Auditor Report of NMDC Steel Ltd.

Mar 31, 2025

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

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

In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
Standalone financial statements give the information
required by the Companies Act, 2013 ("the Act”) in
the manner so required and give a true and fair view
in conformity with the Indian Accounting Standards
prescribed under section 133 of the Act read with the
Companies (Indian Accounting Standards) Rules, 2015,
as amended, ("Ind AS”) and other accounting principles
generally accepted in India, of the state of affairs of
the Company as at March 31, 2025, and its loss, total
comprehensive loss, changes in equity and its cash flows
for the year ended on that date.

Basis for Opinion

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

Our responsibilities under those Standards are further
described in the Auditor''s Responsibility for the Audit of
the Standalone financial Statements section of our report.
We are independent of the Company in accordance with

the Code of Ethics issued by the Institute of Chartered
Accountants of India (ICAI) together with the ethical
requirements that are relevant to our audit of the
Standalone financial statements under the provisions
of the Act and the Rules made thereunder, and we have
fulfilled our other ethical responsibilities in accordance
with these requirements and the ICAI''s Code of Ethics.

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

Key Audit Matters

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

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

We have fulfilled the responsibilities described in the
Auditor''s responsibilities for the audit of the standalone
financial statements section of our report, including in
relation to these matters. Accordingly, our audit included
the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the
standalone financial statements. The results of our audit
procedures, including the procedures performed to address
the matters below, provide the basis for our audit opinion on
the accompanying standalone financial statements.

S .. Key Audit Matter No	Auditor''s Response
1 Litigation Matters, Provisions and Contingent Liabilities related to ongoing litigations
The Company has certain significant ongoing legal and arbitration proceedings, tax cases for various complex matters with the Courts and other forums, continuing from earlier years. Management''s disclosures with regards to provisions and contingent liabilities relating to ongoing litigations are presented in note 2.28	Our audit procedures included and were not limited to the following: We have tested the design, implementation and operating effectiveness of the controls established by the Company in the process of evaluation of litigation matters.

S No	Key Audit Matter	Auditor''s Response
	to the Company''s Financial Statements. Refer note 1.3.ix for related material accounting policy information adopted by the Company. The assessment of whether a liability is recognised as a provision or disclosed as a contingent liability in the standalone financial statements is inherently subjective and requires significant management judgement in determination of the cash outflows, interpretation of applicable laws and regulations, and careful examination of pending assessments at various levels of regulatory authorities.	We have assessed the management''s position through discussions with the in-house legal expert , the probability of success in the aforesaid cases, and the magnitude of any potential loss. We have reviewed the legal and professional expenses incurred and discussed with the management on the developments in respect of these litigations during the year ended 31st March, 2025 till the date of approval of the Standalone Financial Statements. Rolled out of enquiry letters to the Company''s legal counsel.
	Due to complexity involved in these litigation matters, management''s judgement regarding recognition, measurement and disclosure of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined.	We have reviewed the disclosures made by the Company in the Financial Statements in accordance with the applicable Indian Accounting Standards. We have Obtained Management representation letter on the assessment of these matters.
	Accordingly, it has been considered as a key audit matter.
2	Property, plant and equipment and intangible assets (including capital work in progress)
	As at 31st March 2025 the Company has Property, Plant and Equipment (PPE''), Capital Work-in¬ Progress (''CWIP'') and Intangible Asset (IA'') with carrying value of H 20,083.48 crore, H 717.19 crore and H 4.72 crore respectively, as disclosed in note 2.1.1, note 2.2 and note 2.3 of the accompanying Standalone Financial Statements. Refer note 1.3.iv.(a),(b) and note 1.3.v for the material accounting policy information adopted by the Company for recognition and measurement of Property, Plant and Equipment, CWIP and Intangible Assets.	Our procedures included and were not limited to the following: We have obtained an understanding of the company''s capitalization policy and management''s process of recording the transactions pertaining to capital expenditure incurred by the company and evaluated the accounting policies adopted by the company in accordance with the requirements of Ind AS 16 and Ind AS 38. We have evaluated the design and tested the operating effectiveness of the controls put in place by the management in relation to the above process. We have obtained componentization reports issued by third party management experts for capitalizations carried out during the year and have assessed appropriateness of basis of componentization and estimates of useful life.
	Determination of carrying values and their respective depreciation and amortisation amounts of PPE, IA and CWIP requires considerable management judgement. The decisions to capitalise or expense costs, the useful life review, residual value review the timeliness of the capitalisation of assets, Spare Parts Capitalization and the use of management''s assumptions and judgementsfor the determination and measurement of assets retired from active use,	We have tested the amounts capitalized during the year, on a sample basis, by inspecting supporting documents and evaluating whether assets capitalized satisfied the recognition criteria in accordance with Indian Accounting Standards and were recognized accurately in the correct periods and with correct amounts. We have reviewed the judgements made by management in determination of carrying values of the specified noncurrent assets including the nature of underlying costs capitalized, determination of realizable value of the assets retired from active use, the appropriateness of useful lives and residual values applied in the calculation of depreciation as determined by technical assessment by management and

