NMDC Steel Ltd Auditor Reports

To,

The Members

of

NMDC Steel Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of NMDC Steel Limited ("the Company"), which comprise the Balance Sheet as at March 31,

2025, and the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date and notes to the Standalone financial statements including a summary of material accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone 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 March 31, 2025, and its loss, total comprehensive loss, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing ("SAs") specified under section 143(10) of the Act.

Our responsibilities under those Standards are further described in the Auditors Responsibility for the Audit of the Standalone 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 (ICAI) together with the ethical requirements that are relevant to our audit of the Standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics.

We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2025. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to be communicated in our report.

We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the standalone 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 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 financial statements.

Key Audit Matter	Auditors Response
1 Litigation Matters, Provisions and Contingent Liabilities related to ongoing litigations
The Company has certain significant ongoing legal and arbitration proceedings, tax cases for various complex matters with the Courts and other forums, continuing from earlier years.	Our audit procedures included and were not limited to the following:
Managements disclosures with regards to provisions and contingent liabilities relating to ongoing litigations are presented in note 2.28 to the Companys Financial Statements. Refer note 1.3.ix for related material accounting policy information adopted by the Company.	We have tested the design, implementation and operating effectiveness of the controls established by the Company in the process of evaluation of litigation matters.
The assessment of whether a liability is recognised as a provision or disclosed as a contingent liability in the standalone financial statements is inherently subjective and requires significant management judgement in determination of the cash outflows, interpretation of applicable laws and regulations, and careful examination of pending assessments at various levels of regulatory authorities.	We have assessed the managements position through discussions with the in-house legal expert , the probability of success in the aforesaid cases, and the magnitude of any potential loss.
Due to complexity involved in these litigation matters, managements judgement regarding recognition, measurement and disclosure of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined.	We have reviewed the legal and professional expenses incurred and discussed with the management on the developments in respect of these litigations during the year ended 31st March, 2025 till the date of approval of the Standalone Financial Statements.
Accordingly, it has been considered as a key audit matter.	Rolled out of enquiry letters to the Companys legal counsel.
	We have reviewed the disclosures made by the Company in the Financial Statements in accordance with the applicable Indian Accounting Standards.
	We have Obtained Management representation letter on the assessment of these matters.

 

2 Property, plant and equipment and intangible assets (including capital work in progress)
As at 31st March 2025 the Company has Property, Plant and Equipment (PPE), Capital Work-inProgress (CWIP) and Intangible Asset (IA) with carrying value of Rs 20,083.48 crore, Rs 717.19 crore and Rs4.72 crore respectively, as disclosed in note 2.1.1, note 2.2 and note 2.3 of the accompanying Standalone Financial Statements.	Our procedures included and were not limited to the following:
Refer note 1.3.iv.(a),(b) and note 1.3.v for the material accounting policy information adopted by the Company for recognition and measurement of Property, Plant and Equipment, CWIP and Intangible Assets.	We have obtained an understanding of the companys capitalization policy and managements process of recording the transactions pertaining to capital expenditure incurred by the company and evaluated the accounting policies adopted by the company in accordance with the requirements of Ind AS 16 and Ind AS 38.
Determination of carrying values and their respective depreciation and amortisation amounts of PPE, IA and CWIP requires considerable management judgement. The decisions to capitalise or expense costs, the useful life review, residual value review the timeliness of the capitalisation of assets, Spare Parts Capitalization and the use of managements assumptions and judgementsfor the determination and measurement of assets retired from active use, in accordance with the requirements of Ind AS 16 - Property, Plant and Equipment (Ind AS 16) and Ind AS 38 - Intangible Assets (Ind AS 38).	We have evaluated the design and tested the operating effectiveness of the controls put in place by the management in relation to the above process. We have obtained componentization reports issued by third party management experts for capitalizations carried out during the year and have assessed appropriateness of basis of componentization and estimates of useful life.
Considering the significance of amounts involved in the context of the balance sheet of the Company and the level of judgements and estimates required, we consider this to be a key audit matter in the current year audit.	We have tested the amounts capitalized during the year, on a sample basis, by inspecting supporting documents and evaluating whether assets capitalized satisfied the recognition criteria in accordance with Indian Accounting Standards and were recognized accurately in the correct periods and with correct amounts.
	We have reviewed the judgements made by management in determination of carrying values of the specified noncurrent assets including the nature of underlying costs capitalized, determination of realizable value of the assets retired from active use, the appropriateness of useful lives and residual values applied in the calculation of depreciation as determined by technical assessment by management and external technical experts, where required, and evaluation of appropriateness of long outstanding CWIP balances pertaining to long-term projects.
	We have evaluated the appropriateness and adequacy of the related disclosures in the financial statements in accordance with Schedule III to the Companies Act, 2013 and the applicable Indian accounting standards.

