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Auditor Report of NMDC Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of NMDC Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss, Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016, and its Profit and its Cash Flow for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") as amended issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "ANNEXURE A" a statement on the matters specified in the paragraphs 3 and 4 of the Order.

2. As required by section 143 (5) of the act, we give in "ANNEXURE - B", a statement on the matters specified by the Comptroller and Auditor General of India for the Company.

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

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

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

e) On the basis of the written representations received from the directors as on March 31, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "ANNEXURE - C".

g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. There are no pending litigations for the Company that will impact the financial position of the Company;

ii. There are no foreseeable losses on long-term contracts including derivative contracts;

iii. There are no amounts required to be transferred, to the Investor Education and Protection Fund by the Company.

"Annexure A" to the Independent Auditor''s Report

Referred to in paragraph 1 under the heading ''Report on Other Legal & Regulatory Requirement'' of our report of even date to the financial statements of the Company for the year ended March 31, 2016:

(1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which all the fixed assets are physically verified by the management over a period of three years. In our opinion the periodicity of the physical verification is reasonable having regard to the size of the Company and the nature of fixed assets. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies have been noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the company as to whether the title deeds of immovable properties are held in the name of the company, our observations are listed below:

A. Below are Leasehold Lands (General / Social Amenities) for which no comments could be offered for the reason no documents were made available for our verification:

1. Land for Bailadila Estate at Jagdalpur measuring 10 (Acres) valuing Rs.7,333/-;

2. Land acquisition for Screening Plant measuring 470 (Acres) valuing Rs.3,16,416/-;

3. Land acquisition for intake arrangement measuring 14.13 (Acres) valuing Rs.23,769/-;

4. Land for Sankini Nalla W/supply scheme for 10 & 11A proj. measuring 2 (Hectares) valuing Rs.10,97,400/-;

5. Land for Sankini Nalla W/supply scheme for 10 & 11A proj. measuring 3 (Hectares) valuing Rs.18,04,200/-;

6. Land Lease Hold of Dep No. 10 for Iron Ore measuring 308.13 (Hectares) valuing Re.1/-;

7. Land Lease Hold of Pocket No. 1, 2 and 3 Near Bhansi measuring 189.956 (Hectares) valuing Re.1/-;

8. Land Lease Hold of Bacheli Float Ore Area measuring 99.956 (Hectares) valuing Re.1/-;

9. Land Lease Hold Dep No. 11C Mines & Fine Ore Dump measuring 122.619 (Hectares) valuing Rs.1,53,44,299/-;

10. Land for operation township at Hill top Location: Hilltop (Measurement is Under reconciliation) valuing Rs.10,564/-;

11. Building (Social Amenities) with Gross Block - Rs.75,73,23,199/- and Net Block Rs.63,18,65,570/-;

12. Land Lease Hold (for Town Ship) Type II Qtr in Kirandul measuring 20.81 (Hectares) valuing Rs.1,00,590/-;

13. Buildings (General) with Gross Block - Rs.24,43,22,980/- and Net Block Rs.17,07,51,184/-

B. Below are Leasehold Lands (General) for which the company holds possession letter issued by Joint Secretary, Mining resources Department Raipur:

1. Land Lease Hold Dep No. 14 Mines measuring 407.55 (Hectares) valuing Rs.6,99,87,154/-

2. Land Lease Hold Dep No. 14 Non Mining measuring 546.882 (Hectares) valuing Rs.10,66,22,023/-

3. Land Lease Hold of Dep No. 11 For Iron Ore measuring 1,809.23 (Hectares) valuing Re.1/-

C. Below are Leasehold Lands (General) for which the Company holds possession Letter Issued by Mining Officer District, South Bastar, Dantewada:

1. Mining Lease of DEP No. 05 measuring 1334.463 (Acres) and valuing Rs.68,30,81,258/-

2. Mining Lease of DEP No. 10 measuring 764.379 (Acres) and valuing Rs.34,76,68,456/-

3. Mining Lease of DEP No 10 (FO) measuring 352.858 (Acres) and valuing Rs.14,92,37,757/-

4. Mining Lease of DEP No 11A measuring 764.379 (Acres) and valuing Rs.2,71,92,866/-

D. Below are Leasehold Lands (General) for which the Company holds possession Letter Issued by Chief Secretary, Mining resources Dept. M.P:

1. Land Lease Hold of Dep No. 14 for Float Ore measuring 317.79 (Hectares) valuing Rs.18,770/-

E. Portion of total land at Research & Development Center measuring 9.12 acres which had expired during Feb 07 (6.66 acres) and the balance in Feb 10 (2.46 acres).

