NMDC Steel Ltd Auditor Reports

(Issued consequent to provisional comments u/s 143(6)(b) of Companies Act, 2013 issued by O/o. CAG, vide Letter No. DGCA/Hyd/AC Desk/NMDCSteel/2023-24/1.04 dated 15 July 2024, and it supersedes our Independent Auditors Report dated 27 May 2024)

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 standalone balance sheet as at March 31, 2024, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as "Standalone Financial Statements").

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, ("Ind AS") and the other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024 and its loss, total comprehensive income, the changes in equity and its cash flows for the year ended on that date.

Basis of 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 Responsibilities 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 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 of the current period. 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. We have determined the matters described below to be the key audit matters to be communicated in our report.

S.No. Key Audit Matters	How our audit addressed the key audit matters
1 Property, Plant & Equipment (including capital work in progress)	Our audit procedures included the following:
Refer note: 2.1.1 and 2.2 to the standalone financial statements	• Obtained an understanding of the 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 AS16.
As at 31 March 2024, the Company has Property, Plant and Equipment (PPE) and Capital Work- in-progress (CWIP) with carrying values of Rs. 20,230.36 crores and Rs.1,214.89 crores respectively. Refer note 1.3 (iii) (a) & 1.3 (iii) (b) for the accounting policies adopted by the Company for recognition and measurement of PPE and CWIP. Determination of the carrying values and their respective depreciation and amortization amounts of PPE requires considerable management judgement. These include the decisions to capitalize or expense costs, the annual asset life review, the timeliness of the capitalization of assets and the use of managements assumptions and estimates for the determination and measurement of assets retired from active use, in accordance with the requirements of Ind AS 16 - Property, Plant and Equipment.	• Tested the design and operating effectiveness of the controls put in place by the management in relation to the above process.
The carrying value of CWIP also includes balances pertaining to packages and other assets which the management intends to complete the same with in next financial year.	• Tested the amounts capitalized during the year, on a sample basis, by inspecting supporting documents and evaluating whether assets capitalized satisfied the recognition criteria.
Considering the significance of the 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.	• Obtained the Asset Evaluation and Capitalization Report (AECR) prepared by the external technical expert appointed by management which covers extensive details and workings, with respect to Componentization of PPE and also includes the useful life of the various assets.
	• Reviewed the managements judgments concerning the determination of the appropriate useful life used in depreciation calculations. These judgments are based on technical assessments conducted by both internal
	management and external experts as necessary. Additionally, we evaluated the appropriateness of long-standing Capital Work in Progress (CWIP) balances related to packages and other assets.
	• Evaluated the appropriateness and adequacy of the related disclosures in the standalone financial statements in accordance with the applicable accounting standards.
	Based on the above procedures performed, we did not identify any significant exceptions in the managements assessment of PPE and Capital Work in Progress.
2 Inventory:	Our audit procedures included the following:
Refer note: 2.7 to the standalone financial statements	• Obtained an understanding of the managements process for physical verification of inventory - Raw materials and Byproducts.
The various categories of inventory comprise of Raw Material (RM), Work-in progress (WIP), Finished Goods (FG) and stores & spares. 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 team of external technical expert have carried out the physical verification of the said categories of inventory from 21.03.2024 to 04.04.2024 with the objective to quantify the actual physical stock available at various locations within the plant.	• We were present during the physical verification of raw material & by-products and observed the process performed by the external technical expert.
Based on the report provided by the external technical expert, the Company has given the necessary effect in the standalone financial statements with respect to deviation between the physical stock and book stock.	• Obtained the report provided by the external technical expert from the management and analysed the same with respect to the quantity deviations.
Considering the significance of the amounts involved in the context of the statement of profit and loss of the Company and the level of judgements, we consider this to be a key audit matter in the current year audit.	• Compared the quantity deviations of the Inventory physically verified with the deviation levels (Norms for shortages) as recommended by the company and found to be within the set levels as compared with the industry standards.
	Based on the above procedures performed, we did not identify any significant exceptions in the managements process of physical verification.
3 Restatement - Prior period errors:	Our audit procedures included the following:
Refer note: 2.1, 2.1.2, 2.14.2, 2.15.2, and 2.27 to the standalone financial statements and 2.32.12 to the notes to accounts	• Obtained an understanding of the nature of errors identified by management and the relevant financial implication for each error.
The Company has discovered the errors pertaining to prior periods which includes the effect of mistakes in applying accounting policies, recognition of elements of financial statements and misinterpretations of facts and the relevant errors discovered have been corrected in the current financial year. Considering the accounting policy adopted by the company and the DCCO, the management is of the view that effect of such errors discovered during the period is not material and accordingly restatement of the standalone financial statements is not required in this regard.	• Understanding the relevant accounting policy followed by the management and discussed the necessary measures taken by management for rectification of said errors.
Considering the significance of the matter and in the context of the relevant provisions of Ind AS, we consider this to be a key audit matter in the current year audit.	• Detailed discussion at various levels of the management to understand the implications on the treatment of the errors.
	• Performed necessary audit procedures to ensure the errors has been dealt accordingly.
	• Considering the materiality level and other facts and circumstances in the present case, the errors discovered are less than the set level of materiality.
	Based on the above procedures performed, we did not identify any significant exceptions in the managements explanation for the implications of the errors discovered during the year.
4 SEBI (LODR) regulations non-compliance:	Our audit procedures included the following:
The Company has not complied with the regulation number 17,18,19,20, and 21 of SEBI LODR regulations, 2015 relating to ideal composition of Board of Directors due to non-appointment of Independent Director, constitution of Audit Committee, Nomination and Remuneration Committee, Stakeholder Relationship committee and Risk Management Committee, respectively.	• Obtained the relevant information from the management with respect to the composition of Board and status of constitution of various committees.
Considering the non-compliances involved with SEBI LODR regulations as mentioned above, we consider this to be a key audit matter.	• Reviewed the minutes of the Board meeting wherein the noncompliance with the said regulations of the SEBI LODR have been taken note by the Board.
	Based on the above procedures performed, we did not identify any significant exceptions in the managements explanation relating to non- appointment of Independent Director.
5 Litigations, claims and contingencies:	Our audit procedures included the following:
Refer note: 2.31 to the standalone financial statements	In view of the significance of the matter applied the following audit procedures in this area, among others to obtain sufficient audit evidence:
The Company is subject to number of legal lawsuits, claims, governmental and/or regulatory inquiries, tax and commercial disputes arising from time to time in the ordinary course of business for which the final outcome cannot be easily predicted.	• We evaluated the design and tested the operating effectiveness of controls in place for the determination and recognition of provisions and disclosures for litigation and claims. We determined that we could rely on these controls for the purposes of our audit;
Most of the claims involve complex issues. The Company makes the assessment either to make provision or disclose a contingency on a case- to-case basis considering the underlying facts of each litigation. The Companys conclusions may result in incorrect disclosure or provision in the books of account considering the aforesaid assessment involving significant judgment to be exercised by the Company based on current developments. Further, unexpected adverse outcomes could also significantly impact the Companys reported results.	• Reviewing minutes of the meeting of those charged with governance and correspondence between the entity and its external legal counsel, where necessary.
This area is significant to our audit, since the accounting and disclosure for litigations, claims and contingencies is complex and judgmental.	• Obtained a list of ongoing litigations from the management. We selected a sample of significant litigations and evaluated the Companys assessment thereof by:
	i) making enquiries with the officers and the relevant section in-charge of the company;
	ii) verifying correspondence, orders and appeals in respect of open litigation; and
	• Evaluating the adequacy of disclosures given in Note 2.31 standalone financial statements
	Based on the above procedures performed, we did not identify any significant exceptions in the managements explanation relating to litigation, claims and contingencies.