 

3 Inventories
As at 31 March 2025, the Company has a significant amount of inventory comprising raw materials Rs 1275.73 crores, work-in-progress of Rs 563.17 crores and finished goods of Rs 810.25 crores. Inventories are valued at the lower of cost and net realisable value (NRV) in accordance with Ind AS 2 - Inventories.	Our procedures included and were not limited to the following:
Refer to the note no. 2.7 Inventories to the Financial statements and Refer note 1.3.vi. for the material accounting policy information adopted by the Company for recognition and measurement of inventories.	We have understood and performed the walkthroughs of the inventory valuation process and controls over recording and monitoring inventory.
The determination of cost involves judgment in selecting an appropriate cost formula, particularly for items with fluctuating prices. The assessment of NRV involves significant estimation, especially in respect of slow-moving, obsolete, or excess inventories and for products where selling prices are volatile or uncertain.	We have evaluated the design and implementation of internal controls with regard to the Inventory valuation, Obsolescence assessment, Physical verification processes. We Observed inventory counts conducted by management or third parties at selected locations and verified count sheets to test the accuracy of inventory records.
Due to the volume of inventory, estimation involved in determining NRV, and the judgment in identifying obsolete or slow-moving inventory, this area is considered a key audit matter.	We have performed sample testing of inventory valuation by verifying the basis of cost (raw materials, labour, overhead allocation) in SAP through purchase orders terms and conditions and observed the cost calculation, cost allocation through Cost Run Process in SAP on a sample basis, then compared it with the accounting policy and verified the accounting treatment given in the SAP Books.
The Management has appointed an external technical expert to carry out the physical verification of Raw materials which consists of Coal, Iron Ore and Coke products (by-products). The external technical expert team carried out the physical verification of the said categories of inventory from 26.03.2025 to 04.04.2025 with the objective to quantify the actual physical stock available at various locations within the plant.	We have assessed the Net Realisable Value (NRV) by reviewing sales data after year-end for selected inventory items and compared the cost to actual selling prices less estimated selling costs and also evaluated the reasonableness of estimates and assumptions used.
Based on the report provided by the external technical expert, the Company has given the necessary effect in the financial statements with respect to deviation between the physical stock and book stock in SAP.	We have reviewed the disclosures made in the financial statements in accordance with Ind AS 2 for adequacy and appropriateness.
	We have reviewed the appointment procedures followed for selecting the management expert, enquired & obtained the details of previous work history, experience in the current field to assess the competency and interacted with the team of experts understood the working mechanism, results from the devices and stockpile measuring tools being used in the stock verification process.
	We have Obtained an understanding of the communication between the management and the expert for information and collection of daily results of physical verification of inventory - Raw materials and Byproducts.
	We were present during the physical verification of raw material & by-products and observed the process performed by the external technical expert. Obtained the report provided by the external technical expert from the management and analysed the same with respect to the reports generated from the devices used and noted the quantity deviations with respect to actual stock in SAP.
	We have compared the quantity deviations of the Inventory physically verified with the deviation levels (as % norms for shortages) as recommended by the company and noticed to be within the set levels as compared with the industry standards.
	We have also conducted the Physical verification of Finished Goods (HR Coils) on a sample basis and identified the actual stock based on the coil ID located in the sector- wise bay location in the plant and also verified the physical verification conducted by the management for total finished goods and semi-finished goods. We have reviewed the disclosures made in the financial statements in accordance with Ind AS 2 for adequacy and appropriateness with respect to the number of losses.

