s t c Auditors report

To Members of The State Trading Corporation of India Limited

Report on the Audit of the Standalone Financial Statements

We have audited the accompanying standalone financial statements of The State Trading Corporation of India Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2023, the Statement of Profit and Profit (including Other Comprehensive Income), the statement of changes in Equity and the Standalone Cash Flow Statement for the year then ended, notes to the Standalone financial statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "The Standalone Financial Statements").

Qualified Opinion

In our opinion and because of the various issues as mentioned in the Basis for Qualified Opinion paragraphs, the aforesaid Standalone Financial Statements except for the qualified opinion give the information required by the Companies Act 2013 ("the Act") in the manner so required and present 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 ) Rule 2015 as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2023 and its net profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

1. Non-Current Assets held for Sale

i. We draw your attention to Note No. 2(ii) regarding management decision to continue the company as non-operating company for the time being and to prepare the accounts from the financial year 2021-22 onwards as per non-going concern basis. Thus, there has been change in the significant accounting policies of the Company and the presentation of financial statements. As per Note No. 3.1 (e) in the Notes to accounts it is further stated that the financial statements for the year 2022-23 have been prepared on realization basis (non- going concern assumption) and the non-current assets have been classified as held for sale. Therefore, all the assets held for sale have been carried at their estimated realizable values. However, all the non-current assets held for sale i.e. Property, Plant and Equipment in absence of any report for realizable value have been stated at their respective historical values/carrying values as per books of accounts as on 31.03.2023 and not on realization basis. This is non-compliance of the accounting policy No. 3.1 (e) of the Company and we are unable to comment upon the impact of the same on the financial statements.

Further there is also non-compliance of requirements of IND AS-105.

As per IND AS-105, "Non -Current Assets held for Sale and Discontinued Operations", it requires that asset that meet the criteria to be held for sale should be measured at lower of carrying amount and fair value less costs to sell and to be separately presented in the Balance Sheet and also result of discontinued operations to be presented separately in the Statement of Profit and Profit.

However, no fair value estimation of the non-current assets held for sale have been carried out as on 31st March,2023 but is said to be under process. Thus, there is also non-compliance of IND AS 105 applicable to the Company. ii. Refer to Note No.4(a) of Standalone Financial Statements, non-availability of title deeds in the name of the company in respect of following properties namely:

a) Leasehold Building

i. Leasehold land at Jawahar Vyapar Bhawan valued at Rs. 55,929 lacs

ii. Leasehold land at Housing Colony at Aurobindo Marg valued at Rs. 12,394 lacs

iii. Plot at Mallet Bunder, Mumbai Port Trust valued at Rs. 11.67 lacs

b) Freehold Building

i. 8 Residential Flats at Asian Games Village Complex, allotted by DDA amounting to Rs. 2720 lacs

ii. 7 apartments in different locations of Mumbai amounting to Rs. 1918 lacs Further, lease period for plot at Mallet Bunder, Mumbai Port Trust has already expired and the land has been handed over to Mumbai Port Trust. Surrender certificate has been executed on 12.11.2021. But this still continues to be shown as non-current assets held for sale. Thus, non- current assets held for sale has been overstated by Rs. 1167 lacs. It will also have consequential impact on the Statement of Profit and Profit account resulting into overstatement of profit by Rs. 11.67 lacs.

Further the farm tanks installed at Mallet Bunder amounting to Rs. 14.84 lacs have also been handed over on as is where is basis. The company has not raised any debit note for the same and thus non-current assets are being overstated by Rs. 14.84 lacs.

Further, company has not amortised the value of the leasehold properties according to the IND AS 116 for the period expired till 31.03.2023 resulting into overstatement of non-current assets held for sale and consequential impact on profit of the company, the amount whereof could not be quanti ed in absence of complete data from the Company. iii. Refer Note No. 4, for non-adjustment of value/area in Fixed Assets Register against areas acquired by Delhi Metro Rail Corporation (DMRC) for construction of Metro Station & by L&DO for widening of the Road during Asian Games, as well as the fiats/area of land sold by the company to The Handicrafts and Handloom Exports Corporation of India Limited (HHEC) for its Housing colony. Management is in correspondence with DMRC and concerned departments.

This has resulted into overstatement of non-current assets held for sale and consequential impact on profit of the company, the amount whereof could not be quanti ed in absence of complete data from the Company.

