ANNEXURE "A"

[POSITION OF STOCK & DEBTORS]

Particulars 31.08.2020 11.08.2016 (Date of Inspection)

(As per Stock Statement) (As per Site Inspection)
Quantity Rate (Rs.) Value (Rs.) Quantity Rate (Rs.) Value (Rs.)

[A] Inventory
1 As per Stock Statement Enclosed - - 83,954,731.00 - - 1,637,000.00

Total 83,954,731.00 1,637,000.00

[B] Less : Creditors (2,057,798.60) (100,000.00)

[C] PAID STOCK [A-B] 81,896,932.40 1,537,000.00

[D] BOOK DEBTS

1 Up to 60 Days 62,010,800.00 62,010,800.00
2 60 Days to 180 Days - -
3 Over 180 Days - -

Total 62,010,800.00 62,010,800.00

[E] TOTAL VALUE OF SECURITY [C+D] 143,907,732.40 63,547,800.00

 ANNEXURE "B"
[Computation of Drawing Power (As per Auditor)]

Particulars 31.03.2016 [As per Provisional Balance Sheet] 30.06.2016 [As per Stock Statement] 31.07.2016 [As per Stock Statement] 11.08.2016 [As per Site Inspection]
Value of Security Margin Drawing Power Value of Security Margin Drawing Power Value of Security Margin Drawing Power Value of Security Margin Drawing Power
(As per Auditor) (As per Auditor) (As per Auditor) (As per Auditor)

[A] Inventory
As per Annexure 'A' Err:509 Err:509 83,954,731.00 1,637,000.00

[B] Less : Creditors

As per Annexure 'A' Err:509 Err:509 (2,057,798.60) (100,000.00)

[C] Paid Stock [A-B] Err:509 25% Err:509 Err:509 25% Err:509 81,896,932.40 25% 61,422,699.30 1,537,000.00 25% 1,152,750.00

[D] Book Debts (Up to 60 Days)

As per Annexure 'A' Err:509 40% Err:509 Err:509 25,000,000.00 62,010,800.00 25,000,000.00 62,010,800.00 25,000,000.00

However, Drawing Power against

Book Debts only Allowed upto
Rs.250 Lacs. (As per Sanctioning
Authority)

[E] [C+D] Err:509 Err:509 86,422,699.30 26,152,750.00

[F] DRAWING POWER [subject to Sanction Limit of Rs. 400 Lacs] Err:509 40,000,000.00 40,000,000.00 26,152,750.00

[G] Outstanding Balance 40,444,058.50 40,450,260.50 40,958,195.50 40,958,195.50

[H] Overdue Amount Err:509 450,260.50 958,195.50 14,805,445.50

 ANNEXURE "C"
[Details of Insurance]

Insured : M/s Diplomat Agrofeeds Private Limited

Insurer : The Oriental Insurance Co. Ltd.
Location of the Property : Alipur, Hapur Road, MEERUT-250002
Insured

S.N. Policy No. Particulars Amount of Policy Period of Insurance Risk Coverage
(Rs.)

1 252405/48/2017/2094 Building 30,000,000.00 22/07/2016 Fire Policy

(Including RCC Structures, Civil Works to (Earthquake
Shed, Electrical Fittings and other building 21/07/2017 and STFI)
related items)

2 252405/11/2017/695 Building 30,000,000.00 01/01/2016 Fire Policy

(Including RCC Structures, Civil Works to (Earthquake
Shed, Electrical Fittings and other building 31/12/2016 and STFI)
related items)

3 252405/11/2016/523 Stock 50,500,000.00 06/07/2015 Fire Policy

(Consisting of all kinds of Raw Material, to (Earthquake
Finished and unfinished goods, Packing 05/07/2016 and STFI)
Material)

* The above insurance has already been expired on 05th July, 2016 and not been renewed up till date of report.
 ANNEXURE "D"
[COMMENTS ON PROFITABILITY & INVENTORY RATIOS]

(Rs. in Lacs)
S.No. Particulars 31.03.2018 31.03.2019 Trend 31.03.2020 Trend
(Audited) (Audited) (Estimated)

1 Net Sales 2,491.60 2,544.29 Rising 2,600.00 Rising

2 Change in Sales 2.11% 4.35% Rising

3 Profit/ (Loss) Before Tax 43.15 48.09 Rising 49.57 Rising

4 PBT/ Sales % 1.73% 1.89% Down 1.91% Rising

5 Inventory 735.89 741.26 Rising 850.00 Rising

6 Inventory to Turnover Ratio 29.53% 29.13% Down 32.69% Rising

7 Inventory to Turnover (Days) 108 106 Rising 119 Rising

8 Sundry Debtors 26.34 13.04 Rising 25.00 Rising

9 Debtors to Turnover Ratio 1.06% 0.51% Down 0.96% Rising

10 Debtors to Turnover (Days) 4 2 Down 4 Rising

11 Current Assets 819.26 854.35 Rising 890.51 Rising

12 Current Liabilities 489.16 363.96 Rising 468.00 Rising

(including Cash Credit From Bank)

13 Current Ratio 1.67 2.35 Down 1.90 Down

14 Total Outside Liabilities 626.96 826.23 Rising 925.46 Rising

15 Net Worth 235.31 253.73 Rising 268.80 Rising

16 Debt to Equity Ratio 2.66 3.26 Down 3.44 Rising

 ANNEXURE "E"
[OVERALL VIEWS/ COMMENTS ABOUT THE ACCOUNT]

S.No. Comments

1 The Stock Statement have not been submitted by the borrower on timely basis. For Instance, the
stock statement for the month of March 2016, June 2016 and July 2016 have been submitted in
m/o June 2016, July 2016 & August 2016.