S No	Key Audit Matter	Auditor''s Response
	in accordance with the requirements of Ind AS 16 - Property, Plant and Equipment (''Ind AS 16'') and Ind AS 38 - Intangible Assets (''Ind AS 38'').	external technical experts, where required, and evaluation of appropriateness of long outstanding 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.	We have evaluated the appropriateness and adequacy of the related disclosures in the financial statements in accordance with Schedule III to the Companies Act, 2013 and the applicable Indian accounting standards.
3	Inventories
	As at 31 March 2025, the Company has a significant amount of inventory comprising raw materials of H 1275.73 crores, work-in-progress of H 563.17 crores and finished goods of H 810.25 crores. Inventories are valued at the lower of cost and net realisable value (NRV) in accordance with Ind AS 2 - Inventories. Refer to the note no. 2.7 Inventories to the Financial statements and Refer note 1.3.vi. for the material accounting policy information adopted by the Company for recognition and measurement of inventories.	Our procedures included and were not limited to the following: We have understood and performed the walkthroughs of the inventory valuation process and controls over recording and monitoring inventory. We have evaluated the design and implementation of internal controls with regard to the Inventory valuation, Obsolescence assessment, Physical verification processes. We Observed inventory counts conducted by management or third parties at selected locations and verified count sheets to test the accuracy of inventory records.
	The determination of cost involves judgment in selecting an appropriate cost formula, particularly for items with fluctuating prices. The assessment of NRV involves significant estimation, especially in respect of slow-moving, obsolete, or excess inventories and for products where selling prices are volatile or uncertain.	We have performed sample testing of inventory valuation by verifying the basis of cost (raw materials, labour, overhead allocation) in SAP through purchase orders terms and conditions and observed the cost calculation, cost allocation through Cost Run Process in SAP on a sample basis, then compared it with the accounting policy and verified the accounting treatment given in the SAP Books.
	Due to the volume of inventory, estimation involved in determining NRV, and the judgment in identifying obsolete or slow-moving inventory, this area is considered a key audit matter. The Management has appointed an external technical expert to carry out the physical verification of Raw materials which consists of Coal, Iron Ore and Coke products (by-products). The external technical expert team carried out the physical verification of the said categories of inventory from 26.03.2025 to 04.04.2025 with the objective to quantify the actual physical stock available at various locations within the plant.	We have assessed the Net Realisable Value (NRV) by reviewing sales data after year-end for selected inventory items and compared the cost to actual selling prices less estimated selling costs and also evaluated the reasonableness of estimates and assumptions used. We have reviewed the disclosures made in the financial statements in accordance with Ind AS 2 for adequacy and appropriateness. We have reviewed the appointment procedures followed for selecting the management expert, enquired & obtained the details of previous work history, experience in the current field to assess the competency and interacted with the team of experts understood the working mechanism, results from the devices and stockpile measuring tools being used in the stock verification process.
		We have Obtained an understanding of the communication between the management and the expert for information and collection of daily results of physical verification of inventory - Raw materials and Byproducts.