2. Trade Receivables

All trade receivables amounting to 1,69,673.80 lacs as per Note No. 9 have been outstanding for more than 3 years. The Company has made provision for bad and doubtful debts amounting to Rs. 62,727.62 lacs and another sum of Rs. 68,027.84 lacs have been shown as "Having Significant increase in credit risk" since the same is under litigation. As per Note No.9, it is explained that no provision has been made for the same since the relevant creditors will be paid only after recovery of these trade receivables, though in most of the cases agreements are not tripartite.

Further there has been no recovery during the Financial Year 2022-23 and there is no major update of legal cases which are pending at various forums. Thus trade receivable do not seems to be stated at realisable value less cost to be incurred to recover these trade receivables. There is also no balance confirmation available for these trade receivables as on 31.03.2023 and hence we are unable to comment upon the genuineness and effect of the same on the financial statements, if any.

We are of the view that all trade receivables amounting to 1,69,673.80 lacs are considered doubtful of recovery resulting into short provision for doubtful debts amounting to Rs. 1,06,946.18 lacs. Thus the provision for bad and doubtful debts has been understated by Rs. 1,06,946.18 lacs and consequential impact on the statement of profit and profit account resulting into overstatement of profit by Rs. 1,06,946.18 lacs.

Further in case of M/s Rajat Pharmaceuticals Ltd (RPL), under note no.39, who drew bills of exchange on STC which were accepted upon receipt of overseas buyers pre-acceptance to STCs bills of exchange. However, the foreign buyers defaulted in making payments against the export bills and have gone into liquidation. A sum of Rs. 527.86 crores has been admitted by the liquidator of one of the foreign buyers i.e. Loben Trading Co. Pte. Ltd, Singapore. A Decree of Rs. 62.47 crores approx. has been passed by Honble Bombay High Court in favour of STC against the dues from another foreign buyer i.e Sweetland Trading Pte Ltd., Singapore. As of current date, RPL has gone into liquidation and offcial liquidator is appointed by Honble High Court of Bombay. The matter is also under investigation by CBI. Banks & Financial institutions have filed legal suit against RPL before DRT making STC also a party to the case claiming Rs. 476.47 Crore. Also refer to Note No. 39, for matters other than RPL, as all these matters are sub-judice and/or under investigation of CBI and we are unable to comment upon the genuineness and effect of the same on the Financial Statements.

3. Borrowings

i. Refer to Note No. 20 , the view of the default by the company in paying due to interest amount to the banks, STC was declared NPA. The lender banks have initiated DRT proceedings against the company. The memorandum of the OTS (MOTS) proposal with lender banks is still in progress and is in line with the minutes of the high-level meeting held in 29.08.2019 and the further clarificatory letter dated 13.10.2020 of the Administrative Ministry. The liability towards banks is proposed to be settled by the way of transfer of title of identified property worth Rs. 300 crore on "as is where is basis" as a full and final settlement.

The lead bank (Canara Bank) has given two options to the company: -

1. Execution of equitable mortgage in favour of the lead bank at Delhi so that lenders can legally proceed for sale of properties mentioned in the Settlement Agreement with the authority to sell and realise the sale amount.

2. As joint suit is pending before the DRT-II, Delhi, the lenders shall proceed before DRT in execution of the consent decree for the accepted OTS amount of Rs. 300 cr.

The decision making is pending with STC to convey their acceptance of suitable option for moving the MOTS ahead subject to seeking opinion from senior Government advocate. Pending settlement of OTS, the company has not provided any interest further in its financial statements since 01.04.2021.

ii. Considering the fact that correspondence has been made by Canara Bank and STC in respect of the MOTS of Borrowings, the Borrowings have been crystallized at Rs. 30,000 lacs on as is where is basis. However, contrary to this, borrowings have been reflected at Rs. 80,623.24 lacs as against 30,000 lacs, thereby overstating the borrowings to the extent of Rs. 50,623.24 lacs. The management is of the opinion that the matter is still in discussion stage. This is also non-compliance of IND AS -109 as well as IND AS -10 (regarding events occurring after Balance Sheet date) by not taking into consideration the accounting effects of the events occurring after the balance sheet date regarding crystallization of bank loan amount at Rs. 30,000 lacs.

4. Foreign Currency Receivables and Payables

Currently, as per books of accounts, USD 3,149.35 lacs and Euros 20.90 lacs is receivable from its foreign buyers and USD 1665.41 lacs and Pound 0.04 lacs is payable to its foreign suppliers. In nutshell, there are foreign buyers and creditors standing in the financials of STC which have not been revalued in the FY 2022-23, the potential impact of which is huge. Thus, the Company has not complied with Ind AS 21 (regarding Effects of Changes in Foreign Exchange) by not revaluing the carrying amounts, in most cases, of foreign currency receivables and payables which are under litigation/disputed. Therefore, we are unable to ascertain the potential impact on the financial statements, if any.

