Steel Authority of India Ltd Auditor Reports

To the Members of Steel Authority of India Limited

Report on the Audit of the Standalone Financial Statements

OP1non

1. We have audited the accompanying standalone financial statements of Steel Authority of India Limited (the Company), which comprise the Balance Sheet as at 31^st March 2026, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity 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 the "Standalone Financial Statements), in which are included the returns for the year ended on that date audited by the branch auditors of the Companys branches/ units/marketing regions as listed in Appendix 1.

2. In our Opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the reports of the branch auditors as referred to in paragraph 15 below, 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 (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March 2026, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

3. We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing 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 we have obtained together with the audit evidence obtained by the branch auditors, in terms of their reports referred to in paragraph 15 of the Other Matter section below is sufficient and appropriate to provide a basis for our audit Opinion on Standalone Financial Statements.

Emphasis of Matters

4. We draw attention to the following:

a) Note 49.2 to the accompanying standalone financial statements, which describes that the revenue from operations include sales to government agencies aggregating to Rs 2,479.36 crore and Rs 9,723.71 crore for the quarter and year ended 31^st March 2026 (cumulative upto 31^st March 2026 of Rs 18,766.51 crore) which is recognized on the basis of provisional prices as per the terms of sales with such Government agencies.

b) Note No. 49.13 (I) (i) and (ii) to the accompanying standalone financial statements, which describes the exceptional item of Rs 451.34 crore and Rs 216.88 crore, pertaining to an increase in Gratuity Liability and relating to the net impact of adjustment of balances relating to the earlier years DVC electricity tariff dispute, respectively.

c) Note 49.14 to the accompanying standalone financial statements, regarding suspension of certain officers and employees of the Company basis directions from the Ministry of Steel, Government of India and related investigation to be conducted by external investigative agencies on certain matters relating to policy/pricing decisions of the Company. In view of the management, basis their internal assessment, the matter is not likely to have a material impact on the operations of the Company and/ or the standalone financial statements.

Our opinion is not modified in respect of these matters.

Key Audit Matters

5. Key audit matters are those matters that, in our professional judgment, and based on the consideration of the reports of the branch auditors as referred to paragraph 15 below, 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.

Key audit matter	How our audit addressed the key audit matter
Provision and contingent liabilities relating to ongoing litigations	Our audit procedures included, but were not limited to the following:
The Company is subject to a number of legal, regulatory and tax cases for which final outcome cannot be easily predicted and which could potentially result in significant liabilities.	• Obtained understanding of the process of identification and measurement of provisions and contingent liabilities relating to ongoing litigations implemented by the Management, through various discussions held with Companys legal and finance personnel.
Managements disclosures with regards to provisions and contingent liabilities relating to ongoing litigations are presented in note 47.1 to the Companys Standalone Financial Statements. Refer note 3.15 of related summary of material accounting policy information and other explanatory information adopted by the Company.	• Evaluated the design and tested the operating effectiveness of the controls put in place by the management in relation to assessment of the outcome of the pending litigations.
The assessment of whether a liability is recognised as a provision or disclosed as a contingent liability in the standalone financial statements is inherently subjective and requires significant management judgement in determination of the cash outflows from the business, interpretation of applicable laws and regulations, and careful examination of pending assessments at various levels of regulatory authorities.	• Inspected the summary of litigation matters and discussed key developments during the year with the Companys Legal and Finance personnel.
	• Inspected and evaluated, where applicable, external legal and/or regulatory advice sought by the Company. Obtained direct confirmations from the dealing lawyers for certain material ongoing litigations.
Since the amounts involved are significant and due to the range of possible outcomes leading to high estimation and uncertainty that requires significant management and auditor judgement, this matter is considered to be a key audit matter for the current year audit.	• Discussed and challenged the managements assessment of the likelihood, magnitude and accounting of any liability that may arise in certain material cases. Accordingly, we reviewed the amount of provisions recognised and contingent liabilities disclosed in the standalone financial statements and exercised our professional judgment to assess appropriateness of such conclusions, involving experts as required.
	• Evaluated the adequacy of disclosures made in the Companys standalone financial statements in accordance with the applicable accounting standards.

 

Property, plant and equipment and intangible assets (including caP1tal work in progress)	Our audit procedures included, but were not limited to the following:
As at 31st March 2026 the Company has Property, Plant and Equipment (PPE), Other Intangible Asset (IA) and CaP1tal Work-in-Progress (CWIP) with carrying value of ^64,666.28 crore, ^1,389.53 crore, ^10,551.69 crore, respectively, as disclosed in note 4, note 7 and note 5 of the accompanying Standalone Financial Statements. Refer note 3.1, 3.2 and 3.3 of the summary of material accounting policy information and other explanatory information adopted by the Company for recognition and measurement of such non- current assets.	• Obtained an understanding of the managements process of recording the transactions pertaining to caP1tal expenditure incurred by the company and evaluated the accounting policies adopted by the company in accordance with the requirements of Ind AS 16 and Ind AS 38.
Determination of carrying values and their respective depreciation and amortisation amounts of PPE, IA and CWIP requires considerable management judgement. These include the decisions to caP1talise or expense costs, the annual asset life review, the timeliness of the caP1talisation 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 and Ind AS 38 - Intangible Assets.	• Evaluated the design and tested the operating effectiveness of the controls put in place by the management in relation to the above process.
	• Tested the amounts caP1talized during the year, on a sample basis, by inspecting supporting documents and evaluating whether assets caP1talized satisfied the recognition criteria and were recognized accurately in the correct periods and with correct amounts.
The carrying value of CWIP also includes balances pertaining to long-term projects which requires careful examination of continuity and viability of such projects.	• Reviewed the judgements made by management in determination of carrying values of the specified non- current assets including the nature of underlying costs caP1talized, determination of realizable value of the assets retired from active use, the appropriateness of useful lives applied in the calculation of depreciation as determined by technical assessment by management and external technical experts, where required, and evaluation of appropriateness of long standing CWIP balances pertaining to long-term projects.
Considering the significance of amounts involved in the context of the balance sheet of the Company and the level of judgements and estimates required, we consider this to be a key audit matter in the current year audit.	• Evaluated the appropriateness and adequacy of the related disclosures in the standalone financial statements in accordance with the applicable accounting standards.