S No	Key Audit Matter	Auditor''s Response
	Based on the report provided by the external	We were present during the physical verification of
	technical expert, the Company has given the	raw material & by-products and observed the process
	necessary effect in the financial statements with	performed by the external technical expert. Obtained the
	respect to deviation between the physical stock	report provided by the external technical expert from the
	and book stock in SAP.	management and analysed the same with respect to the reports generated from the devices used and noted the quantity deviations with respect to actual stock in SAP. We have compared the quantity deviations of the Inventory physically verified with the deviation levels (as % norms for shortages) as recommended by the company and noticed to be within the set levels as compared with the industry standards. We have also conducted the Physical verification of Finished Goods (HR Coils) on a sample basis and identified the actual stock based on the coil ID located in the sector- wise bay location in the plant and also verified the physical verification conducted by the management for total finished goods and semi-finished goods. We have reviewed the disclosures made in the financial statements in accordance with Ind AS 2 for adequacy and appropriateness with respect to the number of losses.
4	Recognition of Revenue from Contract with Customers
	Revenue is a significant item in the financial	Our audit procedures included but were not limited to the
	statements and is one of the key performance indicators of the Company. The Company	following:
	recognizes revenue from sale of goods and services	We have understood and evaluated the Company''s revenue
	as per the five-step model prescribed under Ind AS	recognition policy and assessed the compliance with Ind AS
	115 - Revenue from Contracts with Customers.	115. We have evaluated the design and tested the operating effectiveness of internal controls relating to revenue
	The Company has recognised the revenue from operations of H 8503.05 crores during the FY 2024-	recognition.
	25 from the manufacture and sale of Hot-Rolled	We have tested, on a sample basis, contracts with
	(HR Coils), HR Sheets, Pig Iron, Pit Iron and other	customers to assess whether the five-step model under Ind
	by-products.	AS 115 is correctly applied, which included the following:
	The revenue recognition criteria have been	- Conducted the detailed study of the agreement on
	disclosed under the point xii of the material	a sample basis with customers (including the MOU''s
	accounting policies.	entered with other peers in the industry like SAIL etc) and identified the performance obligations in each contract
	Application of Ind AS 115 involves significant	agreement. Evaluated the transaction prices and identified
	judgement in identifying performance obligations,	the allocating process of the transaction price to the
	determining transaction price, allocating the	performance obligations. Finally tested the accuracy of
	transaction price to performance obligations, and assessing the timing of revenue recognition	timing of revenue recognized and amounts determined.
	(whether at a point in time or over time).	We have performed a detailed walkthrough process and understood the Business and Sales Process of the company. We have held detailed discussions with management and process owners to understand the nature of goods/services sold and reviewed the typical contract terms with customers (standard and customized contracts). Understood the process of order receipt, dispatch/delivery,

S No	Key Audit Matter	Auditor''s Response
	Given the complexity and the volume of transactions, there is a risk of inappropriate recognition of revenue, particularly close to the year end. Accordingly, revenue recognition has been identified as a key audit matter	invoicing, and revenue recognition procedures also correlated with the process flow in SAP. We have also looked into the industry-specific revenue recognition nuances (with Inco-terms such as Ex-Works, Delivery at Point, CIF etc) We have walked through the entire order-to-cash cycle and observed the Sales order processing: Verified the controls over acceptance and authorization of orders. Verified the Inventory dispatches with respect to evaluation of how dispatch/delivery is recorded (e.g., shipping documents, delivery challans). We have Observed the process of Invoicing: Reviewed how invoices are generated and linked to dispatch documentation. Revenue recognition: Identified the point at which revenue is recognized and assessed if it aligns with transfer of control per Ind AS 115. We have traced how payments are matched against invoices and accounted in SAP as a part of cash application procedures. We have Performed the substantive analytical procedures and trend analysis on revenue streams for product wise, customer wise to identify any unusual patterns or inconsistencies. We have Tested the revenue transactions occurring near year-end as a part of our cut off procedures related to quarter end/ year end to determine whether revenue was recognized in the correct accounting period. We have Assessed the disclosures in the financial statements relating to revenue recognition (including the disaggregated revenue disclosures) to ensure adequacy and compliance with Ind AS 115 and the requirements of Schedule III to the Companies Act, 2013.
Emphasis of Matter		Other Matter
1.	We draw attention to Note 2.32.15 to the standalone Ind AS financial statements, which describes the management''s assessment that the interest clause relating to delayed payments under a Long-Term Agreement with a supplier is not enforceable in substance. This conclusion is based on historical commercial practice, confirmation obtained from the supplier, and the absence of any claims or intent to enforce the clause. Accordingly, no provision has been made in respect of such interest.	1. The Standalone financial statements for the year ended March 31,2025 includes comparative financial information for the year ended March 31,2024. The Standalone financial statements for the year ended March 31,2024 have been audited by predecessor auditor, M/s Sanjiv Shah & Associates, who expressed unmodified opinion on those financial statements vide their revised report dated July 24,2024. Our opinion is not modified for the above matter.
2.	We draw attention to Note 2.30.1 to the standalone financial statements, which describes the delayed compliance from the approved Scheme of Arrangement as approved by Ministry of Corporate Affairs with regard to non-identification of employees of demerged Company to the resulting Company till the year under audit. Our opinion is not modified in respect of this matter.	Information Other than the financial Statements and Auditor''s Report Thereon • The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Board''s report and the Annexures to the Board''s report but does not include Standalone financial statements, and our auditor''s report thereon.

