STOCK AUDIT REPORT

DATE OF VISIT AT BRANCH : 28.01.2016

AT UNIT : 12.03.2016
DATE OF SUBMISSION OF REPORT : 22.03.2016

Name of the Account M/s Bagadiya Brothers Name of the CA Firm MRCA & Associates
Constitution Pvt Ltd Membership No. 012690C
Name of the branch Union Bank of India, Name of the person who CA. Aashish Agrawal
Main Branch, Ramsagar inspected the account Nikhil Kumar
Para, Raipur
RO / FGM / ZO RO, Raipur Name of the person Sajet Lima
Category of Branch from the branch who
accompanied C.A.
Name of the person/s Jagriti Upadhyay
contacted at borrowers
site : Duration of audit 3 Days

ADDRESS :
Regd. Office Bagadiya Mansion, Jawahar Nagar, Raipur (C.G.)
Work Office  Bonte Senegal, Regus Daka City Centre, Azur 15 Building, 12 BLD Djily,
MBAYE, BP 50555, Dakar, Senagal.
 Bonte Cote D’lvoir, Treichville, Bld Vge, Immeuble Kablane 1BP 12453-
Abidjan 01, Cote D’lvoir
Godown (in India)  Kandla Port, Gandhidham, Gujarat.
 Paradeep Port, Orrisa.
 Gangavaram Port, Visakhapatnam, Andhra Pradesh.

Category of borrower Large Corporate Assets Classification Standard

Nature of activity Export of Iron Ore Fines, Rice, Wheat, Maize, Sugar etc.
Date of last renewal 01.08.2015 Regular / Short If short Short (for 3 months)
Banking Arrangements Sole /Multiple / review, give the validity
Consortium period of limit

Our bank’s share 88.50% Name of lead bank Union Bank of India
Name/ Date/ Rating of CRISIL Date of last consortium 23.09.2015
External Credit Rating 25.02.2015 meeting held
Agency LT: BBB-
ST: A4

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 1. POSITION OF ACCOUNT AS ON THE DATE OF VISIT
(Rs in Lakhs)
Nature of Limit sanctioned Drawin O/s as on Value of Margin Rate of *Turnover for last one
facility g 18.03.2016 Collateral interest year (1st April 15 to 1st
power security Jan 2016)
Debit Credit
A. FUND BASED
i. Packing Credit: 7,906.52 6,119.81 Secured against Stock- 25% BR+ 23,070.47 17,497.90
Working 15,000.00 stock & book debtsBook 3%
Capital Cash Credit: & other collateral Debts-
5,000.00 Securities Valued 50%
FDBP: 10,000.00 at 43,500.00 Lacs (as per the
latest
renewal)
ii. Term
NIL
Loan
B. NON FUND BASED
DALC
Bank (5000.00)
Guarantee
.
INSPECTION OF ACCOUNT AT BRANCH

TERMS AND CONDITIONS

Ascertain whether all terms and conditions of sanction are As per our observation the company has
complied with complied with terms & conditions
subject to notes at the end
If no, the terms and conditions which are yet to be complied
NA
with

DOCUMENTATION

i. Whether proper documents obtained, if not give details

Date of document 08.02.2014
Date of last debit balance confirmation (DBC) 18.02.2014
ii. Whether the documents have been vetted by advocated / Yes
legal department as per the norms of the bank.
iii. Whether Credit Process Audit(CPA) of the a/c has been Yes
completed before disbursement of the loan
iv. Whether equitable / simple mortgage of property created, if NA
not, nature of deficiency
v. Whether stamps of adequate value affixed on documents NA
and also for creating equitable mortgage of property if not,
give details.
vi. Date of vetting / verification of documents 12.02.2014
vii. Whether charge on assets properly created (including first Yes, The charge for both mortgage
charge / second charge / pari passu charge) If not, reasons and hypothecation has been
for non-creation of charge. properly created.
viii. Details of registration of charge including modification /
enhancements.

