ANNEXURE-1

1. Sanction to be conveyed to the party with our usual protective clauses. Acknowledgement/
confirmation from the borrower should be obtained for having agreed to the terms and
conditions stipulated by the Bank. A copy of the same to be forwarded for our records.
2. Please ensure proper documentation manual before release of limit. Before the advance is
made available, branch should ensure that the signatories to the loan papers have been
properly authorized to borrow on behalf of the borrower company
3. All securities , prime as well as collateral and personal corporate guarantees stipulated should
be obtained
4. Legal scrutiny Report of the properties should be obtained from our Panel Advocate as per
prescribed format.EMT should be completed in all respect strictly adhering to the guidelines
issued by HO from time to time Valuation report of the properties should be forwarded to SA.
5. Letter of undertaking should be obtained from the borrower as well as the guarantors stating
that no consideration either by way of commission/ brokerage/fees in any from will be paid by
the former or received by the latter directly or indirectly.
6. An undertaking letter from the company should be obtained to the effect that they will not
declare or pay any dividend when their accounts with us are in arrears.
7. The following undertaking letters are to be obtained before disbursement of loan.
a) Not to divert bank borrowings/ working capital funds obtained/ to be obtained.
b) Not to undertake any new project/ scheme unless expenditure on such expansion is covered
by companys net cash accruals after providing for dividends, investment etc. Or for long
term uses for financing such new project or expansion without permission of bank.
c) Not to invest by way of share capital or land or advance funds to or place deposits with any
associate/allied/sister/any other concern.
d) Not to enter into any borrowing arrangement either secured or unsecured with any other
Bank/ Financial Institution/ Company.
8. The account in due for mid term review after 6 month from the date of sanction. Please ensure
prompt submission of review data/ report to Risk Management Section, Circle
Office,Bhubaneswar.
9. Rate of interest has to be collected as per HO guidelines for inland credit and to subject to
changes as advised by Bank from time to time.
10. The following to be incorporated in Branchs sanction memorandum:
The interest rate is linked to MCLR. The MCLR and the actual lending rates are subject to
review and variation from time to time as per RBI guidelines and also subject to changes in the
financial of the borrower.The changes in the MCLR and the actual lending rate will be notified in
the Notice Board of the bank from time to time and also in the Banks website which shall be
construed as sufficient notice. Bank reserve a right change the rate of interest from time to time
by issuing requisite notice. Displaying of notice in the notice Board of the branch/website of the
bank shall constitute requisite notice regarding change of interest rates.
Location/ Raw As %age Stock As %age Finished As %age Store As %age
Godown Material To total process/ To total goods To total spares To total
semi
finished
goods
Harianta, Lime Note -- -- ACC NOTE ---- -----
Tangi, Cement Note BLOCKS
cuttack Fly ash Note
Rice husk Note
as power 100
oil 100
Note: High value item to be checked 100%, medium and low items could b checked 25% to 50%
at random

The physical verification of high value stocks like aluminum, power & soluble Oil are checked by us by
100%
The physical verification of the others stocks was carried out by us on 8th day of march 2017
Stocks are lying heaps and stock which cannot be measured unless actual weightment /counting is
taken, due to the nature , value and strong Patten. The stock on eye estimation is approximate to the
stock shown by borrower. Stock as on 27.02.2017 is determined ny adjusting issues and sales and
respects for the period 1.3.2017-7.03.2017

(a) Comments on value of old / obsolete goods/ non usable stocks. Non moving stocks , sales return
and %age of such stock to the total stocks:

There is no such old , obsolete and non moving stock

(b) As per the information gathered and to the best of our acknowledge , the following stock to be
further excluded from the stock declared in Col no. 4 under item no. 6 above for the reasons
mentioned ( this shall include old/ obsolete/ , non usable and slow moving goods, goods in transit ,
goods received in others for proce4ssing / job works etc.)
Description Quantity Value Reason of extension

Not Applicable

C. system of inventory control

(a) Observation on the quality of stocks (To include method of storage safety and security
protection from rain, sun, moisture, dust, pilferage, etc.)

