To padmakumar@federalbank.co.in
From cotton
Subject our account with your Erode Branch.
This print out sent by Registered Post.
Shri K P Padmakumar
Chairman
Federal Bank Limited
Aluva.
Dear Sir,
Our company has been banking with your bank since its commencement of business in 1996 and had made steady and consistent progress till year 2000 availing packing credit limits from your Erode branch well secured with collaterals and guarantees. From time to time we were facing various problems with regard to the assessment and review of our credit needs as also due to various procedural hurdles and administrative irregularities at the branch level with three consecutive branch managements.
In particular the bank restrained us from executing a bulk order for Rs. 3.43 crores in November 1999, by delaying assessment of our request for the required limits while simultaneously preventing us from moving to any other bank. At about the same time due to this uncertain attitude of the bank we could not take up another major order from an American Company which was even more valuable.
The bank had frozen our limits and this completely reversed all the progress that we had made during 1996-2000 and incapacitated our business causing loss of revenue and profits apart from completely hurting our prospects.
The various details have been summarized in our request for a comprehensive review of our accounts by a detailed and elaborate letter addressed to the Chairman on 10th December 2001, which was a step taken to bring the chairman's attention to how the bank's practices and the branch level hurdles were hurting our business prospects.
We waited for your response which was not forthcoming despite repeated reminders so a year later the matter had to be taken up with Reserve Bank of India. Later the Writ Petition (No 41167 of 2002)_ has also been filed in the High Court of Madras, which also did not prompt the bank to make suitable amends.
Due to various irregularities that existed at the branch administration during 1996 - 2001 and due to the bank's refusal to pay attention to our credit needs while preventing us from moving to a different bank, our company's prospects were severely hurt. The bank had unfairly frozen our account three years ago and this had completely hurt our business and it is estimated that our losses of profit due to loss of business alone amount to a value of Rs 2.4 crores, apart from the value of further progress on various business fronts, the value of the damage to our business reputation and personal anguish caused by the situation.
For the first four years of operation the procedural hurdles and delays at your bank limited our growth prospects in terms of establishing manufacturing facilities and accepting larger export orders. During the last three years whatever little progress that was made during the first four years was reversed, which caused considerable erosion of our inventories and other resources which left us crippled. There were various ways by which we were affected. Our work in process of that time was rendered unusable midway due to the situation forced upon us by the bank's total disregard for our needs and the way it kept our account frozen.
There were various other practical business factors that come into play when flow of resources were blocked. For instance alternative market borrowings that were forced upon us by the situation was prohibitively expensive. The quality of materials purchased with contingent market credit could not be assured. Time delays were expensive with a multiplier effect. One major problem lead to a multiplicity of problems and the losses multiplied, our various resources decayed during the last three years and the combined effect is such that it absorbed the money invested in stocks and work in progress. The bank was completely unwilling to allow us to move to any other bank that had a good understanding of our clean transaction record and prospects, nor did the bank allow us to create the manufacturing facilities required with Term Loan assistance from supportive term lending institutions.
Our business is completely incapacitated since the last three years. Our losses as on this date, 17th July, 2003 are estimated as under
* The profits lost in the unserviceable portion of the export order of Rs 3.43 crores alone was estimated to be Rs 60 lakhs including the drawback/DEPB benefits that would have accrued to us.
* The loss of export orders from our regular buyer, Fonora Textiles, Canada, whose orders were at a level of about Rs 4 crores per year, (without considering the annual increase in volume which was sometimes as high as 50%) was Rs 8 crores during the last 2 years which caused us a loss of profit and export benefits of Rs 1.4 crores.
* The loss of profits on account of a FRACTION of the various local transactions that we had to refuse would be another Rs 40 lakhs.
This estimate excludes the loss of business with an American Company whose transactions were to be larger and far more valuable which could not be taken up due to our situation at the bank. This estimate does not taken into account the numerous other positive enquiries from several overseas companies that could not be entertained despite all the positive interest shown by the companies by email correspondence and personal visits. Besides this estimate excludes our losses due to the various procedural hurdles and limitations caused by your branch during the first four years - between 1996 and 2000.This estimate does not truly reflect the extent of our prospects hurt by the restraint placed on us on the opportunities that we had to set up suitable manufacturing facilities. Beyond all this is the loss of reputation to the company and the directors and loss of the Directors' time and all the anguish caused, for which we still have not assigned a value.
The bank still fails to respond to the situation even after all these delays and losses. Under the circumstances it is appropriate that we make a claim for the Rs 2.4 crores estimated lost and in addition a suitable compensation for the damages to our company's reputation and the personal and family level anguish caused.
Thank you.
For Whitefield Cottons P Limited
M.Sivasubramanian.
Director.
No comments:
Post a Comment