National Steel & Agro Industries Ltd Directors Report.

TO THE MEMBERS OF M/s. NATIONAL STEEL AND AGRO INDUSTRIES LIMITED

(A Company under Corporate Insolvency Resolution Process (CIRP), Mumbai)

REPORT ON THE AUDIT OF THE STANDALONE IND AS FINANCIAL STATEMENTS

Initiation of Corporate Insolvency Process

The Hon?ble National Company Law Tribunal ("NCLT"), Mumbai Bench, admitted petition for initiation of Corporate Insolvency Process ("CIRP") under the provisions of the Insolvency and Bankruptcy Code, 2016 ("the Code") and related rules and regulations issued thereunder, filed by financial creditors vide order no. CP(IB)2067/MB/2019 delivered on 11th April 2022 and appointed an Interim Resolution Professional ("IRP") to manage affairs of the Company in accordance with the provisions of Code. The Committee of Creditors of the Company appointed with the requisite voting share, in its meeting held on 11th May 2022 the IRP as Resolution Professional ("RP") for the Company. Upon initiation of the CIRP proceedings, the management of affairs of the Company and power of Board of Directors are now vested with RP. Further, as mentioned in Note 1 and in terms of Sections 14 of the Code, until the resolution plan has been approved by the Hon?ble NCLT, moratorium shall continue to be in effect.

Qualified Opinion

We have audited the accompanying standalone Ind AS financial statements of National Steel and Agro Industries Limited, ("the company"), which comprise the balance sheet as at 31st March 2022, the statement of profit and loss, (including other comprehensive income), statement of changes in equity and statement of cash flows for the year then ended, and notes to the standalone Ind AS financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section in our report, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013 as amended ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2022, its loss, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

1. As mentioned in Note 32.6 regarding non-recognition of interest on borrowing of banks and financial institutions and taken over by JM Financial Asset Reconstruction Company Limited amounting to 15,698.49 Lakhs for the year ended 31st March 2022. The same is not in compliance with requirements of Ind AS - 23 on "Borrowing Cost" read with Ind AS - 109 on "Financial Instruments".

Had provision for interest been recognised, finance cost and total loss for the year, would have been higher to that extent as mentioned above, having consequential impact on borrowings and other equity.

2. We draw your attention to Note 55.3 wherein the rent amounting to 74.88 Lakhs (including GST) has been paid to the various related parties for the periods from August 2018 to April 2021. According to the information and explanation provided to us these premises has been utilized by the company without any consideration. The owners approached the company for the payment of the rent which has been quantified and approved by the Board of Directors during the year. The management is of the opinion that the liability has crystalized during the year and accordingly the payment has been made. However, the provisions of Ind AS 116- Leases have not been complied with.

3. In accordance with the Insolvency and Bankruptcy Code ("Code"), the Resolution Professional ("RP") has to receive, collate and admit the claims submitted by the creditors as a part of Corporate Insolvency Process ("CIRP"). Such claims can be submitted to the RP within 90 days from the date of commencement of CIRP. Pending final outcome of the CIRP, no accounting impact in the books of accounts has been made in respect of excess, short, or nonreceipts of claims for operational and financial creditors and disclosed under the head contingent liabilities. Hence, consequential impact, if any, is currently not ascertainable and we are unable to comment on possible financial impacts of the same.

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under Section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the ‘Auditor?s Responsibilities for the Audit of the Standalone Ind AS Financial Statements? section of our report. We are independent of the Company in accordance with the ‘Code of Ethics? issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our Qualified opinion on the Standalone Ind AS financial statements.

Emphasis Of Matter

1. Two of the lenders have declared Company and it?s Directors as Wilful Defaulter. One lender bank has issued notice to the Company and it?s Directors with intent to classify them as "Wilful Defaulter". The Company and it?s Directors have respectively replied to the said notice.

2. As per Note 35 the company has written off Target Plus Incentive receivable amounting to 4,043.75 Lakhs to the Statement of Profit & Loss as an exceptional item as the same cannot be utilized due to expiry of validity period of the scheme.

Our opinion is not qualified on these matters.

