Saturday, March 29, 2014

The Gardener

In our younger days we (my elder brother AVL Rao and me) always dreaded one particular job. It was the job of removing the weeds in our house garden. This used to be a tough manual job assigned to us by our eldest brother Ramakrishna Rao (AVR). He was highly interested in gardening as a hobby. People from our village appreciated his skills in maintaining the beautiful garden at our Adekhandi house. There were rare varieties of flower plants in our garden. The visitors to the house always used to praise the beauty of our wonderful garden. Some of them even used to call it a Mini Lalbhag!
We had absolutely no objections for our beloved eldest brother garnering all the attention and praise for his hobby. But we always felt that he was getting this sole credit at our expense. None of the visitors ever felt that the total absence of weeds in our Mini Lalbhag was a contribution by the two of us! Oh! How much suffering we had to undergo while removing certain weeds! There used to be plenty of a particular type of weed called ‘Touch Me Not’! This was called “Naachike Mullu” (Blushing Thorn) in Kannada. Our fingers used to bleed heavily while removing this thorny weed. It was not unusual to see tears rolling down our eyes due to the pain inflicted by such weeds.
Our eldest brother was a tough taskmaster. He would not only entrust the work to the two of us, but also conduct periodical quality checks on our performance. He would take us to task even if he observed a minor weed among his pretty flower plants. Most of the times our misery used to be such that we never appreciated the beauty of the flowers in our own garden. Besides, many of these weeds would reappear after some time. It meant another round of removal of weeds for us. In other words, this was a repetitive periodical job for the two of us. We even felt sometimes that we were bonded labourers under our eldest brother!

AVR's gardening hobby increased over the years.  He used to bring seedlings from several sources and plant them in our house garden.  Our Adekhandi house had several species of rare plants, which the visitors to our home enjoyed and appreciated.
The Real Gardener
Our eldest brother was quite good in his studies. But keeping in tune with those times, our father thought that a pass in lower secondary examination (LS) was more than enough for a village boy. That qualification was also quite sufficient for a village school teacher which was thought as a standard job for a village boy of those days. So that was it. He had to curtail his ambition of going for further studies.
In course of time my immediate elder brother (AVL) also completed his fourth standard. In his case my father perhaps thought that a fourth standard itself was more than enough. He was made to sit at home and engage himself in assisting in agricultural activities.
It was my turn now to join my two elder brothers. By that time our elder brother had realised that there was no future for our family unless we went for higher education. He took it as a challenge to see that his younger brothers got what had been denied to him. He took a decision to make me continue my education further. This was inspite of the fact that he had limited resources at his command. I was first sent to the Middle School. After some time AVL was also made to revive his education career at the behest of our elder brother. I should say that this decision of our beloved brother became a turning point in our family affairs. Our brother supported us knowing fully well that our family could not afford to offer any financial support. Eventually both of us completed our graduation to become the first persons in our village to achieve this distinction.
Today our beloved eldest brother is not with us anymore. But the educational foundation he laid for two of his younger brothers has enabled our family members to stand on their own feet. All of us are comfortably placed financially – thanks to this Gardener who nurtured the two of us just like he brought up the flower plants in his beautiful garden.

AVR in discussions with the famous Kannada singer B K Sumitra
(Standing in between is my younger brother Madhava)

As a tribute to my brother it may not be out of place for me to present below two of the flowers from our house garden:

The Brahma Kamala (Night Queen) and the traditional Jasmine flowers at their full Beauty

