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MEDCHEM ORGANICS PRIVATE LIMITED

Stock and Receivables Audit – June’2015
SCOPE:
1 Verification of reasonableness /quantity/quality of Stocks and receivables and the
information furnished in the stock statements of the Company as on 31.05.2013 with
the books / other records including excise records of the Company held at
factory/registered office, with special emphasis on value and realisability thereof. The
stocks will need to be examined in terms of moving, non-moving and receivables in
terms of good for recovery and doubtful of recovery.
2

Verification of the system of valuation of stocks adopted by the Company for drawing
up the stock statements, with specific reference to the reasonableness and whether the
same complies with the generally accepted accounting practices, AS-2. The
correctness of valuation and physical quantity of work-in-process shown in the stock
statements are to be commented in detail.

3

Verification of Book Debts- with comments on their quantity, realisability and ageing
analysis. Receivables not connected to the operations of the Company will have to be
commented upon specifically

4

Physical verification of inventories (held at the factory and branches/ godowns) as on
a date during the course of audit with reference to the books of the Company and
cross verification with reference to the stock levels at the beginning of the accounting
year, production/ activity levels at the factory and purchases made during the period.
The stocks of raw materials and finished goods may be verified with reference to
excise records also. The correctness and physical quantity of semi-finished goods
shown in the stock statement may be specially commented upon.

5

Slow moving and obsolete stock details be furnished together with values.

6

Month-wise cash inflows/sales realization and utilization thereof (in the last 12
months) is to be examined and comments to be made on whether the sales proceeds
have been retained in the WC cycle for unit’s operations.

7

Maintenance of accounts with any other Bank and interlocking of funds among group
Companies.

8

Group Company transactions or transactions with other associates/sister Companies,
if any, are to be examined and the impact thereof is to be commented upon.

9

Unhealthy accounting practices noticed, if any and any other aspect having a bearing
on above points may be reported for our information.

10 Any other matter, in our judgement, which is of interest to the Bank.
11 The above list is only illustrative and not exhaustive. Any other information which in
the view of stock Auditor is relevant and material to be appropriately furnished with
reasoned comments.
1
Nachiketha Consultancy, Hyderabad

Chityal Mandal.500 038. Vengalrao nagar.508114. Dates of Visits : From 20. Telangana .No. Name of the Auditors : M/s.06. 2 Nachiketha Consultancy.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 STOCK & RECEIVABLES AUDIT 1. Hyderabad. Banking Arrangement : Sole Banking Stock/Receivables Verified as of : 31.2015 to 27. Hyderabad.2015. MEDCHEM ORGANICS PRIVATE LIMITED 1.2015 M/s.06. Hyderabad . Nandana vanam.. SR Nagar X Roads. Nalgonda Dist.405. MEDCHEM ORGANICS PRIVATE LIMITED was started on 9th april2007 by four professionals with the aim of ORGANIC CHEMICALS can be converted as AFFORDBLE MEDICINES (MOPL) by acquiring 21.2015 Date of completion : 28. Hyderabad. Stock & Receivables Audit of M/S.05.06. Place of Visit Register Office & Corporate Office : Factory / Work Place 5th floor.12 acres. : Sy.1 Conducted on behalf of : State Bank of Hyderabad Branch Name : KPHB Colony. Telangana . Nachiketha. Veliminedu Village. The commercial production actually started from January 2015.

4. The Stock & Receivables Audit of the Company has been carried out in pursuance of the appointment given by State Bank of Hyderabad.Ganapathirao Mr.2 2.55 Crores as against Rs. No Non-fund base limits.Director Projects.A Mohana Krishna Mr.6.Ch.S.63 Crores during the year 2011-2012.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 Promoter’s List Mr.00 Crores.1.1. Verification & valuation of inventories and examination of receivables by agewise classification and making provision for bad and doubtful debts Verification of Inventory: The inventory of the Company mainly comprises of Raw Materials of PP Woven 3 Nachiketha Consultancy. There are no changes in the accounting policies observed during the current financial year compared to the previous financial year which have an impact on the profitability of the Company.Seetaramaiah . 1. STATE BANK OF HYDERABAD. which will have a bearing on the profitability of the Company. 1. Hyderabad . Hyderabad sanctioned the working capital limits of Rs 5. . Hyderabad. KPHB Colony Branch. .2013 are 7.G. KPHB Colony Branch. 2. . As per Provisional Balance Sheet of the Company the sales in the year 2012 .Venkateswara Rao Mr.Tech-Director. Whether the Company’s operations are adequate as per the sanctioned limits of working capital facilities and the impact on Company’s profitability/liquidity. 3.Managing Director.Executive Director.1 1. Accounting policies adopted by the Company and any change in the accounting policies during the current financial year. indicting growth of 14% during the year 2012-13.