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Wherever required, whether charge registered Date of Date of Value of charge
with ROC, within prescribed time (Form 8 & registration of certificate
13 filed or not) charge
Form 8 08.02.2014 08.02.2014 435.00 Crores
If charge is not yet registered, the reasons therefore :
ix The Prime & Collateral Securities offered by way of Land & Yes
Building are registered under CERSAI (Central Registry of
Securitisation Asset Reconstruction & Security Interest of
India)
x Any other irregularity observed in respect of documentation

3 Operations / performance of the account at branch

(Please see operations of account for full FY From
01.04.2015 to 29.02.2016 )
i Whether the account is being regularly / actively operated. Yes, as per our test check basis
account is being regularly operated
ii Whether sales are being routed through the account Yes, as per our test check basis
sales is being routed through the
account
ii-a Whether cash withdrawals are regularly allowed the reasons Not Observed
of allowing cash withdrawal. Whether in your opinion such
cash withdrawal are warranted or not.
ii-b Any transaction indicating diversion of funds noticed No such cases noticed
random check of 5% to 10% of the total debits (subject to
minimum 20 transactions)
ii-c Loans & Advances to sister/associate concern 13.70 Lacs (as per latest audited
Financial Statement)
iii No. of Cheques returned for financial reasons Nil
iv Detailed observations as regard any large transaction of Annexure 1 (Provided Below)
Rs.500 Lacs and above be commented upon.
v Average daily balance (debit as well as credit) From 01.04.2015 to 28.01.2016
INR Account
Average Dr. Rs. 5704.41 Lakhs
Average Cr. Rs NIL
vi Whether the utilization of the limit is more than 90% or not? Yes
Credit/Debit summations in relation to utilization of the From 01.04.2015 to 01.02.2016
limit and the sales projection?
INR Account
Dr. Sum 23070.47 Lakhs
Cr. Sum 17497.90 Lakhs
vii Whether the interest has been serviced within 10 days? Yes, by the system automatically
Number of times the account remained overdrawn 6 Times
Whether the excesses have been allowed continuously or Rarely
occasionally or rarely
Average time taken for adjustment of Excess. -
Ascertain reasons for such overdrawals 1 Time Allowed by Branch and 5
Times due to Interest Charges.
Whether excesses allowed have been reported regularly to Yes as informed.
higher authority.
Whether excesses have been confirmed or not? If not Yes

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 confirmed, action taken for adjustment of excess.
viii Whether PC is adjusted timely? If not give the following Yes
details
ix
Sr. No. Amount Last date of shipment Since when overdue
NIL
Whether extension of time has been taken / applied for to NA
ECGC and upto which date it is valid (in case of overdue
PC)
Whether PC is adjusted by application of local Rupee fund NA
/ export proceeds?
x Whether bills foreign / inland are being realized as per Yes
tenor / terms
xi Details of overdue bills, both inland / foreign. NA
xii Details of bills returned unpaid NA
xiii Buyer wise ECGC coverage obtained as per terms of NA
sanction or not
xiv Is there any devolvement of L/C, if yes, number of L/Cs NA
devolved, amount and the fate of devolvement
Reason of devolvement of L/Cs be given in brief NA
xv Whether any guarantee invoked? If yes, number, date and No
amount.
Reasons of invocation of L/G be given in brief -
xvi No. of guarantees expired but still outstanding. No Such Cases Found.
xvii Whether interest is being serviced regularly or not, if not NA
details upto which the interest has been repaid and the
amount of overdue interest.
xviii In case of term loan, whether repayment of installment is NA
regular, if not details upto which the installments have been
repaid and the amount of overdue installments.
3-a Profitability for relationship (Total earning of the bank with From 01.04.2015 to 01.02.2016
the relationship be mentioned)
Interest on CC Limit –
748.43 Lacs
Other Charges –
Rs. 57,303.00
A Submission of Statements
i Whether stock statements are being submitted regularly Yes
i-a Whether book debts statements are being submitted Yes
regularly. Date of last stock statement
ii Whether DP is being calculated, check DP register. If not DP is calculated automatically by
maintained, give remarks Finacle System.
iii-a Whether QPR statements submitted as per terms of Yes
sanction (Details to be given)

QPR – I QPR – II QPR – III QPR-IV

Date of Submission 19.07.2015 25.11.2015 16.02.2016 Not Yet Due
b Whether operating limits are fixed as per QPR NA
c Whether the information submitted in QPR Yes, as informed us.
statement is as per the books of account of the
party? (analytical view)

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 d Whether monitoring reports is being submitted Yes, as informed by Bank officials.
regularly? If not submitted give details when it
was last submitted
iv Details of insurance policy
a Name of the insurance company The New India Assurance Co. Ltd.
b Validity (Stock at the Particular Ports) Expiry Date: 06.07.2016 (Kandla, Gujrat)
Expired on: 30.10.2015 (Paradeep Port)*
Expired on: 30.10.2015 (Visakhapatnam
Port) *