Friday, March 28, 2014

My Days South - Episode No.13

As mentioned by me earlier, the Senior Manager Kudva had his cabin in the main branch at the MG Road, while our Corporate Cell was located at the Church Street at a walking distance from the branch. I took the company official to him for taking him to the unit for the stock verification. It was obvious to me that Kudva had received instructions from the Head Office to release the limit at any cost. Even though he was trying to make it a routine job, the pressure under which he was acting could not be hidden.
I should mention here that there was a difference between his attitude and our attitudes (me and the other two officers). Kudva had been posted to our prestigious branch with a clear indication that he would leave the branch only on promotion to the selection grade. He was very ambitious at that stage and he knew it was very important to follow the instructions of HO even at the cost of overlooking certain basic norms at his personal risk. He was indeed in a catch 22 situation. He had to somehow release the limit to the party and he was trying to convince himself that what he was doing was perfectly alright.
However, I and the other two officers were quite sure that the account was likely to land us in problem sooner or later. We had no illusions about the honesty of the party. We knew that the enhanced limit was being thrust on us by unknown hands in HO and we had decided not to deviate from the procedures even at the cost of our future promotions. I also thought that as I was not a party to the enhancement recommendation, I would be out of trouble if the enhanced limits were released after the stock inspection by Kudva himself.
But Kudva was a very shrewd person. As he was stepping into the vehicle along with the company official he saw me going back to the Corporate Cell. He suddenly gestured to me to stop. He requested me to join him in the vehicle. I immediately developed a feeling that I was being trapped. But there was no way I could refuse his request. I got into the vehicle much against my wishes.
We were at the corporate office of the company within a short time. The MD of the company was all smiles on seeing us. We were taken to the unit for stock verification. Kudva started asking all sorts of questions to the official who took us around and physically showed the stock items as listed in the statement submitted to the branch. All the items were supposed to be computer hardware items about which we had very little exposure in those days. Kudva also verified the purchase invoices and appeared to be fully convinced of the genuineness of the stock declared in the statement.
We left the place and came back to the branch. Kudva certified the statement for having inspected the stock as provided for in the statement itself. As the CC limit exceeded Rs10 lakh, a copy of the statement duly certified was also sent to the Large Borrowal Accounts Section at the Circle Office. Later Kudva also signed the stock inspection register which was maintained by us meticulously. Basing on the inspection certificate the limit was released by us and advised to the main branch where the operative accounts were being maintained.
The company withdrew the money from the CC account over a period of time. The role of our Corporate Cell was limited to advising the limit to the branch. Further monitoring was done at the branch only. Subsequent two inspections of the stock were conducted by the two other officers working under me. The inspection was done quarterly as permitted in the sanction.
I had mentioned earlier that an imported consignment of the company had been seized by the Customs Authority. The case was handed over by the customs to the Central Bureau of Investigation (CBI). An officer from CBI visited our branch for investigation. He could not find any irregularity in the matter of opening the letter of credit by our branch. He gave the branch a clean chit.
All the three corporate accounts of the party started showing sickness after some time. The supply bills remained overdue. The activities came to a standstill at the outstation units also. We were asked to get the stock at the Bangalore unit valued by an outside professional. The party also agreed for such valuation. We fervently hoped that once the valuation of the stock was done by the professional, the branch may be out of trouble.
But the party went on delaying access to the valuer to conduct his valuation. Ultimately he had to give up. In the meanwhile a special inspection of overdue supply bills was conducted by the inspection department. The inspector came to the conclusion that the bills discounted were mostly accommodation bills.
While submitting his report, the inspector also made a special mention that the Bangalore unit had been sanctioned substantial enhancement in the CC limit recently. He specifically mentioned that the enhanced limit was released on the basis of stock inspection conducted by the Senior Manager Kudva.
This remark made Kudva shaky as he knew he had certified the stock under pressure from the Head Office. He suddenly remembered that I had also visited the unit along with him as requested by him. He desperately wanted to involve me at that stage somehow. One evening he came to the Corporate Cell and told me that he had just met the DGM at the Circle Office to discuss the position of the three accounts. He also told me that the DGM had advised him to take my signature in the stock statements to prove that the branch had conducted the inspection thoroughly. 
I was really in a catch 22 situation at that time. I knew that I would be in real trouble if I signed the statements at that stage. There was no moral reason for me to sign the statement as it was neither my turn for verification nor I had been convinced about the genuineness of the stock shown to us. It was Kudva who had certified the stock under instructions from the HO.
But Kudva was not going to leave me. He was a man in a hurry. He went in search of the stock statement file in the godown personally. Meanwhile the two officers told me not to sign the statement at any cost. But it was not easy to refuse. I had to work under Kudva at least for some more time. He was sure to harm my interest sooner or later without any mercy.
Kudva came back from the godown with the stock statement file and the godown checking register after some time. He took my signatures in both of them just below his signatures. I got a feeling that I was being trapped. But I was helpless. I could only pray God to protect me. However Kudva had forgotten about one thing. We had sent a copy of the stock statement to the Circle Office, which carried only his signature.
All the three accounts became totally sticky thereafter. The party refused to allow stock inspections at its units in Goa and Hubli and the units closed down fully. The activity at Bangalore also came to a standstill. The party gave several assurances to the bank. He used to say that everything would become normal once the imported consignment was released by the customs. That never happened, however. A special team from HO conducted an in depth study of the three accounts and submitted a report to HO.
Meanwhile the then CMD retired and a new CMD took charge. He decided to handover the case to the Central Bureau of Investigation (CBI). The two outstation units had huge overdues as compared to the Bangalore unit as they enjoyed higher limits. However, quite surprisingly, only the file of the Bangalore unit was handed over to CBI for investigation. 
I was transferred to a branch near Raichur for semi-urban service on my promotion as Senior Manager. I worked there for three years. Just before I completed my third year, I received summons to appear before the CBI investigator at Bangalore in connection with the subject account.
------- (To be continued)

Sunday, March 23, 2014

A Special Visitor to Our Garden

The last week we had a special visitor at our house garden. Perhaps he knew that we had pet animals like a dog and a cat at our home. He must have felt it secure to land in our garden for a small break.

It was early morning. As I was watering the plants, I suddenly realised the presence of a strange bird in the garden. I first thought it to be an owl and later as an eagle. Only subsequently I came to know that it was a Black Kite. I got a feeling that it might have been wounded and was taking rest in our garden.

The bird allowed me to take several photographs. I could even take extremely close up shots. It gave an indication that it does not intend to fly away early. I was a bit worried initially that it may be attacked by dogs or cats. But fortunately our garden is fully protected with fencing and stray dogs have no entry.

Both my sons arrived to see the strange guest and took several photographs. We offered dog food, baked eggs and water to the guest. But he simply refused to eat. We kept a close watch on his movements. We found him moving to different locations at different times within the garden only on his legs. Only once he opened his wonderful wings. He stayed with us for two full days and flew away on the third night. Here are a few photographs of the wonderful guest:

I think I have arrived at a safe place. It looks so secure!

Let me see what should I do here?  Let me move.

 Wonderful green leaves I should say!

Do I feel a bit dizzy!

Let me keep my head down and sleep.

 Did I sleep for long? I really have no clue!

 I feel fully refreshed with so many green leaves around!

I am back on air! Tata ! Good Bye!

Friday, March 21, 2014

The Story of Thimmappa - The Model (Village) Entrepreneur

I wish to write about another character from our village as a final tribute to our village legends. This gentleman’s name was Thimmappa. He was a close friend of my eldest brother, AVR.

Thimmappa was the eldest son of Venkappaiah of Hosalli about whom I have already written a separate article. Thimmappa was a physically handicapped person. He had problems in both of his legs. While he could do all his own routine work without any problems, he could not do any physical work normally one has to do in the village. I am not sure whether he had this handicap by birth or it was a result of polio disease.

I have often heard that if a person is handicapped in one organ, he will have his other organ/s function in a very superlative way. In the case of Thimmappa, the organ which was functioning superlatively was the best possible one - it was his brain!

As far as my memory goes, Thimmappa was already a young man in his late teens. He was a classmate of my eldest brother. It seems he was good at his studies; but in keeping with the times, his father thought that a lower secondary pass was more than sufficient. Thimmappa knew his limitations like any handicapped person. He had lost his mother in his young age and that definitely was another handicap for him. He was brought up by his adventurous father. But there was no way he could help his father in his agricultural activities. Indeed the life was tough for the Malnad farmers of those days. Only physically strong men like Venkappaiah were fit for the profession.