Material Uncertainty Related to Going Concern

We draw attention to Note 33 of the financial statement, regarding preparation of financial statements on going concern basis, which states that the Company has incurred losses during the year, its liabilities exceeded total assets and its net worth has been fully eroded as on 31st March 2022. The Corporate Insolvency Resolution Process (CIRP) against the Company is in process. Since the CIRP is currently in progress, as per the Code, it is required that the Company be managed as a going concern during the CIRP. The standalone financial statements are continued to be prepared on going concern basis. However there exists material uncertainty about the Company?s ability to continue as going concern since the same is dependent upon the resolution plan to be approved by NCLT. The appropriateness of preparation of standalone financial statements on going concern basis is critically dependent upon CIRP as specified in the Code. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind AS financial statements for the financial year ended March 31, 2022. These matters were addressed in the context of our audit of the Standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each key audit matter below, our description of how our audit addressed the matter is provided in that context.

In addition to the matter described in the Basis for Qualified Opinion, Emphasis of matters & Material Uncertainty Related to Going Concern section, we have determined the matters described below to be key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor?s responsibilities for the audit of the Standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Ind AS financial statements.

Key Audit Matters How our audit addressed the Key Audit Matters
Expected Credit Loss (as described in Note VI(R)(iv) of the standalone Ind AS financial statements)
The Company determines expected credit losses based on historical loss experience ad- justed to reflect current and estimated future economic conditions Our audit procedures related to verification of expected credit losses for trade receivables included the following, among others:
The Company considered current and anticipated future economic conditions and effect from the pandemic relating to COVID - 19. We identified expected credit losses as a key audit matter because the Company exercises significant judgment in calculating the same. We tested the effectiveness of controls over the (1) development of the methodology for the allowance for credit losses, including consideration of the current and estimated future economic conditions
(2) completeness and accuracy of information used in the estimation of probability of default and
(3) Computation of the allowance for credit losses based on the age wise details of trade receivables provided to us.
(4) We tested the mathematical accuracy and computation of the allowances by using the same input data used by the Company.
Provisions and contingent liabilities relating to taxation, litigations and claims
Our audit procedures included:
The provisions and contingent liabilities relate to ongoing litigations and claims with various authorities and third parties. These relate to direct tax, indirect tax, claims, general legal proceedings, and other eventualities arising in the regular course of business. (1) Understanding the process followed by the Company for assessment and determination of the amount of provisions and contingent liabilities relating to taxation, litigations and claims.
As at the year ended 31 March 2022, the amounts involved are significant. The computation of a provision or contingent liability requires significant judgment by the Company because of the inherent complexity in estimating future costs. The amount recognized as a provision is the best estimate of the expenditure. The provisions and contingent liabilities are subject to changes in the outcomes of litigations and claims and the positions taken by the Company. It involves significant judgment and estimation to determine the likelihood and timing of the cash outflows and interpretations of the legal aspects, tax legislations and judgments previously made by authorities. (2) Evaluating the design and implementation and testing operating effectiveness of key internal controls around the recognition and measurement of provisions and reassessment of contingent liabilities.
(3) Involving our tax professionals with specialised skills and knowledge to assist in the assessment of the value of significant provisions and contingent liabilities relating to taxation matter, on sample basis, in light of the nature of the exposures, applicable regulations and related correspondence with the authorities.
(4) Inquiring the status in respect of significant provisions and contingent liabilities with the Company?s internal tax and legal team, including challenging the assumptions and critical judgments made by the Company which impacted the computation of the provisions and inspecting the computation.
(5) Assessing the assumptions used and estimates of outcome and financial effect, including considering judgment of the Company, supplemented by experience of similar decisions previously made by the authorities and, in some cases, relevant opinions given by the Company?s advisors.
(6) Testing data used to develop the estimate for completeness and accuracy.
(7) Evaluating judgments made by the Company by comparing the estimates of prior year to the actual outcome. Assessing the Company?s disclosures in the standalone financial statements in respect of provisions and contingent liabilities.

We have determined that there are no other key audit matters to communicate in our report.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR?S REPORT THEREUPON

The Company?s Board of Directors/ Resolution Professional/Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the Standalone Ind AS financial statements and our auditor?s report thereon. The Board of Directors report is expected to be made available to us after the date of this auditor?s report.

Our opinion on the Standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the Company?s annual report, if we conclude that there is a material misstatement of this other information, we are required to communicate the matter to those charged with governance.