5. Deferred tax Assets (Net)

Refer Note No. 12 , the Company has MAT credit of Rs. 1367.36 lacs . Reversal of MAT credit was also raised by the CAG auditors for the FY 2020-21. But still the MAT credit has not been reversed and this has resulted into overstatement of profit by 1367.36 lacs and overstatement of Current assets by Rs. 1367.36 lacs. The company is hopeful of profits in future years so reversal of MAT credit is not done.

6. Other Current Assets

i. Refer Note No. 14 –"Other Current Assets for non-provisioning in respect of Duties and taxes recoverable, CST (coal) amounting to Rs. 6.89 lacs which is non recoverable and still not written off. ii. Refer Note No. 11- Other Financial Assets -Claims Recoverable for non-provisioning in respect of Claims Recoverable o/s since last many financial years amounting to 1951.35 lacs where no present status could be ascertained by the management of the Company and still not written off.

This is non-compliance of IND AS -36 as no provision has been made for impaired assets.

All these current assets are being reflected at their carrying amounts instead of on realization values.

This has resulted into overstatement of Current assets by Rs. 1951.35 lacs and overstatement of profit by Rs. 1951.35 lacs.

7. Provisions

Refer Note No. 38, for non-provision of a demand of Rs. 4,743 lacs out of total demand received from Land and Development Office - New Delhi amounting to Rs. 13,283 lacs (for the period March, 2004 to July, 2018) which has resulted in overstatement of profit by Rs. 4,743 lacs and understatement of liabilities. However, it has been shown as contingent liability. Also, company has not provided for interest accruing on the said demand amount (to be calculated at the rate of 10%) approx. The matter is under correspondence with L&DO office and no provision is made for the year 2022-23 in the accounts.

8. Trade Payables

All the trade payables amounting to Rs. 1,11,708.55 lacs are without any balance confirmation and are outstanding for more than 3 financial years.

No amount is payable to these parties as these are suppliers who have entered into legal agreement with STC wherein no amount is payable to them until and unless the amount is recovered from the foreign buyer. Thus, the management has not accorded any treatment to these trade payables and to that extent, liabilities are overstated.

9. Statutory Dues

GST

The GST input receivable and payable balances are not reconciled by the Company as on March 31,2023. GST input Rs. 78.81 lacs - seems non claimable but no provision has been made. Profit of the company is overstated by the same amount.

Tax Deducted at Source

TDS deducted will be reconciled with form 26AS at the time of submitting Income Tax return, as on the date of report the complete information is not available.

No provision has been made for TDS default of Rs. 8.89 lacs pending, submission of correction statements.

10. Other Observations

Refer Note No. 24, customer at credit includes amount payable to U.P. Government amounting to Rs. 603 lacs. As informed by the management, Branch has made various other claims on U.P Government and accordingly dues of Rs. 3911 lacs is recoverable from U.P. Government for which debit note dated March 10, 2014 was raised. However, the said claim was not recognized in the standalone financial statements of the branch till date, as its ultimate collection was not certain. In absence of information on acceptability of the said claim by the UP Government, we are unable to ascertain its possible impact, if any, on the standalone financial statements of the Company.

It seems that the financial statements have not been prepared on realization basis as mentioned in the accounting policies. All non-current assets held for Sale and other current assets have been stated at their carrying amounts as appearing in the books of accounts without making any exercise by the management to determine the realizable value of each current asset.

The impact of the following observations is not ascertainable:-i. Refer to Cases and Disputes and matters under Litigation and amounts covered under Contingent Assets and Contingent Liabilities, since majority of the matters are subjudice, it is not possible to quantify the liabilities and the interest obligation if any on these cases. ii. Refer to Claims recoverable from HHEC, co-owner to the property at Jawahar Vyapar Bhawan, who have not paid their share of expenses to STC since last many years amounting to Rs. 970.92 lacs as on March 31,2023. The matter is said to be under correspondence with HHEC.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 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 we have obtained is sufficient and appropriate to provide a basis for opinion.