 

4 Recognition of Revenue from Contract with Customers
Revenue is a significant item in the financial statements and is one of the key performance indicators of the Company. The Company recognizes revenue from sale of goods and services as per the five-step model prescribed under Ind AS 115 - Revenue from Contracts with Customers.	Our audit procedures included but were not limited to the following:
The Company has recognised the revenue from operations of H 8503.05 crores during the FY 202425 from the manufacture and sale of Hot-Rolled (HR Coils), HR Sheets, Pig Iron, Pit Iron and other by-products.	We have understood and evaluated the Companys revenue recognition policy and assessed the compliance with Ind AS 115. We have evaluated the design and tested the operating effectiveness of internal controls relating to revenue recognition.
The revenue recognition criteria have been disclosed under the point xii of the material accounting policies.	We have tested, on a sample basis, contracts with customers to assess whether the five-step model under Ind AS 115 is correctly applied, which included the following:
Application of Ind AS 115 involves significant judgement in identifying performance obligations, determining transaction price, allocating the transaction price to performance obligations, and assessing the timing of revenue recognition (whether at a point in time or over time).	- Conducted the detailed study of the agreement on a sample basis with customers (including the MOUs entered with other peers in the industry like SAIL etc) and identified the performance obligations in each contract agreement. Evaluated the transaction prices and identified the allocating process of the transaction price to the performance obligations. Finally tested the accuracy of timing of revenue recognized and amounts determined.
Given the complexity and the volume of transactions, there is a risk of inappropriate recognition of revenue, particularly close to the year end.	We have performed a detailed walkthrough process and understood the Business and Sales Process of the company. We have held detailed discussions with management and process owners to understand the nature of goods/services sold and reviewed the typical contract terms with customers (standard and customized contracts). Understood the process of order receipt, dispatch/delivery, invoicing, and revenue recognition procedures also correlated with the process flow in SAP. We have also looked into the industry-specific revenue recognition nuances (with Inco-terms such as Ex-Works, Delivery at Point, CIF etc)
Accordingly, revenue recognition has been identified as a key audit matter	We have walked through the entire order-to-cash cycle and observed the Sales order processing: Verified the controls over acceptance and authorization of orders. Verified the Inventory dispatches with respect to evaluation of how dispatch/delivery is recorded (e.g., shipping documents, delivery challans).
	We have Observed the process of Invoicing: Reviewed how invoices are generated and linked to dispatch documentation. Revenue recognition: Identified the point at which revenue is recognized and assessed if it aligns with transfer of control per Ind AS 115. We have traced how payments are matched against invoices and accounted in SAP as a part of cash application procedures.
	We have Performed the substantive analytical procedures and trend analysis on revenue streams for product wise, customer wise to identify any unusual patterns or inconsistencies. We have Tested the revenue transactions occurring near year-end as a part of our cut off procedures related to quarter end/ year end to determine whether revenue was recognized in the correct accounting period. We have Assessed the disclosures in the financial statements relating to revenue recognition (including the disaggregated revenue disclosures) to ensure adequacy and compliance with Ind AS 115 and the requirements of Schedule III to the Companies Act, 2013.

Emphasis of Matter

1. We draw attention to Note 2.32.15 to the standalone Ind AS financial statements, which describes the managements assessment that the interest clause relating to delayed payments under a Long-Term Agreement with a supplier is not enforceable in substance. This conclusion is based on historical commercial practice, confirmation obtained from the supplier, and the absence of any claims or intent to enforce the clause. Accordingly, no provision has been made in respect of such interest.

2. We draw attention to Note 2.30.1 to the standalone financial statements, which describes the delayed compliance from the approved Scheme of Arrangement as approved by Ministry of Corporate Affairs with regard to non-identification of employees of demerged Company to the resulting Company till the year under audit.

Our opinion is not modified in respect of this matter.

Other Matter

1. The Standalone financial statements for the year ended March 31,2025 includes comparative financial information for the year ended March 31,2024. The Standalone financial statements for the year ended March 31,2024 have been audited by predecessor auditor, M/s Sanjiv Shah & Associates, who expressed unmodified opinion on those financial statements vide their revised report dated July 24,2024.

Our opinion is not modified for the above matter.

Information Other than the financial Statements and Auditors Report Thereon

• The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Boards report and the Annexures to the Boards report but does not include Standalone financial statements, and our auditors report thereon.

• Our opinion on the standalone 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 and, in doing so, consider whether the other information is materially inconsistent with the Standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

• If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Company Management and Those Charged with Governance for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone 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 Ind AS and other accounting principles generally accepted in India. 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements,

Company 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone 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 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 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 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 financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to standalone financial statements 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 the management.

