Cosmos Bank - A Volcano Waiting To Erupt

E-mail sent to Chairman, two Directors and the Managing Director of the Cosmos Bank and

September 6, 2018

Mr. Milind Kale

Chairman

The Cosmos Co-operative Bank Limited

Cosmos Tower

Plot No-6, S.No-132/B, ICS Colony
Ganeshkhind Road

Pune – 411007                                           

E-mail: milind.kale@cosmosbank.in

Sir,

Sub: Final Request to offer detailed explanation on quick mortality, infant mortality and still born NPAs totaling to more than Rs.2,916 crore and explaining the NPAs disclosed in the annual accounts that are prima facie camouflaged or window-dressed.

This has reference to my numerous requests in this regard made to you and your colleagues on the Board of Directors of the Bank to come clean on the issues of NPAs. However, you have steadfastly refused to offer any explanation.

You have stated that the cumulative NPAs of the Bank are Rs.1,017 crore and the NPA ratio falls within the danger limit fixed by the RBI.  However, a cursory look at the accounts and other records visible from the periphery shows that this is not the case. The NPAs are much more than what you are holding out to the public.

I am once again giving you the list of NPAs known to me and informally admitted by you, Mr. Krishnakumar Goyal and Mr. Mukund Abhyankar informally during some of the various meetings.

The list of NPAs known to me is as follows in Table 1: (Rs. in Crore)

Table – 1

Sr. No.	Particulars of Defaulter/Scamster	Amount in Rs.
1	Brainer Impex Private Limited together with MBPY Exim Private Limited (became dead in four months – Maleychandra Madhavchandra Biswas – the promoter is a relative of top politician of that time as told by you from time to time for reasons best known to you)	130.15
2	Euro Multivision Limited: (became NPA within a year)	278.59
3	Euro Décor Private Limited: (became NPA within a year)	82.63
4	Euro Ceramics Private Limited: (became NPA within a year or so)	59.68
5	Euro Merchandise (India) Limited: (became NPA within a year or so)	32.20
6	Other entities in Euro Group: as confirmed by Directors Krishnakumar Goyal, Mukund Abhyankar and Milind Kale (same fate as other Euro companies mentioned above)	445.00
7	Kalanikethan Textiles And Jewels Private Limited: (within  6 to 9 months)	89.30
8	Rosary Education Trust, Pune: within 1.5 years	46.50
9	Noble Exchange Environment Solutions Pune LLP: (within 2 years)	31.21
10	Pratibha Logistics Private Limited:	52.00
11	Pratibha Shipping Limited:	157.51
12	Graf Laboratories Private Limited: (within two years or so)	114.75
13	Krishna Structural Steel (India) Limited: (within a very short time)	85.00
14	Roji – Tasha Stampings Private Limited: (within a short time)	20.00
15	TKT Hightek Cast Private Limited, Ahmadabad: (within 2 years)	113.94
16	S K Wheels Private Limited: (within a short time)	109.47
17	Hollywood Academy: (within a short time)	41.39
18	Dilip Chhabria Design Pvt Ltd:(within a short time)	47.00
19	Parshuram Forge Private Limited: (within a short time)	50.15
20	Country Club Hospitality & Holdings P. Ltd: (within a short time)	60.00
21	Tricot Impex Private Limited: (taken over from SBI in October 2015)	30.00
22	Sachin Travels Limited: (within a short time)	23.95
23	Desai Tusharkumar Nanubhai:	27.26
24	Shri Kankeshwari Agro Pvt Ltd: (Rs.30.00 crore taken over from Bank of Baroda in October 2015)	32.85
25	Snehadeep Structure Pvt Ltd.: (within a short time)	25.31
26	Shubhada Tools Industries Private Limited: (within a short time)	22.70
27	Nectar Prints Private Limited: (within a short time)	20.40
28	Citrus Resorts Bangaluru Private Limited: (within a short time)	19.93
29	Little Master Auto Cast Pvt Ltd.: (within a short time)	21.75
30	Janata International: (within a short time)	18.48
31	Anoushka Medicare & Diagnostics Pvt Ltd: (within a short time)	18.19
32	Pandit Automotive Sangli Limited: (this loan was transferred from SBI in October 2015) – (within one and half  years)	16.94
33	Pandit Automotive Satara Limited: (this loan was also transferred from SBI in October 2015) – (within one and half years)	16.00
34	Manan Autolink Private Limited: (within a short time)	58.20
35	Saptasatij Metatech Private Limited: Rs.102.62 crore (within a short time)	102.62
36	Tristar Cars Private Limited: (This company has satisfied all loans of Tata Capital Finance amounting to Rs.1.58 crore in Match 2016. The Cosmos bank has written off Rs.50.35 crore meekly during FY 2016-17 and 2017-18. The loan was sanctioned in March 2013)	50.35
37	Shakti Bio Science Limited: (Rs.50.26 crore taken over from Union Bank of India in March 2013 to eventually write off in Cosmos Bank’s books)	42.58
38	Rotoflow Polymers Private Limited: (Rs.17.96 crore written off in FY 2017-18, the balance in earlier years. Loan sanctioned in December 2013 onwards.)	49.90
39	K A Malle Pharmaceuticals Limited:	15.23
40	Duke Corporation Limited: (The loan was mainly utilized to satisfy loan of Rs.15.00 crore from Export Import Bank of India and Rs.20.00 crore from Citi Bank in July – November 2010 and the rest is the history)	50.00
41	Masscorp Limited: (within a short time)	25.00
42	Dhanshree Infratech Private Limited:	6.80
43	Shubh Tex Production Pvt Ltd: (within a short time)	7.90
44	Bogus vehicle loans at various Branches: (instant loss)	25.00
45	Surface Graphics Private Limited:	8.21
46	Shirish Polychem Limited:	14.00
47	Crystal Clear Veg Oil Refinery Pvt Ltd.: within 4 months)	23.63
48	Mirco Dynamics Pvt Ltd.:	10.00
49	Little Woods Nursery: (in 8 months)	00.70
50	Woodstock Helicopters Pvt Ltd:	12.31
51	Goenka Omprakash Basantla:	4.80
52	Glaacia Cosmetics Pvt Ltd: (within a year)	2.73
53	Lokhandwala Mohammad Abdul	14.00
54	Arya Distributors	2.61
55	Lokseva Pratisthan	0.76
56	Ranjana Newspirnt Imports	1.22
57	Balaji Dhanya Bhandar (Pro. Deeparan Chowdhary )	2.81
58	Control Automation Pvt Ltd.	2.11
59	Sumo Industries P. Ltd.	5.12
60	Balaji Cars Pvt Ltd.	13.45
61	Patel Anil Kanjibhai	14.50
62	New Phalton Sugar Works Limited	10.12
	Total	2,916.89