• Our opinion on the standalone financial statements
does not cover the other information and we do not
express any form of assurance conclusion thereon.

• In connection with our audit of the standalone
financial statements, our responsibility is to read the
other information and, in doing so, consider whether
the other information is materially inconsistent

with the Standalone financial statements or our
knowledge obtained during the course of our audit or
otherwise appears to be materially misstated.

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

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

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

In preparing the standalone financial statements,

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

The Company''s Board of Directors are also responsible for
overseeing the Company''s financial reporting process.

Auditor''s Responsibility for the Audit of the
Standalone Financial Statements

Our objectives are to obtain reasonable assurance
about whether the Standalone financial statements as a
whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor''s report that
includes our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that an audit
conducted in accordance with SAs will always detect
a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic
decisions of users taken on the basis of these standalone
financial statements.

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

• Identify and assess the risks of material
misstatement of the standalone financial statements,
whether due to fraud or error, design and perform
audit procedures responsive to those risks,

and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control.

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

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

the management.

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

draw attention in our auditor''s report to the related
disclosures in the Standalone financial statements or, if
such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditor''s report.

However, future events or conditions may cause the
Company to cease to continue as a going concern.

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

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

We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we
identify during our audit.

We also provide those charged with governance with
a statement that we have complied with relevant
ethical requirements regarding independence, and to
communicate with them all relationships and other
matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

Report on Other Legal and Regulatory
Requirements

1. As required by Section 143(3) of the Act, based on
our audit, we report, that:

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

the purposes of our audit of accompanying
financial statements.

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

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

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

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

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

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

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

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

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

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

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

i. The Company has disclosed the impact of
pending litigations on its financial position
in its financial statements - Refer note 2.28
to the standalone financial statements.

As part of our audit procedures, we
sought direct confirmation from the legal
counsel of the Company to corroborate
the financial impact of the disclosed

pending litigations; however, we did not
receive any response. Consequently, we
have relied solely on the management''s
representation and disclosures made in the
financial statements.

ii. The company does not have any long¬
term contracts including derivative
contracts for which there were any material
foreseeable losses.

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

iv. (a) The Management has represented

that, to the best of its knowledge and
belief, as disclosed in Note 2.29.ix to
the standalone financial statements
no funds have been advanced or
loaned or invested (either from
borrowed funds or share premium or
any other sources or kinds of funds)
by the Company to or in any other
person(s) or entity(ies),including
foreign entities ("Intermediaries”),
with the understanding, whether
recorded in writing or otherwise,
that the Intermediary shall, directly
or indirectly lend or invest in other
persons or entities identified in any
manner whatsoever by or on behalf of
the Company ("Ultimate Beneficiaries”)
or provide any guarantee, security
or the like on behalf of the
Ultimate Beneficiaries.

(b) The Management has represented,
that, to the best of its knowledge and
belief, as disclosed in Note 2.29.x to
the standalone financial statements,
no funds have been received by
the Company from any person(s)
or entity(ies), including foreign
entities ("Funding Parties”), with the
understanding, whether recorded in
writing or otherwise, that the Company
shall, directly or indirectly, lend or
invest in other persons or entities
identified in any manner whatsoever
by or on behalf of the Funding Party
("Ultimate Beneficiaries”) or provide
any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.

(c) Based on audit procedures performed
by that have been considered
reasonable and appropriate in the
circumstances, nothing has come
to our notice that has caused us to
believe that the representations under
sub clause (i) and (ii) of the rule 11(e ),
as provided under (a) and (b) above,
contain any material misstatement.

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

vi. Based on our examination which included
test checks and more fully described in
note 2.32.17 to the standalone financial
statements, the Company has used an
accounting software for maintaining its
books of account for the year ended March
31, 2025, which has a feature of recording
audit trail (edit log) facility and the same
has operated throughout the year for

all the relevant transactions recorded in
such software except that the feature of
recording audit trail (edit log) at the data
base level to log any direct changes for the
accounting software used for maintaining
the books of account was not enabled.
Further, during the course of our audit we
did not come across any instance of the
audit trail feature being tampered with.

Audit trail, except at the database level, has
been preserved by the Company as per the
statutory requirements for record retention.

