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