Emphasis of Matters:

a. Refer Note No. 38(ii), Contingent Liabilities which includes an amount of Rs.1.33 Crores in respect of pending sales tax liability. The Company has not complied in carrying out corrective actions as suggested by Government Audit Party (GAP) for F.Y. 2014-15 in the accounts as on 31st March, 2016 and for F.Y. 2015-16 in the accounts as on 31st March, 2017 amounting to Rs. 0.19 Crores and Rs. 1.11 Crores respectively.

b. Refers to Note No.38, in respect of litigation matters, their present status and provisioning, if any, required and on-going investigations into the alleged irregularities; further, the Companys past operations have exposed it to the risk of extensive litigation and contractual claims from third parties with increased litigation costs not fully provided for. Due to the range of potential outcomes, voluntary retirement of employees dealing with these cases and the significant uncertainty around the resolution of various claims, the amount of ultimate liabilities, if any, to be recorded in the statements as provision is not ascertainable.

Our opinion is qualified in respect of these above matters.

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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters described in the basis for qualified opinion section, we have determined the matters described below to be the Key audit Matters to be communicated in our report.

S.No.	Particulars	Description	Procedures applied for audit
1.	Evaluation of uncertain tax positions and contingent liabilities	The company has uncertain material tax positions and contingent liabilities including matters under dispute which involves significant judgment to determine the possible outcomes of these disputes.	In response to this key matter, our audit included, amongst other principal audit procedures:
			- We evaluated managements judgment of tax risks, estimates of tax exposures and contingencies by testing the design implementation and operating effectiveness of the related controls.
			- We obtained details of completed tax assessments and demands for the year ended March 31,2023 from management.
			- We involved in the detailed discussions with the management for underlying assumptions in estimating the tax provisions and the possible outcome of the disputes.
			- Our team also considered legal precedence and other rulings in evaluating managements position on these uncertain tax positions as at March 31,2023 to evaluate whether any change was required to managements position on these uncertainties.
2.	IT systems and controls over Financial Reporting	We identified IT systems and controls over financial reporting as a key audit matter for the Company because its financial accounting and reporting systems are fundamentally reliant on IT systems and IT controls to record it in books.Automated accounting procedures and IT environment controls, which include IT governance, IT general controls over program development and changes, access to program and data and IT operations, IT application controls and interfaces between IT applications are required to be designed and to operate effectively to ensure accurate financial reporting.	In response to this key matter, our audit included, amongst other principal audit procedures:
			• Assessed the complexity of the IT environment by through discussion with the head of IT and internal audit and identified IT applications that are relevant to our audit.
			• Assessed the design and evaluation of the operating effectiveness of IT general controls over program development and changes, access to program and data and IT operations by engaging IT specialists.
			• Performed inquiry procedures at the Company in respect of the overall security architecture and any key threats addressed by the Company in the current year.
			• Assessed the design and evaluation of the operating effectiveness of IT application controls in the key processes impacting financial reporting of the Company by engaging IT specialists.
			• Assessed the operating effectiveness of controls relating to data transmission through the different IT systems to the financial reporting systems.

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 Management Discussion and Analysis, Annual Report on CSR activities, Report on Corporate Governance, Secretarial Auditors Report Information, but does not include the standalone financial statements and our auditors report thereon. The Management Discussion and Analysis, Annual Report on CSR activities, Report on Corporate Governance, Secretarial Auditors Report is expected to be made available to us after the date of this auditors report. 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 identified above when it becomes available to us 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. When we read such other information as and when made available to us and if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

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

The Companys Board of Directors are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("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, (changes in equity) and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) 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 implementation and maintenance of 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. Management has prepared these financial statements on non-going concern basis as per decision of the Board of Directors.

Board of Directors are also responsible for overseeing the Companys financial reporting process. However it is to point out that there are no Full Time Working Directors in the Company as on 31st March, 2023 and the Company is functioning only with the assistance of Independent Directors and Director (Finance) on Additional Charge.

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 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 financial statements.

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

• Identified and assessed the risks of material misstatement of the 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.

• Obtained an understanding of internal financial controls 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 system in place and the operating effectiveness of such controls.

• Evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Concluded on the appropriateness of managements use of the non-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 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.

• Evaluated the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. However the financial statements of the Company have been prepared on non-going concern basis as decided by the Board of Directors.

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 de ciencies 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 and importance in the audit of the 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.