2 Stock figures submitted at the year end(i.e. 31/03/2016) & shown in the financial Statement not
matched (As per Stock Statement Submitted for the m/o march 2016, stock is 2,17,56,000.00 &
as per Provisional Balance Sheet 2016 is 2,17,56,540.00, Difference is 540.00)

3 Insurance of Stock expired on 05/07/2016 (Policy No. 252405/11/2016/523) and it has not
been renewed till date of report.

4 For calculating the Drawing Power, the values depicted in the Provisional Balance Sheet (duly
certified by the Chartered Accountant) has been taken into consideration. However, this
difference has substantially reduced the Drawing Power of the Borrower.

5 The amount of Sundry Creditors as on 31st July, 2016 is Rs. 1 Lacs, which have been reduced by
a substantial amount from the month (i.e, 31st March, 2016) of Rs. 42.83 Lacs. which seems to
be unauthentic. This reduction in sundry Creditors substantially increased the Drawing Power
for the month of July, 2016.

6 There is no discrepancy between the values provided in the Provisional Balance Sheet as on 31st
March,2016 and as shown in the Stock Statement for the month of March,2016

Particulars As on 31st March, 2016

As per Provisional As per Stock Difference
Balance Sheet Statement

Sundry Debtors
Trade Receivables 13,973,871.00 13,973,871.00 -
Less: Advances from Customers - - -

Net Sundry Debtors 13,973,871.00 13,973,871.00 -

Sundry Creditors 4,283,268.50 4,283,268.50 -

7 Confirmation from creditors & debtors have not obtained during the audit period.

8 Decrease in Average Debtors Collection Period in Financial Year 2015-2016 as compared to

Financial Year 2014-2015.
9 The Branch is advised to strictly consider the terms and conditions of the Sanction Letter while
computing the Drawing Power. Special attention is required to be given on the values of the
Sundry Creditors, Book Debts, Reduction in Sundry Creditors, Increase in Sales/ Purchase and
comparative fluctuation in Book Debts and Stock.

10 Bank’s name plate has not been displayed at the premises where stocks are kept. The Bank is
advised to insist the borrower to place the same.

11 The Collateral Property i.e. Factory Building mortgage with the bank has not been demarked. i.e.
as per our visit and our notice, the client has mortgage that property with additional land owned
by them. So, it is difficult to distinguish the mortgage property.

12 On physical verification of the stock there is a huge difference between the value of stock
present at the site and as provided in the Stock Statement for the m/o July-16. As per our visit on
11/08/2016, we could identify only Rs.16.37lacs worth of stock but as per stock statement
submitted by party the value of stock is Rs.278lacs. This huge difference in the value of
inventory has not been explained by the party, resulting in non reliablility on the figures
depicted in the Stock Statements submitted by the account over the time.

Further, no books of accounts have been presented before us for the Book Debts of the
borrower, which stands at Rs.620.11 Lacs at 31st July, 2016. This also puts the reliablity of the
actual Book Debt into question.

13 For calculation of Drawing power as on 11th Aug., 16, Since no information provided by the
borrower, Book Debts have been assumed to be the same as that provided by the borrower in
the stock Statement for the month of July-16.

14 As per stock statement submitted for the month of june & july the party has only one debtor
having balance of Rs. 5,90,50,500.00 & 6,20,10,800.00 respectively. Which is quite unrealistic
that our company have only one debtor.

15 The Branch is advised to obtain Proper Stock Statements from the Borrower, clearly mentioning
the Units, Rates and value of Inventory and complete details of Book Debts and Sundry
Creditors. Further, in order to improve the reliability on the figures provided, in addition to
monthly Stock Statements, the Bank is advised to obtain quarterly Debtors' Statement with
complete age wise breakup also Creditors' Statement duly certified from Auditors of the
Borrower.

16 As per Index of Charges shown on the MCA Portal (Annexed herewith), the Chargeholder of the
Charge ID 10475802 (Cash Credit of Rs.400 Lacs) has been showing as the Branch Located at
Alipur, Hapur Road, Meerut, while the charge has been created by the Punjab National Bank,
Civil Lines, Saket, Meerut- 250001.

The Branch is advised to ask the borrower to rectify the above error by taking necessary steps
so as to register the above charge with their Branch.

For GAURAV SINGHAL & CO.

(Chartered Accountants)
 CA. Gaurav Singhal
Date : 13th August, 2016 Partner
Place: Meerut (M.No. 414993)