• Conclude on the appropriateness of managements 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 Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to

draw attention in our auditors report to the related disclosures in the Standalone 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 auditors 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 financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

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.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit, 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 of accompanying financial statements.

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 except for the matters stated in paragraph i(vi) below on reporting under Rule 11(g).

c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive

Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account.

d) In our opinion, the aforesaid Standalone financial statements comply with the Ind AS specified under Section 133 of the Act.

e) The provisions of Section 164(2) of the Act are not applicable to the Company vide Ministry of Corporate Affairs notification G.S.R 464 (E) dated 5th June 2015 since the Company is a Government company as defined under section 2(45) of the Act;

f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls with reference to standalone financial statements;

g) With respect to the matter to be included in the Auditors Report under section 197(16) of the Act, as amended, we are informed that the Company being a Government company, as defined in section 2(45) of the Act, the provisions of section 197 read with Schedule V, of the Act, relating to managerial remuneration are not applicable to the Company, in terms of Ministry of Corporate Affairs notification G.S.R 464 (E) dated 5th June 2015;

h) The modification relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph b above on reporting under section 143(3)

(b) and paragraph i(vi) below on reporting under Rule 11(g).

i) 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, 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 financial statements - Refer note 2.28 to the standalone financial statements.

As part of our audit procedures, we sought direct confirmation from the legal counsel of the Company to corroborate the financial impact of the disclosed pending litigations; however, we did not receive any response. Consequently, we have relied solely on the managements representation and disclosures made in the financial statements.

ii. The company does not have any longterm 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, as disclosed in Note 2.29.ix to the standalone financial statements no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kinds of funds) by the Company to or in any other person(s) or entity(ies),including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, 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, as disclosed in Note 2.29.x to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, 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 audit procedures performed by 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 the rule 11(e ), as provided under (a) and (b) above, contain any material misstatement.

v. the Company has not declared or paid any dividend during the year and has not proposed final dividend for the year.

vi. Based on our examination which included test checks and more fully described in note 2.32.17 to the standalone financial statements, the Company has used an accounting software for maintaining its books of account for the year ended March 31, 2025, which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all the relevant transactions recorded in such software except that the feature of recording audit trail (edit log) at the data base level to log any direct changes for the accounting software used for maintaining the books of account was not enabled. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with. Audit trail, except at the database level, has been preserved by the Company as per the statutory requirements for record retention.

2. As required by the Companies (Auditors Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

3. As Required by Comptroller and Auditor General of India in terms of sub section (5) of section 143 of the Act, we give in the "Annexure C" statement on directions issued.

Annexure "A" to the Independent Auditors Report

Referred to in paragraph 1(f) under Report on Other Legal and Regulatory Requirements section of our report of even date)

Report on the Internal financial Controls with reference to standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal Standalone financial controls with reference to standalone financial statements of NMDC Steel Limited ("the Company") as of March 31, 2025, in conjunction with our audit of the Standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls with reference to standalone financial statements based on the internal control with reference to the standalone financial statements 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. These responsibilities include the design, implementation and maintenance of adequate internal Standalone financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 with reference to Standalone 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") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls with reference to standalone financial statements. 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 with reference to standalone 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 standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference to standalone financial statements included obtaining an understanding of internal financial controls with reference to standalone 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 Companys internal financial controls with reference to standalone financial statements.

Meaning of Internal Standalone financial Controls with reference to standalone financial statements

A Companys internal financial control with reference to standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control with reference to standalone 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 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 standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to standalone financial statements

Because of the inherent limitations of internal financial controls with reference to standalone 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 with reference to standalone financial statements to future periods are subject to the risk that the internal financial control with reference to standalone 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 with reference to standalone financial statements and such internal financial controls with reference to standalone financial statements were operating effectively as at March 31, 2025, based on the criteria for internal financial control with reference to standalone financial statements established by the respective Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal financial Controls Over standalone financial Reporting issued by the Institute of Chartered Accountants of India.

Annexure "B" to the Independent Auditors Report

(Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements section of our report of even date)

In terms of the information and explanations sought by us and given by the Company and the books of account and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that

i) (a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, plant and equipment and relevant right of use assets.

(B) The Company has maintained proper records showing full particulars of intangible assets.