F. Below are Freehold Lands (General / Social Amenities) for which no comments could be offered for the reason no documents were made available for our verification:

1. Private land from Adivasi for Pipe line from Nerli Dam to Screening Plant measuring 1.54 (Acres) valuing Rs.7,375/-

2. Land for Bhansi camp Location: Bhansi valuing Rs.7,840/-

3. Land acquired for Const. of Intake water supply to Screening Plant Location: Bacheli measuring 14 (Acres) valuing Rs.18,987/-

4. Value of PVT Land for Oxidation Pond Location: Bacheli measuring 17.77 (Acres) valuing Rs.13,294/-

5. 4 Acres land for Rly Siding at Bacheli Location: Bacheli measuring 4 (Acres) valuing Rs.5,502/-

6. Land acquired from Adivasi for Tailing Dam near Parapur measuring 81.39 (Acres) valuing Rs.2,11,395/-

7. Acquisition of Land for Tailing Dam and diff of Amt. paid vide JV NO/1246 1/88. (Measurement under Reconciliation) valuing Rs.30,635/-

8. Forest land for uniflow rly. Dispatch system measuring 2 (Hectares) valuing Rs.12,40,000/-

9. Buildings (General) with Gross Block - Rs.39,41,46,810.00 & Net Block - Rs.26,86,59,423/-

10. Land Areas in Bacheli Pargana measuring 14.40 (Acres) valuing Rs.49,53,000/-

11. Land Area in Bacheli Pargana (Kameli Kala) measuring 2.1 (Acres) valuing Rs.5,57,000/-

12. Land Area in Bacheli Pargana (Poro Kameli) measuring 3.27 (Acres) valuing Rs.13,41,000/-

13. Land Areas in Kodenar Pargana measuring 21.32 (Acres) valuing Rs.1,46,85,000/-

14. Land Area in Bada Bacheli measuring 1.46 (Acres) valuing Rs.3,84,000/-

15. Land Areas in Bada Bacheli Pargana measuring 6.33 (Acres) valuing Rs.23,10,000/-

16. Land Areas in Padapur Pargana measuring 9.28 (Acres) valuing Rs.24,43,000/-

17. Land - Area in Kodenar Pargana measuring 3.48 (Acres) valuing Rs.9,16,000/-

18. Land - Area in Jagdalpur measuring 5.823 (Hectares) valuing Rs.10,57,78,000/-

19. Land for Accumulation of Slimes measuring 39.58 (Acres) valuing Rs.70,95,02,000/-

20. Land at Madadi VIL measuring 15.79 (Acres) valuing Rs.44,67,22,000/-

21. Land Freehold in Kirandul Pargana measuring 47.18 (Acres) valuing Rs.22,569/-

22. Land Freehold (Construction of 100 Permanent Type-C Qtrs) measuring 75.9 (Acres) valuing Rs.46,200/-

23. Land Free Hold for Construction of K.V. School Near Praleosh Vidyalaya measuring 21.62 (Acres) valuing Rs.22,39,610/-

24. Buildings (Social Amenities) with Gross Block - Rs.62,18,21,873/- and Net Block - Rs.48,86,76,147/-

25. Land Area in Bada Bacheli Pargana measuring 0.32 (Acres) valuing Rs.1,58,000/-

(2) (a) The management has conducted the physical verification of inventory at reasonable Intervals.

(b) The discrepancies noticed on physical verification of the inventory as compared to books records which has been properly dealt with in the books of account were not material.

(3) 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 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. Accordingly the provisions of clause (3) (iii) (a) to (c) of the order are not applicable to the company and hence not commented upon.

(4) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees, and security.

(5) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

(6) The Central Government has prescribed the maintenance of cost records under section 148(1) of the Act. Company is generally maintaining proper cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013.

(7) (a) According to information and explanations given to us and on the basis of our examination of the books of account, and records, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income - Tax, Sales tax, Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31, 2016 for a period of more than six months from the date on when they become payable.

(b) According to the information and explanation given to us, there are no dues of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax outstanding on account of any dispute, except the following:

Name of the Nature of dues Period to which Statute/Authority it relates

Nagar Palika, Export Tax 1995-96 Kirandul

Nagar Palika, Conservancy 1997-98 to Kirandul Tax 2005-06, 2014-15 2015-16

MP Commercial Commercial 2002-03 Tax Act, 1994 Tax 2005-06 2008-09

Nagarpalika, Export Tax May 2001 to Bade Bacheli July 2002 and March 2010 to March 2016

DFO, Dantewada Forest Permit Jun''2002 to and State of Fee Oct''2012 Chhattisgarh

GHMC, Hyderabad Property Tax 2011-12

Karnataka Forest Forest 2008-09 to Tax Act,1963 Development 2010-11 Tax

Karnataka Sales Tax on REP 1991-92 to Tax Act, 1957 Licenses 1992-93

Karnataka Motor Road Tax on 2003-04 Vehicle Taxation Dumpers Act 1957

MMDR Act Royalty Sept-1977 to Aug-2005

Service Tax Act Service Tax 2007-08 to 2011-12

Commercial Tax Entry Tax 2008-09 Department, Government of Chhattisgarh

Sales Tax Authority Sales Tax 2006-7, 2012-13 2013-14

Nagarpalika Property Tax 2016 Parishad, Bade Bacheli

Name of the Statute/ Authority Forum Amount (Rs. in Crores)

Nagar Palika,Kirandul High Court, Chhattisgarh 11.01

Nagar Palika,Kirandul High Court, Chhattisgarh 0.63

MP Commercial Dy.Commissioner of 1.60 Tax Act, 1994 Commercial Tax (Appeal), Sagar

Nagarpalika High Court of Chhattisgarh 0.67 Bade Bacheli

DFO, Dantewada and State of High Court, Chhattisgarh 143.80 Chhattisgarh

GHMC, Hyderabad GHMC, Hyderabad 0.10

Karnataka Forest High Court of Karnataka, 243.68 Tax Act,1963 Bangalore

Karnataka Sales Deputy Commissioner of 0.80 Tax Act, 1957 Commercial Taxes, Bellary

Karnataka Motor Regional Transport Officer, 0.96 Vehicle Taxation Hospet Act 1957

MMDR Act Madhya Pradesh State Govt. 0.89

Service Tax Act Commissioner of Customs, 1.12 Central Excise & Service Tax, Hyderabad

Commercial Tax Department, Commissioner (Appeals) 0.01 Government of Commercial Tax Department, Chhattisgarh Government of Chhattisgarh

Sales Tax Authority Sales Tax Authority 0.52

Nagarpalika Nagar Palika Bacheli 56.07 Parishad, Bade Bacheli

(8) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks.