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 sub-section (11) of section 143 of the Companies Act, 2013, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanation given to us, we give in the Annexure "A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

i. We have sought and obtained all the information and explanations, except for the matters referred in "Basis for Qualified Opinion"- Impact of which is partly non-ascertainable, which to the best of our knowledge and belief were necessary for the purposes of our audit and if not, the details thereof and the effect of such information on the financial statements.

ii. In our opinion, proper books of account as required by law have been kept by the Company, except for the matters referred in "Basis for Qualified Opinion", so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the Agra branch which have been prepared in Delhi only.

iii. The Balance Sheet, the Statement of Profit and Profit including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account. We have not visited any branch offices of STC as we were informed that all Branches are closed and no activities are carried out from these Branches. The audit was conducted remotely by us from Corporate Office of STC at New Delhi.

iv. In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards, except for the para (b) of Basis for Qualified opinion, specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

v. The going concern matter described under "Material uncertainty in relation to Going Concern" paragraph above, in our opinion, may have an adverse effect on the functioning of the company.

vi. Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of sub-section (2) of Section 164 of the Act are not applicable to the Company, being a Government Company;

vii. 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 a qualified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

viii. Pursuant to the Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 197 of the Companies Act, 2013, are not applicable to the Company, being a Government Company; and ix. 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:

a. The Company has not been able to disclose the impact of pending litigations on its financial position in its financial statements, refer note 38 & 39 to the financial statements.

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

c. During the year, the Company has made no transfer to Investor Education and Protection Fund due to heavy accumulated profits. Therefore , question of delay in transferring amounts, required to be transferred, by the Company does not arise.

d. i) The respective Management of the Company , whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, other than as disclosed in notes to accounts, no funds (which are 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 entity (‘Intermediaries) with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

ii) The respective Management of the Company, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (‘Funding Parties) with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(iii) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances performed by us, whose financial statements have been audited under the Act, nothing has come to our attention 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. e. There has been no dividend declared during the year.

3. We are enclosing our report in terms of Section 143 (5) of the Act, on the directions and sub-directions issued by the Comptroller and Auditor General of India, on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, in Annexure- C.

For TIWARI & ASSOCIATES

CHARTERED ACCOUNTANTS

FRN No. 002870N

Sd/-

(SANDEEP SANDILL)

Partner

Membership No.085747

UDIN: 23085747BGZERD5063

Place: New Delhi

Date: 23.05.2023

ANNEXURE ‘A TO INDEPENDENT AUDITORS REPORT

Referred to Paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of Independent Auditors Report of even date to the members of The State Trading Corporation of India Limited on the Standalone Financial Statements for the year ended 31st March 2023.

1. Fixed Assets

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (Assets held for Disposal). However, the records are in the process of being updated for the financial year under audit. Fixed Assets register is under finalization.

b) The company has a Programme of conducting physical verification of items of fixed assets in a phased manner. The physical verification report of all branches have been received however Physical Verification report of Corporate office (New Delhi) is not provided by 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 title deeds of immovable properties are held in the name of the Company except for cases as below :

Location	Description	Held in the name of	Audit observations	Gross Block/ Revalued amount (Rs in Crore)	Net Block (in crore)
New Delhi	Lease hold Land at Tolstoy Marg, Jawahar Vayapar Bhawan, New Delhi. Area: 2.599 acres	President of India	Execution of lease deed is pending since 1975. Further, out of total area, physical position of land measuring 714.60 sq mtrs is not now with STC (i.e. 388.91 sq mtrs. acquired by DMRC for construction of Metro and 325.69 sq mtrs. by NDMC for widening of the Road during Asian Game) and value the same has not been uploaded in FAR / FAS. Measurement for area under physical position is yet to be done.	581.88	559.29
New Delhi	STC / MMTC Housing Colony, Aurobindo Marg, New Delhi Area: 16.17 acres	President of India	Execution of lease deed (for 50% share of total land measuring 32.33 acre) allotted for housing colony is still pending. Further, records / details for area given by STC from its own share to HHEC for its housing colony is to be adjusted in the FAR / FAS. Measurement for area under physical position of the company is yet to be done.	125.57	123.94
New Delhi	Flats at AGVC, Khel Gaon Marg, New Delhi. Area: 8 fiats measuring 14424 sq fts	President of India	Execution of lease / conveyance deed is still pending.	27.45	27.20
Mumbai	7 nos. of Flats (refer foot note of note no.4 Area: 7997 sq fts	President of India	Execution of lease / conveyance deed is still pending.	29.35	19.18
Mumbai	Mallet Bunder Area: 11586.96 sq meters approx	President of India	Lease deed expired since 2016 and the company has surrendered the plot , certificate being executed on 12.11.2021	36.72	11.67

All the aforesaid properties have been held in the name of the promoter i.e. President of India. No valid reason could be obtained by the management as to why title deed has not been executed in the name of STC. d) According to the Information and explanations given to us and on the basis of the examination of the record of the Company, the Company has not revalued its Property, Plant and Equipment (now classified as "Assets held for disposal" or intangible assets or both) during the year.

e) Original title deeds of 1 Ahmedabad, 18 Mumbai fiats are not available with the company, however photocopies and true copies are available with the company.

f) According to the Information and explanation given to us and on the basis of the examination of the record of the Company, no proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

2. Inventories and Working Capital Limits

Since the Company does not have any tradeable inventory, this item is not applicable.

