Reading a Balance Sheet for Due Diligence - India AOC-4 Focus
The balance sheet in AOC-4 tells you if a company can actually pay you. We focus on debt, receivables, related-party loans and net worth trends - not every line item accountants love.
Lenders don't get management accounts in a neat Excel every time - sometimes all you have is the audited balance sheet filed via AOC-4 on MCA. That's still useful. A few ratios and line-item checks on the public filing can tell you whether the borrower story holds up before you ask for more data.
Where to get the balance sheet
Download AOC-4 attachments from MCA filing history for the relevant financial year. On Infyner, open the company profile Finance tab - same data, parsed into columns so you can compare three years side by side without opening PDFs.
Confirm the filing year is current. If the latest AOC-4 is two years old, you're analysing stale numbers - flag it as a red flag before drawing conclusions.
Reading the assets side
Fixed assets - growth should match the borrower's capex story. Flat fixed assets with claims of major expansion is a mismatch worth asking about.
Trade receivables - compare to revenue. Receivable days creeping up while revenue is flat often signals collection stress. Cross-check with current assets total.
Cash and bank - low cash relative to current liabilities is a liquidity warning. Remember: audited cash is point-in-time on balance sheet date - it doesn't include undrawn limits.
Reading liabilities and equity
Borrowings - compare to what the borrower declared in the credit application. Undisclosed debt on AOC-4 that wasn't mentioned in CMA data is a serious integrity issue.
Trade payables - unusually high payables can mean the company is stretching suppliers - or that revenue is inflated. Context matters.
Net worth / equity - negative net worth doesn't automatically kill a proposal, but it changes the risk grade. Check if losses are eroding promoter stake over consecutive years.
Cross-check with other MCA data
Compare borrowings on the balance sheet against registered charges on MCA. Material debt not secured by a registered charge, or charges for amounts far above reported borrowings, both deserve follow-up.
Pair balance sheet review with MGT-7 for shareholding changes and the full lender MCA workflow for a structured appraisal.
Limitations of public filings
AOC-4 is annual and audited - but dated. Consolidated vs standalone matters for group borrowers. Related-party disclosures are in the notes, not always obvious in summary views. For investment context, angels use the same data differently - see pre-investment due diligence.
Ready to run this on a live counterparty?
Common questions
Can I rely only on AOC-4 balance sheet for lending?
It's a starting point. Full appraisal needs CMA, bank statements, GST returns, and site visit for material exposures.
What if AOC-4 shows standalone but the group is consolidated?
Standalone understates group resources and liabilities. Request consolidated statements for group exposures.
How do I spot window dressing?
Compare year-end receivables and payables against prior year and revenue trend. Sudden year-end spikes in cash or receivables are classic signals.
Are LLPs balance sheets on MCA?
LLPs file Form 8 with statement of accounts - different format from company AOC-4.
Where do I find the auditor's CARO qualifications?
In the auditor's report attachment to AOC-4. Qualified opinions are a credit negative - read the qualification text.
