My Days South - Episode No.5

One of the files the DM wanted me to handle exclusively was that of a company called XYZ Company Ltd. He wanted me to go through the file on a priority basis and get thoroughly updated. The file was earlier handled by the Accountant Gupta. The name of the company appeared familiar to me. The moment I started going through the file, I remembered that the company had come out with an initial public offer (IPO) about a year back. The issue had attracted huge subscription and only some lucky investors had got the allotment. As far as I knew the Rs10 shares were being quoted at a price of around Rs40. That was quite a good quotation for a new company, which had just started commercial production at the time of issue.

But the dealings of the company with our bank gave me a different story altogether. I found the accounts of the company highly irregular with overdues under different heads. The company had also entered the exports field. But the very first shipment had been rejected by the client. The total liability under various working capital accounts was incommensurate with the sales of the company. In spite of all the irregularities the bank had continued the facilities. There appeared to be no genuine efforts from the company to clear the overdues with the bank.

There was another great surprise for me. The promoter of the company had overdue loans with our Abdul Rehman Street (A R Street), Mumbai branch. In fact I had visited the said unit during my inspection of the branch way back in 1978. The then Senior Manager of the branch Mr. K R Nayak, a strong man, had been able to recover a major portion of the overdues with his firm handling of the account. I could not understand how the same promoter was able to get the sanction for huge limits at our bank after about ten years.

The DM told me that the account was very sensitive. The promoters had the right connections to get the sanctions and I had to ensure that all the irregularities in the accounts are regularly reported to the Circle Office. It was also important to ensure that any additional facility was always backed by a sanction and all telephonic sanctions are confirmed in writing and preserved properly. He even asked me to hold an additional copy of sanctions in a separate file under lock and key.

I made a careful study of the file and listed out all the irregularities in the accounts. I opened a separate register to note down the position of all the accounts of the company and started monitoring the same. I also went through the various feedback statements submitted by the company including stock statements, monthly select operational data and quarterly operational data.

As if by coincidence, right at that time the branch received a letter from the Circle Office asking for the submission of a fortnightly report on the dealings and state of affairs of company on a regular basis. The letter highlighted the fact that the company had huge overdues and irregularities in different accounts that needed close monitoring. The letter also mentioned that the Circle Office had been asked by the Head Office to send a report to them based on our report.

Basing on the study already made by me I prepared a comprehensive report on the company’s financial position and the dealings with our branch covering all the irregularities in the accounts. I also highlighted the fact that the company had problems right from the time of opening the account with our branch. Both the DM and SM went through my report and agreed that it gave a true state of affairs of the company. The SM asked me to work out the deficit in the security position of the account. The same was worked out by me by deducting the total dues of the company from the total of stock and book debts (realizable current assets) declared by the company. The deficit arrived at was substantial against the total dues of about Rs5 crore.

We submitted the first report to the Circle Office. Meanwhile there was absolutely no improvement in the overdue position and the company was just managing to run the unit and pay the salaries and wages. I had reported at the branch in the month of June and the company had declared total sales of about Rs50 lakh in the months of April and May. We also came to know that the company was launching a rights issue at a premium in the month of August.  

We submitted the second fortnightly report to the Circle Office. There was no improvement in the position as compared to the previous report. Hardly a week later, our DM received an urgent call from the Secretariat of the CMD. He was asked to meet the CMD immediately. It was about 2 PM in the afternoon. The DM asked me to accompany him in his car and we proceeded to the Head Office straightaway. On the way the DM told me that the MD of the company was waiting for an appointment with CMD at the Head Office. The DGM who was in-charge of the Secretariat wanted us to meet him.

We met the DGM at the Secretariat. He appeared to be quite disturbed. I was meeting him for the first time. He looked to be a rude personality. He asked the DM as to why the branch was creating problems for the company. The following was the conversation:

DM: Sir, let me introduce the new Manager to you.

DGM: (Merely looks at me with an expressionless face!)

DM: He has worked as Credit Manager at the Canning Street Branch under Mr. B R Nayak. On his recommendation, the DGM has posted him to our Corporate Cell, Sir.

DGM: Is it so? What exactly he is doing right now?

DM: I have asked him to focus on certain sensitive files including that of XYZ Company, Sir.

DGM: Well Mr.…..Your name?

DM: Sir, you cannot forget his name. He is your namesake, sir!

DGM: Oh! I see! Bye the bye, what is this business of fortnightly report, Mr.Murthy?

DM: Sir, I asked him to prepare the report in detail listing out all the irregularities as sought by our Circle Office. He is well experienced in the Inspection Department having worked for seven years in Bombay, Sir.

DGM: Oh! I understand now! Well Mr.Murthy, it appears to me that you are thinking that you are still in the Inspection Department! Am I right?

DM: (Tries to explain. But the DGM is not in a mood to listen)

DGM: Let me tell you. The report is nothing but an inspection report. The CMD is not at all happy. Anyway you may meet him, when he calls you in.

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The situation appeared to be quite unnerving to me. I had met the CMD earlier at the Canning Street branch when he had come on a visit to Kolkata. But the circumstances there were quite different. I always felt fully protected under my DM B R Nayak there. Here it was a different story altogether. I even felt I may be shunted out to a God-forsaken place. We sat there anxiously waiting for a call.

------- (To be continued)

A V Krishnamurthy