Emphasis of Matter

We draw attention to:

1. Note No. 2.32.1 to the accompanying statement, as per the Scheme of Arrangement the staff and workmen of the Demerged company (NMDC Limited) are deemed to be the employee of the resulting company (NMDC Steel Limited). NMDC Limited maintains the said workmen and staff posted in the company on roll and raise an invoice for their salary and the same are treated as Operational and Maintenance expenses in the books of the company. This arrangement will be continued till any final decision is taken by the board of directors in this regard.

2. Note No. 2.34.10 to the accompanying statement, the company has valued the raw material, store & spares and loose tools at cost and work-inprogress, finished goods at lower of cost or Net Realisable Value. The adjustment of Rs.

548.07 crores have been made to write down the marketable work-in-progress and finished goods to net realisable value, the same has been recognised under changes in Inventories of work- in-progress and finished goods respectively.

3. Note No. 2.32.4 to the accompanying statement, the company with regard to the Companies (Indian Accounting Standard) Rules 2023 notified vide MCA Notification dated 31st March 2023, the accounting policies of the company were reviewed and changes have been made accordingly as directed in the said notification. Certain addition to the accounting policies with respect to "Capital Works in Progress" and "Contingent liabilities" have been incorporated which the company determined necessary for the purpose of fair reporting.