 

By-products inventory	Our audit procedures included, but were not limited to the following:
Refer to note 3.7 of summary of material accounting policy information and other explanatory information for valuation of by- products amounting to Rs 4,792.71 crore as at 31st March 2026 and significant accounting judgements, estimates and assumptions related thereto and the note 3.21.4 of the summary of material accounting policy information and other explanatory information.	• Obtained an understanding of the processes and procedures, including controls relating to identification of sub grade fines, iron and steel scrap embedded in BF slag and LD slag and slime containing iron ore fines (by- products).
Inventories of by-products mainly consist of sub- grade fines, iron and steel scrap embedded in BF slag and LD slag and slime, and tailings containing iron ore fines, which are accumulated in stock P1les.	• Evaluated the accounting policy adopted by the Company for valuation of the by- product inventory in accordance with the requirements of Ind AS 2, Inventory in conjunction with the EAC Opinions obtained by the management.
Further, as explained in notes 49.10, pursuant to the order of Ministry of Mines, Government of India dated 16th September 2019, certain by- products were allowed to be sold and hence, were valued for the first time in the previous years.	• In assessing managements assessment of the value of byproducts, we discussed in detail with the management to understand the procedures adopted in ascertaining the quantity and quality (including gradation) of the by- products considered for valuation.
The management of the Company also sought the Opinion of Expert Advisory Committee of the ICAI (EAC Opinions) on recognition and measurement of by-product inventories.	• Managements estimate of the NRV was verified with reference to the average selling price (ASP) published by the Indian Bureau of Mines. We also obtained technical analysis report from external experts sought by management for determining the quantity of by- products and the chemical analysis report used by the management for arriving at the quality (including gradation) of fines.
Valuation of such items requires management to exercise significant judgement in respect of use of estimates for determination of the quantity, quality and valuation rate of these items.	• Obtained managements working of estimated future sales / consumption used for classification of the by- product inventory between current and non- current, and tested the underlying assumptions basis our understanding of the processing and further approvals required for sale of such inventory in addition to evaluating managements estimates on availability of demand for such by-products.
Further, basis the expected future saleability and plans for captive consumption of such by-product inventories, the management has classified inventory expected to be sold / consumed after 12 months from the date of balance sheet, being the operating cycle of the Company, as non- current inventory.	• Evaluated the appropriateness and adequacy of the related disclosures in the standalone financial statements in accordance with the applicable accounting standards.
Owing to the insignificant movement in sales / consumption of such by-products inventory, the materiality of the carrying value thereof and the complexities discussed above, we have considered this area as a key audit matter in the current year audit.
Further, the managements assessment of classification and valuation of aforesaid inventory as described in note 49.10 is considered fundamental to the understanding of the users of the standalone financial statements.

Information other than the Standalone Financial Statements and Auditors Report thereon

6. The Companys Board of Directors is responsible for the other information. The other

information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditors report thereon. The Annual 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 and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions necessitated by the circumstance and the applicable laws and regulations.

Responsibilities of Management and Those Charged with Governance for the

Standalone Financial Statements

7. The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

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

Auditors Responsibilities for the Audit of the Standalone Financial Statements

10. 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 Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

11. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our Opinion on whether the Company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls;

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

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

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation; and

• Obtain sufficient appropriate audit evidence regarding the standalone financial statements/ financial information of the Company and its branches/units/marketing regions or the business activities within the Company to express an Opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit of standalone financial statements of the Company and such branches/units/marketing regions included in the standalone financial statements, of which we are the independent auditors. For the other branches/units/marketing regions included in the standalone financial statements, which have been audited by the branch auditors, such branch auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit Opinion.

12. 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.

13. 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.

14. 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 Matter

15. We did not audit the annual financial statements/financial information of 09 branches/ units/marketing regions included in the standalone financial statements of the Company whose annual financial statements/financial information reflects total assets of Rs 52,387.86 crore as at 31^st March 2026, and total revenues of Rs 43,962.35 crore, total net profit after tax of Rs 1,105.11 crore, total comprehensive profit of Rs 1,089.2 crore, and net cash inflow of Rs 3.56 crore, respectively, for the year ended on that date, as considered in the standalone financial statements. These annual financial statements/ financial information have been audited by the branch auditors, whose reports have been furnished to us by the management, and our Opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of these branches/units/marketing regions, and our report in terms of sub-section (3) of section 143 of the Act in so far as it relates to the aforesaid branches, is based solely on the report of such branch auditors.

16. We draw attention to the fact that the composition of the Board of Directors of the Company was not in compliance with the requirements of Section 149 of the Companies Act, 2013 ("the Act") and Regulation 17 read with Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR Regulations") up to 31^st March 2026 due to non-availability of the requisite number of Independent Directors and Non-Executive Directors on the Board.