Once his education came to an end, Thimmappa decided that the only way he could come up in life was by entering the field of business. He knew he had the business acumen. He could decide whether a deal was profitable or not within no time. He was also capable of making it profitable by his own ingenuity. His father had the wherewithal to provide him the necessary capital. He waited for the right opportunity.

Thimmappa had another advantage - a most lovable personality. By nature he was very jovial and always would take things as they came. He was very friendly with everybody and would never talk non-sense. The main thing with him was - he never let his friends down. The best example was my own brother. Thimmappa wanted my brother to partner him in his business. He repeatedly requested my father to allow my brother to join him in his business. But my father never agreed. I am sure my bother’s life-journey could have been quite different if only he was permitted to join Thimmappa. But that never happened. Nevertheless, Thimmappa tried to help his friend in the best possible manner whenever he got an opportunity.

In our Malnad the farmers were always required to have some business acumen to survive. They had to sell their produce to private vendors, who would visit the villages with hard cash. A majority of them used to be Muslim traders, highly polished, but equally shrewd businessmen. As young boys we used to like these traders very much. They knew the art of pleasing children. They would hand over some peppermints or chocolates to us invariably on arrival at our house! This was a part of their marketing strategy. They would engage in tough bargaining with the elders. At the end of the business deal they would take out from their waist-belts the fresh, crispy and brand new currency notes! That was their trademark.

It seems Thimmappa picked up the business tactics from these professionals. I mean, only the positive ones! He started engaging himself in small business deals. Occasionally he took the produce from our villages to the Chikmagalur and other markets. I have seen him set up tent-shop near our village temple whenever there was any festival or during the visit of Yakshagana troupes. He was waiting for an opportunity to set up a regular shop; but was undecided on the place (location).

There is a place called Agalagandi on the Sringeri-Jayapura road. This place was dominated by our community people in those days. Under the Panchayath Chairmanship of a gentleman called Thimmappaiah, this village was recognized as a ‘model-village’ by the Government. The village gained sudden importance once the bridge across the river Tunga came up near Sringeri in the late fifties. The busses from Chickmagalur could now reach Sringeri by traveling a short distance via Agalagandi, without going through the round-about route via Koppa and Hariharapura. Naturally Agalagandi came to limelight and so were the business opportunities.

Thimmappa along with his younger brother Krishna Rao (the two were the sons of the deceased first wife of Venkappaiah) set up a shop in Agalagandi with the capital provided by his father. Bit by bit he built up his business in the village which was seeing progress. In those days also the tendency to make purchases against credit was very prevalent. Thimmappa knew the problems of recovery. But he did not want to displease his customers also. He came out with a novel idea. He displayed a prominent board in the shop. He would simply ask the credit seekers to read the board. It read: Credit only Tomorrow (Kada Naale)! When we heard about this innovative board, we were very much amused. We thought, “What an intelligent way of saying no?”

Thimmappa’s business picked up in due course and he constructed his own building for residence-cum-business. Now he needed a partner - not a business partner - but a life-partner. He set his eyes on a girl in our village. The girl’s family owned lot of lands; but it had turned barren as the girl’s father was incapable of managing the same. The family was in dire straits. Thimmappa’s proposal was originally not liked by the family in view of his handicap. Ultimately Thimmappa was able to convince the bride and the family.  The family had nothing to repent. The pair led a very successful married life.

As far as business was concerned, Thimmappa could have taught a lesson or two to the present day management Gurus. In those days there were very few provision stores which could be accessed by the villagers. Thimmappa wanted to meet each and every needs of a villager nearer home. For this purpose he had maintained a notebook in his shop. He would note down any item, of which the customer was in need, but was not available in the shop. He would ensure that the item was sourced from somewhere and made available at his shop next time. Thus over a period of time, he developed his shop as a supermarket and ensured that no customer went away for want of a particular item in the shop.

Thimmappa was, after all, basically an agriculturist. He did not want to give away that privilege in spite of his physical limitations. He purchased some agricultural land and developed a coffee estate. You may not believe this! But he developed the entire estate through his younger brother, who did all the physical supervision. Sitting at his shop, Thimmappa remotely controlled the estate and saw to it that it became a full pledged coffee plantation!

I remember many occasions when I and my brother (AVL) were deputed by our elder brother (AVR) to bring provisions on credit from Thimmappa’s shop. We had to walk for four miles. We were being sent there only as a last resort by our elder brother. In the normal course our brother did not want to take any obligations from his closest friend. But our financial position used to be so bad that there was no other way than to seek favour from friends. Brother would send us with a personal letter addressed to Thimmappa.

When we visited his shop for the first time, we looked at the prominent board in the shop. It read: Credit only Tomorrow (Kada Naale)! We were highly embarrassed to handover the letter to Thimmappa after reading the board. But he received us with all his humility. He ordered the boys to give us the provisions as per the list given by our brother. The message on the board was fortunately not made applicable to us! There were occasions when we carried some cash, though not commensurate with the list carried by us. Thimmappa would refuse to accept the same. He would push back the money to our packets. He carried this friendship with my brother till the very end.

While studying at the Sringeri College, I used to catch a bus to Sringeri on occasions, from Agalagandi, in front of Thimmappa’s shop. He would call me inside the shop and hand over a dozen notebooks for my usage. He would also push some cash in my pockets! He was always interested in giving support to education. Quite fittingly his daughter came up as a brilliant student and did her medical. I am told that she is having a flourishing practice along with her husband in Sagar town, near Shimoga.

