Policy on Stock Audit and Empanelment of Stock Auditors

Annexure I
STOCKAUDITREPORT

DATEOFVISITATBRANCH 25.02.2022
DATE OF VISIT AT UNIT 08.03.2022
DATE OF SUBMISSION OF REPORT 15.03.2022

Name of the Savera India Riding Name of CA firm Mayur R. Shah &
Account Systems Company Membership No. Associates
Private Limited FRN: 116506
Private Limited Name of the person Mayur R. Shah
Constitution Company who inspected the
account

Name of the branch V N Road Name of the person Sumit Sharma

From the branch who
accompanied CA

Name of Borrower Savera India Riding Systems Company Private Limited

PAN No of borrower AAJCS2012E
CIN No of borrower U27100MH2005PTC152340
GST No of borrower 27AAJCS2012E1ZR
LEI of borrower NA
RO/FGMO/ZO RO Mumbai South, Name of the Gajanan Gurav CFO
Category of branch FGMO Mumbai person/s contacted
Very Large Branch at borrowers site:

ADDRESS:
Office 113-A, Mittal Tower, Nariman Point Mumbai, Mumbai 400021

Factory Plot No. D/22, MIDC Industrial Area, Taloja, Dist.-Raigad,

Maharashtra
Category of borrower MSME Asset Classification Standard

If account is under No Reasons for stress: NA

Stress
No

Allowed. If yes brief

comment.
Nature of activity/ Manufacturing/ Servicing of Elevator System Solutions, Specially
BSRC ode Guide Rails & Fish Plates

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 Policy on Stock Audit and Empanelment of Stock Auditors

Date of last renewal New Sanction letter dated Regular/If review for Regular
01.12.2021 Shorter period give
validity period of
limit
Banking arrangement Sole Banking Name of Lead Bank NA

Our Bank’s Share

Date of last NA
consortium meeting
held
Name/Date/Rating External Rating: ICRA
of External Credit Dated: 25.02.2021
Rating Agency Short Term Scale Rating: A4
POSITIONOFACCOUNTASONTHEDATEOFVISIT:
Nature of Limit O/s as Value of Margin Rate *Turnover for
facility sanctioned On Security of Last one
22.02.2022 28.02.20 Interest year(01.04.2021t
(Amt. in lacs) 22 o22.02.2022Marc
(Amt. in h)
lacs) (Amt. in lacs)
Exist. New Debit Credit
Sanctioned
A. FUNDB
ASED
Working 700 1000 83.84 (A.c 1994.11 Stock:20% EBLR+2% 16060.30 16144.14
Capital no 501- Book
89+501-106) Debts:20%
OD 300 Cancelled - -

Term Loan
UGECL 184.13 169.91 156.3 - - 7.5%
Ext. of 94 94 94 - - 7.5% or
UGECL EBLR+1%
whicheve
r is
lower.

B. NON
FUND
BASED
Inland LC 200 200 0 - 25% As
Applicabl
e

Limit vis-à-vis turnover under multiple/consortium finance arrangements. Limits with all
the member Banks should be compared with the total TO & Sales of the corresponding
period.

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 Policy on Stock Audit and Empanelment of Stock Auditors

INSPECTION OF ACCOUNT AT
BRANCHTERMSANDCONDITIONS
Ascertain whether all terms and: Yes Conditions
of sanction are complied
With
If no, the terms and conditions:
A )which are yet to be complied with
b)

c)

d)
2. DOCUMENTATION

i) Whether proper documents : Yes Obtained.

