Due Diligence Audit in
Koderma

IMAK Advisory is an ICAI-registered firm of chartered accountants in Whitefield, Bengaluru, carrying out financial and tax investigations of businesses for investors, buyers, lenders and sellers across India. A due diligence audit checks that a business is what it claims to be before a transaction, and finds the risks that should change the price, the terms or the decision.

What is the definition of due diligence? It is the reasonable care and investigation a person or business undertakes before entering an agreement. To define due diligence in a deal is to describe the review of a target's accounts, taxes, contracts and operations. The with due diligence meaning, in laws and contracts, is acting with the care a reasonable person would take. To explain due diligence simply: it is inspecting the business before you commit, as you would inspect a used car before buying it.

The types of due diligence include financial, tax, legal, commercial, operational, compliance, HR, IT and environmental reviews, as well as vendor reviews by sellers and customer identification checks by banks. The financial due diligence meaning is the analysis of sustainable earnings, net debt, normal working capital and financial risks for the purpose of the transaction – not an audit opinion.

What is a due diligence report? It is the decision document that records the scope, findings, quantified risks and recommendations for price adjustments, indemnities, escrow and conditions before closing. A company due diligence report for an acquisition or investment covers quality of earnings, balance sheet and net debt, working capital, cash flow, tax, compliance and related parties. A sample due diligence report for banks follows the lender's or the Indian Banks' Association's structure on the borrower's constitution, directors, compliance, charges and borrowings; we share formats with invented details only.

Typical findings include one-time income inside reported profit, promoter costs below market, related-party rent or purchases, old receivables, unpaid GST, TDS or provident fund, open tax demands and share issues or foreign investment without proper filings. Each is graded by likelihood and amount, and linked to the price or to a protection in the agreement. Legal and title review is done by advocates, whom we coordinate with so that the client sees one combined view.

Quality of earnings work adjusts reported EBITDA for one-time income and costs, owner-related expenses, related-party pricing, accounting choices and discontinued activities, because the price is usually a multiple of normal, continuing profit. Every adjustment is supported by evidence, and adjustments that increase profit are shown as clearly as those that reduce it, so the analysis stands up in negotiation.

Net debt includes more than bank loans: unpaid statutory dues, overdue suppliers, customer advances, deferred payments, unfunded gratuity and amounts owed to promoters all reduce the equity price. A normal working capital level, usually based on the last twelve months, protects the buyer from inheriting a business that needs immediate cash, whether the deal uses completion accounts or a locked-box price.

Tax exposures are among the most frequent surprises after closing, because past years can be reopened and the liability stays with the company. The review covers income-tax assessments and notices, TDS defaults that lead to disallowances, GST input credit and reconciliations, transfer pricing, past share transactions and whether tax losses survive a change in ownership. Compliance checks cover filings with the Registrar of Companies, share capital history, charges, FEMA reporting and labour registrations.

For startups, the focus shifts to revenue quality, burn and runway, the cap table, ESOP pools, founders' agreements and share-issue compliance; for sellers, a vendor review before inviting buyers fixes problems early and speeds up the buyer's work. Reviews run through a virtual data room with structured management meetings, and early red flags are shared during the work, not only in the final report. After closing, the findings become a hundred-day plan for controls, reporting, compliance gaps and indemnity tracking.

Revenue gets particular attention: we trace sales from order to invoice to cash, test how long contracts, subscriptions and returns are recognised, look at credit notes issued after the year end, and measure dependence on the largest customers and the change-of-control clauses in their contracts. People costs are checked too – payroll against provident fund and insurance filings, accrued gratuity and leave, unpaid bonuses, key contracts and ESOPs that may vest when ownership changes. In cross-border deals, FEMA pricing and reporting, sector caps and approvals are reviewed alongside the usual work, and in joint ventures the value and ownership of each partner's contribution is confirmed before the agreement is signed.

We do not publish fees; our team shares the exact total after reviewing your requirements. Visit us at ITPL Main Rd, Pattandur Agrahara, Whitefield, Bengaluru, Karnataka 560066, call or WhatsApp +91 79798 50684, or email imakadvisoryteam@gmail.com, and the IMAK Advisory team will propose a scope for your review under a non-disclosure agreement.