CWE falls into debt trap
View(s):The Cooperative Wholesale Establishment (CWE) which operates 310 retail outlets countrywide is on the verge of bankruptcy with debts of Rs. 10 billion to two state banks the Bank of Ceylon and the Peoples Bank and Rs. 3 billion to suppliers.The Treasury has turned down a request by Minister of Industry and Commerce Rishad Bathiudeen for Rs.8.5 billion to bailout the CWE. The retail chain is making losses continuously with many of the suppliers already halting supplies due to nonpayment of their dues.
Big suppliers will also curtail their supplies as the CWE has held up payments for 60 to 70 days, a leading fast moving consumer product supplier told the Business Times.Several suppliers were not getting any payment since March this year, following the decision taken by the former CWE Chairman Kiran Atapattu to close the central ware house in Colombo and direct all the supplies to be sent directly to outlets countrywide, a medium scale supplier who wished to remain anonymous said.
CWE took almost five months to pay for the purchases made by them during the months of March and April 2015, he said adding that the confidence of the suppliers had on CWE was lost due to this and some of them halted their supplies and others reluctant to issue goods as per the CWE requirement.The institution is operating without a chairman at present and the ministry official appointed to oversee the functions is not getting involved in operational matters, he disclosed.