Further, with effect from 21 April 2026, the Company again ceased to have the requisite number of Independent Directors and Non-Executive Directors and also does not have a Woman Director on its Board. Consequently, the composition of the Board of Directors and certain Committees of the Board, including the Audit Committee and the Nomination and Remuneration Committee, was not in compliance with the requirements of Sections 149, 177 and 178 of the Act and Regulations 17, 18 and 19 read with Schedule II of the SEBI LODR Regulations.

Accordingly, the constitution of the Audit Committee and Board of Directors at the time of approval of the aforesaid financial results was not fully in compliance with the requirements of the Act and SEBI LODR Regulations.

Steel Authority of India Limited (SAIL) being a Government Company, Directors (including Independent Directors) are appointed based on the nomination by Government of India. The status of the vacancies in various positions in the Board and the consequence of the same for non -compliance with request for filling up the vacancies in the positions of the Executive Directors and Independent Directors was pursued by the Company with the Administrative Ministry vide our letter dated 24.03.2026, 22.12.2025, 21.03.2025, 30.10.2024, 08.04.2024 and 22.03.2024. The same was also taken-up with the Administrative Ministry and DPE earlier also. The Board has been regularly kept informed in this regard.

17. As referred in note 47.2 (a) to the accompanying standalone financial statements, the constitutional validity of the Entry Tax Act has been upheld by the Honble Supreme Court and the matters relating to levy of entry tax are now pending before Regular Benches of the High Court. Pending decision by the High Court of Jharkhand, the management is of the view that no adjustment is required in the accompanying standalone financial statements of the Company for the disputed entry tax demand amounting to Rs 111.43 Crore as on 31^st March 2026 (previous year Rs 105.13 Crores as on 31^st March 2025).

Our Opinion on the standalone financial statements, are not modified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

18. Based on our audit, and on the consideration of the reports of the branch auditors as referred to in paragraph 15 above, we report that the provisions of section 197 read with Schedule V to the Act are not applicable to the Company since the Company is a Government company as defined under section 2(45) of the Act. Accordingly, reporting under section 197(16) is not applicable.

19. 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 the Annexure I, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

20. Further to our comments in Annexure I, as required by section 143(3) of the Act based on our audit, and on the consideration of the reports of the branch auditors as referred to in paragraph 15 above, we report, to the extent applicable, 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 purpose of our audit of the accompanying standalone financial statements;

b) In our Opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us, except for the matters stated in paragraph 20(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended).

c) The reports on the accounts of the branch offices of the Company audited under section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report;

d) The Balance Sheet, the Statement of Profit & Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity dealt with by this report are in agreement with the books of account and with the returns received from the branches not visited by us;

e) In our Opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;

f) The provisions of section 164(2) of the Act are not applicable to the Company since the Company is a Government company as defined under section 2(45) of the Act;

g) The qualification/modification relating to the maintenance of accounts and other matters connected therewith are as stated in paragraph 20(b) above on reporting under section 143(3)(b) of the Act and paragraph 20(i)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended);

h) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company as on 31 March 2026 and the operating effectiveness of such controls, refer to our separate report in Annexure II wherein we have expressed an unmodified Opinion; and

i) With respect to the other matters to be included in the Auditors Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our Opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the branch auditors as referred to in paragraph 15 above:

i. The Company, as detailed in note 47.1 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2026;

ii. the Company has made provision, as required under the applicable law or Indian Accounting Standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31^st March 2026 except Rs 1.00 crore pertaining to unclaimed matured deposits which was required to be deposited in the Investor Education and Protection Fund during the year ended 31^st March 2018 and which has not been deposited till 31^st March 2026;

iv. a. The management has represented that, to the best of its knowledge and belief, as disclosed in note 51.7(a) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (the 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 (the Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 51.7(b) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (the 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; and

c. Based on such audit procedures performed as 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 final dividend paid by the Company during the year ended 31^st March 2026 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend

As stated in note 49.16 to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31 March 2026 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

vi. Based on our examination which included test checks except for the instance mentioned below, the Company, in respect of financial year commencing on 1 April 2025, have used accounting software for maintaining its books of account which have a feature of recording audit trail (edit log) facility and the same have been 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 audit trail feature being tampered with, other than the consequential impact of the exception given below.

Nature of exception noted	Details of Exception
Instances of accounting software for maintaining books of account which did not have a feature of recording audit trail (edit log) facility	The audit trail feature of certain accounting software used for maintaining books of accounts of one plant and two units of Corporate Office does not have a feature of recording audit trail (edit log) facility. Additionally, certain features of audit trail (edit log) were not enabled for the entire financial year at one plant.
Instances of accounting software for maintaining books of account for which the feature of recording audit trail (edit log) facility was not operated throughout the year for all relevant transactions recorded in the software	The audit trail feature was not enabled at the database level for certain accounting software for corporate office, one unit, five marketing regions and seven plants to log any direct data changes, used for maintenance of all accounting records by these corporate office/unit/marketing regions/ plants.

Additionally, the audit trail has been preserved by the company as per the statutory requirements for record retention

21. As required by section 143(5) of the Act, we give in Annexure IN, a statement on the matters specified in the directions issued by the Comptroller and Auditor General of India in respect of the Company.