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

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

For SHARAD & ASSOCIATES

Chartered Accountants
Firm''s registration number: 06377S

Sharad Sinha

Partner

Membership Number: 202692

Hyderabad, May 27,2025 UDIN: 25202692BMHZAJ7857

---

Mar 31, 2024

Basis of Opinion

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

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian accounting standards prescribed under section 133 of the Act, ("Ind AS") and the other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024 and its loss, total comprehensive income, the changes in equity and its cash flows for the year ended on that date.

We conducted our audit of the standalone financial statements in accordance with the standards on auditing ("SAs") specified under section 143 (10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s 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 ICAI''s code of ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

S.No.	Key Audit Matters		How our audit addressed the key audit matters
1	Property, Plant & Equipment (including capital	Our audit procedures included the following:
	work in progress)		Obtained an understanding of the management''s process of
		•
	Refer note: 2.1.1 and 2.2 to the standalone financial statements As at 31 March 2024, the Company has Property,		recording the transactions pertaining to capital expenditure incurred by the Company and evaluated the accounting policies adopted by the Company in accordance with the requirements of Ind AS16.
	Plant and Equipment (PPE) and Capital Work-
	in-progress (CWIP) with carrying values of	•	Tested the design and operating effectiveness of the controls
	Rs. 20,230.36 crores and Rs.1,214.89 crores		put in place by the management in relation to the above
	respectively. Refer note 1.3 (iii) (a) & 1.3 (iii)		process.
	(b) for the accounting policies adopted by the Company for recognition and measurement of	•	Tested the amounts capitalized during the year, on a sample
	PPE and CWIP. Determination of the carrying		basis, by inspecting supporting documents and evaluating
	values and their respective depreciation		whether assets capitalized satisfied the recognition criteria.
	and amortization amounts of PPE requires	•	Obtained the Asset Evaluation and Capitalization Report
	considerable management judgement. These		(AECR) prepared by the external technical expert appointed
	include the decisions to capitalize or expense		by management which covers extensive details and workings,
	costs, the annual asset life review, the timeliness		with respect to Componentization of PPE and also includes
	of the capitalization of assets and the use of management''s assumptions and estimates for		the useful life of the various assets.
	the determination and measurement of assets retired from active use, in accordance with the requirements of Ind AS 16 - Property, Plant and Equipment. The carrying value of CWIP also includes balances pertaining to packages and other assets which the management intends to complete the same with in next financial year.	•	Reviewed the management''s judgments concerning the determination of the appropriate useful life used in depreciation calculations. These judgments are based on technical assessments conducted by both internal management and external experts as necessary. Additionally, we evaluated the appropriateness of long-standing Capital Work in Progress (CWIP) balances related to packages and other assets.
		•	Evaluated the appropriateness and adequacy of the related
	Considering the significance of the amounts involved in the context of the balance sheet of the Company and the level of judgements and		disclosures in the standalone financial statements in accordance with the applicable accounting standards.
	estimates required, we consider this to be a key audit matter in the current year audit.	Based on the above procedures performed, we did not identify any significant exceptions in the management''s assessment of PPE and Capital Work in Progress.
2	Inventory:	Our audit procedures included the following:
	Refer note: 2.7 to the standalone financial	•	Obtained an understanding of the management''s process
	statements		for physical verification of inventory - Raw materials and By-
	The various categories of inventory comprise of Raw Material (RM), Work-in progress (WIP), Finished Goods (FG) and stores & spares. The Management has appointed an external technical expert to carry out the physical verification of	•	products. We were present during the physical verification of raw material & by-products and observed the process performed by the external technical expert. Obtained the report provided by the external technical expert
	Raw materials which consists of Coal, Iron Ore	•
	and Coke products (by-products). The team of external technical expert have carried out the		from the management and analysed the same with respect to the quantity deviations.
	physical verification of the said categories of	•	Compared the quantity deviations of the Inventory physically
	inventory from 21.03.2024 to 04.04.2024 with the		verified with the deviation levels (Norms for shortages) as
	objective to quantify the actual physical stock		recommended by the company and found to be within the set
	available at various locations within the plant.		levels as compared with the industry standards.
	Based on the report provided by the external	Based on the above procedures performed, we did not identify any
	technical expert, the Company has given the	significant exceptions in the management''s process of physical
	necessary effect in the standalone financial	verification.
	statements with respect to deviation between the physical stock and book stock.
	Considering the significance of the amounts involved in the context of the statement of profit and loss of the Company and the level of judgements, we consider this to be a key audit matter in the current year audit.

