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AREAS OF FINANCIAL RISK |
SLT continues to push ahead with aggressive investment as a necessary requisite in a highly dynamic market place. Such aggressive investment also lays the Company open to risk in the event that desired returns are not achieved from projects into which resources are infused.
The Company has an inbuilt ‘prudence factor’ that ensures careful evaluation of probability of risk with regard to projects put forward for investment.
On evaluation and approval of a project for infusion of financial resources, the project is rigorously monitored to ensure that desired results are obtained.
This system also governs the investments made in our subsidiary companies.
Exchange Rate and Interest Rate Risks
SLT’s foreign currency inflows are maintained in foreign currency accounts, which act as a natural hedge against foreign currency exposure.
This currency hedging policy requires that cash flows from international revenues be first utilised to service the Company’s foreign currency debts. A separate sinking fund in US Dollars is maintained for the redemption of the US$ 100 million notes in 2009.
The Company maintains a mix of fixed and floating rate interest debts, to mitigate the risks arising from volatility of interest rates.
Refinancing, early settlement of loans and alternative financing methods are some of the measures considered when mitigating risks associated with interest rates.
Liquidity Risk
Regular financial planning and monitoring systems are in place to ensure that sufficient cash flows are available to meet all financial commitments. The Company maintains sufficient cash reserves and marketable securities, as well as committed credit facilities in order to support its activities without interruption.
Credit Risk
Comprehensive systems are in place to monitor SLT’s debtors and recoveries. Credit risk originating with customers is also mitigated to a large degree, by the practice of taking initial deposits, as well as through
pre-paid sales. |
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