A Bone Chilling real life story where a Blossoming Business was shot down with catastropic failure

by ill advice for procurement of finance. A big wake up call.

This is a true story

This is with respect to a recent NPA project awarded to us recently. A particular firm from India

(well known) had a clean (with no defaults) heafty balance sheet in a seeds business. Over the years,

their business grew manifold bringing great prosperity all over. After a few years of successful

operation, they decided to go for a small refinery so that they could make their own oil and grow

their business. This is when the devil rang a bell.

They approached a particular finance company to render them finance for their expansion. Without

any caution, without any tentative terms, without any paperwork, without having done due diligence

on the company, they mandated this finance company. Initially, the company did a sweet talk and

gave them big assurances (all verbal) that their work would be done on most professional terms

possible and that they would be given their requisite amount of loan within 90 days. They gleefully

agreed without confirming the terms. The finance company did tough paperwork to ensure that they

would be able to take advantage of these innocent souls. Initially this company had no resources and

they outsourced it to a company. The new company first led them to a bank promising sanction. The

bank approved the loan.They mortgaged all their land, property, assets into this loan. Now, the firm

wanted an enhanced santion so this new finance company led them to an nbfc. This nbfc promised

them sanction on the condition that they bring a 90 day letter from the bank saying that they no

longer wished to avail their facility and would take over the loan (Again, no terms were given). The

firm got this letter and the nbfc transferred and mortgaged all their assets. After mortgaging, the nbfc

gave them the terms of a whopping interest rate of 36% per annum, exorbitant unheard of processing

fees and equally inflated service charge (without any npa, defaults, profit balance sheet, worst in

history). As a result of this, the companies finances, production, plant nose dived. They were unable

to pay this 36%. On top of that the nbfc complused them to pay DAILY interest by 10 am everyday.

This caused a catastrophic failure of the company. As they did not pay the interests, the company ran

into an NPA, shutdown of their plant, employees removed, personal life destroyed, promoter suffered

a stroke, all turned into a big zero. A perfectly well functioning completely sound company went into

an NPA.

We are now reviving this company and will use our length and breadth to salvage them. This is a

living example of how important we are, how important the right advice and right resources are.

Always be very very cautious when you select a finance company. nmistry@Rachcons.in