FTG says its Rwanda operations have been heavily affected with reduced sales for products such as snacks, spices and the playground business.