(b) The Company has a program of verification of Property, Plant and Equipment and capital work in progress so as to cover all the items of once every 3 years which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Pursuant to the program, Property, Plant & Equipments, other than Land, lease hold land and social facilities were verified by the management during the year. According to information and explanation given to us, no material discrepancies were noticed on such verification.

(c) Based on the examination of the registered sale deed provided to us, we report that, the title deeds of all the immovable properties of land and buildings (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the Company) disclosed in the standalone financial statements included in property, plant and equipment are held in the name of the Company except the following:

Description of Property	Gross Carrying Value	Held in the name of	Whether promoter, director, or their relative	Period held: indicate a range, where appropriate	Reason for not being held in the name of the Company
Freehold Land at Village Nagarnar, District Bastar, Chattisgarh	0.07	Petitioners	No	Since 2001	Presently the case is in Honble Supreme Court of India, in the revenue record the land is in favour of 05 petitioners but the land is in the possession of the company
543.52 hectares of Freehold Land at Nagarnar,Kasturi, Amaguda,Madpal, Manganpur, Bijaput, Uppanpal, Brahmani, Chokawada, Karanpur Villages District Bastar, Chattisgarh	81.45	NMDC Limited	No	Since 2001,2007, 2010, 2012, & 2022	Due to a demerger scheme, Mutation of land title is pending
22.49 hectares of Leasehold Land at Villages Kopaguda and Garavadkala, District Bastar, Chattisgarh	0	Government of Chattisgarh	No	Since 2010	The Land has been taken over from District Industries Centre, Jagdalpur being utilised for peripheral works near Nagarnar and has been allotted in the name of the company, however the same has not been brought into the books as the amount payable is not yet ascertainable in the absence of any demand from the concerned authorities and execution of Lease
62.619 hectares of Forest land at Nagarnar, Amaguda & Tiriya Village, District Bastar, Chattisgarh	0	Government of Chattisgarh- Forest Department	No	Since 2010,2015 & 2022	The permission has been obtained from the Govt. of Chhattisgarh (Forest Dept.) for use of Forest land having area 62.619 hectares for construction of Steel Plant at Nagarnar but the land is not in the name of the company
32.04 hectares of Lease Hold Land (RoU Asset) at Village Chokawada, Manganpur, Kasturi, Uppenpal,Madpal Bijaput and Nagarnar, District Bastar, Chattisgarh	6.87	NMDC Limited	No	Since 2010, 2015 & 2022	Due to a demerger scheme, Mutation of lease deed is pending
114.01 hectares of Lease Hold Land (RoU Asset) at Village Nagarnar, Manganpur, Kasturi, and Amaguda, District Bastar, Chattisgarh	39.53	NMDC Limited	No	Since 2001, & 2022	Due to a demerger scheme, Mutation of lease deed is pending
20.28 hectares of Lease Hold Land (RoU Asset) at Village Dhanpunji, District Bastar, Chattisgrah	4.74	NMDC Limited	No	Since 2015	Due to a demerger scheme, Mutation of lease deed is pending
6.26 hectares of Lease Hold Land (RoU Asset) at Village Dhanpunji, District Bastar, Chattisgrah	0.40	NMDC Limited	No	Since 2010	Due to a demerger scheme, Mutation of lease deed is pending
1.37 hectares of Lease Hold Land (RoU Asset) at Village Nagarnar, District Bastar, Chattisgrah	0.69	NMDC Limited	No	Since 2022	Due to a demerger scheme, Mutation of lease deed is pending
0.60 hectare of Lease Hold Land (RoU Asset) at Village Jhanj, District Raipur, Chattisgrah	0.53	NMDC Limited	No	Since 2010	Due to a demerger scheme, Mutation of lease deed is pending
7.20 hectares of Lease Hold Land (RoU Asset) at Village Dhanpunji, District Bastar, Chattisgrah	0.39	NMDC Limited	No	Since 2010	Due to a demerger scheme, Mutation of lease deed is pending

(d) The Company has not revalued any of its property, plant and equipment including right-of- use assets and intangible assets during the year.

(e) No proceedings have been initiated during the year or are pending against the Company as at March 31, 2025 for holding any benami property under the Benami Transactions (Prohibition)

Act, 1988 (as amended in 2016) and rules made thereunder.