If not, give details

Date of Documents : 23.12.2019

Date of last Debit Balance

Confirmation (DBC) : 20.04.2021

ii) Whether the documents have : Yes, last vetted on 12.09.2019

Been vetted by advocate/Legal
Dept. as per the norms of the Bank

iii) Whether Credit Process Audit : Yes, report dt. 21.09.2019

(CPA) of the a/c has been
Completed before disbursement of
the loan

iv) Whether equitable/Simple: Yes

mortgage of property created,
If not, nature of deficiency

v) Whether stamps of adequate : Yes value

affixed on documents
and also, for creating equitable
mortgage of property. If not,
give details
vi) Date of registration of EM with SRO :Done in 2012

vii) Whether charge on assets: Yes

properly created (including
First charge/second charge/
Pari passu charge) If not, reasons

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 Policy on Stock Audit and Empanelment of Stock Auditors

for non-creation of charge

viii) Detailsoftheregistrationofchargeincludingmodifi
cation/enhancements:
Wherever required, whether Date of Date of Value of
charge registered with ROC registration of certificate charge
within prescribed time charges
(Form8 &13filedornot)
Yes Refer Statement of Charge as enclosed.
If charge is not yet registered there
as on therefore:
ix) The Prime security by way of :Yes cersai ID is 200000606055 as per last report
Stock& book debts & Collateral securities
offered by way of Land
&Bldg. are registered under
CERSAI(Central Registry of
Securitization Asset Reconstruction&
Security Interest of India)

x) Any other irregularity observed : No

In respect of documentation

xi) In applicable case any other charges / : Nil

payment of any guarantee fees etc.
to be verified.

3. Operations/Performance of the A/c at branch (Please see operations of

accountsforFYfrom01.04.2021to23.02.2022)

i) Whether the account is being : Yes

Regularly/actively operated

ii) Whether sales are being routed : Yes

Through the account

ii-a) Whether cash withdrawals are regularly: We have noted no big cash withdrawal
Allowed, the reasons of allowing cash from bank statement
Withdrawal. Whether in your opinion
such cash withdrawals are warranted or not.

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 Policy on Stock Audit and Empanelment of Stock Auditors

iii) No. of cheques returned for NIL

Financial reasons
iv) Detailed observations as regards any We have observed that transactions which are
largetransactionofRs.5.00lacsandaboveb above Rs. 5.00 lacs pertain to business purpose
ecommentedupon only.
v) Average daily balance(debit as well
As credit) Average Average
Debit Credit
Account No Balance Balance
319505010000089 178.72 141.10 Lacs
319505010000106 138.02 Lacs 123.48 Lacs
vi) Whether the utilization of the limit No
Is more than 90% or not?
Credit/Debit summations in relation Period : 01.04.2021-22.02.2022
to utilization of the limit and the Dr. Transactions:16,060.30 lacs
sales projection? Cr. Transactions:16,144.14 lacs

Period : 01.04.2021-28.02.2022
Net Sales: Rs.12,429.66lacs
vii) Whether the interest has been Yes
Serviced within 10 days?
Number of times the account Nil observed
Remained overdrawn

Whether the excesses have been No

Allowed
Continuously or occasionally or Nil
Rarely
Average time taken for adjustment NA
Of Excess:
Ascertain reasons for such Overdrawals NA

Whether excesses allowed have been NA

reported regularly to higher
authority:
Whether excesses have been confirmed NA
or not? If not confirmed action taken
for adjustment of excess

iv) Whether PC is adjusted timely? NA

If not give the following details
v) S no Amount Last date of NA
Shipment Since when overdue

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 Policy on Stock Audit and Empanelment of Stock Auditors

Whether extension of time has been NA

taken/applied for to ECGC and up to
which date it is valid(in case of overdue
PC)
Whether PC is adjusted by application of NA
local Rupee fund/export proceeds?

v) Whether bills foreign/inland are being NA

realized as per tenor/terms
vi) Details of overdue bills, both NA
inland/foreign
vii) Details of bills returned unpaid NA
viii) Buyer wise ECGC cover age obtained NA
As per terms of sanction or not
ix) Is there any devolvement of L/C, if NA – Nil as informed
yes, number of L/Cs devolved, amount
and the date of devolvement

Reasons of devolvement of L/C be NA

Given in brief
x) Whether any guarantee invoked? If NA
yes, number, date and amount. Reasons
of invocation of L/G be given in brief

xi) No. of guarantees expired but still Nil

outstanding.
xii) Whether interest is being serviced Yes
regularly or not. If not details up to
which the interest has been repaid and
the amount of overdue interest.
xiii) In case of term loan, whether: Yes
repayment of installment is regular, if
not details up to which the installments
have been repaid and the amount of
overdue installments
3a Profitability for relationship (Total Interest earned by bank on CC from 01.04.2021 –
earning of the Bank with the 22.02.2022 is of Rs. 17,68,970
Relationship be mentioned)
4 Submission of statements
i) Whether stock statements are being Yes
Submitted regularly
i-a) Whether book debts statements are Yes
Being submitted regularly Date of last Date of last stock statement: Jan 2022
stock statement