RESPONSIBILITY OF MANAGEMENT AND RESOLUTION PROFESSIONAL AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDLONE FINANCIAL STATEMENTS

The Company?s Board of Directors/Resolution Professional / Management is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone Ind AS financial statements, the management is responsible for assessing the Company?s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors and Management is also responsible for overseeing the Company?s financial reporting process.

We are informed that the Resolution Professional, Mr. Dushyant Dave (IBBI Regn. Number: IBBI/ IPA-003/IP-N00061/2017-2018/10502) has approved these financial statements on the basis of approvals from the Board of Directors in the meeting held on 30th May, 2022, without prejudice and without any guarantee on the accuracy, adequacy, correctness, completeness or reliability of the financial statements as the same pertains to period prior to the CIRP Commencement Date.

We are also informed that such approval by the Resolution Professional of these financial statements is to comply with the provisions of the Code and this without prejudice to the rights and contentions of the Resolution Professional under applicable laws. The Resolution Professional reserves/retains his right to file avoidance transactions under Section 43, 45, 66, and 50 of the Code at a later date and that such approval of these financial statements shall not be in conflict with such proceedings that may be initiated before relevant court / tribunal.

AUDITOR?S RESPONSIBILITY FOR THE AUDIT OF STANDALONE IND AS FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor?s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing (SAs) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Ind AS financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also

- Identify and assess the risks of material misstatement of the Standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to Standalone Ind AS financial statements of the Company in place and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

- Conclude on the appropriateness of management?s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company?s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor?s report to the related disclosures in the Standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor?s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the Standalone Ind AS financial statements, including the disclosures, and whether the Standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor?s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor?s Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure-A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable

2. As required by Section 143(3) of the Act, we report that: a. We have sought and except for matters described in the basis of Qualified Opinion Paragraph above have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. Except for the possible effects of the matters described in the Basis for Qualified Opinion Paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

d. Except for the possible effects of the matters described in the Basis for Qualified Opinion Paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended.

e. On the basis of the written representation received from the directors as on March 31, 2022 taken on record in the meeting of RP, none of the directors is disqualified as on March 31, 2022 from being appointed as a director in terms of Section 164(2) of the Companies Act, 2013. f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure-B" to this report.

g. In our opinion, no managerial remuneration for the year ended March 31, 2022 has been paid / provided by the Company to its directors. Therefore, the provisions of Section 197 read with Schedule V to the Act are not applicable.

h. With respect to the other matters to be included in the Auditor?s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements – Refer Note 34 to standalone Ind AS financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. (a) The Management has represented that, to the best of its knowledge and belief, other than as disclosed in the Note 49(A) to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity (ies), including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The Management has represented, that, to the best of its knowledge and belief, other than as disclosed in the Note 49(B) to the accounts, no funds have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. No dividend has been declared or paid during the year by the company. Therefore, the provisions of section 123 of the Companies Act 2013 are not applicable.

For Fadnis & Gupte
Chartered Accountants
FRN-006600C/C400324
Place : Indore CA Vikram Gupte
Dated : 30th May, 2022 (Partner)
Membership No. 074814
UDIN: 22074814AJXVRI7056

ANNEXURE A TO THE AUDITOR?S REPORT

Referred to in paragraphs under the heading ‘Report on Other Legal and Regulatory Requirements? of our report of even date to the members of National Steel and Agro Industries Limited for the year ended March 31, 2022

(i) (a) (A) The Company has maintained records on yearly basis for additions / deletions made during that year showing full particulars including quantitative details and situation of property, plant and equipment.

(B) The company is maintaining records on yearly basis for additions / deletions made during that year showing full particulars of intangible assets.

(b) As per our information and according to the explanations given to us and based on the audit procedures applied, the management has conducted physical verification of Property, Plant and Equipment of the company during the year.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of all the immovable properties disclosed in the financial statements are held in the name of the company. There are no lease properties in possession of the Company.

(d) As informed and explained to us, the management has not revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year.

(e) According to the information and explanations given to us and on the basis of our examination of the records of the Company, no proceedings have been initiated or are pending against the company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 (previously known as Benami Transactions (Prohibition) Act, 1988) and rules made thereunder.

(ii) (a) As informed and explained to us the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification needs to be strengthened in view of the nature & size of the business. No discrepancies of 10% or more in the aggregate for each class of inventory were noticed during such physical verification by the management.