(ii) (a) Inventories (except for goods-in-transit, which have been received subsequent to the year-end) were physically verified during the year by the Management at reasonable interval. In our opinion and according to the information and explanations given to us, the coverage and procedure of such verification by the Management is appropriate having regard to the size of the Company and the nature of its operations. In respect of goods-in- transit, the goods have been received subsequent to the year-end. No discrepancies of 10% or more in the aggregate for each class of inventories were noticed on such physical verification of inventories when compared with books of account.

(b) During the year, the Company has been sanctioned working capital limits in excess of Rs.5 Crores, in aggregate, from banks against the security of current assets. The Company has filed quarterly returns or statements with such banks, which are in agreement with the books of accounts other than those set out below:

Name of the Bank	Working Capital Limit sanctioned	Nature of Current Assets Offered as Security	Quarter ended	Amount disclosed as per quarterly return/ statement	Amount as per Books of Accounts	Differences	Remarks
State Bank of India	2600	Inventory	Jun-24	4,057.20	3,309.23	747.97	We are explained that such
State Bank of India	2600	Trade Receivables	Jun-24	6.32	36.76	-30.44	differences have arisen due to
State Bank of India	2600	Inventory	Sep-24	3,585.14	3,469.27	115.88	submission of quarterly returns/
State Bank of India	2600	Trade Receivables	Sep-24	26.66	51.63	-24.97	statements to the bank on provisional
State Bank of India	2600	Inventory	Dec-24	3,223.15	3,257.98	-34.83	basis and that these returns/
State Bank of India	2600	Trade Receivables	Dec-24	211.35	232.02	-20.67	statements were not revised later
State Bank of India	2600	Inventory	Mar-25	2,731.94	3,056.83	-324.89
State Bank of India	2600	Trade Receivables	Mar-25	214.00	197.48	16.52

(iii) The Company has not made any investments, provided 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 during the year. Hence, reporting under Clause (iii) (b) to (f) is not applicable to the Company.

(iv) The Company has not granted unsecured loans to companies, firms and Limited liability partnerships or other parties. Accordingly, the requirement to report on Cause 3(iii) of the order is not applicable to the Company.

(v) The Company has not accepted any deposits or amounts which are deemed to be deposits from the public. Accordingly, clause 3(v) of the Order is not applicable to the Company.

(vi) The maintenance of cost records have been specified by the Central Government under section 148(1) of the Act. We have broadly reviewed the specified accounts and records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended, prescribed by the Central Government for maintenance of cost records under Section 148(1) of the Act, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained by the Company. We have, however, not made a detailed examination of the cost records with the view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues, including Goods and Service tax, Provident Fund, Employees State Insurance, Income-tax, Sales Tax, duty of Custom, duty of Excise, Value Added Tax, cess and other material statutory dues applicable to the Company have generally been regularly deposited by it with the appropriate authorities.

There were no undisputed amounts payable in respect of Goods and Service tax, Provident Fund, Income-tax, Sales Tax, Service Tax, duty of Custom, Duty of Excise, Value Added Tax, cess and other material statutory dues in arrears as at March 31, 2025, for a period of more than six months from the date they became payable.

(b) There were no statutory dues referred in subclause (a) above which have not been deposited on account of disputes as on March 31, 2025 since in our opinion, disputed matters under CGST Act,2017 for the period 2017 to 2021 pertains to M/s NMDC Limited, being predemerger demands, in accordance with sub section 1 of section 85 of CGST Act,2017 read with Part B paragraph 5.1 of the Scheme of Arrangement approved by Ministry of Corporate Affairs. We are informed that M/s NMDC Limited has disputed the demands by appeal to Commissioner-Appeals, Raipur.

(viii) There were no transactions relating to previously unrecorded income that were surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 (43 of 1961) during the year.

(ix) (a) In our opinion, the Company has not defaulted in repayment of loans or other borrowings or in repayment of interest thereon to any lender during the year.

(b) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(c) The Company has not taken any term loan during the year and there are no unutilised terms loans at the beginning of the year and hence, reporting under clause 3(ix)(c) of the Order is not applicable.

(d) On an overall examination of the financial statements of the Company, funds raised on short-term basis have, prima facie, not been used during the year for long-term purposes by the Company.

(e) The Company did not have any subsidiary or associate or joint venture during the year and hence, reporting under clause (ix)(e) of the Order is not applicable.

