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 EMD, payment & lifting risk mitigation

1 EMD (Earnest Money Deposit) – Risk Controls

Key Risks

  • Capital blockage across multiple auctions

  • EMD forfeiture due to non-payment or default

  • Bidding beyond working-capital capacity

Mitigation Strategy

  • Allocate auction-wise EMD budget, not ad-hoc payments

  • Avoid bidding on overlapping auctions with high EMD

  • Maintain a live EMD tracker (paid / adjusted / refunded)

Leegal Rule:

Never deploy more than 25–30% of your liquid capital as EMD at one time.

2. Post-Bid Payment – Risk Controls

Key Risks

  • Missing payment deadlines

  • Bank transaction delays

  • GST miscalculation leading to short payment

  • Payments from non-registered bank accounts

Mitigation Strategy

  • Pre-calculate all-in payable value (bid + GST + charges)

  • Keep payment-ready funds before bidding, not after winning

  • Always pay from GST-linked business bank account

  • Maintain RTGS/NEFT screenshots and UTR logs

Critical Alert:

Late payment = EMD forfeiture + blacklisting exposure.

3. Lifting & Delivery – Risk Controls

Key Risks

  • Missing lifting window

  • Demurrage & ground rent

  • Partial lifting disputes

  • Logistics mismatch (vehicle / labour / tools)

Mitigation Strategy

  • Freeze lifting plan within 24 hours of Sale Order

  • Confirm:

    • Seller working days & hours

    • Loading method

    • Weighment process

  • Keep backup transport & labour on standby

  • Complete lifting well before deadline (buffer days matter)

Field Reality:

Most penalties occur in the last 20% of the lifting period.

4. Documentation & Compliance Risks

Key Risks

  • Missing gate pass

  • Weight disputes after exit

  • Incomplete invoices or challans

Mitigation Strategy

  • Collect and verify before vehicle exit:

    • Gate pass (signed & stamped)

    • Weighment slip

    • Invoice / delivery challan

  • Raise discrepancies on-site only, not later

5. GST & Accounting Risk Mitigation

  • Ensure GST activity matches scrap category

  • Reconcile MSTC invoices with GSTR-2B

  • Record EMD adjustments correctly in books

  • Avoid cash or third-party payments

Leegal’s Integrated Risk Shield

We convert MSTC execution into a controlled business process:

  • EMD exposure mapping

  • Payment deadline monitoring

  • Lifting SOPs & seller coordination

  • Dispute-prevention documentation audits