However, the Company has stock of stationery/Stores and spares which does not have any significant value and has been physically verified by the Company.

3. According to information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013 (‘the Act). Accordingly, clauses (iii) (a), (b) & (c) of paragraph 3 of the Order are not applicable to the Company.

4. According to the information and explanations given to us, the Company has not given any loans, or made any investments or provided any guarantees or security to the parties covered under sections 185 and 186 of the Act. Accordingly, paragraph 3 (iv) of the Order is not applicable to the Company.

5. The Company has not accepted any deposits, in terms of the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rules framed there under. Thus clause (V) of Paragraph 3 of the order is not applicable to the Company.

6. We have been explained that the Central Government has not prescribed the maintenance of cost records for the services of the Company under Companies (Cost Records and Audit) Rules, 2014, prescribed by the Central Government under Section 148 of the Companies Act, 2013. Accordingly, this clause of the order is not applicable to the Company.

7. Statutory Dues:

a) According to the information and explanations given to us and on the basis of our examination of the books of account, the company is regular in depositing undisputed statutory dues, including provident fund, employees state insurance, income-tax, sales-tax, goods and service tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues which may be applicable to the Company. According to information and explanation given to us there are no outstanding undisputed statutory dues as referred above as at the last day of the financial year under audit for a period of more than six months from the date they became payable. b) According to the information and explanations given to us and as per books of account, there are dues outstanding of Sales Tax, Wealth Tax, Custom Duty Excise Duty, Value Added Tax, Service Tax, Goods & Service Tax and Cess which have not been deposited as on 31st March 2023 by the company, on account of any dispute are as under (refer Note no.38(ii) in financial statements)

Name of Statue	Nature of Dues	Period to which Amount relates	Forum where dispute is pending	Amount (in crores)
Customs Act	Custom Duty	2011-12	CESTAT, Ahmedabad	1.69
Customs Act	Customs	-	Commissioner (Appeals), Mumbai	0.06
Custom Act	Custom Duty	2017-18	CESTAT, Chennai	4.16
Sales Tax	Sales Tax	1986-87	Kerala High Court	0.50
Orissa Sales Tax Act	Sales tax	1988-89	Commissioner (Appeals), Orissa	0.01
Bihar Sales Tax Act	Sales tax	1989-90	Sales Tax Appellate Tribunal	0.01
Central Sales Tax Act	CST, WB	2003-04	Joint Commissioner, Sales Tax	0.23
West Bengal Vat Act /	WBVAT	2011-12	Joint Commissioner, Commercial Tax	0.02
Central Sales Tax Act Central Sales Tax Act	CST, WB Central Sales Tax Act	1993-94	Honble Assam High Court	0.02
		1994-95
		1995-96
Maharashtra Sales Tax Act	Sales Tax	1992-93	Maharashtra Sales Tax Tribunal	0.74
		1996-97
Maharashtra Sales Tax Act	BST, CST & MVAT	1993-94	Joint Commissioner, Sales Tax	47.69
		2000-01
		2003-04
		2006-07
Maharashtra Sales Tax Act	BST, CST & MVAT	2004-05	Joint Commissioner, Sales Tax	390.36
		2009-10
		2011-12
Maharashtra Sales Tax Act	TDS on Work Contract	2012-13	Sales Tax Appellate Tribunal,	0.21
			Mumbai
TNGST/AST/CST	Sales Tax	1974-75, 1975- 76, 1985-86 to 1987-88, 1989- 90 & 1991-92	Honble Madras High Court	0.83
Service Tax
Finance Act, 1994	Service Tax	2005-06 - 2006- 07	CESTAT (Stay Granted)	7.28
Finance Act, 1994	Service Tax	01.04.2012- 31.03.2015	CESTAT	4.37
Finance Act, 1994	Service Tax	2007-08 - 2016-17	CESTAT	6.02
Finance Act, 1994	Service Tax	01.04.2011- 31.03.2012	Service Tax Appeallate Tribunal	0.13
Finance Act, 1994	Service Tax	01.10.2004- 31.03.2011	Supreme Court, Delhi	16.53
Finance Act, 1994	Service Tax	01.04.2015- 30.06.2017	Joint Commissioner of CGST & Central Excise Mumbai	1.24
Certificate Dues Liability
BPDRA	Certificate Dues Liability	1971-72,1976-77 to 1978-79	Concerned Department	0.0633

