Guides · 1 Nov 2026

How to reconcile godown sugar stock with your books

Start from the last verified stock, add bags received from the bagging floor, subtract bags that left through the gate, and compare the result with a physical count by grade and lot. Explain each difference with a document, get the adjustment approved, and use the same closing figure in the ledger, the P-II return and the bank stock statement.

Why the godown figure gets tested

Your closing sugar stock is read by three outside parties. Each one compares it with another record, so an unexplained gap does not stay inside the mill.

Food Ministry: mills file a monthly P-II return through the prescribed API. The September 2026 return was due by 7 October. ChiniMandi reported in September 2026 that closing stock declared in P-II would be tested in a physical verification drive, with any discrepancy treated as a violation of the Sugar (Control) Order, 2025.
Release orders: reports from August 2026 say quotas moved from monthly to fortnightly from September, and that sugar must leave the mill within seven days of sale. Read the current order, because these terms change often.
Bank: lenders against pledged sugar rely on periodic stock statements and inspection reports. The Control Order leaves pledges to scheduled banks in place, though a lender may sell pledged sugar only under a written Central Government direction.
Auditor: under CARO 2020 the auditor reports whether physical verification was done at reasonable intervals, and whether discrepancies of 10% or more in aggregate for a class of inventory were noticed. Where sanctioned working capital limits against current assets exceed Rs 5 crore, the auditor also reports whether quarterly returns to banks agree with the books.

The equation

Run this in bags, for each godown, grade and lot. Convert to quintals only after the bags agree, using the actual net weight per bag.

Closing book stock = opening verified stock + bagged receipts + transfers in - gate dispatches - transfers out - bags issued for reprocess, plus or minus approved adjustments.

The figures below are made up to show the method.

Line	Bags
Opening verified stock	1,20,000
Bagged receipts	+18,500
Gate dispatches	-15,200
Issued for reprocess	-300
Closing book stock	1,23,000
Physical count	1,22,960
Difference to explain	40 short

The records that must agree

The GST link matters. A DFPD letter to mills raised mismatches between GST sales data and P-II figures, and told them to file accurate data in both.

Record	What it holds	Check it against
Bagging record and Daily Manufacturing Report	Bags made by grade	Godown receipt slips
Godown stock register	Receipts, issues, stack position	Gate passes and stack cards
Sales invoices and GST data	Quantity sold	Gate dispatches and P-II sales
P-II return	Opening, production, dispatch, closing	Godown register and GST data
Bank stock statement	Pledged and free stock	Godown register and pledge list

Where differences usually come from

Sold but not lifted: invoiced sugar still in the godown. Hold it on a separate line with the buyer and the date of sale.
Cut-off: bags made on the last shift but received the next day, or a truck loaded at night that crosses the gate next morning.
Wrong grade or lot: the total agrees but one grade is short and another is over.
Reprocess and re-bagging: torn bags, sweepings and returned sugar with no weighed document.
Transfers: bags that have left one godown and have not reached another.
Weight: sugar absorbs moisture, so check bag weights by sample and investigate any drift.

A routine that holds up

Match bagging slips with godown receipts every day, by grade and lot.
Match gate passes with godown issues and invoices every day.
Update a stack card each time bags are added or removed.
Spot count one stack in each godown every week, chosen by someone other than the godown keeper.
Count every stack before the P-II closing figure is fixed, and weigh a sample of bags.
Use a count team that does not report to the godown keeper.
Keep lab hold, pledged and sold-but-not-lifted stock on separate lines.
Agree pledged lots with the bank's list before sending the stock statement.
Have a second person approve each adjustment, with a written reason.
Correct errors with a new entry. Never overwrite the original.

Where SugarOS fits

SugarOS holds godown stock by grade, lot and bags in an append-only ledger, with daily reconciliation, physical counts that need approval, and bank pledge marking.

Frequently asked questions

How often should we do a full physical count?

CARO 2020 says reasonable intervals and sets no number. With monthly P-II returns and government verification drives, counting before each month-end close is a sensible rule for sugar. Agree the frequency with your auditor and your bank.

What difference between book and physical stock is acceptable?

We found no official tolerance for a mill's sugar stock. The 10% in CARO is an auditor's reporting test and gives no allowance for shortage. Set a written limit with your auditor and investigate every difference above it.

Should sold-but-not-lifted sugar be counted in closing stock?

Count it physically, because it is in your godown. How it appears in the books and in P-II depends on your sale terms and the current return format, so settle that with your auditor and show it on its own line.

Can pledged sugar be dispatched?

Only as your bank's terms allow, and within your release order. Mark pledged lots clearly so that they cannot be allocated to a sale by mistake.

Sources

Talk to SugarOS