(9) Based upon the audit procedures performed and the information and explanations given by the management, 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.

(10) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(11) Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(12) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to the Company.

(13) 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 standards.

(14) Based upon the audit procedures performed and the information and explanations given by the management, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commented upon.

(15) Based upon the audit procedures performed and the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

(16) In our opinion, the Company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

For Tej Raj & Pal

Chartered accountants

ICAI Reg No: 304124E

CA B Vijay

Partner

Mem No 214678

Place : Hyderabad

Date : 27-05-2016


Mar 31, 2015

We have audited the accompanying financial statements of NMDC Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's management is 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 and financial performance of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent, and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

a) As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A to this report a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

b) As required by section 143 (5) of the Companies Act 2013, we give in the Annexure B to this report, a statement on the directions issued by Comptroller & Auditor General of India, to the extent applicable.

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

1. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

2. 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;

3. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow

Statement dealt with by this Report are in agreement with the books of account;

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

5. On the basis of the written representations received from the directors as on March 31, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015, from being appointed as a director in terms of Section 164 (2) of the Act; and

6. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion, and to the best of our information and according to the explanations given to us:

i. There are no pending litigations for the company that will impact the financial position of the company;

ii. There are no foreseeable losses on long-term contracts including derivative contracts;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure A to the Independent Auditors' Report

The Annexure A referred to in our Independent Auditor's Report to the members of the Company on the standalone financial statements for the year ended March 31, 2015, we report that:

i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The Company has a regular programme of physical verification of its fixed assets by which all the fixed assets are physically verified by the management over a period of three years. In our opinion the periodicity of the physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies have been noticed on such verification.

ii) a) The inventories have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.

b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and the book records were not material.

iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Companied Act, 2013 ('the Act'). Consequently, clauses 3 (iii) (a) and 3 (iii) (b) of the Order are not applicable to the Company.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories fixed assets and sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

v) The Company has not accepted any deposits from the public. Consequently, the clause 3(v) of the order is not applicable to the Company.

vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Companies Act, 2013, in respect of the mining activities carried on by the Company and we 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 records.

vii) a) According to the information and explanations given to us and on the basis of examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth- tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts are payable in respect of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax or cess and other material statutory dues which were in arrears as at March 31,2015, for a period of more than six months from the date they became payable.

b) As at March 31,2015, there have been no disputed dues, which have not been deposited with the respective authorities in respect of Income tax, Wealth-tax, Service tax, duty of customs, duty of excise, value added tax and Cess, except the following:

Name of the Nature of dues Period to statute/Authority which it relates

Nagar Palika, Kirandul Export Tax 1995-96

Nagar Palika, Conservancy 1997-98 to Kirandul Tax 2005-06, 2014-15

MP Commercial Commercial 2002-03 Tax Act, 1994 Tax 2005-06 2008-09

Nagarpalika, Export Tax May 2001 to Bade Bacheli July 2002 and March 2010 to March 2015 DFO, Dantewada and State of Forest Permit Jun'2002 to Chattisgarh Fee Oct'2012

GHMC, Hyderabad Property Tax 2011-12 Karnataka Forest Forest 2008-09 to Tax Act,1963 Development 2010-11 Tax

Karnataka Sales Tax Tax on REP 1991-92 Act,1957 Licenses to 1992-93

Karnataka Motor Vehicle Taxation Road Tax 2003-04 Act 1957 on Dumpers

MMDR Act Royalty Sept-1977 to Aug-2005

APGST Sales Tax 2004-05

AP VAT VAT 2006-07

Service Tax Act Service Tax 2007-08 to 2011-12

Commercial Tax Entry Tax 2008-09 Department, Govt. of Chhattisgarh

Income Tax Act, Tax Deducted 2007-08 1961 at Source

Name of the Forum Amount Statute/Authority (Rs. in Crores)

Nagar Palika, High Court, Chhattisgarh 10.97 Kirandul

Nagar Palika, High Court, Chhattisgarh 0.59 Kirandul

MP Commercial Dy.Commissioner of Tax Act, 1994 Commercial Tax(Appeal), Sagar 1.60

Nagarpalika, High Court of Chhattisgarh 0.64 Bade Bacheli

DFO, Dantewada High Court, Chhattisgarh 143.80 and State of Chattisgarh

GHMC, Hyderabad GHMC, Hyderabad 0.10

Karnataka Forest High Court of Karnataka, Tax Act,1963 Bangalore 247.95

Karnataka Sales Tax Deputy Commissioner of Act,1957 Commercial Taxes, Bellary 0.80

Karnataka Motor Regional Transport Officer, Vehicle Taxation Hospet 0.96 Act 1957

MMDR Act Madhya Pradesh State Govt. 0.89

APGST ADC, Warangal 0.01

AP VAT ADC, Warangal 0.02

Service Tax Act Commissioner of Customs, Central Excise & Service Tax, Hyderabad 1.12