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 Policy on Stock Audit and Empanelment of Stock Auditors

ii) Whether DP is being calculated: Yes

Check DP register. If not Maintained,
Give remarks
iii)a) Whether QPR statements submitted QPR-I QPR-II QPR-III QPR-IV
As per terms of sanction.(Details to be
given) Yes Yes Yes NA
b) Whether operating limits are fixed Yes
As per QPR?
c) Whether the information submitted Yes
In QPR statement. Is as per the books of
account of the party?(analytical view)

d) Whether monitoring reports is being Yes

Submitted regularly? If not submitted
give details when it was last submitted.

iv) Details of insurance policy

a) Name of insurance company: Bajaj Allianz General Insurance Company Ltd.

Policy No. Sum Insured Sum Insured For

(In Rs.)
OG-22-1902-4010-00000071 5,00,00,000 Burglary Insurance- Stocks at D-22, Taloja
MIDC Area, Talpanvel, Dist-Raigad,
Maharashtra Panvel-410208
OG-22-1902-4010-00000080 5,00,00,000 Burglary Insurance -Stock Of Steel And
Elevator Gride Rail And Other Elevator
Component at C/O Savera Kothari (I) Pvt
Ltd,B-61 And 62, SipcotNdustrial Area
Irungattukottai Kancheepuram Tamilnadu-
602105
OG-22-1902-4057-00000031 18,05,50,000 Building Structure, Stocks, Furniture &
Fixture & Fitting, Plant & Machinery at D-
22 Taloja MIDC Area, Panvel Taloja 410208,
Taloja, Raigarh,Maharashtra
OG-22-1902-4057-00000032 13,00,00,000 Plant & Machinery & Raw Material at C/O
Savera Kothari (I) Pvt Ltd,B-61 And 62,
SipcotNdustrial Area Irungattukottai
Kancheepuram Tamilnadu-602105
OG-22-1902-4057-00000033 8,10,00,000 Building Structure, Plant & Machinery,
Furniture & Fixture & Fitting at C/O Savera
Kothari (I) Pvt Ltd,B-61 And 62,
SipcotNdustrial Area Irungattukottai
Kancheepuram Tamilnadu-602105
b) Validity :from Sep 2021 to Sep 2022
c) Insurance coverage: As per Policy Enclosed and also see point no 23

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 Policy on Stock Audit and Empanelment of Stock Auditors

d) Comments on any discrepancy in the Nil

Policy like the address of the godown/
shop/unit, type of goods insured and in
adequacy etc.
B. Unit/Visit
Name of the person contacted at Amount of the policy
unit
Arvindat Taloja Unit As per Policy
1a Whether party’s name board has been During our visit to unit, party’s name board was
prominently displayed? not there.
Whether notice of hypothecation of No
Bank/s has been prominently displayed

1b Whether Free Access to stock kept NA

in premises, not owned by the
borrower.
1C Whether applicable statutory NA
Approval are in placed and verified.
2 Production capacity of the unit Lasty ear This year
i) Licensed capacity 24,000 MTon 24,000 MTon
ii) Installed capacity 24,000 MTon 24,000 MTon
iii) Actual capacity 20,000 MTon 20,000 MTon
iv) PLFsince31stMarch of Preceding NA NA
Year Monthly in applicable cases
3a Method of valuation of stock
i) Raw material Weighted Average Weighted Average
ii) Stocks in process Weighted Average Weighted Average
iii) Finished goods Weighted Average Weighted Average
If not in order give details

3b Comments on the discrepancies No Comments.

observed in 3 above particularly the There is no change in the method of valuation of
effect of change in the method of stock as per management.
valuation of stocks on value of stocks

4 Stock Position of hypothecated stock as on 28.02.2022 and position of

receivables and sundry creditors of same date.