S.No.	Key Audit Matters	How our audit addressed the key audit matters
3	Restatement - Prior period errors:	Our audit procedures included the following:
	Refer note: 2.1, 2.1.2, 2.14.2, 2.15.2, and 2.27 to the	• Obtained an understanding of the nature of errors identified
	standalone financial statements and 2.32.12 to the	by management and the relevant financial implication for each
	notes to accounts	error.
	The Company has discovered the errors	• Understanding the relevant accounting policy followed by the
	pertaining to prior periods which includes the	management and discussed the necessary measures taken
	effect of mistakes in applying accounting policies, recognition of elements of financial statements	by management for rectification of said errors.
	and misinterpretations of facts and the relevant	• Detailed discussion at various levels of the management to
	errors discovered have been corrected in the	understand the implications on the treatment of the errors.
	current financial year. Considering the accounting	• Performed necessary audit procedures to ensure the errors
	policy adopted by the company and the DCCO, the management is of the view that effect of such	has been dealt accordingly.
	errors discovered during the period is not material	• Considering the materiality level and other facts and
	and accordingly restatement of the standalone	circumstances in the present case, the errors discovered are
	financial statements is not required in this regard.	less than the set level of materiality.
	Considering the significance of the matter and in	Based on the above procedures performed, we did not identify
	the context of the relevant provisions of Ind AS,	any significant exceptions in the management''s explanation for the
	we consider this to be a key audit matter in the current year audit.	implications of the errors discovered during the year.
4	SEBI (LODR) regulations non-compliance:	Our audit procedures included the following:
	The Company has not complied with the	• Obtained the relevant information from the management with
	regulation number 17,18,19,20, and 21 of	respect to the composition of Board and status of constitution
	SEBI LODR regulations, 2015 relating to ideal composition of Board of Directors due to	of various committees.
	non-appointment of Independent Director,	• Reviewed the minutes of the Board meeting wherein the non-
	constitution of Audit Committee, Nomination	compliance with the said regulations of the SEBI LODR have
	and Remuneration Committee, Stakeholder	been taken note by the Board.
	Relationship committee and Risk Management	Based on the above procedures performed, we did not identify any
	Committee, respectively.	significant exceptions in the management''s explanation relating to
	Considering the non-compliances involved with SEBI LODR regulations as mentioned above, we consider this to be a key audit matter.	non- appointment of Independent Director.
5	Litigations, claims and contingencies:	Our audit procedures included the following:
	Refer note: 2.31 to the standalone financial	In view of the significance of the matter applied the following audit
	statements The Company is subject to number of legal	procedures in this area, among others to obtain sufficient audit evidence:
	lawsuits, claims, governmental and/or regulatory	• We evaluated the design and tested the operating
	inquiries, tax and commercial disputes arising	effectiveness of controls in place for the determination and
	from time to time in the ordinary course of	recognition of provisions and disclosures for litigation and
	business for which the final outcome cannot be	claims. We determined that we could rely on these controls
	easily predicted.	for the purposes of our audit;
	Most of the claims involve complex issues. The	• Reviewing minutes of the meeting of those charged with
	Company makes the assessment either to make	governance and correspondence between the entity and its
	provision or disclose a contingency on a case-to-case basis considering the underlying facts	external legal counsel, where necessary.
	of each litigation. The Company''s conclusions	• Obtained a list of ongoing litigations from the management.
	may result in incorrect disclosure or provision in	We selected a sample of significant litigations and evaluated
	the books of account considering the aforesaid	the Company''s assessment thereof by:
	assessment involving significant judgment to	i) making enquiries with the officers and the relevant
	be exercised by the Company based on current developments. Further, unexpected adverse	section in-charge of the company;
	outcomes could also significantly impact the	ii) verifying correspondence, orders and appeals in
	Company''s reported results.	respect of open litigation; and
	This area is significant to our audit, since the	• Evaluating the adequacy of disclosures given in Note 2.31
	accounting and disclosure for litigations, claims	standalone financial statements
	and contingencies is complex and judgmental.	Based on the above procedures performed, we did not identify any significant exceptions in the management''s explanation relating to litigation, claims and contingencies.

We draw attention to:

1. Note No. 2.32.1 to the accompanying statement, as per the Scheme of Arrangement the staff and workmen of the Demerged company (NMDC Limited) are deemed to be the employee of

the resulting company (NMDC Steel Limited). NMDC Limited maintains the said workmen and staff posted in the company on roll and raise an invoice for their salary and the same are treated as Operational and Maintenance expenses in the books of the company. This arrangement will be continued till any final decision is taken by the board of directors in this regard.