4. Note No. 2.32.5 (C) to the accompanying statement, the company has intimated to the Stock exchanges where the company is listed vide letter reference No.18(5)/2024 - Sectt. dated 20.01.2024 regarding suspension of Director (Commercial) of the Company on the basis of the directions from the Ministry of Steel, Government of India. In view of the management, the matter is not likely to have a material impact on the operations of the Company and/or these financial results.

Our opinion is not modified in respect of the above matters.

Information other than the standalone financial statements and auditors report thereon

The Companys Board of Directors is responsible for of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Report on Corporate governance and Business responsibility report and Shareholders information but does not include the 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 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 accounting principles generally accepted in India, including the Ind AS prescribed under section 133 of the Act read with Companies (Indian Accounting Standard) Rules, 2015, as amended. 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 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, 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 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 responsibilities 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 cai 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 scepticism 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 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 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 management.

• Conclude on the appropriateness of management; 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 th date of our auditors report. However, future event: 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 _i 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors 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.

Other Matters

1. The audit of standalone financial statements for the corresponding year ended March 31, 2023 included in the Statement was carried out and reported by N G Rao & Associates who have expressed unmodified opinion vide their audit report dated May 23, 2023. Our opinion on the Statement is not modified in respect of this matter.

2. The company has complied with the provision of The Employees Provident Funds and Miscellaneous Provisions Act, 1952, as applicable, for Nagarnar on pay scale employees through the trust maintained by NMDC Limited. However,

; where EPF is not deducted due to the wage limit

: criteria, the Act requires certain procedures to

be compiled with, which is not followed by the company in respect of Nagarnar Contractual employees.

Report on other legal and regulatory requirements

1) As required by the Companies (Auditors Report) Order, 2020 ("the Order"), issued by the Central

Government of India in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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 changes in equity and the cash flow statement 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 Indian accounting standards specified under section 133 of the Act

(e) The Company being a government company, the requirement of obtaining written representations from the directors in accordance with the provisions of Section 164 (2) of the Act is not applicable vide MCA Notification G.S.R 464 (E) dated 5^th June 2015.

(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" Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting;

(g) The Company being a government company, the other matters to be included in the Auditors Report in accordance with the requirements of section 197 (16) of the Act, as amended, in respect of whether the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act is not applicable;

(h) As per the Directions issued by the Comptroller and Auditor General of India in pursuance to Section 143(5) of the Act, on the basis of the information and explanations given to us and the records examined by us, we give in the "Annexure C" a statement on the matters specifically so directed.

(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, 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 2.31 to the standalone financial statements;

ii. The Company did 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, no funds (which were material either individually or in the aggregate) 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 or entity, including foreign entities ("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, no funds (which were material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entities ("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. The Company has not declared or paid any dividends during the year and accordingly reporting on the compliance with section 123 of the Companies Act, 2013 is not applicable for the year under consideration.

vi. Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March 31, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with. The company stores all financial information data on cloud storage, which is subscribed by NMDC Limited.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31, 2024.

Chartered Accountants

Firms Registration Number: 003572S

CA Hitesh Jain

Partner

Membership Number: 232064

UDIN: 24232064BKHKAO4774

Place: Hyderabad

Date: July 24, 2024

Annexure - A to the Independent Auditors Report

(Referred to in paragraph 1 under Report on other legal and regulatory requirements section of our report of even date to the Members of "M/s. NMDC Steel Limited")

(i)

(a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment.

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

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has a regular programme of physical verification of its Property, Plant and equipment and right to use assets, under which all the assets are physically verified in phased manner over a period of three years, which in our opinion is reasonable having regard to the size of the entity and the nature of its assets. In regard to this program certain assets were physically verified during the year and no material discrepancies were noticed on such verification.

(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 immovable properties (other than immovable properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the Company, except for the following which are not held in the name of the Company:

Description on of item on Property	Gross Carrying value (Rs in Cr)	Title Deed held in the name of	Whether promoter, director or their relative or employee	Period held - indicate range, where appropriate	Reasons for not being held in the name of the Company
ROU Assets (Lease Hold Land)	5.06	NMDC Ltd.	Company	2010, 2015 & 2022	Due to Demerger and as per Scheme of arrangement.
ROU Assets (Lease Hold Land)	32.12	NMDC Ltd.	Company	2001 & 2022	Due to Demerger and as per Scheme of arrangement.
ROU Assets (Lease Hold Land)	0.80	Govt. of Chhattisgarh	NA	2010	Application made to District Collector Bastar, to calculate the value from the date of allotment. However, allotment order dt. 17.05.2010 is in the name of NMDC Limited for Construction of CSR School.
Free hold land -Government	0.07	Petitioners	NA	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.
Free hold land - Private	81.45	NMDC Ltd.	NA	2001, 2007, 2010 & 2022	Due to Demerger and as per Scheme of arrangement.
Land		Govt. of Chhattisgarh	NA	2010	The area of land - 21.02 Hectares (Govt. land) has been taken over from District Industries Centre, Jagdalpur which is not included in the above land Schedule as on 31.03.2024. This is utilised for peripheral works near Nagarnar and has been alloted 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.
Land		Govt. of Chhattisgarh (Forest Dept.)	NA	2014, 2015 & 2018	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.