*As informed by the management the expired

insurance have been renewed, however the
copy of the renewed insurance are not made
available for our verification.
c Insurance coverage Stock at Visakhapatnam: 3,600.00 Lacs
Stock at Paradeep Port: 1,200.00 Lacs
Stock at Kandla, Gujrat: 910.00 Lacs
d Comments on any discrepancy in the policy like No discrepancy found.
the address of the godown / shop / unit, type of
goods insured and inadequacy etc.
B Unit Visit
1-i Name of the person contacted at unit with Sunil Patni (Vizag & Gangavaram Port)
designation
ii Whether party’s name board has been prominently Not found
displayed
iii Whether notice of hypothecation of Bank’s has Not found
been prominently displayed

2 Production capacity of the unit Last Year This Year

i Licensed capacity
ii Installed capacity NA
iii Actual Capacity (running)

3a Method of valuation of stock At Cost (net of At Cost (net of

CENVAT credit) CENVAT credit)
i Raw Material - -
ii Stocks in process - -
iii Finished goods / Goods Traded At Cost or NRV At Cost or NRV
Whichever is Lower Whichever is Lower
If not in order give details
3b Comments on the discrepancies observed in 3 above particularly the effect of change in the
method of valuation of stocks on value of stocks
4 Stock position of hypothecated stock as on 12.03.2016 and position of receivables and sundry
creditors of same date.
A PHYSICAL INVENTORY (Stock)
Sr. Particulars QTY MT. Total Value
No. (in Lakhs)
Value of Stocks as shown in stock statement as on
12.03.2016
i Raw Material - -
ii Finished stocks 1,73,750 MT 2,994.52
TOTAL 1,73,750 MT 2,994.52

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 Add : Purchases (from the date of stocks statement till the - -
date of inspection)
Less : Material consumed / reduction on account of sales* - -
(from the date of stocks till the date of inspection)
TOTAL 1,73,750 MT 2,994.52
Add : Stock given on job work - -
TOTAL 1,73,750 MT 2,994.52
Less : Stock received on job work - -
Less : Stock belonging to sister concern for which no - -
payment has been made
TOTAL VALUE OF STOCK* 1,73,750 MT 2,994.52

B DRAWING POWER (Stocks)

i Value of the stocks as arrived at as per clause No.4 A above. 2,994.52
ii Less unpaid stocks including the stocks received under DAL/C/LG 701.23
or under bills
iii Less value of stocks non saleable / obsolete or value of stocks left over -
iv Less value of stock which does not rank for DP i.e. normally 3/6 -
months old. It should be taken as per sanction terms)
v. suppliers -
Total Value of Stocks available for Drawing Power 2,293.29
Less: Margin on Stock @25% 573.32
Drawing Power 1,719.97

C BOOK DEBTS
Sr. No. Particulars Amount
1 Book debts as on 12,373.11
2 Less book debts more than 90 days old* -
3 Less book debts declared doubtful / irrecoverable by the party’s -
auditor
4 Less book debts not pertaining to the business of the party / balance -
of sister concern (Note 1)
Book debts available for drawing power. 12,373.11

D DRAWING POWER (Book Debts)

Sr. No. Particulars Amount
1 Book debts available for drawing power as per clause 4-C above. 12,373.11
2 Margin on book debts @50% 6,186.56
3 Drawing power 6,186.56

E VERIFICATION OF BOOK DEBTS

a Collect age wise and party wise break-up of book debts any party wise No such discrepancy
receivable be checked with invoice / sales register comments on any found
discrepancy observed.
b Whether receivables are routed through the account Yes
c Average time taken for realization of book debts to be compared with the Realiasation of book
past trend / industry trend / trade trend. Reasons for any deviation to be debts depends upon
analyzed and commented upon. the Agreement
Between the parties
d Overall observations as to the quality of book debts. Satisfactory
e Verify excise records/sales tax returns/assessment orders of sales tax Not able to Verify the
sales Tax return

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F Composition of value of stock and book debts as on the Level of stock and Book Debts has
balance sheet date should be compared with value of been increased on the date of
stocks as on the date of inspection. verification, when compared with
stock & debtors as on 31/03/2015
audited accounts.