8. The Company does not have any transactions to be recorded in the books of account that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

9. In our opinion and according to the information and explanations given to us, the company has defaulted in repayments of loans/borrowings to Bank (refer note no.20 & Basis of qualified opinion section of our audit report). However, the company has outstanding loans/ borrowing from financial institutions but not from Government or dues to debenture holders.

Lender-wise details of sum defaulted by company & period of default is as follows-

Name of Banks	Amount of Instalments and interest overdue	Period of Default as on 31.03.2023 (in days)
Syndicate Bank	280.71	1825 Days
Indian Overseas Bank	188.02	1825 Days
Union Bank of India	140.72	1856 Days
Indian Bank	94.81	1856 Days
Exim Bank	74.43	2372 Days
Bank of Baroda	26.27	1744 Days
UBI (Kumily)	1.28	1856 Days
TOTAL	806.24

10. Based upon the audit procedures performed and the information and explanations given by the management, a) the company has not raised moneys by way of initial public offer or further public offer including debt instruments and term Loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

b) According to the information and explanations given to us, and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year under review in terms of provisions of section 42 and Section 62 of the Companies Act,2013.

11. i. According to the information and explanations given to us and as represented by the management and based on our examination of the books and records of the Company and in accordance with generally accepted auditing practices in India, frauds by the ex-employees of the Company have been noticed which are in litigation since last few years. We are informed that there are 11 cases filed since last few years at various forums by CBI and other bodies involving fraud perpetuated by Staff of STC on others. No amount has been quanti ed by the Management as these cases are said to be subjudice.

ii. 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 upto the date of this report. iii. No whistle blower complaints have been noticed to be received by the Company during the year.

12. As per notification no. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 is not applicable to the Government Companies. Accordingly, paragraph 3 (xi) of the Order is not applicable to the Company.

13. The Company is not a Nidhi Company and therefore paragraph 3(xii) of the Order related to such Companies is not applicable to the Company.

14. In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standard. (Refer Note No.47)

15. As per records of the company and according to information and explanations given to us by the management, the company has not entered into any non-cash transactions with directors or persons connected with them & hence the above clause is not applicable.

16. The company is not required to be registered under section 45-IA of Reserve Bank of India Act,1934.

17. The Company has not incurred cash loss during the financial year covered by our audit but there were cash loss during the immediately preceding financial year. 18. Statutory Auditors of the Company are appointed by C&AG of India every year.

19. According to our view, Since the company has ceased its business operations and prepared the financial statements on a non-going concern basis, material uncertainty exists as on the date of audit report. There are a number of legal cases regarding trade receivables and the borrowings from bank amounting to Rs. 80,623 lacs which are NPAs since long indicating that the Company is not capable of meeting its liabilities existing at the date of Balance Sheet as and when they fall due within a period of one year from the Balance Sheet date.

20. Since the Company has huge accumulated losses and is not a going concern, it is not required to spend any amount on CSR and the question of any amount being transferred to Corporate Social Responsibility (CSR) does not arise. Therefore, reporting under the said clause (xx) of the order is not applicable to the Company.

For TIWARI & ASSOCIATES

CHARTERED ACCOUNTANTS

FRN No. 002870N

Sd/-

(SANDEEP SANDILL)

Partner

Membership No.085747

UDIN: 23085747BGZERD5063

Place: New Delhi

Date: 23.05.2023

"Annexure B" to INDEPENDENT AUDITORS REPORT

Referred to Clause (vii) of Paragraph 2 under the heading of "Report on Other Legal and Regulatory Requirements" of Independent Auditors Report of even date to the members of The State Trading Corporation of India Limited on the Standalone Financial Statements for the year ended 31st March 2023.