Stocks namely Lime & cements are kept in hopper as well as in raw material shed. Stocks like fly
ash, Rice, Husk, AAC blocks are kept in open place within the factory premises as there are bulky
in nature.
(b) Observation on market, demand/supply position, future prospects.
 Satisfaction, future prospected looks good due to boost to infrastructure activities, Govt also
insist fly ash bricks in its various projects. The unit is also the only unit in production of AAC
Blocks in this area.
(c) Observation regarding the movement of stock and holding level of raw materials, work-in-
process and finished goods.

Satisfactory.

(d) Whether consumption of raw materials is commensurate with production activity and other
production expenses:

Yes, consumption of raw material is commensurate with production activity and other
production expenses.
(e) Risk identification and suggestions for risk management:

Not Applicable.
(f) Comments on inventory control and management system practiced by the borrower. Comments
regarding maintenance of books of accounts bin cards procedure adopted for deployment of
stocks ( FIFO / LIFO), valuation of stock in process and finished goods.

The company maintains fully computerized system of accounting. The procedure for valuation of
stocks of raw materials is FIFO basis and the finished goods are valued at cost raw materials &
proportionate cost of production.
(g) Brief comments on description of production activity, whether there were any special events
like, breakdown in production activity, loss of materials and other relevant issues, which are
relevant to the financing bank.

As explained to us, the unit has team of personnel who takes immediate care in case of
breakdown of machinery to prevent any loss of production.

D. METHOD OF COSTING OF RAW MATERIALS, WORK-IN-PROCESS AND FINISHED GOOS

Raw Material: Valued at landed cost.

Finished Goods: At cost or Net Realizable Value, whichever is lower.

The borrower follows accounting standard 2: Valuation of Inventories of raw- materials and finished

Goods

E. 1. PLANT LAYOUT AND PLANT MAINTENANCE

(Here comment on functioning of plant and machinery, capacity utilization whether any
machine is remaining idle for long.)

2. Insurance coverage :- Yes/NO

 a) Whether the goods are fully insured for all Yes

b) Whether the policies are in force YES valid till 19/02/2018

c) Whether Bankers clause included in the policy Yes

d) Whether additional risks like/ strike, electrical, YES

e) Location of good properly stated in the policy Harianta, Tangi Cuttack

f) Extent of insurance cover available Build & Plant- 2200 Lacs

g) Goods sent to the processing units/ sub-

Contractors; whether insured / transit insurance

Obtained: - Not Applicable

h) Whether any location / go down is not covered in

the insurance. Whether any risk is excluded, If so,

specify the reasons. Not Applicable

F. QUALITY CONTROL

[Comment on quality control measures like quality management audit (ISO Audit), internal quality
improvement process, R&D orientation]

Not Applicable.

G. LABOUR TURNOVER

(Comment on method of measurement of labour turnover; here specify replacement method or

separation method, industrial relation and overall position relating to industrial peace)

The unit is fully mechanized, as a result dependence on labour is minimized Moreover labour is loc
ally available. So the labour turnover is very low.

H. DRAWING POWER COMPUTATION

(comment on whether the drawing power is computed as per the norms advised by the bank:
whether there is any difference in computation of DP).

Yes, the Drawing power computed as per norms of bank. As per annexure
 Observation as to the marketability / saleability of the stock, (Briefly describe market condition, demand
pattern, marketing arrangement, etc.)

There is adequate demand for the materials as number of infrastructure projects and industrial activities
are being initiated and running in nearby area.

Any qualifying comments of the statutory auditors of the company regarding maintenance of books of
accounts and accounting policy adopted by the borrower. This should be commented.