Annexure I referred to in paragraph 20 of the Independent Auditors Report of even date to the members of Steel Authority of India Limited on the standalone financial statements for the year ended 31^st March 2026

Comments	Managements Replies
In terms of the information and explanations sought by us and given by the Company and the books of account and records examined by us in the normal course of audit and based on the consideration of the reports of the branch auditors, and to the best of our knowledge and belief, we report that:	Necessary action is being taken to update location and extent of area in respective plants in fixed asset register. This is a continuous process.
(i) (a) (A) The Company has maintained proper records showing particulars of plant and equipment, caP1tal work-in-progress, investment property and relevant details of right- of-use assets. However, we have observed that the records of location and identity of certain fixed assets need strengthening in the Fixed Asset Register (FAR) to ensure accurate tracking and verification. Further, the area in respect of certain lands need to be reconciled with the records of the authorities in the respective States and wherein, as informed to us by the management, the delay is due to procedural matters involved.
(B) The Company has maintained proper records showing full particulars of intangible assets. (b) The Company has a regular programme of physical verification of its property, plant and equipment, caP1tal work-in-progress, investment property and relevant details of right- of-use assets under which the assets are physically verified in a phased manner over a period of three years, which in our Opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain property, plant and equipment, investment property and relevant details of right-of-use assets were verified during the year and no material discrepancies were noticed on such verification. However, there are certain land and buildings which are under encroachment / unauthorised occupation and hence, were not subjected to physical verification.	Necessary action is being taken to evict the occupants from land and building under encroachment/unauthorised occupation.
(c) The title deeds of all the immovable properties (including investment properties) are held in the name of Company (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee), disclosed in Note 4 on Property, Plant and Equipment, and 4a on Right-of-use assets to the standalone financial statements, except for the following properties, for which the Companys management is in the process of getting the registration in the name of the Company:

 

Description of property	Gross carrying value	Held in name of	Whether promoter, director or their relative or employee	Period since held	Reason for not being held in name of company
Freehold Land	0.13	Triveni Structural Limited	N	25-02- 1970	Pending Registration
Freehold Land	0.06	Southern Railway	N	31-03- 1984	Pending Registration
Freehold Land	0.01	Asian Refractories	N	05-04- 1963	Rehabilitation on behalf of Deptt of Industries, Govt of Bihar
Freehold Land	0.12	Assam Siliminites & Bharat Refractories Ltd	N	11-02- 1976 & 30-04- 1978	Rehabilitation on behalf of Deptt of Industries
Freehold Land	0.13	India Firebricks & Insulation Company Ltd.	N	15-09- 1960	Rehabilitation on behalf of Deptt of Industries
Freehold Land	0.04	State Govt	N	1956-57	Pending receipt of Records of Rights (ROR)
Freehold Land	127.03	Jharkhand State Government	N	From 1960	MOU signing formalities awaited between Jharkhand Govt and SAIL/Bokaro Steel Plant
Freehold Land	5.57	Various Parties	N	1986 to 2008	Mutation is pending, disputed
Freehold Land	0.06	Various Parties	N	1954-1974	Mutation is pending, disputed
Freehold Land	0.002	Govt of W.B	N	1963	Pending Registration
Freehold Land	7.55	Title Deed not executed for land acquired by Tamil Nadu State Govt	N	1972 to 1980	Land was Acquired by Tamil Nadu State Government. All land aquired are registered as "Salem Steel Plant" in "A" register of revenue records

For properties where the Company is a lessee, the lease arrangements have been duly executed in favour of the Company except in following cases:

Description of property	Right- of-Use Asset Value	Location	Details of Lessor	Period held	Reason for non-execution of lease agreement
Leasehold Land	16.80	Kolkata Port Trust	N	07-05-2014	Pending Registration
Leasehold Land	0.91	Jammu & Kashmir Govt	N	05-07-1968	Pending Registration
Leasehold Land	0.67	Kanpur Development Authority	N	1986	Pending Registration
Leasehold Land	23.04	Kolkata Metropolitan Development Authority	N	09-10-2009	Pending Registration
Leasehold Land	29.86	Vizag Seaport Pvt. Ltd.	N	20-07-2022	Pending Registration
Leasehold Land	0.27	Paradip Port Turst	N	01-01-2025	Pending Registration
Leasehold Land	6.11	Mecon Ltd & HEC Ltd	N	30.04.78 from Mecon Ltd and Nov 1986 from HEC Ltd	Lease from HEC Ltd ExP1red in Nov 2016 and is under renewal process. The land from MECON was originally held by HSL our parent.
Leasehold Land	123.25	Uttar Pradesh State Industrial Development Corporation (UPSIDC)	N	01-02-2009	Litigation with UPSIDC, U.P
Leasehold Land	0.01	Hindustan Rourkela Steel Plant	N	01.10.1959	Record of rights not yet transferred
Leasehold Land	3.30	Hindustan Steel Limited	N	01.10.1959	Record of rights not yet transferred
Leasehold Land	75.26	Hindustan Steel Limited	N	01.10.1959	Record of rights not yet transferred
Leasehold Land	0.12	Bolani Ore Limited	N	1983	Record of rights not yet transferred
Leasehold Land	15.81	Hindustan Steel Limited	N	29.11.1997	Record of rights not yet transferred
Leasehold Land	37.7	Chattisgarh Govt	N	March-2013	Taken up with the concerned authorities

(d) The Company has not revalued its property, plant and equipment (including right- of-use assets) or intangible assets during the year. Accordingly, the reporting under Clause 3(i)(d) of the Order is not applicable to the Company.

(e) No proceedings have been initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions Act, 1988 (as amended) and rules made thereunder. Accordingly, the reporting under Clause 3(i) (e) of the Order is not applicable to the Company.