Commercial Tax Commissioner (Appeals) Department, Govt Commercial Tax Department, of Chhattisgarh Government of Chhattisgarh 0.01

Income Tax Act, Commisioner of Income Tax, 1961 (Appeals) Hyderabad 5.23

viii) The Company has no accumulated losses and has not incurred cash losses in the financial year covered by our audit and the immediately preceding financial year.

ix) The Company has not taken any term loan from financial institutions and banks. Consequently, the question of defaulting in payment of any loan installment or interest thereon does not arise.

x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Consequently, the clause 3 (x) of the order is not applicable to the Company.

xi) According to the information and explanations given to us, the Company has not obtained any term loans. Consequently, the clause 3 (xi) of the Order is not applicable to Company.

xii) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For VENUGOPAL & CHENOY

Chartered Accountants

FRN: 004671S

(P.V.SRI HARI)

Place : Hyderabad Partner

Date : 28-05-2015 Membership No.021961


Mar 31, 2014

We have audited the accompanying financial statements of NMDC Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss into which are incorporated the accounts of Six Projects/Units audited by Branch Auditors and of Head Office, Sponge Iron Unit and R&D Labs audited by us, and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including Accounting Standards referred to in sub section (3C) of section 211 of Companies Act, 1956 (''the Act''). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these 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. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements, together with the Accounting Policies and Notes to Accounts, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(b) in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. The Company has informed that Department of Company affairs vide the notification No.GSR 829(E) dt October 21,2003, notified that Section 274(1)(g) of the Companies Act, 1956, is not applicable to the Government Companies. Hence Clause regarding disqualification of directors is not applicable.

f. The Company has provided for cess under section 441A of the Companies Act, 1956 but the same has not been deposited, pending notification specifying the manner of payment.

Annexure to the Independent Auditor''s Report Re: NMDC LIMITED [Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date]

(i) In respect of Fixed Assets:

(a) The company is generally maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the assets have not been physically verified by the management during the year but there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year, a few fixed assets have been disposed off/ identified for disposal by the company. On the basis of information and explanations given to us, we are of the opinion that disposal of the part of fixed assets has not affected the going concern status of the company.

(ii) In respect of Inventories:

(a) The inventory has been physically verified by the management during the year applying ABC system except the inventory with Third parties. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) According to the information and explanation given to us, the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

(iii) According to the information and explanations given to us, the company has neither granted nor taken any loans secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 (The Act), hence clauses iii (a, b, c, d, e, f and g) of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003, are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) According to the information and explanations given to us, there are no contracts or agreements that need to be entered into the Register maintained under section 301 of the Companies Act, 1956. As there are no such contracts or agreements, Clause v (b) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003, is not applicable.

(vi) In our opinion and according to the information and explanation given to us, the company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provision of the Act and the rules framed there under.

(vii) The company has an internal audit system commensurate with the size and nature of its business.

(viii) The Company has come under the ambit of Cost Audit of mining of Iron Ore in addition to Sponge Iron activity. Considering this, we have broadly reviewed the books of account maintained by the Company pursuant to Companies (Cost Accounting Records) Rules, 2011, and Companies (Cost Audit Report) Rules, 2011, and we 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 records.

(ix) In respect of Statutory Dues:

(a) According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor education and protection fund, Employees'' state insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues applicable to it.

(b) According to information and explanation given to us, no undisputed amounts payable in respect of Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty and Cess were in arrears, as at 31.03.2014 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are dues of Forest Development Tax, Forest Permit fee, Income Tax, Entry Tax, Sales Tax, Export Tax, Conservancy Tax, Road Tax and Property Tax which are not deposited on account of dispute which are as follows:

Name of the Nature of dues Period to statute/Authority which relates which it relates

Nagar Palika, Export Tax 1995-96 to Kirandul 2003-04

Nagar Palika, Conservancy 1997-98 to Kirandul Tax 2005-06

MP Commercial Commercial 2002-03 Tax Act, 1994 Tax 2005-06 2008-09

Nagarpalika, Export Tax May 2001 to Bade Bacheli July 2002 and March 2010 to March 2014

DFO, Dantewada Forest Permit Jun''2002 to and State of fee Oct''2012 Chattisgarh

GHMC, Hyderabad Property Tax 2011-12

Income tax Act, Income-tax 2006-07 1961 2007-08

2008-09 2009-10

Karnataka Forest Forest Tax Act, 1963 Development Aug''08 to Tax Mar''12

Karnataka Sales Tax on REP 1991-92 to Tax Act, 1957 Licenses 1992-93

Karnataka Motor Road Tax on 2003-04 Vehicle taxation Dumpers Act, 1957

MMDR Act Royalty Sept-1977 to Aug-2005

APGST Sales Tax 2004-05

AP VAT VAT 2006-07



Name of the statue/Authority Forum Amount (Rs. In Crores)

Nagar Palika, Kirandul High Court, Chhattisgarh 5.50

Nagar Palika, Kirandul High Court, Chhattisgarh 0.56

MP Commercial Tax Act, 1994 Dy.Commissioner of Commercial Tax(Appeal), Sagar 1.44