(f) The Company did not have any subsidiary or associate or joint venture during the year and hence, reporting under clause (ix)(f) of the Order is not applicable.

(x) (a) The Company has not issued any of its securities (including debt instruments) during the year and hence reporting under clause (x)(a) of the Order is not applicable to the Company.

(b) During the year the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally) and hence reporting under clause (x)(b) of the Order is not applicable to the Company.

(xi) In respect to Fraud:

a) To the best of our knowledge, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

b) To the best of our knowledge, no report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and up to the date of this report.

c) As represented to us by the Management, there were no whistle-blower complaints received by the Company during the year and up to the date of this report.

(xii) Company is not a Nidhi Company. Accordingly, clause 3(xii) of the Order is not applicable to the Company.

(xiii) In our opinion, the Company is in compliance with Section 188 of the Act where applicable, for all transactions with the related parties and the details of the related party transactions have been disclosed in the financial statements as required by the applicable accounting standards, except for the following material transactions:

Nature of the related party relationship and the underlying transaction	Amount Involved Rs In Crores)	Remarks
Sale of HR Coils to M/s NMDC Limited, being a Company under common control of and significant influence by virtue of Majority of Common Directors	235.19	The amount of sale transactions of HR Coils during the year has not been specifically disclosed in accordance with Para 18(a) of Ind AS 24
Availment of Services for deputed employees by NMDC Limited, being a Company under common control of and significant influence by virtue of Majority of Common Directors	121.65	The amount of purchases of service during the year has not been specifically disclosed in accordance with Para 18(a) of Ind AS 24

The Company has not complied with Section 177 of the Act since no audit committee has been constituted in the absence of appointment of Independent Directors on the board of the Company by the Central Government.

(xiv) (a) In our opinion, on the basis of the review of Internal Audit Reports, scope and coverage in internal audit execution and the fact of non-submission of the internal audit reports and its compliance to the Board of Directors, periodically, in the absence of the Audit Committee, Company does not have internal audit system commensurate with the size and the nature of its business.

(b) We have considered the internal audit reports issued to the Company during the year and covering the period up to March 2025.

(xv) Company has not entered into any non-cash transactions with its directors or persons connected to its directors and hence, provisions of Section 192 of the Companies Act, 2013 are not applicable to the Company.

(xvi) a) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934 and shall be dealt with by the Central Statutory Auditors. Accordingly, clause 3(xvi)

(a), (b) and (c ) of the Order is not applicable to the Company.

(d) The Group does not have more than one Core Investment Company (CIC), as defined in the regulations made by the Reserve Bank of India, as part of the Group.

(xvii) The Company has incurred cash losses of Rs. 2368.68 Crores during the financial year covered by our audit and cash losses of Rs.1648.22 Crores in the 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 disclosed in note 2.29.xii to the Standalone financial statements, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information in the Standalone financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that the Company is not capable of meeting its liabilities existing at the date of the balance sheet as and when they fall due within a period of one year from the balance sheet date.

We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

(xx) The Company has incurred losses during the three immediately preceding financial years and hence, it is not required to spend any money under sub-section (5) of section 135 of the Act. Accordingly, clause 3(xx) of the Order is not applicable to the Company.

Annexure "C" to the Independent Auditors Report

(Referred to in paragraph 3 under Report on Other Legal and Regulatory Requirements section of our report of even date)

Particulars- Directions	Response of Company Auditors
1 Whether the Unit has system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the Integrity of the accounts along with the financial implications, if any, may be stated.	The company has a system in place to process all accounting transactions through the IT systems except for inventory valuation that is carried out manually with checks and balances in place. Based on audit procedures performed, there are no financial implications identified in respect of carrying value of inventory recognized in the books of accounts as the year end. Accordingly, there are no implications on integrity of accounts
2 Whether there is any restructuring of an existing loan or cases of waiver/write off debts/loans/ interest etc., made by a lender to the Unit due to the Units inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for Rs	There has been no restructuring of an existing loan or a case of waiver/write-off debts/loans/interest etc., in the case of the Company for the year under audit
3 Whether funds (Grants/Subsidy etc.) received/ receivable for specific schemes from Central/ State Government or agencies were properly accounted for/utilised as per its term and conditions? List the cases of deviations	The company has not received any grant or subsidy, etc., from the Central or State government or its agencies during the year under audit.