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

We have audited the internal financial controls over financial reporting of The State Trading Corporation of India Limited ("the Company") as of March 31, 2023 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 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 over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting 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 over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, 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 system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of un-authorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting (IFCFR)

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

Basis for Qualified Opinion

a) Company is maintaining "Performance Management System", Payroll Software and "Leave Management System" which are not interfaced with each other as well as the accounting software. As a result of above, Manual Accounting entries are being made on periodical basis in the Tally ERP, Accounting software used by company.

b) Lack of effective scrutiny of accounting ledgers as far as o/s liabilities/Claims recoverable/Security Deposits is seen as they are not updated .

c) Manner of maintenance of Fixed Assets Schedule & register need to be strengthened.

d) Lack of proper contract management is noticed. Irrespective of completion of contracts the EMD/Security deposits are still being withheld in the books by the company.

e) Lack of control over the renewal of Rent/lease Agreements on timely basis. There are numerous of agreements which have not been renewed over a long period.

f) Ine ective implementation of accounting policy in balance confirmation of trade receivable & vendor balance, is noticed. The balances outstanding in the trade receivable account cannot be reconciled in customers books as balance confirmations are not obtained and available for these customers.

g) As there are no proper Full Time working Directors in the Company, and there is also lack of Senior management personnel in the Company, all decisions and matters requiring immediate attention are kept on hold and there is ine ective management control in the Company.

A ‘material weakness is a de ciency, or a combination of de ciencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Companys annual or interim financial statements will not be prevented or detected on a timely basis.

Qualified Opinion

In our opinion, the Company has, except for effects of the material weaknesses described above on achievement objectives of the control criteria, in all material respects, an adequate internal financial controls system over financial reporting and such internal financials controls over financial reporting were operating effectively as at 31st March, 2023, 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. We have, to the extent possible, considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2023 standalone financial statements of the Company, and these material weaknesses are not likely to affect our opinion on the standalone financial statements of the Company.

For TIWARI & ASSOCIATES

CHARTERED ACCOUNTANTS

FRN No. 002870N

Sd/-

(SANDEEP SANDILL)

Partner

Membership No.085747

UDIN: 23085747BGZERD5063

Place: New Delhi

Date: 23.05.2023

Annexure- ‘C to the INDEPENDENT AUDITORS REPORT

Referred to Paragraph 3 under the heading of "Report on Other Legal and Regulatory Requirements" of Independent Auditors Report of even date to the members of The State Trading Corporation of India Limited on the Standalone Financial Statements for the year ended 31st March 2023.

1.	Whether the company has system in place to process all the accounting transactions through IT System? If yes, the processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.	Company is maintaining "Performance Management System", Payroll Software and "Leave Management System" which are not interfaced with each other as well as the accounting software. As a result of above, Manual Accounting entries are being made on periodical basis in the Tally ERP Accounting software.
2.	Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc., made by the lender to the company due to companys inability to repay the loan? If yes, the financial impact may be stated. Whether such cases are properly accounted for? (In case, lender is a Government company, then this direction is also applicable for statutory auditor of lender company).	The company is in the process of "One time settlement" (OTS) with the Lender Banks for the dues of banks for which Company is in continuing default.
		The lender banks have initiated DRT proceedings against the company. The memorandum of the OTS (MOTS) proposal with lender banks is still in progress and is in line with the minutes of the high-level meeting held in 29.08.2019 and the further clarificatory letter dated 13.10.2020 of Ministry. The liability towards banks is proposed to be settled by the way of transfer of title of identified property worth Rs. 300 crore on "as is where is basis" as a full and final settlement.
		However, as per the recent correspondence between Canara Bank and STC dated 22.04.2023, the lender bank has given two options to the latter:-
		1. Execution of equitable mortgage in favour of the lead bank at Delhi so that lenders can legally proceed for sale of properties mentioned in the Settlement Agreement with the authority to sell and realise the sale amount.
		2. As joint suit is pending before the DRT-II, Delhi, the lenders shall proceed before DRT in execution of the consent decree for the accepted OTS amount of Rs. 300 cr.
		The decision making is pending with STC to convey their acceptance of suitable option for moving the MOTS ahead. Pending settlement of OTS, the company has not provided any further interest in its financial statements for the current year 2021-22.
3.	Whether the fund received/receivable for specific schemes from Central/State agencies were properly accounted for/ utilized as per its terms and condition? List the cases of deviation.	As per information & explanation given to us, the Company has not received any fund under any scheme of the Central/State Government during the year under report.

For TIWARI & ASSOCIATES

CHARTERED ACCOUNTANTS

FRN No. 002870N

Sd/-

(SANDEEP SANDILL)

Partner

Membership No.085747

UDIN: 23085747BGZERD5063

Place: New Delhi

Date: 23.05.2023