(ii) (a) In our Opinion, the management has conducted physical verification of inventories at reasonable intervals during the year except for goods-in-transit and inventories lying with third parties and, in our Opinion, the coverage and procedure of such verification by the management is appropriate and in certain cases, the bulk inventories have been verified on the basis of visual surveys /estimates. The discrepancies noticed on physical verification of inventory as compared to book records were not 10% or more in aggregate for each class of inventory. For stocks lying with third parties at the year- end, written confirmations have been obtained by the management;

(b) As disclosed in Note 51.5 to the standalone financial statements, the Company has been sanctioned a working caP1tal limit in excess of Rs 5 crores by banks based on the security of current assets. The quarterly statements, in respect of the working caP1tal limits have been filed by the Company with such banks and such statements are in agreement with the books of account of the Company for the respective periods which were subject to review, except for the following:

Name of the Bank / financial institution	Working caP1tal limit sanctioned	Nature of current assets offered as security	Quarter	Infor- mation disclosed as per return	Infor- mation as per books of accounts	Difference	Remarks
Consortium of banks led by State Bank of India	10,000	Stock and Trade Receivables	30th June 2025	39,625	39,347	(278)	As informed to us by the management, the information to the banks was provided based on provisional numbers
			30th September 2025	34,481	32,969	(1,512)
			31st December 2025	31,241	31,036	(205)
			31st March 2026	30,885	29,997	(888)

(iii) During the year, the Company has made investments in subsidiary companies. However, the Company has not provided any loans or advances in the nature of loans, or stood guarantee, or provided security to any company, firm, Limited Liability Partnership or any other party during the year.

(a) During the year, the Company has not provided loans or provided advances in the nature of loans, or stood guarantee, or provided security to any other entity. Accordingly, reporting under clause 3(iii)(a) of the Order is not applicable to the Company.

(b) In our Opinion, and according to the information and explanations given to us, the terms and conditions of investment in Subsidiary Company is not prejudicial to the interest of the company.

(c) The Company has not provided loans or provided advances in the nature of loans, or stood guarantee, or provided security to any other entity. Accordingly, reporting under clause 3(iii)(c), (d), (e) and (f) of the Order is not applicable to the Company.

(iv) In our Opinion, and according to the information and explanations given to us, the Company has complied with the provisions of section 186 of the Act in respect of investments made and guarantees and security provided by it, as applicable. Further, the Company has not entered into any transaction covered under section 185 of the Act.

(v) In our Opinion, and according to the information and explanations given to us, the Company has not accepted any deposits or there are no amounts which have been deemed to be deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, reporting under clause 3(v) of the Order is not applicable to the Company.

(vi) The Central Government has specified maintenance of cost records under sub-section (1) of section 148 of the Act in respect of the products of the Company. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records and are of the Opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) In our Opinion, and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities by the Company, though there have been slight delays in a few cases except for delay in deposit of Tax Deducted at Source (TDS) under Section 192 of the Income-tax Act, 1961 in respect of house perquisites provided to nonexecutive employees, as detailed below.

The undisputed statutory dues outstanding as at 31 March 2026 for a period of more than six months from the date they became payable, as per the books of account of the Company, are as follows:

Name of the Statute	Nature of Dues	Amount (Rs in Crores)	Period to which the amount relates	Due Date	Date of Payment
Income-tax Act, 1961	TDS u/s 192	134.74 (including interest till 31/03/2026)	FY 2001-02 to 2009-10	NA	NA
BBMP Act, 2020	Property Tax	1.05	FY 2016-17	NA	NA
Greater Hyderabad Municipal Corporation Act, 1955	Property Tax	0.10	FY 2024-25 and 2025-26	NA	NA

(b) Details of statutory dues referred to in sub-clause (a) above which have not been deposited as on March 31,2026 on account of disputes are given below:

Name of the Statute	Nature of Dues	Amount (Rs in Crores)	Period to which the amount relates	Due Date	Date of Payment
Central Excise Act, 1944	Excise Duty	626.36	10.32	1988-2018	Tribunal
		0.32	-	1993-1994	BIFR
		1.56	-	2001-2004	Commissioner
		4.95	0.00	1995-2022	Commissioner - Appeal
		3,955.32		2008- 2017	Excise Department
		147.17	10.14	1997-2017	High Court
		251.61	1.50	2000-2020	Supreme Court
Central Excise Act, 1944	CENVAT Credit Disallowed on Service Tax	1.15	0.05	2004-2008	Remand pending with Adjudicating Authority
Central Excise Act, 1944	Penalty & Interest on Excess CENVAT Credit Availed	0.54	0.03	2010-2011	Tribunal
Central Excise Act, 1944	Service Tax	1.08	0.24	2013-2017	Tribunal
Sales Tax / VAT Act	Sales tax &VAT	164.44	25.93	1987-2018	Commissioner
		0.70		2005-2014	Commissioner (Appeals )
		1.00		1992-2008	High Court
		11.27	0.66	1993-2018	Joint commissioner
		110.00	51.30	1989-1994	Supreme Court
		355.98	17.41	1998-2017	Tribunal
Sales Tax / VAT Act	CST on High Sea Sales	124.50	11.48	1989-1993	High Court
		3.09		1989-1992	Supreme Court
		4.31	0.92	Various years	JC (Commercial Tax), Appeals and Tamil Nadu STAT
		29.78		1988-2008	High Court
		743.53	0.81	2013-2021	CIT(A)
Income Tax Act, 1961	Income Tax	795.08	38.58	2010-2015	ITAT
		0.26		2015-2018	Commissioner (IT) Appeals
		43.82		2006- 2023	AO
Goods and Service Tax Act, 2017	GST	5.12		2017-2018	High Court
		452.61	2.41	2017-2020	Commissioner (Appeals )
		186.40	16.16	2018-2020	Appealte Authority
		119.20	4.15	2017-2023	Additional Commissioner
		1,170.26	2.16	2017-2022	Assistant Commissioner, GST
Customs Act, 196 2	Custom Duty	1.65	-	2008	High Court
		4.30	-	2009-2021	Tribunal
EPF & MP Act, 1952	EPF	2.86	-	1979-2017	High Court
		2.03	-	1996-2019	CGIT, Dhanbad
ESI Act, 1948	ESI contribution for Contractors workers	13.34	-	1990-2010	ESI Court, Kolkata
Finance Act , 1994	Service Tax	74.65	0.97	2006-2022	Tribunal
		16.67	0.34	2002-03 to 2017- 18	Commissioner
HP Entry Tax Act, 2010	Entry tax	3.90	0.59	2007-2012	Deputy Excise and taxation Commissioner, Appeals
Jharkhand Entry Tax	Entry tax	111.43		2001-2018	High Courts
Odisha Entry Tax, 1999	Entry tax	24.39	4.62	2004-2009	Sales Tax Tribunal
		58.95	28.08	2008-2015	High Court
		209.51	203.08	2010-2017	Supreme Court
Odisha Sales Tax Act	OVAT	16.08	4.09	2005-2015	Sales Tax Tribunal
		52.18	7.17	2016-2017	OSTT
		16.03		2009-2010	Joint Commissioner
		207.27	0.53	2009-2016	High Court
Orissa Rural Infrastructure and socio Economic Development (ORISED) Act , 2004	MADA	1,856. 00		2024	Supreme Court
The Payment of Gratuity Act, 1972	Gratuity	1.37		2003-2004	High Court
Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007	Entry tax	0.83		2013-2014	Commisioner (Appeal )
Other Statutes	Permission Fee	140.64	3.13	2025-26	High Court
Other Statutes	Property Tax	1,517. 85	-	2016-25	High Court
Other Statutes	Royalty	96.28	96.28	2017-18	High Court
		0.17	-	2017-18	Civil court
Other Statutes	Stamp Duty	1.40	0.19	2024-25	Commissioner - Jabalpur Court
Other Statutes	Terminal Tax	1.99	-	2001-2002	High Court
Other Statutes	Consolidated Tax	2.99	-	2021-2026	High Court
Other Statutes	ENVIRONMENT CESS	280.02	280. 02	2006-2025	High Court
Other Statutes	Octroi Duty	21.77	-	1992-1999	High Court
Other Statutes	Arbitration	0.29	-	2013	City Civil Court
Other Statutes	Municipal Dues	3.37	-	1986-2018	Hight Court of Madras
Other Statutes	Stamp Duty	2,320. 40	-	1990-2013	Orissa High Cour
Other Statutes	ESI	55.62	-	1999-2007	ESI Court Banglore
Other Statutes	Concast civil case	10.34	-	2009-2010	High Court
Other Statutes	Miscellaneous civil cases	1.65	-	2009-2014	Concerned Departments
Other Statutes	Forest Development Tax	10.02	3.30	2010-2011	Supreme Court
Other Statutes	Other Statuto ry dues	7.29	-	N.A.	Civil court
Other Statutes	Municipal Tax	7.22	2.00	1998-2026	Supreme Court

(viii) According to the information and explanations given to us, no transactions were surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961) which have not been previously recorded in the books of accounts.

(ix) (a) According to the information and explanations given to us, the Company has not defaulted in repayment of its loans or borrowings or in the payment of interest thereon to any lender.

(b) According to the information and explanations given to us including confirmations received from banks/ financial institution and other lenders and representation received from the management of the Company, and on the basis of our audit procedures, we report that the Company has not been declared a willful defaulter by any bank or financial institution or government or any government authority.

(c) In our Opinion and according to the information and explanations given to us, money raised by way of term loans were applied for the purposes for which these were obtained.

(d) In our Opinion and according to the information and explanations given to us, and on an overall examination of the financial statements of the Company, funds raised by the Company on short term basis have, prima facie, not been utilised for long term purposes.

(e) According to the information and explanations given to us and on an overall examination of the standalone financial statements of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

(f) According to the information and explanations given to us, the Company has not raised any loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies.

(x) (a) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments), during the year. Accordingly, 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 or (fully, partially or optionally) convertible debentures during the year. Accordingly, 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, no fraud by the Company or no fraud on the Company has been noticed or reported during the period covered by our audit.

(b) According to the information and explanations given to us including the representation made to us by the management of the Company, no report under sub-section 12 of section 143 of the Act has been filed by the auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014, with the Central Government for the period covered by our audit.

(c) According to the information and explanations given to us and based on the records of the Company, no case was received during the year under the VIGIL / Whistle Blower Mechanism of SAIL by the Vigilance department.

xii) The Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it. Accordingly, reporting under clause 3(xii) of the Order is not applicable to the Company.

(xiii) In our Opinion and according to the information and explanations given to us, all transactions entered into by the Company with the related parties are in compliance with sections 177 and 188 of the Act, where applicable. Further, the details of such related party transactions have been disclosed in the standalone financial statements, as required under Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified in Companies (Indian Accounting Standards) Rules 2015 as prescribed under section 133 of the Act.

(xiv) (a) In our Opinion and according to the information and explanations given to us, the Company has an internal audit system commensurate with the size and nature of its business. However, the internal audit function is being performed by the employees of the Internal Audit Department of the Company. It is recommended that the overall internal audit process needs to be strengthened specially, identifying key control areas and addressing key risk areas in order to achieve comprehensive audit coverage and implementation of corrective actions.

(b) We have considered, the internal audit reports for the year under audit, issued to the Plant/Units during the year and till date, in determining the nature, timing and extent of our audit procedures.