2. Note No. 2.34.10 to the accompanying statement, the company has valued the raw material, store

& spares and loose tools at cost and work-inprogress, finished goods at lower of cost or Net Realisable Value. The adjustment of Rs.

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

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

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

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

Information other than the standalone financial statements and auditors'' report thereon

The Company''s Board of Directors is responsible for of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report including Annexures to Board''s Report, Report on Corporate governance and Business responsibility report and Shareholder''s information but does not include the standalone financial statements and our auditor''s report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance/ conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

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

Responsibilities of management and those charged with governance for the standalone financial statements

The Company''s board of directors is responsible for the matters stated in section 134 (5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS prescribed under section 133 of the Act read with Companies (Indian Accounting Standard) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

The Company''s Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due

to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

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

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

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management''s 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 Company''s ability to continue as a going concern.

If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced.

We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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 auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

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

2. The company has complied with the provision of The Employees'' Provident Funds and Miscellaneous Provisions Act, 1952, as applicable, for Nagarnar on pay scale employees through the trust maintained by NMDC Limited. However, where EPF is not deducted due to the wage limit criteria, the Act requires certain procedures to

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

Report on other legal and regulatory requirements

1) As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central

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

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

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

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

(c) The balance sheet, the statement of profit and loss (including other comprehensive income), the statement of changes in equity and the cash flow statement dealt with by this report are in agreement with the relevant books of account;

(d) In our opinion, the aforesaid standalone financial statements comply with the Indian accounting standards specified under section 133 of the Act

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

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B" Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting;

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

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

(i) With respect to the other matters to be included in the 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. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 2.31 to the standalone financial statements;

ii. The Company did not have any longterm contracts including derivative contracts for which there were any material foreseeable losses;

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

iv.

(a) The Management has represented that, to the best of its knowledge and belief, no funds (which were material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in

any other person or entity, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented that, to the best of its knowledge and belief, no funds (which were material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever

by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. The Company has not declared or paid any dividends during the year and accordingly reporting on the compliance with section 123 of the Companies Act, 2013 is not applicable for the year under consideration.

vi. Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March 31, 2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the

software. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with. The company stores all financial information data on cloud storage, which is subscribed by NMDC Limited.

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

For Sanjiv Shah & Associates

Chartered Accountants Firm''s Registration Number: 003572S

CA Hitesh Jain

Partner

Membership Number: 232064

UDIN: 24232064BKHKAO4774

Place: Hyderabad Date: July 24, 2024

---

Mar 31, 2023

To the Members of NMDC Steel Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of NMDC Steel Limited {hereinafter referred to as "the Company"), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes In Equity and the Cash flow statement for the year then ended, and notes to Ihe financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the "financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 ol the Act read with companies (Indian Accounting Standards) Rules, 2015 as amended, ("Ind AS*) and other accounting principles generally accepted In India, of the state of affairs of the Company as at March 31, 2023, and its financial performance including other comprehensive income, its Cash Flow and the changes in equity for the year ended on that date.

Basis for opinion

Wc conducted our audit of the Ind AS financial statements in accordance with the standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the audit of the Ind AS 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 Ind AS financial statements under the provisions of the Act and the Rules made there under, and wc have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAfs code of Ethics. Wc believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Key Audit Matters

Key audit matters are those matters that. In our professional judgment, were of most significance in our audit of the financial statements ol the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

S.No.	Key Audit Matters	How our audit addressed the key audit matters
1	Demerger: The Demerger Scheme of Arrangement between NMDC Limited ( Demerged Company) and NMDC Steel Limited (Resulting Company) and their respective shareholders and creditors ("the Scheme") pursuant to the provisions of Sections 230-232 of the Companies Act, 2013 ("Act") and the other applicable provisions thereof and applicable rules thereunder (hereinafter referred to as the "Scheme"), involving Demerger of the Demerged undertaking from Demerged Company to the Resulting Company has been duly sanctioned by the Ministry of Corporate Affairs ("MCA") vide its order dated October 6, 2022 ("Order"). NMDC Limited received the MCA Order dated 06.10.2022 on 11th October 2022 and filed the same with the concerned Registrar of Companies on 13th October 2072. Hence, the scheme is operative from 13th October 2022. The Appointed Date of the Scheme is April 1, 2021. Accordingly, with effect from the Appointed Date, the business of NMDC Iron & Steel Plant at Nagarnar has been transferred from NMDC Limited and vested into NMDC Steel Limited (N5L).	Our audit procedures included the following: We have reviewed the Order of MCA dt.06.10.2022 Authorising the scheme, and noted appointed day and effective date of implementation of the scheme. We obtained necessary information from the Management about the transfer of Assets, Liabilities and employee services related aspects. Based on the above procedures performed, we did not identify any significant exceptions in the implementation of the scheme.
2	Capital Work-in progress: (Refer Note No.-2.2 of the financial statements) Capital Work-in progress (CWIP) as on 31.03.2023 in the books is 19,545.23 Crores, out of which Incidental Expenditure During Construction (IEDC) amounts to 3,342.97	Our audit procedures included the following: We obtained an understanding and evaluation of the system of internal control over the capital work in progress with reference to identification and testing of key controls.