and Finished Goods of HDPE Lam.Paper TOTAL Say Rs. purchases invoices provided by the company  Physical Verification of inventory did not reveal any major deviations.14 Crores are beyond the cover period.Pouches B.2. in Crores 4. 4. PP Woven Sacks etc. Granules. The details of sundry debtors Ageing analysis given in Annexure-II STOCKS DECLARED BY THE COMPANY: The following are the details of Stocks as on 31.05. out of which Rs.4. Physical Verification of stocks at the factory was conducted on 27th June’2015 and the relevant observations are as under. However the arrangement of stocks needs improvement for facilitating easy verification.36 Crores. the receivables as on 31.2013. Liners. Black Paper are considered to be Slow moving as they are not moving for the past 6 months: Particulars Alu.0.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 Fabrics.3. Bopp Film bags.2013 are Rs.  As per our observation. Qty (in Kgs) Rate/Kg 4282 8802 Amount (In Rs) 34 145588 32 281664 427252 0.5 As per the books of accounts of the Company. We have verified with stock statement submitted to the bank as on 31. Hyderabad  . as declared by the Company in the stock statement submitted to the Bank: 4 Nachiketha Consultancy.05.1. Observations:  It is observed that at the Factory suitable registers indicating in/out of relevant stock is not maintained.05. the Aluminium Pouches. Receivables (Sundry debtors):  4.1.2013 and sales. Fabrics.04 Valuation of Inventory: Valuation of inventory as per the Company is as under: Raw Materials and Finished goods are valued at lower of Cost or net realisable value. 4. PP Yarn. It is observed that the Company is adopting the valuation method as stated above.22 Crores within the cover period of 90 days and Rs.

Hyderabad .2013 are 0.38 1. Sundry Creditors: As per books of the Company the sundry creditors as on 31.2013 Name of the Creditor Amount (Rs. ` Loans and Advances: As per books of accounts of the Company there are no loans & Advances.05. Granules.) Aavya Industries Pvt Ltd 404852 Adarsh Sacks Pvt Ltd 539141 E-Polymers Pvt Ltd 445406 Karteek Enterprises Modi Polymers Pankaj Polytec Pvt Ltd Pvn Fabrics Sajjala Woven Sacks 768884 192550 270665 132672 752365 Smart Roto Prints . 5. Bopp Film bags. BOPP Film Lamination. PP Woven Sacks etc.  Finished goods: HDPE Lam.S Industries S S V Fab Industries Pvt Ltd Total Say Rs in Crores 253200 142710 3973585 0.40 Crores. In Crores 0. Fabrics. 4.40 5 Nachiketha Consultancy. Liners.32 Raw Materials: PP Woven Fabrics.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 Description Raw Materials Finished Goods Total  Rs. No LC Limit. PP Yarn.Cr 71140 S.05. Detailed sundry Creditors As given below Sundry Creditors as on 31.94 0.

In Crores 7. The details as given below Name of the Supplier Daman Polythreed (p) Ltd Sri Ramdas Paper Board Sai Ram Cotton Prints Klere Packs ltd Total Say Rs. Nil as on 31. 10. Hyderabad . 8. As on 31.05 Advances from Customers (Liabilities): As per Books of accounts of the Company there are no advances from the customers.05.1 8. there are Rs.03. Verification of capitalization of revenue expenditure during the current financial year.0. Segregation of direct and indirect cost and other income.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 6.2013 12.1 Advances to suppliers (Asset): As per books of accounts of the Company. Amount(Rs. Examination of working capital facilities from the Bank and status of the drawing power requirements.05. 11.) 73146 75000 100000 220651 468797 0.2013 Nil Investments: As per books of accounts of the Company there are no Investments by the Company as on the date of Audit.05 Crores advances given to suppliers. 6 Nachiketha Consultancy.2012 Nil 9. 7. CAPITAL WORKS IN PROGRESS: The position of capital works in progress is as under: As on 31. The segregation of direct and indirect costs and other incomes is as per norms.