Today both my brother and Thimmappa are no more. Their friendship remained unbroken till their death. Thimmappa left first and my brother followed. Thimmappa’s character serves as a great example for the present generation as to how to make virtue out of one’s handicap. He died as a successful businessman, a great husband, a great father and a true friend for all times. May his soul rest in peace!
(This story was written by me on 1st November 2008)

My Days South - Episode No.12

As luck would have it, the company (3M India) came out with an urgent request for issue of a guarantee one fine morning when both our Senior Manager and Divisional Manager were on leave. The guarantee was required towards some custom duty payment to be made by the company.
As mentioned by me earlier, the company was not amenable to submit a board resolution and to execute a counter guarantee as per bank rules. In this case we were constrained with one more problem. The draft of the guarantee had some clauses, which deviated from the standard bank guarantee. Such deviations required sanction from the DGM of the Circle Office. I had to rush to the Circle Office, which was located near our office.
Considering the sensitivity of the account, I barged into the chambers of the DGM Mr. Annappa Pai. It was the first time I was entering his cabin for some sanction. I explained the situation to him and told him that the account was sensitive. The DGM could appreciate the urgency. He simply asked me to proceed with the issuing of the guarantee and to send a letter to him to confirm the oral permission given by him. However, he told me that he could not do anything regarding the requirement of resolution and counter guarantee and it was for me to take care.
While coming back from the DGM’s office an idea struck me. I was aware that our bank had attached a copy of the resolution to be passed by the board of the companies to the current account opening forms of the corporates. This draft resolution covered the issue of guarantees by the bank on behalf of the companies also. I went to our main branch and verified the resolution submitted by the company while opening its current account. To my relief, I found that the resolution had specifically covered the guarantees also and the CEO of the company had been authorized to sign the counter guarantees. I took out a copy of the same for our records.
Now it was the question of only obtaining a counter guarantee from the CEO, which I was able to manage. The guarantee was issued to the company promptly and I could heave a sigh of relief. The account continued to be sensitive till the then CMD retired from the bank.
We had three corporate accounts belonging to an ex-service person. All the three units were dealing with computer hardware. While one of the units was in Goa, the other was in Hubli. Both these outstation accounts enjoyed total limits in excess of Rs50 lakh and were classified as large borrowal accounts. The third unit was located in Bangalore. The MD of the company stayed in Bangalore. He controlled the three units from Bangalore as headquarters. As the outstation units enjoyed cash credit facilities, our branches at Hubli and Goa had been entrusted with checking of the stock there. While the outstation unit files were being handled by our large borrowal accounts section at the Circle Office, the Bangalore unit file was handled by the advances section.
The Bangalore unit enjoyed only a small cash credit limit of Rs5 lakh. But our branch had recommended an enhancement of the said limit to Rs30 lakh. This recommendation had been sent to the Circle Office before I had reported at the branch on transfer from Kolkata. I was told that this enhancement was recommended under pressure from somebody at the Head Office. However, just before the sanction was being released, the Reserve Bank of India conducted a special inspection of all the three accounts and sent a special report to Head Office listing out several irregularities.
Among the irregularities pointed out was the discounting of supply bills on partnership firms. In the normal course the supply bill limits are permitted against bills drawn on reputed corporates and government departments only. The RBI had an apprehension that these bills were accommodation bills. As far as the branch was concerned it had obtained specific sanction from the Head Office for discounting such bills.
Meanwhile one of the outstation units had landed in another problem. The Customs Authority had seized an imported consignment received under the letter of credit opened by our branch. They had found out that the actual items imported were different from those mentioned in the letter of credit. The value of the consignment was estimated much higher than the invoiced amount by the customs.
Almost immediately after I joined the branch, we received a letter from the Circle Office that the Head Office had kept the proposal for enhancement in abeyance in view of the serious observations made on the accounts by the RBI. We were also advised to monitor the accounts closely. It was not clear as to why the Head Office had kept the enhancement in abeyance instead of rejecting it outright under the given circumstances.
Over a period of time I came to know that the sanction of the large limits to these companies had something to do with an ex-Chairman of the Bangalore Development Authority. I was told that the Head Office was bent upon sanctioning the enhanced limit to the Bangalore unit sooner or later. There was the apprehension that the branch may be forced to release the enhanced limit under pressure from the Head Office.
While the stock declared by the outstation units was being inspected regularly by our branches in Goa and Hubli, the stock of the Bangalore unit was being inspected by our branch. We had a system under which four of us – the Senior Manager Kudva, me and two other officers were inspecting the stock of all the units strictly by rotation.
I had earlier mentioned that Kudva having worked in the Circle Office (CO) previously as Senior Manager was adept in the art of passing on the accountability. He had started a system of making remarks in every communication received from CO/HO asking his juniors to act upon the instructions, if any. He would mention the specific names of the Manager and the officer. The idea was obviously to make them accountable in case of any future inspections/investigations. He thought that he had performed his duty and was out of the accountability factor. Many a time the instructions used to be impossible to comply with. We had several times expressed our unhappiness to him without much success. In a similar manner he also wanted to shirk from his responsibility of stock inspection. But somehow he was unsuccessful in evading this duty.
As mentioned by me above, the Head Office had kept the sanction of the enhanced limit in abeyance to the Bangalore unit in view of the irregularities observed by the RBI inspectors. But we had heard from different sources that it was only a question of time and the HO was bent upon sending the sanction to the branch at any cost sooner or later. We knew there would be pressure to release the enhanced limit immediately thereafter. It would then naturally be a question of saving our skin for us.
As apprehended by us, the sanction letter was received through the Circle Office one particular day. We were asked to obtain the necessary loan documents for the enhanced limit and make available the same to the company expeditiously. Accordingly we obtained all the loan papers meticulously. The company came back to us a week later with a stock statement showing stocks sufficient to cover the enhanced limits.
It was obviously necessary for us to make a stock inspection before releasing the enhanced limit. By a strange coincidence, it was the turn of our Senior Manager Kudva to inspect the stock. As we had been meticulous in checking the stock strictly by rotation, there was no way he could pass it on to any of us. Besides he was under tremendous pressure from the HO to release the limit at any cost. So the company official came with his vehicle to take him to the unit.
------- (To be continued)