A.PHYSICALINVENTORY:(Stocks)
(Rs in lacs)
Particulars Total value
Value of stocks as shown in stocks statement as of
i)Raw Material 98.99
ii)Stock in process 175.99
iii)Stores and spares -
iv)Finished stocks 389.86

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 Policy on Stock Audit and Empanelment of Stock Auditors

Total 664.84
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)
Add stocks given on job work -
Total 664.84
Less stocks received on job work -
Less stocks belonging to sister concerns for which no -
Payment has been made.
Total Value of Stocks 664.84

Gross sales minus returns should represent net sales during the period
12,429.66 lacs
Total value of stocks must tally with the books of accounts maintained by the party
Yes
In case of excisable items, the excise register should be checked to find out stock position.
NA
Other wise stock register/original invoice be checked to record the stock position. Stock received
under L/C or goods received under bills, in respect of which the company has not
Retired the bills should be deducted while calculating the drawing power.
NA
The entire stocks to be bifurcated value-wise in to three categories A, B and C depending
upon the high/medium/low cost items. While high cost items to be verified at least 80%,medium
and low cost items may be verified at random covering about 40% and 30% of the total value of
stocks declared

B. Age-wise details of stock

i) Value of the stocks as on the date of inspection 664.84

ii)Value of stock up to 3months 664.84

iii)Value of stock older than 3 months, upto 6months -
iv)Value of stock older than 6 months -

C. Book Debts
Sr. No Particulars Amount (In Lacs)
1. i) Value of the book debts as on the date of inspection 1,862.63

2. ii)Value of book debts upto 3 months 1,825.40

3. iii)Value of book debts older than 3 months, upto 6 months 37.23
4. iv)Value of book debts older than 6 months -

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D. Verification of Book Debts/Others

a- Collect age wise and party wise breakup of Yes –Age wise break up is attached.
Book debts and party wise
b- Whether receivables are routed through the Yes
Account ?
c- Comments and comparison with past trend of Satisfactory
with working capital cycle (debt or holding
period, credit or holding period, inventory
holding period) of the firm and whether it is
At par with the industry.
d- Overall observations as to quality of book The company is working with standard
debts? clients.
e- Verify GST Records/Verify GST applicable returns Yes Done.
(old excise records/sales tax returns/assessment
orders of sales tax if required)

f In case of EPC contractors, bill raised, unbilled NA

revenue, amount of loan raised from
Bank against the bill amount of the company, is
to be commented
g Comment that in case of Power producer NA
/generator the advances paid for supply of coal
is included for calculation of Drawing
Power or not.
E. Composition of value of stocks and book debts as on the Balance Sheet date should be
compared with value of stocks as on the date of inspection:
Stock as on 31.03.2021 is RS 676.04 Lakhs being 9.23% of revenue whereas stock as on
28.02.2022 is being around 5.5% of the revenue. Book debts are around 2.79 month of Revenue as
on 31.03.2021 whereas the current position is around 1.83 months of revenue.

5. Stocks sent for job work to other processors:

No. Material kept in sister company premises for their own consumption.

a) Whether letter of lien and letter of free access is obtained?: NA

b) Details of the stocks sent on job work:
Nature of Value of To whom Date of Proof of Remarks
stocks Stocks sent dispatch dispatch

c) While checking the movement of stock, a counter check could be made of records
pertaining to excise duties and Sales tax wherever applicable, in the form of challans and
registers: NA

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6)Stocksreceivedforjobworkorstocksbelongingtosisterconcern/alliedconcerns:
Nature of From whom Date of Value of Proof of Whether such
stocks received receipt stocks receipt Stocks are
segregated & kept
apart from the
stocks Hypo the
Bank
---------nil-
---
7. Whether the value of the stocks as revealed from the books of the party and actually lying
at the site of the party as arrived at above tallies with each other? If not the variation if any
to be analyzed and reported: Yes

8. Whether inventory levels accepted have been followed by the company? If not there as on
to be analyzed and reported here: Yes.