Debit and Credit summation in the Bank account 15.25 Crores sanctioned by State Bank of India.in Total Fund Based (A) 2.72 Non Fund Based Letter of Credit --Bank Guarantee --Total Non Fund Based (B) --Total Working Capital (A+B) 2.50 0.1 The fund based working capital limits existing as on 31.) 1. 14.05.05.2013 is as Aug'12 10966868 11279316 under: Sept'12 3439648 3218348 Oct'12 7672687 8140013 Nov'12 5721507 5306817 Dec'12 6772596 6244637 (Rs.3 The Company submitting DP Requirements along with the monthly Stock Statements submitted to the Bank SBI CC A/C Power Calculation is Month Debit Credit Annexure-I April'12 12770455 12658145 May'12 8778000 8525169 status of working The June'12 11111710 10834166 capital limits as on July'12 6787446 6049208 31.25 Say Plus Rs.53 Crores 10. Hyderabad .MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 13. 13.4 Drawing furnished in 13.12 5678739 5679221 Term Loan Total 0.1.00 1.2 The sales turnover of the Company is in tune with the working capital limits availed by the Company.53 13.) 7 Nachiketha Consultancy.16 108155551 107153251 SME Credit 0.00 1.2013 are Rs. 13.25 1.82 10. there are no Non-fund based limits.25 0.1 The Company’s Month Wise debit and credit summations for the period April 2012 to May 2013 is as under: (Amount in Rs. In Crores) Jan'13 4910092 Limits 5005917 Out standings Feb'13 11718777 11262253 Nature of Facility: SBI March'13 5303132 6310160 Fund Based April'13 6523894 6639881 WorkingMay'13 Capital Cash Credit (Hyp.

17. (Amount in Rs.05. TDS not applicable to Company except Duty and Vat.e. The was regularly all dues regarding to Duty and Vat.93 Crores.2013. Sales Tax.05.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 It observed from above its sales routed through Cash Credit account only. Break up of month wise sales and purchases as per books during the period April 2012 to May 2013 is as under. Excise Duty and Income Tax as on 31.2013. Observations on verification of and purchases as Sales during the current financial year i. PT. are the Excise Company paid statutory Excise 16. In the Company ESI. 15. Hyderabad . Service Tax. Observations on the payment of statutory dues like professional Tax. Month April'12 May'12 June'12 July'12 Aug'12 Sept'12 Oct'12 Nov'12 Dec'12 Jan'13 Feb'13 March'13 April'13 May'13 Total Say Rs. for the months April’2012 to May’2013 is Rs.1 Purchases as Sales as per books per books 7904000 6605680 8055763 5949229 7815309 4922460 7011455 5212722 5358770 3829183 3273423 3600852 4651642 4206020 4182594 3923977 6106745 4029417 6396907 3277856 6456227 5319297 8255474 7852369 7052905 4431172 6806636 7793836 89327520 70954070 8.10 view of nature of activity of the payment of PF. TDS. in Crores the sales on 31.93 7.) 8 Nachiketha Consultancy.8.

75 Crores and insurance for fixed assets Rs.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 The sales and purchases as per books and as per Vat returns are tallied with marginal difference. Observations on the insurance coverage and its validity/risks covered of the Company total inventories. There are no sister/group Companies for the Company. Verification of books of accounts/interlocking of funds among group Companies and transactions with associate Companies.2013. the Stocks of the company lying in the factory site are Rs.05.12. The policy covers normal industrial risks and valid up to 08. 0000000000641939 The stocks stored in the godown storage have been insured for Rs. Observations:  As per the stock statement submitted to the bank as on 31.75 Crores under standard fire and special perils policy.1. 17.Banker’s clause is duly notified in the policy.32 Crores. Hyderabad . 1. 18. indicating 9 Nachiketha Consultancy. The particulars of insurance policies obtained by the Company are as under: Policy no.1. The stocks are insured for Rs.00 Crore.1.2013.

22.38 Crores as on 31.2013.1 The Company’s net profit during the year 2012-13 is not commensurate with the huge growth in sales. Hyderabad .  The insurance policy is in force. Observations on the overall functioning of the Company: 22.75 Crores as against net value of Rs. indicating adequate insured.0. (Amount in Rs. 22.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 adequate insured.No Name of the Bank/Branch Balance as on 31. 19.Lallaguda 20. The Company also confirmed the same.05.016 22. 20. Filing of charges: It is observed that the company has filed all charges in respect of Working Capital limits availed from the banks State Bank of India 21.05. 0.  The Plant and Machinery are insured for Rs.3 The Stock registers indicating in/out of relevant stock to be maintained & streamlined at Factory. 22.0.) S. This as per 10 Nachiketha Consultancy. Legal issues: Suits filed against the Company / by the Company: The books of the Company did not indicate suits filed by the Company or against the Company.05.2013.  The building is insured for Rs.25 Crores as against net value of Rs.4 It is observed from the company’s books of accounts that the company is maintaining current account as under.1 The Company’s performance is indicating growth year by year. indicating inadequate insurance. reportedly increase in administrative expenses.0.2 The placement of of Stocks needs improvement and streamlining. Suggestions to the bank: 23.47Crores as on 31.2013 1 SBI CA A/C.

2 The Company to be followed up for proper maintenance of Stock records at Factory. 11 Nachiketha Consultancy. 23.MEDCHEM ORGANICS PRIVATE LIMITED Stock and Receivables Audit – June’2015 needs close monitoring. Hyderabad .