Nagarpalika, Bade Bacheli High Court of Chhattisgarh 0.61

DFO, Dantewada and State of Chattisgarh High Court, Chhattisgarh 143.80

GHMC, Hyderabad GHMC, Hyderabad 0.10

Income tax Act, 1961 CIT (Appeals), Hyderabad ITAT, Hyderabad 402.32

Karnataka Forest Tax Act, 1963 Dy.Conservator of Forests, Bellary 247.96

Karnataka Sales Tax Act, 1957 Deputy Commissioner of Commercial Taxes, Bellary 0.80

Karnataka Motor Vehicle taxation Act, 1957 Regional Transport Officer, Hospet 0.96

MMDR Act Madhya Pradesh State Govt. 0.89

APGST ADC, Warangal 0.01

AP VA ADC, Warangal 0.02

Name of the Nature of dues Period to statute/Authority which relates which it relates

Service Tax Act Service Tax 2007-08 to 2011-12

Commercial Tax Entry Tax 2008-09 Department, Government of Chhattisgarh

Commercial Tax Value Added 2008-09 Department, Tax Government of Chhattisgarh

MP VAT Act, Value Added 2006-07 2002 Tax

Income Tax Act, Tax Deducted 2007-08 1961 at Source

Central Sales Central Sales Tax Act Tax 2007-08

Name of the statue/Authority Forum Amount (Rs. In Crores)



Service Tax Act Commissioner of Customs, Central Excise & Service Tax, Hyderabad 1.12

Commercial Tax Department, Government of Chhattisgarh Commissioner (Appeals) Commercial Tax Department, Government of Chhattisgarh 0.01

Commercial Tax Department, Government of Chhattisgarh Commissioner (Appeals) Commercial Tax Department, Government of Chhattisgarh 0.03

MP VAT Act, 2002 Asst. Commissioner of Commercial Taxes, Sagar 0.09

Income Tax Act, 1961 Commissioner of Income Tax (Appeals), Hyderabad 4.11

Central Sales Tax Act CTO, Bellary 3.13

(x) In our opinion, the company has no accumulated losses as at 31.03.2014 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanation given to us, the company has not taken any loans from financial Institution or Banks and has not issued any debentures. Therefore, the provisions of clause xi of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003, are not applicable to the company.

(xii) In our opinion and according to the information and explanation given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause xii of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(xiii) In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund/ society. Therefore, the provisions of clause xiii of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause xiv of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003, are not applicable to the company.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, the Company has not obtained any term loans. Therefore, the provisions of clause xvi of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003, are not applicable to the company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the no funds were raised by the Company. Accordingly, the provisions of clause xvii of the Companies (Auditor''s Report) Order, 2003, are not applicable to the company.

(xviii) According to the information and explanation given to us, the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of The Act. Accordingly, the provisions of clause xviii of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003, are not applicable to the company.

(xix) According to the information and explanation given to us, the Company has not issued any debentures. Therefore, the provisions of clause xix of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003, are not applicable to the Company.

(xx) According to the information and explanation given to us, the Company has not raised any money by public issues during the year. Accordingly, the provisions of clause xx of Paragraph 4 of the Companies (Auditor''s Report) Order, 2003, are not applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For VENUGOPAL & CHENOY,

Chartered Accountants FRN: 004671S

(P.V.SRI HARI)

Partner Membership No.21961

Place : Hyderabad Date : 30-05-2014


Mar 31, 2012

We have audited the attached Balance Sheet of NMDC LIMITED (The Company) as at March 31, 2012, and also the Statement of Profit and Loss of the Company for the year ended on that date annexed thereto, into which are incorporated the accounts of Seven Projects / Units audited by Branch Auditors and of Head Office, Sponge Iron Unit and R&D Labs audited by us, and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003, issued by the Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order, to the extent applicable.

1. Further to our comments in the Annexure referred to above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us. The Branch Auditors' Reports have been forwarded to us and have been appropriately dealt with;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the Projects / Units;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(e) The Company has informed that Department of Company affairs vide notification No. GSR 829(E) dt October 21,2003, notified that Section 274(1)(g) of the Companies Act, 1956, is not applicable to the Government Companies. Hence, Clause regarding disqualification of directors is not applicable.

(f) The company has provided for cess under section 441A of the Companies Act, 1956 but the same has not been deposited, pending notification specifying the manner of payment.

(g) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Significant Accounting Policies and Notes there on give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31.03.2012;

(ii) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

(i) In respect of Fixed Assets:

(a) The Company is generally maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the assets have not been physically verified by the management during the year but there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year, a few fixed assets have been disposed off by the Company. On the basis of information and explanations given to us, we are of the opinion that disposal of the part of fixed assets has not affected the going concern status of the Company.

(ii) In respect of Inventories:

(a) The inventory has been physically verified by the management during the year applying ABC system except the inventory with Third parties. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the information and explanation given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book record were not material except to the extent of 1,46,042 tons of Lump ore excess found in Kumaraswamy mines which as per the management was due to retrieval of ore embedded in between boulders, troughs, curve surfaces, undulations and small ditches.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans secured or unsecured to/from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 (The Act), hence clauses iii (a, b, c, d, e, f and g) of Paragraph 4 of the Companies (Auditor's Report) Order, 2003, are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) According to the information and explanations given to us, there are no contracts or agreements that need to be entered into the Register maintained under section 301 of the Companies Act, 1956. As there are no such contracts or agreements, Clause v (b) of paragraph 4 of the Companies (Auditor's Report) Order, 2003, is not applicable.

(vi) In our opinion and according to the information and explanation given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provision of the Act and the rules framed there under.

