We are afraid and sorry to tell you that Uncle Zhang had done a study on MGFA's financial health and have come to conclude that MGFA
may approach cash liquidity problem soon.
Currently 80% of our purchase from factories are perform in cash but most of our sales are given 90days credit term. With the need to pay GST in advance upon implementation coming 1st April 2015 and the surging USD against a week RM. Therefore there is a critical need to tighten control on purchase or else MGFA will end up with growing debt which will ultimately lock IP supply from factories.
On a temporary basis we will have to recapped Siam Spoon monthly credit limit to not more than RM50,000.00 with payment term of 60 days upon receiving of goods.
It is really terrible for us to make this decision, as it will severely impact both MGFA and Siam Spoon business. As advised by our company auditors, this is certainly the only way to ensure the sustainability of MGFA's business through hard times ahead.
We assure that as soon as our business condition retain its normal self, we will recalibrate this terms and limit for more positive growth ahead.
We hope you can offer your opinion and advice on this problem or advice us if you have other better solution. As a well experience and with far sighted businessman like you, I share respect and value to your words always.