Saturday, March 15, 2014

I Don't Know, Son! - Episode No.76

The Safer Bet!
Son: Sunil Gavaskar the former Indian skipper and TV commentator had asked BCCI to sack the coach Duncan Fletcher, dad.
Father: True. Go on, son.
Son: Gavaskar had also asked BCCI to appoint Rahul Dravid as the new coach, dad.
Father: True. Go on, son.
Son: But Rahul has flatly refused to accept the suggestion of Gavaskar to take up the job of coaching, dad.
Father: Go on, son.
Son: BCCI has also said that they are not thinking of sacking the coach as suggested by Gavaskar, dad.
Father: Go on, son.
Son: According to sources, Rahul would rather take up commentary as a regular job, dad.
Father: Go on, son.
Son: Rahul is an intelligent guy who knows that the job of a coach attracts huge responsibility and accountability, dad.
Father: Go on, son.
Son: On the other hand, the job of a commentator involves least accountability and no responsibility, dad!
Father: True. Go on, son.
Son: While the remuneration in dollars is quite attractive, you also have the privilege to ask BCCI to sack a coach and suggest the name of a new one, dad!
Father: I don’t know, son!
Bangalore Police Unable to Trace Mallya!
Son: The Bangalore police have a great reputation for catching all sorts of criminals, dad.
Father: True. Go on, son.
Son: Just last week, they caught a murderer, who had killed a home alone woman, in a matter of six hours, dad!
Father: True. Go on, son.
Son: But the same police have miserably failed in catching a high profile businessman, dad.
Father: Who? Go on, son.
Son: The Special Court for Economic Offences had asked the Cubbon Park Police to serve summons to Vijaya Mallya in a case filed by the Income Tax Department for non-remittance of several crores of TDS, dad!
Father: Go on, son.
Son: But the police could not sight Mallya in the city even after nearly a year, dad!
Father: Go on, son.
Son: Just last month Mallya had participated in the IPL player auction at a star hotel in the city close to the Cubbon Park police station, dad!
Father: I don’t know, son!
Related (Unrelated?) Headlines!
Son: Certain headlines in newspapers are creating a sort of confusion nowadays, dad.
Father: Like what? Go on, son.
Son: The newspapers had reported that the former CEO of Infosys Nandan Nilekani would contest the Lok Sabha elections from the Bangalore South constituency as Congress candidate, dad.
Father: True. Go on, son.
Son: They had also announced that the former CFO Infosys Balkrishna would contest from Bangalore Central constituency as AAP candidate, dad.
Father: True. Go on, son.
Son: Another headline in the papers said that Infosys shares tanked by 9% on bleak growth forecast, dad!
Father: I don’t know, son!
Related (Unrelated?) Headlines!
Son: The newspapers have reported that the senior Congress leader Janardhan Poojari has come out successful in the Congress primary election for Mangalore Lok Sabha constituency, dad.
Father: True. Go on, Son.
Son: They have also reported that the senior Congress leader Veerappa Moily has come out successful in the Congress primary election for Doddaballapur Lok Sabha constituency, dad.
Father: Go on, son.
Son: Another headline in the papers said that the senior most Congress leader Jaffer Sharief has decided to proceed on his pilgrimage to Mecca, dad!
Father: I don’t know, son!
Nothing to do with Qualification!
Son: Congress sources have said that the inability of Jaffer Sharief to pass the primary election for the Bangalore Central Lok Sabha constituency has nothing to do with his qualification, dad.
Father: Go on, son.
Son: It may be noted that Mr. Sharief is said to be a non-matriculate, while both Mr. Poojari and Mr. Moily are law graduates, dad!
Father: I don’t know, son!
A V Krishnamurthy
16th March 2014

Taxation - Avoidance v/s Evasion

The Karnataka High Court has delivered an interesting judgment in the case of Bhoruka Engineering Services v/s Deputy Commissioner of Income Tax (IT). The issue involved was – does an arrangement of the Assessee to avoid the payment of tax contravene any statutory provision?
The Case
Bhoruka Steel Ltd had a mini steel plant in Bangalore for manufacture of billets and rolled products. The company became a sick industrial unit and a rehabilitation programme was formulated. The company had 37 acres of land in Bangalore. Out of this, 30 acres was proposed to be disposed of at a reserve price of Rs25 lakh per acre.
 The land was bought by a group company – Bhoruka Financial Services Ltd (BFSL). Later, the assessee and another group of individuals sold their 98.73 stake in BFSL on the Magadha Stock Exchange to real estate developer DLF after paying security transaction tax. BFSL claimed exemption from gain on sale of shares under Sec 10(38) of IT Act, 1961. BFSL had sold its all other assets (except land) before selling shares to DLF.
The assessing officer (AO) held that the sale of shares by the assessee was a colourable device. According to AO, as immovable property was transferred, the assessee was liable to pay short-term capital gain tax as the property had been sold within 36 months. The order of the AO was upheld both by the Commissioner of IT and the IT appellate Tribunal on appeal by the assessee. The assessee then approached the Karnataka High court (HC).
The HC in its judgment held that every tax payer is entitled to arrange his affairs so that his taxes are as low as possible and he is not bound to select the pattern that will replenish the treasury. If the taxpayer is in a position to carry a transaction in two alternative ways, one of which will result in liability to tax and the other of which will not, he is at liberty to choose the latter and to do so effectively in the absence of any specific tax avoidance provision. If BFSL had sold the property through execution of a sale deed and received the sale consideration, then BFSL ought to have paid capital gain tax. By resorting to tax planning, the assessee took advantage of the benefit in the law.
Tax avoidance means avoiding tax payment by complying with the provisions of the law but taking advantage of loopholes in law. On the other hand, tax evasion means avoiding payment of tax through illegal means or fraud.
(The write up is sourced from Capital Market Magazine)
Note: In addition to saving the capital gains tax, BFSL had also saved the stamp duty payable for registration of sale deed at the Sub-Registrar’s office. A very intelligent and ingenious tax saving methodology indeed!

