03 January 2011
DEAR SIR I)MY CO.(SUPPLIER) HAS BAGGED AN ORDER OF RS.100 CRORE FROM A MULTINATIONAL POWER CO.(PURCHASER) II)AS PER THE TERMS OF THE CONTRACT,INITIAL ADVANCE OF 10% OF THE ORER VALUE WILL BE GIVEN BY THE SUPPLIER AND PURCHASER WILL HAVEE TO FURNISH BANK GUARANTEE OF EQUIVALENT VALUE TO THE SUPPLIER. III)THERE IS A CONDITION IN THE CONTRACT THAT AN APPLICATION FROM TIME TO TIME CAN BE GIVEN BY THE PURCHASER TO THE SUPPLIER FOR REDUCTION IN THE VALUE OF BG TO THE EXTENT OF ADVANCE ADJUSTED BY THE SUPPLIER.
IV)THE QUESTION IS:- A)WHAT ARE THE ADVANTAGES IN COMPLYING WITH THE TERMS OF APPLYING PERIODICALLY TO THE SUPPLIER FOR REDUCTION IN BG VALUE.
B)WHAT WILL BE IMPLICATION IF THE FRESH BG WITH THE REDUCED VALUE IS NOT PERIODICALLY SUBMITTED TO THE SUPPLER AND THE ORIGINAL BG IS MAINTAINED WITH THE SUPPLIER
C)CAN THE SUPPLIER ENCASH THE ORIGINAL BG VALUE IN CASE OF NON COMPLIANCE TO OTHER CONDITION OF THE CONTRACT BY THE PURCHASER EVEN IF THE ADVANCE ADJUSTED THANX AND REGARDS S K MAJUMDAR MANAGER IA