(xv) According to the information and explanation given to us, the Company has not entered into any non-cash transactions with its directors or persons connected with its directors and accordingly, reporting under clause 3(xv) of the Order with respect to compliance with the provisions of section 192 of the Act are not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, reporting under clauses 3(xvi)(a), (b) and (c) of the Order are not applicable to the Company.

(xvii) The Company has not incurred any cash losses in the current financial year as well as the immediately preceding financial year.

(xviii) There has been no resignation of the Statutory Auditors during the year and accordingly the reporting under clause 3(xviii) 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 in the standalone financial statements, our knowledge of the plans of the Board of Directors and management and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that 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. 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) (a) According to the information and explanations given to us, there are no unspent amount towards Corporate Social Responsibility pertaining to other than ongoing projects as at end of the current financial year. However, an amount of Rs. 0.58 crore pertaining to other than ongoing projects as at end of the previous financial year has been transferred to PM Cares fund within the prescribed timeline.

(b) According to the information and explanations given to us, the Company has transferred the remaining unspent amounts towards Corporate Social Responsibility (CSR) under sub-section (5) of section 135 of the Act, in respect of ongoing project, within a period of 30 days from the end of financial year to a special account in compliance with the provision of sub-section (6) of section 135 of the Act,

(xxi) The reporting under clause 3(xxi) of the Order is not applicable in respect of audit of standalone financial statements of the Company. Accordingly, no comment has been included in respect of said clause under this report.

Annexure II

Independent Auditors Report on the internal financial controls with reference to the standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the Act)

1. In conjunction with our audit of the standalone financial statements of Steel Authority of India Limited (the Company) as at and for the year ended 31 March 2026, we have audited the internal financial controls with reference to financial statements of the Company as at that date.

Responsibilities of Management and Those Charged with Governance for Internal Financial Controls

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

Auditors Responsibility for the Audit of the Internal Financial Controls with Reference to Financial Statements

3. Our responsibility is to express an Opinion on the Companys internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India (ICAI) prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) issued by the ICAI. 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 financial statements were established and maintained and if such controls operated effectively in all material respects.

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

5. We believe that the audit evidence we have obtained and the audit evidence obtained by the branch auditors in terms of their reports referred to in the Other matter paragraph below, is sufficient and appropriate to provide a basis for our audit Opinion on the Companys internal financial controls with reference to financial statements.

Meaning of Internal Financial Controls with Reference to Financial Statements

6. A companys internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls with reference to financial statements include those policies and procedures that

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

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

(iii) 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 Financial Statements

7. Because of the inherent limitations of internal financial controls with reference to 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 financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our Opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements and such controls were operating effectively as at 31 March 2026, based on the internal financial controls with reference to 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.

Other matter

9. We did not audit the annual financial statements/financial information of 9 branches/ units/marketing regions included in the standalone financial statements of the Company whose annual financial statements/financial information reflects total assets of Rs 52,387.86 crore as at 31^st March 2026, and total revenues of Rs 43,962.35 crore, total net profit after tax of Rs 1,105.11 crore, total comprehensive profit of Rs 1,089.2 crore, and net cash inflow of Rs 3.56 crore respectively for the year ended on that date, as considered in the standalone financial statements. These annual financial statements/ financial information have been audited by the branch auditors, whose reports have been furnished to us by the management, and our Opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of these branches/units/marketing regions, and our report in terms of sub-section (3) of section 143 of the Act in so far as it relates to the aforesaid branches, is based solely on the report of such branch auditors.

Our Opinion is not modified in respect of this matter with respect to our reliance on the work done by and the reports of the branch auditors.

Annexure III to the Independent Auditors Report On Standalone Financial Statements of Steel Authority of India Limited for the year ended 31^st March 2026

Matters as required to be reported as per the directions issued by the Comptroller and auditor general of India under sub section 5 of section 143 of the Companies Act, 2013.

Based on the verification of records of the company and information and explanations given to us by the branch auditors, we report that:

Questions	Auditors Comments
1 Assess the fair valuation of all the investments, both quoted and unquoted. made directly by the Company or through Trusts, for Post retirement benefits of the employees. This includes verifying valuation methodologies, ensuring consistency with Ind AS and reviewing supporting documentation. The auditor shall provide a brief note on the valuation approach, its reasonability, and compliance with applicable regulations, reporting any material deviations or misstatements.	On the basis of information and explanations furnished to us, the investment function is largely handled at the Corporate Office level. At the plant / unit level, investments are generally not directly dealt with, except in respect of employee benefit trusts, mainly Provident Fund Trusts, wherever maintained by the respective plants / units.
	In respect of such trust investments, the valuation has been carried out on the basis of the relevant records, trust accounts, actuarial valuation reports and valuation statements made available to us. The basis of valuation reported by the respective units includes cost, fair market value, NAV / mark-to-market value, as applicable to the nature of investment and the policy followed by the respective trust.
	On the basis of the records and explanations made available, we have not come across any material deviation in the valuation of investments requiring specific reporting under this direction.
2 Whether the Company has a system in place to process all the accounting transactions through IT systemRs If yes, whether review of this system and controls that are significant to the Companies financial reporting process as well as cyber security has been done by Information Security Auditing Organisations empanelled by CERT- IN at a minimum frequency of once in a year and material discrepancies found if any have been suitably reportedRs The implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications may also be reported.	The Company has installed SAP software for processing accounting transactions at five integrated plants, CFP, Central marketing organization and corporate office. At certain other plants, mines, and units, legacy software systems such as Oracle- based ERPs, or other IT systems are in use.
	In some functional areas such as payroll, inventory valuation, and estate management, data is either manually processed before being uploaded into the IT system or handled outside of fully integrated systems.
	During the year, the Company also undertook an audit of Information Technology General Controls (ITGC) and Application Controls (AC) through external agencies. While the design of ITGCs in SAP was found to provide reasonable assurance of control, certain control weaknesses in areas such as logical access, change management, and IT operations were identified at some locations. The management has initiated remediation measures in this regard.
	As per information and explanations given to us by the management, cyber security assessment/ review/audit has been carried out during the year by an external agency and observations reported in certain plant/units are as under:

 

Cyber Security Review Report	Report date	Deficiencies reported (High / Medium / Low)
Cyber Governance	01/05/2026	It was observed that the IT security policy is established at the corporate level, however, the same was not consistently available with authorized personnel across the respective mentioned plants. (High)
Risk Management	01/05/2026	It was observed that cyber risks are not formally identified or integrated into the enterprise risk management framework. Risk ownership and mitigation plans are not clearly defined. (Risks including - Cloud Security, Vendor Security, Endpoint Security etc.) (Medium)
Vulnerability Management	01/05/2026	It was observed that VAPT activities were not conducted during the FY25-26. (High)
Vulnerability Management	01/05/2026	It was observed that VAPT activities were conducted, however the formal reports were not available till the reporting date. (Medium)
Cyber Governance	01/05/2026	It was observed that information security practices/ framework elements (ISMS / ISO 27001 alignment) are implemented or available for certain units; however, the same is not consistently established or available across all units. (Medium)
Cyber Governance	01/05/2026	It was observed that the organization has not conducted a comprehensive enterprise- wide cybersecurity assessment during the year. While limited activities such as VAPT/ ISO reviews were performed, these do not provide a holistic view on cybersecurity assessments. (Medium)
Logging & Monitoring	01/05/2026	It was observed that centralized logging and monitoring mechanisms (e.g., SIEM) were not established for a significant part of FY25-26. Additionally, network security controls such as firewalls and IDS/IPS are not periodically reviewed, and monitoring logs are not consistently documented or maintained. (Medium)
Incident Management	01/05/2026	It was observed that an incident response framework has been established at corporate level, however, the same was not consistently available with authorized personnel across the respective mentioned plants. (Low)
Remediation Monitoring	01/05/2026	It was observed that there is no centralized mechanism to track remediation of cyber security issues. (Medium)

The management has initiated remediation measures in this regard. It is to be noted that the said review has not been conducted by a CERT- In empaneled Information Security Auditing Organization. Based on our audit procedures conducted on a test-check basis, and the audit observations received from other auditors, no instance of lack of integrity of accounts or any financial implications arising due to the processing of accounting transactions outside the core IT systems has been noted or reported.

Questions	Auditors Comments
3 Whether funds (grants/ subsidy etc.) received/ receivable for specific schemes from Central/ State Government or its agencies were properly accounted for as per the applicable accounting standards or norms and whether the received funds were utilised as per its terms and conditionsRs Whether accounting of interest earned on grants received has been done as per terms and conditions of the Grant. List the cases of deviation.	On the basis of information and explanations furnished to us, one unit has reported receipt of grant. On the basis of records and explanations made available to us, no adverse matter has been noticed in respect of accounting and utilization of grants.
4 Whether the Company has identified the key Risk areasRs If yes, whether the Company has formulated any Risk Management Policy to mitigate these risksRs If yes, (a) whether the Risk Management Policy has been formulated considering global best practicesRs (b) whether the Company has identified its data assets and whether it has been valued appropriatelyRs	(a) Risk Areas and Risk Management Policy: As per the information and explanations given to us by the management, the Company has identified its key risk areas and has formulated a Risk Management Policy to address and mitigate these risks. The latest version of the said policy was approved by the Board of Directors on 14th July 2016. As represented by the management, the policy framework is broadly aligned with core concepts of recognized global standards and practices, including the Risk Management Standard AS/NZS 4360:1999, which served as a foundational reference during its development.
	It is noted that no formal documented one-to-one benchmarking or mapP1ng with these frameworks was undertaken at the time of policy formulation, however, it incorporates principles considered appropriate to the companys operations and risk profile. The management has represented that a comprehensive revision of the Risk Management Policy is currently in progress with a specific objective to explicitly align and document the framework in line with contemporary global standards and regulatory expectations. We have relied on the representation of the management in this regard.
	(b) Data Assets: As per the information and explanations given to us by the management, the company has not identified any data assets and consequently these have not been subject to valuation.
5 Whether the Company is complying with the Securities and Exchange Board of India (SEBI) (Listing Obligation and Disclosure Requirements) Regulations, 2015, and other applicable rules and regulations of SEBI, Department of Investment and Public Asset Management, Ministry of Corporate Affairs, Department of Public Enterprises, Reserve Bank of India, Telecom Regulatory Authority of India, CERT-IN, Ministry of Electronics and Information Technology and National Payments Corporation of India wherever applicableRs If not, the cases of deviation may be highlighted.	On the basis of information and explanations furnished to us, there has been due compliance of all applicable laws, orders, regulations, and other legal requirements under various statutes of the Central and State Governments and appropriate authorities concerning the operations and business of the Company except for the fact that the composition of the Board of Directors of the Company was not in compliance with the requirements of Section 149 of the Companies Act, 2013 ("the Act") and Regulation 17 read with Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR Regulations") up to 31st March 2026 due to non-availability of the requisite number of Independent Directors and Non-Executive Directors on the Board.

 

For and on behalf of the Board of

Directors

Sd/-

Dr. Ashok Kumar Panda

Chairman & Managing Director

Place: New Delhi

Date: 21st August, 2026