(b) The financial creditors have assigned its term loans and working capital loans extended to the Company to M/s. JM Financial Asset Reconstruction Company Limited (JMFARC) along with all underlying securities, rights, title, and interest thereof and therefore reporting under clause (ii)(b) of the Order is not applicable.

(iii) The company has not made investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties and hence reporting under clause (iii) of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us and on the basis of our overall examination, the Company has not granted loans, investments, guarantees and security and therefore reporting under clause (iv) of the Order is not applicable

(v) The Company has not accepted any deposits or amounts which are deemed to be deposits except advance for supply of goods or provision of services amounting to 26.41 Lakhs which are not appropriated against supply of goods or provision of service within a period of 365 days of acceptance of such advance.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained in accordance with the said rules. We have not, however, made a detailed examination of the same.

(vii) (a) According to the books of accounts and records examined by us as per the generally accepted auditing practices in India, in our opinion, the company has been regular in depositing undisputed statutory dues. According to the information and explanations given to us, there were no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income tax, Sales Tax, Customs Duty, Excise Duty, Service Tax, Cess and other material statutory dues which have remained outstanding as at 31st March 2022 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income-tax, service-tax and goods and service tax, which have not been deposited on account of any dispute except as mentioned below:-

Particulars Nature of dues Period to which Dispute Relates Amount Disputed (Rs in Lakhs) Forum where the dispute pending
Central Excise and Service Tax Demand of differential duty 2018-19 694.64 Customs Excise and Service Tax Appellate Tribunal, New Delhi
Central Excise and Service Tax As certain the unpaid Central Excise duty liability 2020-21 302.81 Principal Commissioner, Ujjain
Customs Act Matter pertains to exports of Red Sanders 2016-17 102.50 Customs Excise and Service Tax Appellate Tribunal, New Delhi
Customs Act Matter pertains to differential duty demanded on imports 2016-17 212.99 Customs Excise and Service Tax Appellate Tribunal, Ahmedabad
Customs Act Matter pertains to SAD Refund 2009-10 138.08 Customs Excise and Service Tax Appellate Tribunal, Mumbai
M.P. Commercial Tax Entry Tax 2004-05 50.47 M.P. Commercial Tax Appellate Board, Bhopal
Service Tax Reverse Charge Mechanism 2017-18 247.74 Commissioner Appeals, Customs & SGST
CGST Act, 2017 Related to credit of input Service in TRAN-1 2017-18 5.64 Superintendent, CGST & Customs & Central Excise
CGST Act, 2017 Related to credit of input Service in TRAN-1 2017-18 4.04 Superintendent, CGST & Customs & Central Excise
CGST Act, 2017 Ineligible Input Tax Credit 2017-18 3.17 Superintendent, CGST & C. Ex.
Income Tax Income Tax Act, 1961 2010-11 42.32 Commissioner of Income Tax Appellate, Mumbai
Income Tax Income Tax 2011-12 118.30 Commissioner of Income Tax Appellate, Mumbai
Income Tax Income Tax 2020-21 1,940.54 Commissioner of Income Tax Appellate, Mumbai
Income Tax Income Tax 2015-16 6.54 Commissioner of Income Tax Appellate, Mumbai

(viii) According to the explanations and information given to us by the management, there has been no amount surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

(ix) (a) The Company has defaulted in repayment of loans or borrowings to banks/ financial institution as at balance sheet date as mentioned below:

Name of the Lender Amount of Default as at Balance Sheet Date (Including Interest) ( in Lakhs) Period of Default
M/s. JM Financial ARC Company Limited 1,48,737.08 21.05.2018

(b) According to the information provided to us by the management, the company has been declared as a wilful defaulter by two banks and one bank has issued show-cause notice to the company for declaring it as a wilful defaulter.

(c) The term loans were applied for the purpose for which the loans were obtained.

(d) According to the information and explanation given to us, and the procedures performed by us, and on an overall examination of the financial statements of the company, we report that funds amounting to 20,714.56 Lakhs raised on short term basis have been used for long term purposes by the company on account of loss for the year.

(e) The company does not have any subsidiaries, associates or joint ventures and therefore clause (ix)(e) is not applicable to the company.

(f) The company does not have any subsidiaries, associates or joint ventures and therefore clause (ix)(f) is not applicable to the company

(x) (a) The Company did not raise any money by way of initial public offer/ further public offer (including debt instruments).

