National Steel & Agro Industries Ltd Directors Report.

TO THE MEMBERS OF NATIONAL STEEL AND AGRO INDUSTRIES LIMITED

REPORT ON THE IND AS FINANCIAL STATEMENTS

OPINION

We have audited the accompanying Ind AS financial statements of National Steel And Agro Industries Limited (‘the Company), which comprise the balance sheet as at 31st March, 2019, the statement of profit and loss (including other comprehensive income), the statement of cash flows and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as "Ind AS financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2019, and its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis Of Matter

(a) Material Uncertainty regarding Going Concern

We refer to Note 29 of the Ind AS financial statements, even if the net-worth of the company as on 31st March, 2019 has been fully eroded, its current liability has also been exceeded its current assets and the company has incurred huge losses, the financial statements are prepared on going concern basis for the reasons mentioned in the said note.

Our report is not modified for the above as we are unable to comment on the ultimate outcome of the above.

(b) As mentioned in Note 30 to the Ind AS financial statements, Bank Guarantees (BGs) worth Rs. 6.48 crores have been invoked by the beneficiaries during the year ended 31st March, 2019. The company is however confident of meeting its liabilities. We are unable to comment on the said matter.

(c) As mentioned in Note 31 to the Ind AS financial statements, the company has accumulated secured debts (inclusive of interest & net of payment) amounting to Rs. 1166.04 crores which has been classified as Non-Performing Assets (NPA) by the banks as on 31st March, 2019. Some of the banks – Secured lenders has issued demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("SARFAESI Act") for recovery of their dues on various dates and also some of the Banks have issued notices to the Company and its Directors classifying them as "Wilful defaulters". The Company has replied these notices and contemplating to restructure the loan with the lenders. Also Banks have mandated Forensic Audit for the period April 2015 to December2018. We are unable to comment on the said matter.

(d) As mentioned in Note 33 to the Ind AS financial statements, the GST department had carried out a search at Mumbai office and Talojagodown of the Company, all the documents relevant to the alleged transactions have also been seized by the GST department, also considering the aforesaid allegation, Managing Director of the Company had also been arrested and now released on bail. Therefore, in the absence of any update from GST department, we are unable to comment upon the outcome of the same.

(e) As mentioned in Note 34 to the Ind AS financial statements, the Company has written off the trade receivable/advances amounting to Rs. 4.56 crores pertaining to old and doubtful debts. Further the Company has made provisions of Rs. 108.69 crores in respect of trade receivable /advances.

(f) We draw your attention to Note 35 of the Ind AS financial statements, owing to the resignation of Independent Directors; the composition of the Board/sub committees is not in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 on 31st March, 2019. However as on date, the composition of the Board/sub committees is in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

(g) As mentioned in Note 36 to the Ind AS financial statements,The financial results for the quarter / year ended on 31st March, 2018, 30th June, 2018 and 31st December, 2018 were submitted after due date as per regulation 33 of SEBI–LODR regulations 2015.

(h) As mentioned in Note 38 (a) to the Ind AS financial statements, some of the parties have filed application/ petition before the NCLT/NCLAT under Insolvency & Bankruptcy Code against which the company has adopted legal course. However no case is admitted by the Bench.

MANAGEMENTS RESPONSIBILITY FOR THE IND AS FINANCIAL STATEMENTS

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued there under.This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 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 Ind AS financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate theCompany or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Companys financial reporting process.

AUDITORS RESPONSIBILITY

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors 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 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 theseInd AS financial statements.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of section 143(11) of the Act, we give in the " Annexure A", a statement on the matters specified in the paragraph 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 obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. 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 statement of cash flows and the statement of changes in equity dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of the written representations received from the directors as on 31st March, 2019, taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2019, from being appointed as a director in terms of Section 164(2) of the Act;

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"; and

g. With respect to the other matters to be included in Auditors Report in accordance with the requirements of section 197 (16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanation given to us, the remuneration paid by the company to its directors during the year is in accordance with the provisions of section 197 of the Act.

h. With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, 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 Ind AS financial statements – Refer Note 37 to the Ind AS financial statements;

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

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

For Gupta Saharia & Co.
Chartered Accountants
ICAI FRN-103446W
Place : Indore CA Suresh Saharia
Dated : 30th May, 2019 (Partner)
Membership No. 040180

ANNEXURE A TO THE AUDITORS REPORT

(Referred to in paragraph (1) of our report of even date)

(i) (a) As explained to us, in respect of fixed assets, the Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, the fixed assets have been physically verified by the management, in accordance with the program of verification adopted by the Company. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. To the best of our knowledge, no material discrepancies have been noticed on such verification.

(c) In respect of immovable property, title deeds of all the immovable properties are in the name of the company.

(ii) As explained to us, the inventory of the Company has been physically verified during the year by the management. In respect of materials lying with third parties, these have been confirmed by them. In our opinion the frequency of the verification is reasonable. In our opinion, the discrepancies noticed on verification between the physical stocks and book records were not material, having regard to the size of the operations of the Company.

(iii) As explained to us, the Company has not granted any loans, secured or unsecured, to Companies, firms, Limited Liability Partnerships or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013.

(iv) In our opinion,the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees and security.