IIUIIIW W I V.I1W UUIII:i/UIIJ[>

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

(ii)

(a) The inventories (except for goods-in-transit, which have been received or to be received subsequent to the year-end) were physically verified at the year-end by the management. 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 by considering the date of commencement of commercial operations during the year. Discrepancies of 10% or more in the aggregate for each class of inventory (raw materials and by-products) were noticed on such physical verification of inventories when compared with books of accounts and the same has been properly dealt within the books of accounts by reducing the value of inventory to the extent of Rs. 141.13 crores.

(b) As disclosed in note 2.34.6 to the standalone financial statements, the Company has been sanctioned a working capital limit in excess of INR 5 crore by banks based on the security of current assets. The quarterly statements, in respect of the working capital limits have been filed by the Company with such banks and such statements are not in agreement with the books of account of the Company for the respective periods which were subject to audit/review, as summarized below:

Name of the Bank/ Financial Institution	Working Capital Limit sanctioned	Nature of Current Assets offered as Security	Month Ended	Amount disclosed as per Statement	Amount as per books of accounts	Differences	Remarks/ Reasons, If any
State Bank of India	2600	Inventory	September 2023	2153.33	2227.77	-74.44	As informed to us by the management, the information to the banks was provided based on provisional numbers.
State Bank of India	2600	Trade Receivables	September 2023	43.00	56.85	-13.85
State Bank of India	2600	Inventory	December 2023	3443.15	3637.45	-194.30
State Bank of India	2600	Trade Receivables	December 2023	40.34	50.56	-10.22
State Bank of India	2600	Inventory	March 2024	3724.18	3703.42	20.76
State Bank of India	2600	Trade Receivables	March 2024	8.11	37.01	-28.90

(iii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the company has not made any 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. Accordingly, reporting under clause 3 (iii) of the said Order is not applicable to the company.

(iv) According to the information and explanations given to us and on the basis of our examination of the records, the Company has not made any investments, given any loans, guarantees, or security which attracts compliance of section 185 and section 186 of Companies act. Accordingly, reporting under clause 3 (iv) of the Order is not applicable to the Company.

(v) According to the information and explanations given to us and on the basis of our examination of the records, the Company has not accepted any deposits or amounts which are deemed to be deposits form the public. Accordingly, the reporting under clause 3 (v) of the Order is not applicable to the company.

(vi) According to the information and expiations given to us and on the basis of our examination of the records, the maintenance of cost records under sub-section (1) of Section 148 of the Act for any of the products of the Company is not required for the current year. Accordingly, the reporting under clause 3 (vi) of the Order is not applicable to the Company.

(vii)

(a) According to the information and explanation given to us and on the basis of our examination of the records the Company, Undisputed statutory dues, including Goods and Service tax, Provident Fund, 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 in all cases during the year.

There were no undisputed amounts payable in respect of Goods and Service tax, Provident Fund, Income- tax, and other material statutory dues in arrears as at March 31, 2024 for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us, there are no dues of GST, provident fund,

employees State Insurance, Income- tax, Sales tax, Service tax, Duty of Customs, Value added tax, cess or other statutory dues which have not been deposited by the Company on accounts of disputes:

Name of Statue	Nature of dues	Period	Forum where Dispute is Pending	Amount (In ? Crore)
Income Tax Act,1961	Income Tax	AY 2023-24	-	1.60

(viii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not surrendered or disclosed any transactions as income during the year in the tax assessments under the Income-Tax Act, 1961. Accordingly, the reporting under clause 3 (viii) of the Order is not applicable to the Company.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, The Company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender as on reporting date.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not been declared a willful defaulter by any bank, financial institution, government or any government authority.

(c) According to the information and explanations given to us by the management, in our opinion, term loans availed by the company were, applied by the company during the year for the purposes for which the loans were obtained.

(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company, funds raised by the Company on short term basis have not been utilized for long term purposes.

(e) According to the information and explanations given to us and on the basis of our examination of the records of the company, the company does not have any subsidiary or associates or Joint Ventures. Accordingly, the reporting under clause 3 (ix) (e) of the Order is not applicable to the company.