(b) The company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year.

(xi) (a) According to the information and explanations given to us, no fraud by the Company or no fraud on the Company has been noticed or reported during the year under audit.

(b) No report under sub section (12) of section 143 of the Companies Act has been filed by us in Form ADT 4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government during the year;

(c) As per our information and according to the explanations given to us, no whistle blower complaints were received by the company during the year.

(xii) In our opinion, the company is not a Nidhi Company and therefore, the provisions of clause (xii)(a), (xii)(b) and (xii)(c) of para 3 of the said order are not applicable to the Company.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) (a) In our opinion and according to the information and explanations given by management, the company has an internal audit system which is not commensurate with the size and nature of its business.

(b) The reports of the Internal Auditors submitted for the period April 2021 to December 2021 were considered by us.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Act.

(xvi) (a) According to the information and explanations given to us by the management, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

(b) According to the information and explanations given to us by the management, the company has not conducted any Non-Banking Financial or Housing Finance activities without a valid Certificate of Registration (CoR) from the Reserve Bank of India as per the Reserve Bank of India Act, 1934.

(c) According to the information and explanations given to us by the management, the company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India.

(d) According to the information and explanations given to us by the management, the Group does not have any CIC as part of the Group, hence clause (xvi)(d) of paragraph 3 of the said order is not applicable to the company.

(xvii) The company has incurred cash losses amounting to 16,687.32 Lakhs in the financial year and 17,869.60 Lakhs immediately preceding financial year.

(xviii) There has been no resignation of the statutory auditors of the company during the year.

(xix) On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements and in our knowledge of the Board of Directors and management plans we are of the opinion that there exists a material uncertainty exists as on the date of the audit report that company is capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date due to Corporate Insolvency Resolution Process in progress.

(xx) According to the information and explanations given to us by the management, and on the basis of our examination of the records of the company, the company is not required to spend any amount as per the requirement of section 135 of the Companies Act, 2013, and therefore subclauses (a) and (b) of clause (xx) of para 3 are not applicable.

(xxi) Since the report is being issued for standalone financial statements of the Company therefore reporting under clause (xxi) is not applicable.

For Fadnis & Gupte
Chartered Accountants
FRN-006600C/C400324
Place : Indore CA Vikram Gupte
Dated : 30th May, 2022 (Partner)
Membership No. 074814
UDIN: 22074814AJXVRI7056

ANNEXURE B TO THE INDEPENDENT AUDITOR?S REPORT

Referred to in paragraph (f) under the heading ‘Report on Other Legal and Regulatory Requirements? of our report of even date to the members of National Steel and Agro Industries Limited for the year ended March 31, 2022

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of subsection 3 of Section 143 of the Companies Act, 2013 (the "Act")

We have audited the internal financial controls with reference to Standalone Financial Statements of National Steel and Agro Industries Limited, ("the Company"), as of 31 March 2022 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management?s Responsibility for Internal Financial Controls

The Management of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the "ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company?s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors? Responsibility

Our responsibility is to express an opinion on the Company?s internal financial controls with reference to the standalone Ind AS financial statements of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by the ICAI and prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting with reference to the standalone Ind AS financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to the standalone Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls with reference to the standalone Ind AS financial statements included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor?s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained, is sufficient and appropriate to provide a basis for our audit opinion on the Company?s internal financial controls system with reference to standalone Ind AS financial statements.

Meaning of Internal Financial Controls with reference to these standalone Ind AS financial statements

A company?s internal financial control with reference to these standalone Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A company?s internal financial control with reference to these standalone Ind AS financial statements includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company?s assets that could have a material effect on the standalone Ind AS financial statements.

Inherent Limitations of Internal Financial Controls with reference to Standalone Ind AS Financial Statements

Because of the inherent limitations of internal financial controls with reference to these standalone Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting with reference to these standalone Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls over financial reporting with reference to these Standalone Ind AS Financial Statements and such internal financial controls over financial reporting with reference to these Standalone Ind AS Financial Statements were operating effectively as at March 31, 2022, based on the criteria for internal financial control over financial reporting established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Fadnis & Gupte
Chartered Accountants
FRN-006600C/C400324
Place : Indore CA Vikram Gupte
Dated : 30th May, 2022 (Partner)
Membership No. 074814
UDIN: 22074814AJXVRI7056