(vii) The Company has an internal audit system commensurate with the size and nature of its business.

(viii) During the year, the Company has come under the ambit of Cost audit of Sponge Iron Activity and Windmill power generation. Considering this, we have broadly reviewed the books of account maintained by the company pursuant to Companies (Cost Accounting Records) Rules 2011 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of these records.

(ix) In respect of Statutory Dues:

(a) According to the information and explanations given to us and the records of the Company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor education and protection fund, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues applicable to it.

(b) According to information and explanation given to us, no undisputed amounts payable in Sales tax, Wealth tax, Service tax, Custom duty, Excise duty and Cess were in arrears, as at 31.03.2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are dues of Forest Development Tax, Entry Tax, Sales Tax, Export Tax, Conservancy Tax, Road Tax and Property Tax which are not deposited on account of dispute which are as follows:

Name of the Nature of dues Period to statute / Authority which relates which it relates

Nagar Palika, Export Tax 1995-96 to Kirandul 2003-04

Nagar Palika, Conservancy 1997-98 to Kirandul Tax 2005-06

MP Commercial Commercial 2002-03 Tax Act, 1994 Tax 2005-06 2006-07

Nagarpalika, Export Tax May 2001 to Bade Bacheli July 2002

GHMC, Hyderabad Property Tax 2011-12

Income Tax Act, Income-Tax 2007-08 & 1961 2008-09

Karnataka Forest Forest Aug'08 to Tax Act, 1963 development Tax Mar'12

Karnataka Sales Tax on REP 1991-92 to Tax Act,1957 licenses 92-93

Karnataka Motor Road Tax 2003-04 Vehicle Taxation on Dumpers Act, 1957

MMDR Act Royalty SEP-1977 to AUG-2005

APGST Sales Tax 2004-05

AP VAT VAT 2006-07

Name of the Forum Amount Statute/Authority (Rs. In Crores)

Nagar Palika,Kirandul High Court, Chhattisgarh 10.64

Nagar Palika,Kirandul High Court, Chhattisgarh 0.49

M P Commercial Tax Dy.Commissioner of 1.93 Act,1994 Commercial Tax (Appeal), Sagar

Nagarpalika, Bade High Court of Chhattisgarh 0.54 Bacheli

GHMC Hyderabad GHMC, Hyderabad 0.02

Income Tax,Act 1961 CIT (Appeals), 1024.28 Hyderabad

Karnataka Forest Dy.Conservator of Forests, 257.16 Tax Act,1963 Bellary

Karnataka Sales Deputy Commissioner of 0.40 Tax Act, 1957 Commercial Taxes, Bellary

Karnataka Motor Regional transport officer, 0.96 Vehicle Taxation Act,1957 Hospet

MMDR Act Madhya Pradesh State Govt. 0.89

APGST ADC, Warangal 0.01

AP VAT ADC, Warangal 0.02

(x) In our opinion, the Company has no accumulated losses as at 31.03.2012 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanation given to us, the Company has not taken any loans from financial Institution or Banks and has not issued any debentures. Therefore, the provisions of clause xi of Paragraph 4 of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xii) In our opinion and according to the information and explanation given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause xii of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provisions of clause xiii of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause xiv of Paragraph 4 of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, the Company has not obtained any term loans. Therefore, the provisions of clause xvi of Paragraph 4 of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the no funds were raised by the Company. Accordingly, the provisions of clause xvii of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xviii) According to the information and explanation given to us, the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of The Act. Accordingly, the provisions of clause xviii of Paragraph 4 of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xix) According to the information and explanation given to us, the Company has not issued any debentures. Therefore, the provisions of clause xix of Paragraph 4 of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xx) According to the information and explanation given to us, the Company has not raised any money by public issues during the year. Accordingly, the provisions of clause xx of Paragraph 4 of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For VENUGOPAL & CHENOY,

Chartered Accountants

FRN No: 004671S

(P.V. SRI HARI)

Partner

Membership No. 21961

Place : New Delhi

Date : 28.05.2012


Mar 31, 2011

We have audited the attached Balance Sheet of NMDC LIMITED (The company) as at 31st March, 2011 and also the Profit and Loss Account of the Company for the year ended on that date annexed thereto, into which are incorporated the accounts of Seven Projects / Units audited by Branch Auditors and in respect of Head Office, Lalapur, Sponge Iron Unit and R&D Labs audited by us, and the cash flow statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003 issued by the Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order, to the extent applicable.

1. Further to our comments in the Annexure referred to above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us. The Branch Auditors Reports have been forwarded to us and have been appropriately dealt with;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the Projects / Units;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(e) The Company has informed that Department of Company affairs vide the notification No. GSR 829(E) dt 21st October 2003 notified that Section 274(1)(g) of the Companies Act 1956 is not applicable to the Government Companies. Hence Clause regarding disqualification of directors is not applicable.

(f) The company has provided for cess under section 441A of the Companies Act, 1956 but the same has not been deposited, pending notification specifying the manner of payment.

(g) We invite the attention of members to the impact on the accounts, consequent to the change in accounting policies described in Schedule-24, Notes forming part of accounts.

(h) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Significant Accounting Policies and Notes forming part of accounts appearing in Schedule No.24 give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the company as at 31.03.2011;

(ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to Auditor's Report Re: NMDC LIMITED [Referred to in our report of even date]

(i) In respect of Fixed Assets:

(a) The Company is generally maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the assets have not been physically verified by the management during the year but there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year, few fixed assets have been disposed off by the Company. On the basis of information and explanations given to us, we are of the opinion, that disposal of the part of fixed assets has not affected the going concern status of the Company.