Friday, March 14, 2014

My Days South - Episode No.11

One of the prestigious corporate accounts to be handled by us at the Corporate Cell was that of 3M India Ltd. 3M is one of the most innovative corporations worldwide. It has over 100 years of track record with more than 50,000 products. The company entered India in the year 1988 as a joint venture of the Birla Group called Birla 3M Ltd. The first unit of the company was set up in Bangalore. The name was changed to 3M India Ltd later in Dec 2002, as the partnership with Birlas came to an end.
The Birla family connection to the joint venture has an unfortunate tragic event on record. The well-known industrialist Ashok Vardhan Birla (father of Yash Birla) was coming to Bangalore on 14 February 1990 for the inauguration of the 3M unit in Bangalore. Ashok Birla was responsible for 3M’s entry into India. He was on the Indian Airlines flight IC-605 from Bombay to Bangalore along with his wife Sunanda and daughter Sujata. The flight left Mumbai at 11.58 am and approached the Bangalore HAL airport by 12.44 pm. However, while descending to 11,000 feet, the Air Bus A320 missed the airport and crashed near the Bangalore golf course killing all the 92 people on board.
The company’s connections with our Corporate Cell started in quite an unusual way. We were absolutely in dark about the company and the circumstances under which the account landed at our main branch. We came to know about the circumstances only later. We had heard that our CMD had built a palatial house in Bangalore. There were several stories about the plan, construction, luxurious furniture and interior decoration of the house. As the CMD used to stay at the prestigious Canara Bank House at Basavanagudi, it was expected that the new house would be let out on rent to a prestigious corporate house for the residence of its top executives.
We came to know that the first resident of the luxurious house was to be none other than Mr. Evans (name changed), the CEO of Birla 3M Ltd. It was the same connection, which made the company open its account with our branch. On the face of it, the account appeared to be a very prestigious catch for our bank. Being a multinational company, it was likely to contribute to our branch’s foreign exchange business substantially. It was also expected that the company may avail various credit facilities from our bank.
The first request from the company itself landed us in problem. The company asked the branch to issue a guarantee on behalf of its CEO Mr. Evans to the Customs Authority. As Mr. Evans was coming to India for regular stay, he had come with certain personal belongings.  The Customs Authority insisted for a bank guarantee before releasing the same. We were asked by the officials at HO to issue the guarantee expeditiously in view of his connections with the CMD. We would have been indeed happy to do so as it was simple question of issuing a guarantee and collecting commission. There was absolutely no chance of invoking the guarantee by the Customs Authority.
But the problem was - the company had not collected the draft of the guarantee from the Customs Authority. Besides, Mr. Evans had to execute a counter guarantee to the bank in his individual capacity as per bank rules. When the representative was told about the requirements, he simply complained to Head Office that the branch was not cooperating in the matter!
Mr. Evans himself arrived later at our branch to collect the guarantee. To be frank, it was difficult to understand what exactly he was trying to tell us in view of his very heavy American accent! But it all came down to one particular requirement. The Customs Authority wanted a guarantee to release his belongings and he could not understand why we were not obliging him! He was not convinced that he or his company was required to collect the necessary draft guarantee from the Authority. As regards the counter guarantee, he simply told us that he would not sign any document (particularly the stamped one) under any circumstances! He told us bluntly that there was no such requirement in the American banks!
The company had appointed an Indian called Othello (name changed) as Finance Manager. We thought this gentleman may help us in meeting our requirements. We wanted to somehow issue the guarantee and send Mr. Evans away happily. Otherwise, we knew that the next telephone call would come from the CMD’s Office. But Mr. Othello was more rude and blunt than his CEO.  At least in the case of Evans we were unable to make out what exactly he was telling us! But Othello’s English was very clear. It was like – “You just issue the guarantee. Don’t ask anything from us; neither are we going to sign any papers!”
It really required some ingenuity on our part to get out of this tricky situation. But we managed the situation somehow. It is not appropriate for me to explain the exact strategy followed by us. But we were more worried about the future situations in view of the fact that we were the sole bankers to the prestigious company. We were not to wait long for the next situation!
Hardly a week later, Mr. Evans arrived at the branch with his cheque book.  He wanted to draw some cash for his personal expenses. He expressed his displeasure with the Indian banks, which had not yet introduced a machine called Automated Teller Machine (ATM). He told us that there was no necessity to sign cheques in America to draw cash. He signed a cheque very reluctantly to draw Rs10,000. Our Senior Manager requested him to put his signature on the reverse of the cheque as is the practice in all the banks in India. He refused point blank. He told our SM that there was no such practice in America!
We soon came to know that the company did not require any fund-based limits. 3M being a cash surplus MNC, was hardly in need of funds. The Indian subsidiary would indent funds from the parent company periodically as per its requirements. The company required only some guarantee facilities to meet the Indian operational requirements.
But for availing the guarantee facilities, the company was expected to pass necessary board resolutions authorizing its officials to execute the necessary counter guarantees. The requirement was as per the Companies Act, 1956. Here again, the company was not convinced of our requirements. The irony was - even the Indian Finance Manager Mr. Othello was convinced that the same was not necessary!
------- (To be continued)
A V Krishnamurthy