No such comments by statutory auditors

I. VALUATION OF SUNDRY DEBTORS / BOOK DEBTS

1 (a) Total book debts declared as on 07/03/2017 is Rs 304.64 Lacs

2 (b) Of which bills discounted with the bank Nil

2. (a) Age-wise bifurcation:- (Rs in lacs) Rs. 288.15 Lacs

Outstanding upto 180 days:-
Above 181 days Rs. 15.49 Lacs

b) Details of party-wise bifurcation outstanding (whether outstanding of any particular debtor is in

excess of 5 to 10%of the total debtors)

3. Book debts as percentage to total sales. Cumulative figures should be furnished from the beginning of
the financial year till the date of valuation (cumulative from 01.04.14 to 22.12.14)
Total Book Debts Rs.304.64 Lacs
Total sales as on 07/03/2017 Rs.2449.03 Lacs
% of Book Debts on Total Sales 12.43%

4. Book debts identified as recoverable Rs.304.64 Lacs

Doubtful of recovery Rs. Nil
(%age of such doubtful and bad debts should be Rs. Nil
Specifically commented)

5. Collection machinery put in place Not Application

6. Whether the borrower has provided for book debts

Which are doubtful of recovery? Not Application

7. Whether there any deposit in respect of book debts? Not Application

8. Observation as to the quality of book debts Satisfactory

9. Any discrepancy on verification of the books of accounts? No

10. Whether there are inter-firm/ Intra-firm debtors?
Whether all the debtors are arising out of commercial transaction? No
 11 Comments on drawing power against book debts. Good
12 If the data is stored in computer system, the safety features/
Measures in force to prevent any manipulative correction/ charges
To thebe commented upon. Data back-up is
Done at dally basis

J. GENERAL CHEKLIST

1. Whether the turnover in the account is abnormal, comparable with the past levels/ operating levels?
Please comment,

The account operations are satisfactory.

2. Whether sale proceeds are routed in the account? Please comment. If not roused the reasons
Are to be enquired and commented in the report.

Yes majority of the sale proceeds are routed through the account.

3. Whether purchases comment is mat by issue of check CC/CA? Please comment ,Yes
4. Whether the borrow holds stock received for processing (job work) and whether they are separately
Stored? Please comment. Not Applicable
5. If so, whether it is so declared and deducted from the total stock? Please comment. Not Applicable
6. Whether stock turnover is satisfactory? Please comment. Yes
7. Whether borrowers record maintenance of stock and accounting is satisfactory? Please comment
Whether there are any deficiencies.

Yes, the borrowers maintenance of stock and accounting is satisfactory.

8. Comment on accounts conduct with other consortium banks/ banks under multiple banking
Arrangements. Not Applicable
9. Comments on accounts with any others banks/ any division of funds (If no division is observed, specific
Comment should be made).
No other account
10. Whether random physical inspection now conducted represent a correction position of the entire stock?
Please comment. Yes
11. Whether Banks hypothecation board is displayed? Yes, printed on
Main gate of
factory
12. Whether stocks are properly stored? Yes
13. Whether stock book is maintained up-to-date?
Comment. Yes
14. Whether details of stock, as per Stock Register and Stock Statement tally? Whether value of stock declared
in the stock statement tallies with stocks declared in the balance sheet and for insure cover? Please
comment . yes, the stock
register and stock statement are tallied
15. Weather the purchase/sale invoice are verified ? weather the valuation of purchase is correct ?
weather over valuation of purchase is done ? please comment.
Yes, the valuation of purchase is correct
16. Weather there are any purchase from allied / sister concern. not applicable
17. Whether there are cash purchase? Whether such cash purchase are proportionate? Please comment.
Major of the raw materials are purchase through banking mode excepts some stores items purchase in cash

18. Whether level of sundry creditors is commensurate with past trends? Please comment. Yes
19. Compliance of sanctioned terms with reference to registration of charge on stocks and book debts. Yes
Any other observations on:
a) Verification of invoices Satisfactory
b) Physical verification of stock Satisfactory
c) Stock held with processing / job works or outstation go downs Not Applicable
d) Old, obsolete, non-moving stock Not Applicable