(ii) In respect of Inventories:

(a) The inventory has been physically verified by the management during the year applying ABC system except the inventory with Third parties. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the information and explanation given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

(iii) According to the information and explanations given to us, the Company has neither granted nor taken any loans secured or unsecured to/ from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 (The Act), hence clauses iii (a, b, c , d, e, f and g) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) According to the information and explanations given to us, there are no contracts or agreements that need to be entered into the Register maintained under section 301 of the Companies Act, 1956. As there are no such contracts or agreements, Clause (b) of paragraph 4(v) is not applicable.

(vi) In our opinion and according to the information and explanation given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provision of the Act and the rules framed there under.

(vii) The Company has an internal audit system commensurate with the size and nature of its business.

(viii) The maintenance of cost records under Section 209(1)(d) of The Act has not been prescribed by the Central government for the products of the Company.

(ix) In respect of Statutory Dues:

(a) According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor education and protection fund, Employees' state insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues applicable to it.

(b) According to information and explanation given to us, no undisputed amounts payable in respect of Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty and Cess were in arrears, as at 31.03.2011 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are dues of Forest Development Tax, Entry Tax, Sales Tax, Property Tax, Export Tax, Conservancy Tax, Road Tax and Property Tax which are not deposited on account of dispute which are as follows:

Name of the statute/ Nature of dues Period to Forum Amount Authority which relates which it relates (Rs. In Crores)

Nagar Palika, 1995-96 to High Court, Chhattisgarh 10.67 Kirandul Export tax 2003-04

Nagar Palika, Conservancy 1997-98 to High Court, Chhattisgarh 0.47 Kirandul tax 2005-06

MP Commercial Commercial 1997-98 Dy.Commissioner of 1.93 Tax Act, 1994 Tax 2001-02 Commercial Tax (Appeal), 2003-04 Sagar

Nagarpalika, Export Tax May 2001 to High Court of Chhattisgarh 0.26 Bade Bacheli July 2002

CG VAT Act, 2005 VAT 2006-07 Dy.Commissioner (Appeal) 0.19 Commercial Tax, Raipur

CG VAT Act, 2005 CST 2006-07 Dy.Commissioner (Appeal) 0.17 Commercial Tax, Raipur

The Chhattisgarh Entry tax 2006-07 Dy.Commissioner (Appeal) 0.19 Sthaniya Kshetra Me Commercial Tax, Raipur Mal Ke. Pravesh Par Kar Adhiniyam, 1976

Karnataka Forest Forest August 2008 Dy.Conservator of Forests, 28.60 Tax Act, 1963 Development to March 2011 Bellary Tax

Karnataka Sales Tax on REP 1991-92 to Deputy Commissioner of 0.40 Tax Act, 1957 licenses 92-93 Commercial Taxes, Bellary

Karnataka Motor Road tax 2003-04 Regional transport officer, 0.96 Vehicle Taxation on dumpers Hospet Act 1957

MMDR Act Royalty SEP-1977 to Madhya Pradesh State Govt. 0.89 AUG-2005

APGST Sales tax 2004-05 ADC, Warangal 0.01

AP VAT VAT 2006-07 ADC, Warangal 0.02

(x) In our opinion, the Company has no accumulated losses as at 31.03.2011 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanation given to us, the Company has not taken any loans from financial Institution, Bank and has not issued any debentures. Therefore, the provisions of clause 4(xi) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xii) In our opinion and according to the information and explanation given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly the provisions of clause 4(xii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiii) In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us, the Company has not obtained any term loans. Therefore, the provisions of clause 4 (xvi) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the no funds were raised by the Company.

Accordingly, the provisions of clause (xvii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xviii) According to the information and explanation given to us, the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of The Act. Accordingly, the provisions of clause 4(xviii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xix) According to the information and explanation given to us, the Company has not issued any debentures. Therefore, the provisions of clause 4(xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xx) According to the information and explanation given to us, the Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For RAMAMOORTHY (N) & Co., Chartered Accountants

(CA Surendranath Bharathi)

Partner

Membership No.23837

FRN No: 002899S

Place : New Delhi

Date : 27-May-2011






Mar 31, 2010

We have audited the attached Balance Sheet of NMDC LIMITED (The Company) as at 31st March, 2010 and also the Profit and Loss Account of the Company for the year ended on that date annexed thereto, into which are incorporated the accounts of Seven Projects / Units audited by Branch Auditors and in respect of Head Office, Lalapur and R&D Labs audited by us, and the cash flow statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 issued by the Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order, to the extent applicable.

1. Further to our comments in the Annexure referred to above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us. The Branch Auditors Reports have been forwarded to us and have been appropriately dealt with;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the Projects 1 Units;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

(e) The Company has informed that Department of Company affairs vide the notification No. GSR 829(E) dt 21st October 2003 notified that Section 274(1 )(g) of the Companies Act 1956 is not applicable to the Government Companies. Hence Clause regarding disqualification of directors is not applicable.

(f) The Company has provided for cess under section 441A of the Companies Act, 1956 but the same has not been deposited, pending notification specifying the manner of payment.