9. Reasons of any sudden increase in the raw material/stores and spares, if any:

Reasons of any abnormal increase in the finished goods, if any:

Whether the finished goods include the following:-
i) Goods returned by the buyers: No
ii) Left over or old batches: Nil
iii) Non saleable items being sub-standard or obsolete items of stocks: Nil
iv) With regard to finished goods which have a shelf life, the auditors to verify how many
reached within six months of the expiry date and such goods should not rank for drawing
power: Yes – All stocks are standard and are within 3 months period
11. Whether in your opinion the company is following the correct stocking pattern? Give
comments: Yes

12.a. Whether proper internal control of verification of the stocks exists? :Yes
12.b. Whether proper books of accounts have been maintained by the party? : Yes
(Stock Register/excise register/sales tax records/purchase register/production register/sales
register/work in process/register for consumables & spares etc.)
12.c. Any variance in stock declared under monthly stock statement & QPR submitted to the
Bank: No
12.d. Comments on MSOD statement submitted to Bank: Yes
12.e. Any variation of audited stock against declared stock to the Bank is to be commented:
No such variation.
12.f. Comments on paid stock in transit, if any: NA

13. Details of obsolete stocks:

a) Obsolete stock: Nil as informed
b) Stock as stipulated in the sanction advice should not rank drawing power.
14. Whether the factory has been closed due to lock out/strike or the production has
suffered due to Labour unrest during the year? Give details along with the observation: No

15.Whether branch officials have conducted the inspection of the stocks/unitregularly, if yes

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dates of visits and the major irregularities observed. Any material deviations/variances to be
commented upon: 25.10.2021

16. Verification of the plant and machinery in case of term loan.

a. Verify invoices/bills: NA
b. Whether the end use of the Bank finance is proper?: NA
c. Whether the plant is in working condition?:Yes
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: NA

17. Irregularities pointed out in last RBI inspections/Statutory Inspection/Internal Audit

Concurrent Audit regarding the verification of the stocks/book debts and the steps taken by
the branch for its verification
Irregularities Steps taken for rectification
a) Not found any Irregularities as NA
informed.
b)
c)
d)

18. Check whether the books of accounts are properly maintained and ascertain the valued
of sundry 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: Reply:-Books of accounts are properly maintained and
the company is not banking with any other bank.

19. Whether goods purchased under Letter of 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: NA

20. Reasons, if any, existing or foreseen, which indicates that the continuation of the
relationship with the party will not be beneficial for Bank, be commented upon so as to plan
for timely exit from the a/c: No such cases

21. Comments, if any made by statutory auditor of the borrowing entity on Stock /Book
Debts: Nil-No Comments

22. Steps adopted by the Subject Company/firm for ensuring safety of stock: No such steps
required.

23. Detailed comments about your overall observation in the account: Total receipts and
payments in CC A/c from 01.04.2021 – 22.02.2022 is Rs. 16,144.14 and Rs. 16,060.30lacs
respectively. Total net sales including other income and net purchases of company from
01.04.2021 – 28.02.2022 are Rs. 12429.66 lacs and 8,986.08 lacs respectively. Insurance
Policy: (Fire): Chennai: Insurance policy for stock is for Rs 500 lakhs but we have
observed that stock is more than 500 lakhs in Chennai unit at many times of the year.
We recommend to increase the insurance coverage for Chennai unit.
Purchase for Taloja unit is done from sister unit (Prabhat Steel industries and Emasa) to extent

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 Policy on Stock Audit and Empanelment of Stock Auditors

of 100% whereas for Chennai unit it is around 98%.

24. We confirm that the report is based on impartial professional assessment and we have no
Direct/Indirect interest in the unit.

25. We confirm that no audit assignment has been undertaken for the subject client or any
of its group or associated companies for the past 3years.

ENCLOSURES:-
1. ROC Charges statement
2.Age wise debtor statement as on 28.02.2022
3. Provisional Financials as on 28.02.2022

UDIN No: 22116506AFFEER8742

For Mayur R. Shah & Associates

Chartered Accountants
FRN: 127598W

Mayur R Shah
(Partner)
Membership No: 116506

Place: Mumbai
Date: 15.03.2022

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