Asian Paints flags cash flow problems, seeks 30-day additional credit

One of India's most respected companies, Asian Paints has flagged cash flow problems during the lockdown and is seeking 30 days of additional credit from business partners.

In a communication to the business partners, Harish Lade, Vice President, Supply Chain, has written that the situation has now become extremely difficult as cash flows have been severely impacted, with virtually no inflows. This follows the lockdown put in place to control the coronavirus pandemic.

"In this context, we seek your support and cooperation with an increase in payment terms by 30 days over and above the currently prevailing payment terms," the communication says.

"Hence, the payments that are currently in process shall also get paid after 30 days of additional credit. We do understand that this will have an impact on your operations, but we are hoping that the situation comes back to normal in the near future. We shall endeavour to keep you informed about any changes as the situation develops," the Asian Paints official said.

"You have stood by our side during earlier difficult situations and we are sure that this situation will be no different. Our business partners are out greatest strength and Asian Paints is committed to this relationship," the company said.

"During the lockdown, we continue to work from home and strive to ensure that our business partners are not impacted and continued to process transactions and make payments wherever they are due," it has said.

Following the government directives, Asian Paints has closed its business establishments like offices, factories and warehouses to ensure safety of its employees, stakeholders and the general public.

As per company officials, Asian Paints is in touch with vendors and exploring the possibilities of extending credit. This is the request made to the vendors. The cash flows have been affected due to the current ongoing conditions of lockdown. As the situation continues to be uncertain, this is a proactive measure to conserve cash. Overall the company’s reserves are adequate to take care of the situation and this is a temporary step.