(g) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the Significant Accounting Policies and Notes forming part of accounts appearing in Schedule No.23 give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31.03.2010;

(ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to Auditors Report Re: NMDC LIMITED [Referred to in our report of even date]

(i) In respect of Fixed Assets:

(a) The Company is generally maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the assets have not been physically verified by the management during the year but there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year, few fixed assets have been disposed off by the Company. On the basis of information and explanations given to us, we are of the opinion, that disposal of the part of fixed assets has not affected the going concern status of the Company.

(ii) In respect of Inventories:

(a) The inventory has been physically verified by the management during the year except the inventory with Third parties. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the information and explanation given to us, the Company is maintaining proper records of inventory. The discrepancies, noticed on physical verification of inventory as compared to book records were not material.

(iii) According to the information and explanations given to us,

(a) The Company has neither granted nor taken any loans secured or unsecured to/from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 (The Act), hence clauses iii (a, b, c , d, e, f and g) are not applicable.

(b) There are no contracts or agreements that need to be entered into the Register maintained under section 301 of the Companies Act, 1956. As there are no such contracts or agreements, Clause

(b) of paragraph 4(v) is in applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods and services. During the course of our audit, we have not observed any continuing failure to: correct major weaknesses in internal controls.

(v) In our opinion and according to the information and explanation given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provision of the Act and the rules framed there under.

(vi) The Company has an internal audit system commensurate with the size and nature of its business.

(vii) The maintenance of cost records under Section 209(1 )(d) of The Act has not been prescribed by the Central government for the products of the Company.

(viii) In respect of Statutory Dues:

(a) According to the information and explanations given to us and the records of the Company examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Investor education and protection fund, Employees state insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues applicable to it.

(b) According to information and explanation given to us, no undisputed amounts payable in respect of Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty and Cess were in arrears, as at 31.03.2010 for a period of more than six months from the date they became payable. (c) According to the information and explanations given to us, there are dues of Forest Development Tax, Entry Tax, Sales Tax, Property Tax, Export Tax, Conservancy Tax, Road Tax and Property Tax which are not deposited on account of dispute which are as follows:

Name of the Nature of dues Period to statute/Authority which relates which it relates

Karnataka Forest Forest Aug08 to Tax Act,1963 development tax Mar10

Madhya Pradesh Entry Tax 2001 -02 Entry Tax Act

Nagar Palika, Property tax 2008-09 & Kirandul 2009-10

Nagar Palika, Export tax 1995-96 to Kirandul 2009-10

Nagar Palika, Conservancy tax 1997-98 to Kirandul 2009-10

Nagarpalika, Export Tax May 2001 to Bade Bacheli July 2002

Madhya Pradesh Entry Tax 2000-01 Commercial Tax Act, 1994

Karnataka Sales Tax on REP 1991-92 to taxAct,1957 licenses 92-93

Karnataka Motor Road tax 2003-04 Vehicle taxation oh dumpers Act 1957

MMDRAct Royalty SEP-1977 to AUG-2005

CST Act, 1956 Sales Tax 2005-06

MP Commercial Commercial 1997-98

Tax Act, 1994 Tax/VAT 2001-02 2003-04



Name of the Forum Amount Statue/Authority (Rs. in Crores)

Karnataka Forest Tax Act, 1963 Dy.Conservator of Forests, 26.90 Bellary

Madhya Pradesh Entry Tax Act Commissioner of Commercial 0.01 Taxes(Appeal), Raipur

Nagar Palika, Kirandul Nagar Palika, Kirandul 0.10

Nagar Palika, Kirandul High Court, Chhattisgarh 11.48

Nagar Palika, Kirandul High Court, Chhattisgarh 0.44

Nagarpalika, Bade Bacheli High Court of Chhattisgarh 0.26

Madhya Pradesh Commercial Tax Act, 1994 Dy.Commissioner of 0.01 Commercial Tax(Appeal) Sagar

Karnataka Sales tax Act, 1957 Deputy Commissioner of 0.40 Commercial Taxes, Bellary

Karnataka Motor Vehicle taxation Act 1957 Regional transport officer, 0.96 Hospet

MMDR Act Madhya Pradesh State Govt. 0.89

CST Act, 1956 JCIT (Commercial Tax) 8.76 Davanagiri

MP Commercial Tax Act, 1994 Dy.Commissioner of 1.51 Commercial Tax(Appeal), Raipur

(ix) In our opinion, the Company has no accumulated losses as at 31.03.2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(x) In our opinion and according to the information and explanation given to us, the Company has not taken any loans from financial Institution, Bank and has not issued any debentures. Therefore, the provisions of clause 4(xi) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xi) In our opinion and according to the information and explanation given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly the provisions of clause 4(xii) of the Companies* (Auditors Report) Order, 2003 are not applicable to the Company.

(xii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xiii) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xiv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xv) According to the information and explanations given to us, the Company has not obtained any term loans. Therefore, the provisions of clause 4 (xvi) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xvi) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the no funds raised on a short-term basis have been used for long-term investments.

(xvii) According to the information and explanation given to us, the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of The Act. Accordingly, the provisions of clause 4{xviii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xviii) According to the information and explanation given to us, the Company has not issued any debentures. Therefore, the provisions of clause 4(xix) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xix). According to the information and explanation given to us, the Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xx) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For RAMAMOORTHY (N) & Co.,

Chartered Accountants

(CA SURENDRANATH BHARATHI)

Partner Membership No.23837

Place : New Delhi Date : 22-May-2010

 
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