(f) According to the information and explanations given to us and on the basis of our examination of the records of the

Company, the company does not have any subsidiary or associates or Joint Ventures. Accordingly, the reporting under clause 3

(ix) (f) of the Order is not applicable to the company.

(x) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not raised money by way of initial public offer or further public offer (including debt instruments). Accordingly, the reporting under clause 3

(x) (a) of the Order is not applicable to the company.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, The Company has not made any preferential allotment or private placement of shares of fully of partly convertible debentures during the year. Accordingly, the reporting under clause 3 (x) (b) of the Order is not applicable to the company.

(xi) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, considering the principles of materiality outlined in Standards on Auditing, we report that no fraud by the company or on the company has been noticed or reported during the course of the audit. Accordingly, the reporting under clause 3 (xi) (a) of the Order is not applicable to the company.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, no fraud by the company or on the company been noticed or reported during the course of the audit, Hence, no report under sub-section (12) of section 143 of the Company Act, 2013 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.

(c) According to the information and explanations given to us including the representations made to us by the management of the company, there are no whistle blower complaints received by the company. Accordingly, the reporting under Clause 3 (xi) (c) of the order is not applicable to the company.

(xii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company is not a Nidhi Company. Accordingly, the reporting under Clause 3 (xii) of the order is not applicable to the company.

(xiii) According to the information and explanations given to us and on the basis of our examination of the records of the company, all transactions entered into by the company with the related party is in compliance with Section 188 of the Act, where applicable, and the details of the related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards. Further, no Audit committee has been constituted due to non-appointment of Independent Director during the reporting period, therefore the compliance with Section 177 is not complied with.

(xiv) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, in our opinion the company has an adequate internal audit system commensurate with the size and nature of its business.

(b) We have considered the internal audit reports of the company issued till date for the period under audit.

(xv) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not entered in to any non-cash transactions with its directors or persons or persons connected to its directors and hence, provisions of section 192 of the Companies Act, 2013 are not applicable to the Company. Accordingly, the reporting under the clause 3 (xv) of the Order is not applicable to the company.

(xvi) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the reporting under clause 3 (xvi) (a) of the Order is not applicable to the company.

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the company has not conducted any non-banking financial or housing finance activities. Accordingly, the reporting under the clause 3(xvi) (b) of the order is not applicable to the company.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company is not a Core Investment Company (CIC) as defined in the regulations made by Reserve Bank of India. Accordingly, the reporting under the clause 3(xvi) (c) of the order is not applicable to the company.

(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the group does not have any Core Investment Company as defined in the regulations made by the Reserve Bank of India. Accordingly, the reporting under the clause 3 (xvi) (d) of the order is not applicable to the company.

(xvii) The company has incurred cash losses to the tune of Rs. 1,652.21 Crores in the current financial year and NIL in the immediately preceding financial year, as the DCCO of the company is 31^st August, 2023.

(xviii) There has been no resignation of the statutory auditors during the year, Accordingly, the reporting under the clause 3 (xviii) of the Order is not applicable to the company.

(xix) According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the Board of Directors and management plans, 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 company is not capable of meeting its liabilities existing

at the date of balance sheet as an d 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) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the provisions of the section 135 of Act towards Corporate Social Responsibility are not applicable to the company. Accordingly, the reporting under the clause 3 (xx) of the Order is not applicable to the company.

(xxi) The reporting under clause (xxi) is not applicable in respect of audit of standalone financial statements of the company, accordingly no comment has been included in respect of such clause under this report.

Annexure - B to the Independent Auditors Report

(Referred to in paragraph 2 (f) under Report on Other Legal and Regulatory Requirements section of our report of even date to the Members of "M/s. NMDC Steel Limited")

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

We have audited the internal financial controls with reference to the standalone financial statement of M/s. NMDC Steel Limited ("the Company") as of March 31, 2024 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 the Standalone Financial Statement 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 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 the Standalone Financial Statement 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 ICAI 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 system 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 standalone 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 system with reference to Standalone Financial Statements.

Meaning of Internal 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 authorizations 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 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 the 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 our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system with reference to the Standalone Financial Statements and such internal financial controls with reference to the Standalone Financial Statements were operating effectively as at March 31, 2024, 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 (ICAI).

For Sanjiv Shah & Associates

Chartered Accountants

Firms Registration Number: 003572S

CA Hitesh Jain

Partner

Membership Number: 232064

UDIN: 24232064BKHKAO4774

Place: Hyderabad

Date: July 24, 2024