The above list is only illustrative and not exhaustive. There are many more NPA skeletons hidden in the cupboards of the Board of Directors of the Bank. It is said that the total NPAs are expected to go above Rs.4,000 crore.

Besides, this there are quite a few cases of fraudulent sale of NPAs to ARCs at throw away prices. For example PBG Mall at Navi Mumbai.

At this background, it is worthwhile to note the dismal recovery as reported by you and as certified by the Statutory Auditors.

Recovery till 31/03/2018: (Rs. In Lakhs)

Table – 2

Sr. No.	Financial Year	Principal Amount Involved	Principal Recovered	Interest Recovered	Total Recovered
1	2006-07	12,830.90	173.67	22.19	195.87
2	2012-13	10,840.86	181.50	24.48	205.98
3	2013-14	8,794.71	52.71	53.31	105.82
4	2014-15	17,385.41	319.86	14.71	334.57
5	2015-16	27,045.42	1,338.32	26.00	1,364.22
6	2016-17	26,254.86	366.24	0.09	366.33
7	2017-18	20,975.35	170.35	1.18	171.53
	Total	1,24,127.51	2,602.45	142.75	2,745.20

Thus out of Rs.1,241.28 crore of principal amount involved, the recovery has been only of Rs.26.03 crore. That is only 2.09%.

This abysmally low recovery only establishes the low value or zero value of the collateral security with the Bank. Thus in case of Cosmos Bank, the Gross NPAs are virtually equal to Net NPAs.

If the gross NPA ratio of the declared cumulative NPAs of Rs.1,017 crore is 9.45%, the NPA ratio for Rs.2,917 crore of the accounts listed by me in the Table 1 hereinabove comes to 27.10%. If the loan accounts are properly scrutinized, or rather investigated, the actual NPA ratio thus might go well beyond 40.00%. And considering the track record of recovery, the Net NPA ratio is going to be only marginally lower than the Gross NPA ratio, thereby giving us a situation where Gross is equal to Net!!

This financial position only indicates that due to various Acts of Omission and Commission by the existing Board of Directors since 1998 till date, our Bank is reduced to a simmering volcano waiting to erupt at any moment.

You are therefore once again requested to offer detailed explanation in respect of each account mentioned in Table 1 as well as various other NPAs camouflaged by you under the veil of Restructuring of Loans.

Since you have decided not to provide any explanation to the shareholders in spite of their legitimate requests, I am releasing this to e-mail in the social media to appraise and apprise the Depositors as well as Shareholder about the simmering volcano that the bank is sitting on.

I am also causing this matter be known to the appropriate authorities to wake them up from their pretended slumber.

Thanking you.

Yours faithfully

 

Kishor Satwick

CC:

Mr Suhas Gokhale, MD: E-mail: suhas.gokhale@cosmosbank.in

Dr Mukund Abhyankar, Gr. Chairman: E-mail: mukund.abhyankar@cosmosbank.in

Mr Krishnakumar Goyal, Director: E-mail: krishnakumar.goyal@cosmosbank.in