5 Stocks sent for job work to other processors. -

a Whether letter of lien and letter of free access is obtained? -
b Details of the stock send on job work -
Nature of Value of stocks To whom Date of Proof of Remarks
stocks sent dispatch dispatch

6 Stock received for job work or stocks belonging to sister NIL

concern / allied concern
Nature of From whom Date of Value of Proof of Whether such stocks are
stocks received receipt stocks receipt segregated & kept apart from
the stocks Hyp. To the bank.

7 Whether the value of the stocks as revealed from the books of Physical observation of stock is
the party and actually lying at the site of the party as arrived atdone at Vishakhapatnam and
above tallies with each other? If not variations if any to be Gangavaram Ports. For stocks
analyzed and reported. lying at other locations we have
relied upon the value of stocks
stated in the stock statement
given to us by the management.
8 Whether inventory levels accepted have been followed by the Yes, as informed
company? If not the reasons to be analyzed and reported here.
9 Reasons of any sudden increase in the raw material / stores and NA
spares, if any.
10 Reasons of any abnormal increase in the finished goods, if any:
Whether the finished goods include the following :-
i Goods returned by the buyers NA
ii Left over or old batches NA
iii Non saleable items being sub standard or obsolete items of NA
stocks
iv With regard to finished goods which have a shelf life, the No
auditors to verify how many reached within six months of the
expiry date and such goods should not rank for drawing power.
11 Whether in your opinion the company is following the correct Yes
stocking pattern? Give comments.
12a Whether proper internal control of verification of the stock Yes, as explained to us.
exists?
12b Whether proper books of account have been maintained by the Yes
party? (Stock register / excise register / sales tax records /
purchase register / production register / sales register / work in
process / register for consumables & spares etc.)
13 Details of obsolete stocks: Nil, observed and informed
a) Obsolete stock
b) Stock as stipulated in the sanction advice should not rank
drawing power

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14 Whether the factory has been closed due to lock out / strike or NA
the production has suffered due to labour unrest during the
year? Give details alongwith the observation.
15 Whether branch officials have conducted the inspection of the 13.11.2015
stock / unit regularly, if yes dates of visits and the major
irregularities observed. Any material deviations / variances to
be commented upon.
16 Verification of the plant & machinery in case of term loan.
a Verify invoices / bills
b Whether the end use of the bank finance is proper?
c Whether the plant is in working condition?
NA
d In case of project finance of the projects having long gestation
period.
Cost overrun if any, the reasons be ascertained and the means
of financing
17 Irregularities pointed out in last RBI inspection / statutory
inspection / internal audit concurrent audit regarding the
verification of the stock / book debts and the steps taken by the
branch for its verification.
S IRREGULARITIES
No.
NIL

18 Check whether books of accounts are properly Yes, books of accounts are properly
maintained and ascertain the valued of sundry maintained
creditors for goods and services used for
production on the date of last stock statement
submitted to the branch and report differences, if
any. To also comment, whether they are banking
with any other bank
19 Whether goods purchased under usance Letter of Nil
Credit prior to the date of last stock statement are
included in the stock statement? If so to deduct
the amount for the purpose of calculating
drawing power
20 Reasons, if any, existing or foreseen, which None observed, the account is operating
indicates that the continuation of the relationship effectively, no adverse observations.
with the party will not be beneficial for bank, be
commented upon so as to plan for timely exit
from the account
21 Details comments about your overall observation None observed, the account is operating
in the accounts effectively, no adverse observations.

Signature of the Chartered Accountant

Name : For, MRCA & Associates

CA Aashish Agrawal
Designation : Partner
MRN : 131180
Address : 211,2nd Floor , Samta
Shopping Arcade, Samta
Colony, Raipur (C.G.)

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ENCLOSURES:

Annexure 1
Sr. Particulars Dr/Cr Amount
No. (in Lacs)
1 By Trf Cr 1,150.00
2 Bagadia Bros Pvt Ltd 327004010012225 Cr 550.00
3 By Trf Cr 640.00
4 By Trf Cr 1,000.00
5 By Bagadiya Cr 750.00
6 Bagadiya Brothers Pvt Ltd Cr 700.00
7 Bagadiya Brothers Pvt Ltd Cr 1,700.00
8 Bagadiya Brothers Cr 1,000.00
9 Bagadiya Brothers Pvt Ltd Cr 1,130.00
10 Bagadiya Dr 950.00
11 Bagadiya Brothers Dr 1,400.00
12 327004010012225 Dr 1,000.00
13 Rtgso-Serajuddin And Co Dr 553.55
14 Bill Id : 32700Tt00007215 Dr 621.70

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