(v) The Company has not accepted any deposits from the public within the meaning of Section 73 and 76 of the Companies Act, 2013 and the rules framed there under to the extent notified.

(vi) On the basis of records produced we are of the opinion that prima facie cost records and accounts prescribed by the Central Government under sub section (1) of section 148 of the Companies Act, 2013 in respect of products of the company covered under the rules under said section have been made and maintained. However we are neither required to carry out nor have carried out any detailed examination of such accounts and records.

(vii) (a) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues, including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, goods and service tax and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of Sales Tax, Entry Tax, Service Tax, Customs Duty, Excise Duty,VAT Goods & Service Tax and Cess as at March 31, 2019 which have not been deposited on account of disputes are as follows:

Statement of Disputed Dues

Name of Statute Nature of Dues Amount Disputed Period Forum where dispute is pending
(र)
Excise Duty 12,50,482 2013-14 Commissioner (Appeals), Indore.
5,00,000 2014-15 Commissioner (Appeals), Indore.
Penalty 5,00,000 2014-15 Commissioner (Appeals), Indore.
CENVAT Credit 1,47,91,017 2014-15 Commissioner (Appeals), Indore
The Central Excise Act Differential Duty 6,94,64130 2014-15 Central Excise and Service Tax Appellate Tribunal, New Delhi
Custom Duty 1,92,99,130 2015-16 Central Excise and Service Tax Appellate Tribunal, Mumbai
Custom Duty 47,48,458 2012-13 Central Excise and Service Tax Appellate Tribunal, Mumbai
Excise Duty 6,21,72,263 2015-16 Central Excise and Service Tax Appellate Tribunal, New Delhi
Entry Tax 50,47,197 2004-05 M.P. Commercial Tax Appellate Board, Bhopal
Sales Tax A ct State Case 5,19,604 2004-05 M.P. Commercial Tax Appellate Board, Bhopal
State Case 18,68,541 2005-06 M.P. Commercial Tax Appellate Board, Bhopal
Entry Tax 5,49,730 2008-09 Commercial Tax Tribunal, Ghaziabad
Sales Tax (Commercial Tax) Central Sales Tax 51,158 2010-11 Sales Tax (Ghaziabad)
Vat Tax 1,51,500 2014-15 Sales Tax (Ghaziabad)

(viii) According to the records of the Company examined by us and the information and explanation given to us, The company has defaulted in repayment of loans or borrowings as at balance sheet date as follows:

(A) Default in Working Capital Facility

Name of the Bank Period of Default Amount of Default
(र in Crores)
Bank of India Since 02.07.2018 125.08
IDBI Bank Ltd. Since 03.04.2018 217.45
Andhra Bank Since 07.05.2018 222.00
United Bank of India Since 21.05.2018 40.01
Central Bank of India Since 11.06.2018 96.59
Oriental Bank of Commerce Since 25.06.2018 92.34
Punjab National Bank Since 13.07.2018 86.24
State Bank of India Since 27.04.2018 204.61
Bank of Maharashtra Since 10.10.2018 75.72

(B) Default in Working Capital Facility

Name of the Bank Period of Default Amount of Default
(र in Crores)
IDBI Bank Ltd. Since 01.07.2018 6.02

(ix) According to the records of the company examined by us and the information and explanation given to us, the company has not raised money by way of initial public offer or further public offer (including debt instruments) and term loan.

(x) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the company or any fraud on the company by its officers or employees, noticed or reported during the year.

(xi) According to the records of the company examined by us, managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V of the Companies Act, 2013.

(xii) The Company is not a Nidhi company.

(xiii) According to the records of the company examined by us and the information and explanation given to us, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the financial statement as required by applicable accounting standards.

(xiv) According to the records of the company examined by us, the company has not made any preferential allotment or private allotment of shares or fully or partly convertibles debenture during the year.

(xv) According to the records of the company examined by us and the information and explanation given to us, the company has not entered into any non-cash transactions with directors or persons connected with him.

(xvi) According to the records of the company examined by us the company is not required to be registered under section 45 IA of the Reserve Bank of India Act.1934.

For Gupta Saharia & Co.
Chartered Accountants
FRN-103446W
Place : Indore CA Suresh Saharia
Dated : 30th May, 2019 (Partner)
Membership No. 040180

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT

Report on the Internal Financial Controls under Clause (I) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of National Steel And Agro Industries Limited ("the Company") as of 31st March, 2019 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys Board of Diretors 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 (‘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 the Companys 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 Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting with reference to these Ind AS financial statements 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 as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. 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 these 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 over financial reporting with reference to these Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these Ind AS financial statements, 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 auditors 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 internal financial controls over financial reporting with reference to these Ind AS financial statements.

Meaning of Internal financial Controls over financial Reporting with reference to these Standalone IND AS Financial Statements

A Companys internal financial control over financial reporting with reference to these Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting with reference to these IND AS Financial Statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to these 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 Ind AS financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these 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, the Company has, in all material respects, adequate internal financial controls over financial reporting with reference to these Ind AS financial statements and such internal financial controls over financial reporting with reference to these Ind AS financial statements were operating effectively as at 31st March, 2019, 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.

For Gupta Saharia & Co.
Chartered Accountants
FRN-103446W
Place : Indore CA Suresh Saharia
Dated : 30th May, 2019 (Partner)
Membership No. 040180