Friday, March 7, 2014

My Days South - Episode No.10

The account of XYZ Company continued to be a headache to us. As stated by me earlier, the right issue refund order account was overdrawn and the liability started mounting day by day as the refund orders continued to be presented through the clearing house. We sent a detailed report to the Circle Office highlighting the fact that the company was not furnishing the actual position of the excess subscription received and the actual amount of refund orders issued against the same. The overdrawings reached about Rs27 lakh ultimately.
Meanwhile the financial position of the company had totally deteriorated. But it continued its existence by submitting supply bills for discount occasionally for the payment of salaries and other maintenance expenses. We started seeking the permission of each transaction in the account. We used to allow drawings only with due permission from the Circle Office. We used to refer to each proposal as a part of a ‘Holding On’ operation! The DGM was obliged to give permissions in the absence of clear instructions from CMD.
Through our persistent efforts ultimately it came to light that the company had opened a current account with our A R Street, Mumbai Branch and routed some right issue subscription amount through it. It had diverted the entire proceeds somewhere and had issued the refund orders against the same on our branch. That was the reason for the overdrawings at our branch. This was nothing but a clear case of cheating by the company. We called for an explanation from the company and reported the matter in detail to the Circle Office and sought their instructions.
While we were expecting the Head Office to take some steps to discipline the company, no such thing took place. On the other hand, the MD of the company complained to the CMD that the branch was harassing the company! As a result, the name of our DM Kulkarni did not find a place in the list of promotees to the AGM cadre. In fact the DM was officially called to the Head Office and told by the CMD that his promotion was not cleared for mishandling the account of XYZ Company. That was the type of clout the company enjoyed with our CMD!
After some time Kulkarni was transferred from the branch and a gentleman called Menon was posted in his place. Menon had earlier worked in the Industrial Advances Section of our Head Office. While he knew all the nuances of handling the working capital limits, he was a master in ensuring that no accountability was fixed on him personally! He had picked up this special skill while working at the Head Office! Of course he did not mind if the same was fixed on his juniors! Our Senior Manager Kudva had also picked up this trait while working at the Circle Office. He was also a master in passing on the responsibility to the officers working under him. The two were in fact a dangerous combination for me and my other officers. This was proved in another case that I would come back later. Having worked with a gentleman like B R Nayak, who took it upon himself the protection of people working under him, this was a totally new exposure for me.
As far as the account of XYZ Company was concerned, the methodology followed by Menon was indeed quite innovative. He specifically instructed me not to use the word ‘recommend’ in any of our proposals. His argument was that since all the proposals were first discussed by the company at the Head Office and were submitted to us only later, there was no question of any recommendation from the branch. Accordingly I started mentioning in each proposal that it has already been discussed with the officials in HO and we may be permitted to allow the facility as already agreed! Quite surprisingly our Circle Office did not question the wordings of such proposals.
It was clear that the company was in no position to clear the overdrawings in the rights issue account. At the instance of our CMD, a subsidiary of our bank was asked to allow a loan facility against the security of equity shares held by the promoters. The officials of the subsidiary were obliged to sanction the facility. But the company submitted another request to our bank asking a portion of the loan to be released for its working capital needs.  Even this request was permitted by the CMD and as a result we could only get a portion of the overdrawings cleared from out of the loan sanctioned by the subsidiary.
A stage was reached when we had to run to HO for every single proposal of the company. The MD of the company used to first get an oral sanction from the CMD. We were being summoned by the General Manager in-charge of credit at the Head Office. I had to accompany our DM to meet the GM at his chambers with absolutely no idea about the proposal that would be thrust on us. Our Circle Office DGM would join us by then. Every time we had to brief the GM about the current position of the accounts of the company. It became a routine for us to tell him that there was absolutely no change in the position of irregularities in the accounts.
The GM used to invite some other GMs for discussions to get some moral support. All of them were aware that the GM in-charge of credit was helpless in the face of orders from the CMD. The seriousness of the situation was being reflected on their faces. They would ask the GM (Credit) the same question every time – “Kithle dee moon sangla”? (“How much you have been asked to sanction”?). The reply used to be – “Tha lakh moon sangla or paanch lakh moon sangla” (I was asked to sanction Rs10 lakh or Rs5 lakh). They would all then say “kassan maaraaya? (What is this - man?). The GM would then ask us to allow overdrawings of Rs5 lakh or Rs10 lakh as instructed by the CMD.
I had made it a point to ensure that all the oral/telephonic sanctions from HO/CO were duly confirmed in writing. As the Circle Office officials hated reminders from the branches in view of the hierarchy, I was listing out such pending sanctions in the fortnightly reports to CO/HO. That served the purpose of reminders and also indirectly served the purpose of putting on record that such sanctions had been given.
The retirement of the CMD and appointment of another CMD in our bank made only a marginal difference to the company. The position of irregularities continued till I left the branch on promotion as Senior Manager in June 1990. I continued submission of the fortnightly reports till I left the branch. After some more years the account became totally sticky. A special team from the Circle Office was asked to conduct an in-depth study to fix the responsibility. The fortnightly report came in handy at that time. The team concluded that the sanctioning authorities were aware of all the irregularities in the accounts of the company. There was nothing that was not known to them while allowing the limits to continue and sanctioning additional limits. The team also found that all the adhoc facilities and deviations from sanctions were having specific sanctions from the relevant authorities. It gave a clean chit to the branch and absolved the branch officials from the primary responsibility, which would have been otherwise fixed on them as a matter of routine!
------- (To be continued)
A V Krishnamurthy

Thursday, March 6, 2014

Venkappaiah, the Greatest Storyteller

It is time for me to write about one great character and personality of our village, Venkappaiah of Hosalli. If one were to conduct a popular vote for the best entertaining character in our village, Venkappaiah would have won it hands down. In my opinion he was the greatest storyteller I have ever seen. He would present each incident in his life in such a fashion that the audience would be spellbound and will be on their toes to hear more. He had a never-ending treasure of stories in his basket which he would unravel to the great delight of the audience of all age group.

Venkappaiah had a 6+ feet tall giant of a personality and put his physical strength to full use in doing hard work from morning to night. He had migrated to our village from a place called Mooralli (three villages) where he was the Patel of the village. Even after shifting base, his village people did not allow him to relinquish his post. It was quite unusual for a man from a far away village to retain his post of patel in his earlier location. But that was the kind of reputation Venkappaiah had built up.

Venkappaiah had a large landholding of both arecanut plantation and paddy fields. He had taken the land on tenancy basis. But for all practical purpose, he was more than a landlord. His house in Hosalli was like a fortress. He had two sons from his first wife. The first son Thimmappa was a classmate and close friend of my eldest brother. After the death of his first wife, Venkappaiah had remarried and had children from her. His son from the second wife Srinivasa was in my age group.

Even the second marriage of Venkappaiah was a path-breaking event. He actually did a ‘seemollanghan’ in the process. What I mean here is that he had a cross-border marriage. The girl was from South Kanara district which was under the erstwhile Madras State at that time. In those times all the marriages used to be within the community without exception. Our community people were located only in Sringeri, Koppa, Kalasa, Thirthahalli and Hosanagara areas. In fact many of the brides used to be from the same village. The adage ‘variety is the spice of life’ did not hold good at all!

But Venkappaiah had the courage to break this tradition. There was another catch. It was the name of the bride. Our community owed strict allegiance to the Sringeri Mutt. The name of Sharadamba always carried great respect and reverence. The moment Venkappaiah told that the name of the bride was Sharada, everybody was quite happy. I wish to add here that both my mother and first sister-in-law also carried the same name. Years later I was also destined to follow the footsteps of Venkappaiah and married a girl from South Kanara. But then the times were different and indeed it had been accepted that variety was the spice of life!

Our village had a perfect community-living system in those days. Most of the work connected with agriculture and preparations for the rainy season were conducted through a system of sharing the labour. Each household had to fix a day in advance for the work to be done and inform all the other households. On the allotted day each household would depute one or two persons for the occasion. All the deputed persons would join the household and work for the full day to complete the job. They would be served food cooked specially for such events. The salient feature of this system was that even the richest person in the village would participate and do physical labour along with the poorest. The arrangement was reciprocal and commitments would be kept up invariably.

One main event held by each household annually was the covering of house top (roof) with the new arecanut leaves before the onset of the monsoon. Even though the houses of rich people were having tiled roofs, there would be some constructions like cowsheds covered by arecanut leaves. The work had to start early in the morning as it took a lot of time to remove the old leaves and laying the new ones. The placement of fresh leaves was an expert job known only to a few in the village. Our Venkappaiah was one such expert.

As young boys, we used to wait for the arrival of Venkappaiah anxiously. He used to wear a specially made leather chappal suited to him. As he used to walk long distances regularly the wear and tear used to be high.  We could make out his arrival from a good distance on hearing the sound of his chappals. We would shout at the top of our voice that Venkappaiah had arrived! The news would light up the spirits of one and all. It was always a familiar sight to see him arrive with two cans and two bags. One of the cans would be full of creamy milk and the other with fresh curds. One of the bags would be full with vegetables grown in his house-garden. He would hand over the cans and the vegetable-bag to us to be sent to the kitchen for that day’s use. He would sit down with the other bag and have a cup of coffee. The bag would contain old clothes to be used while doing the physical labour. He would change his clothes and move to the roof to start his job in the company of others.

Once on the roof, Venkappaiah would go full throttle on his job of covering the roof. Simultaneously he would start unfolding another event in his colourful and exciting past life. Suddenly all other conversations would come to an abrupt end. Everybody would keep their ears fully cleared to hear another incident from the never-ending treasure of Venkappaiah. Venkappaiah would work for the full day till sunset in the evening. In between he would have a lunch break; but he would continue with storytelling in view of the popular demand. As children we used to sit glued to our seats or move with Venkappaiah to hear every word of his narration.

It is a pity that none of the stories of Venkappaiah were recorded by anybody and they are permanently lost to the world. As they were real-life incidents narrated in great style by Venkappaiah, there is no chance of reconstructing them in any way. He had faced tough times, great challenges and had come out every time by his sheer courage and enterprising nature. He could see them in a light hearted way as recollections from his past. There used to be tragedies, comic situations, challenges, pathos, joyous moments and what not. Only a master like him would have the guts to face them and come out successful every time. I also feel guilty that I do not recollect a single story as narrated by him. In our anxiety to hear the next incident, we simply forgot the earlier ones! But that doesn’t prevent me from writing about him. I will use this occasion to record his greatness to the future generations to come. Nobody can stop me! So let me continue!

As already mentioned by me above, we had to reciprocate and attend the similar work at Venkappaiah’s house in Hosalli. My father used to return the favour always personally. But there was one occasion on which he could not; as an alternative he deputed my elder brother and me on his behalf. We were in the age group of 16-18 at that time and had picked up sufficient expertise in doing different manual jobs. We thought it was a good opportunity to show our mettle to an expert like Venkappaiah. We told Venkappaiah that father was not well and he thought it fit to depute two of us to compensate one Venkappaiah! He was not exactly pleased; but assigned specific job to us and asked us to proceed. He was a taskmaster when it came to work. But it would be an understatement if I say that we had it tough! We had presumed AVL+AVK=V (Venkappaiah); but it was actually like AVL+AVK=V/10. What I mean here is - output of two of us together was hardly equivalent to a tenth of Venkappaiah. The only justice we did was probably to the food served to us as lunch in the noon! We toiled hard till late in the evening and felt greatly relieved when the final task was accomplished!

In our villages it was customary to recite Sanskrit slokas during lunch time on occasions like marriages, Navarathri festival, etc. There used to be some sort of competition in reciting these slokas. The practice was popularly known as reciting ‘granthas’. The granthas would invariably end with “Hara Namah Parvathi Pathaye!” or “Jai Seetha Kantha Smaran”. The audience would respond loudly shouting,”Hara Hara Mahadeva” or “Jai Jai Ram”. It was an opportunity for people of all age group to exhibit their talents. Our Venkappaiah used to recite one peculiar sloka (?), which nobody could decipher! In fact nobody ever knew in which language it was! I am reproducing it below from my memory:

Gadi Tingi Nagavaan,
Gadi Tingi Nagavaan
Sarvangi Batthise,
Sarvangi Batthise
Girje Kote Sahukar,
Bahu Dina Samsar
Gadi Tingi Nagavaan!
Gadi Tingi Nagavaan!

In my opinion this was the mother of all granthas! Simply because of the way it was rendered by the great Venkappaiah and the secrecy behind its origin. Venkappaiah neither explained its meaning nor its origin. But people continued to enjoy it and Venkappaiah remained an enigma to our villagers.

I do not remember exactly when this great man’s story telling sessions came to an end. As I moved out of our village with my professional career, I could not keep a track. Today his sons have constructed new houses in Hosalli and the fortress like old house stands dismantled. With it the memories of Venkappaiah have also disappeared. But for many of us he would remain an evergreen hero, the master storyteller, the one and the only Venkappaiah of Hosalli. May his soul rest in peace!
A V Krishnamurthy
(This story was written by me in 2008)