	Crores. Since the amount involved Is substantial and the original schedule date of completion has passed, inappropriate classification of IEDC could result in material misstatement of CWIP, hence this is a key audit matter.	We have assessed the progress of the project and examined the management view on delay in project completion. We also assessed the intention and ability of the management to carry forward and bring the asset to its state of intended use. Based on the above procedures performed, we did not identify any significant exceptions in the management''s assessment of Capital Work in Progress.
3	SEBI (LODR) regulations compliance:	Our audit procedures includes the following:
	The Company does not complied with	We obtained the information from the
	regulations number 17,18,19,20, and 21 of	management relating to composition of board
	SEBI LODR regulations, 2015 relating to	and status of constitution of various
	constitution of Audit Committee, N and RC, Risk Management Committee,	committees.
	Stakeholder Relationship committee and	Based on the above procedures performed, we
	Ideal composition of BOD due to non-	did not identify any significant exceptions in
	appointment of Independent Director.	the management’s explanation relating to non-
	Hence this is a key audit matter Para.	appointment of Independent Director
4	Litigations, claims and contingencies:	In view of the significance of the matter we applied the following audit procedures in this
	Refer note: 2.31 of the summary of	area, among others to obtain sufficient audit
	significant accounting policies and notes to the standalone financial statements.	evidence: • Evaluating the design and testing the
	The Company undergoes disputes.	operating effectiveness of controls relating
	lawsuits, claims, governmental and / or	to identification and evaluation of litigation
	regulatory inquiries, tax and commercial	and claims and measurement of provisions.
	disputes arising from time to time in the	contingent liabilities, and disclosures
	ordinary course of business.	thereof.
	Most of the claims involve complex Issues.	• Obtained a list of ongoing litigations from
	The Company, assisted by their legal	the Company''s legal department. We
	counsel assessment to make provision or	selected a sample of significant litigations
	disclose a contingency on a case-to-case	and evaluated the Company''s assessment
	basis considering the underlying facts of each litigation. The Company’s conclusions	thereof by:
	may result in an incorrect disclosure or	i. making enquiries with the In-house
	provision in the books of account considering the aforesaid assessment	legal department of the company;
	involves significant judgment to be	ii. verifying correspondence, orders and
	exercised by the Company based on	appeals in respect of open litigation;
	current developments. Further, unexpected adverse outcomes could also	and

	significantly impact the Company''s	iii. reviewed legal opinions obtained by
	reported results.	the Company.
	This area is significant to our audit, since	• Qvaluating the adequacy of provision and
	the accounting and disclosure for	disclosures given in Note 2.31 to
	litigations, claims and contingencies is complex and judgmental.	standalone financial statements

Information Other than the Financial Statements and Auditor''s Report Thereon

I he Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s’ Report including Annexures to Board''s Report, Business Responsibility Report, Corporate Governance and Shareholder''s information but does not include the financial statements and our auditor''s report thereon.

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

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

Management''s Responsibility for the 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Ind AS and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that arc 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

The Board of Directors are responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Ind AS Financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that Includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on basis of these Ind AS financial statements.

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

• Identify and assess the risks of material misstatement of the Ind AS 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 basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may Involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related dlsdosuras made by management.

• Conclude the appropriateness of management’s 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 Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s 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 date of our auditor''s 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year ended and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

We did not audited the financial statements / information of NMDC Iron & Steel Plant, Nagarnor for the FY 2021-22, since the amounts disclosures of demerged undertaking for the FY 2021-22 were part of financial statements of NMDC Limited, which were duly audited and reported by C & AG appointed qualified Chartered Accountants. Our opinion in so far as it relates to the amounts and disclosure included in respect of the demerged undertaking for the FY 2021-22 is based solely on the report of such NMDC Limited Auditors.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

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

c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income). Statement of changes in equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.

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

e) The provisions of Section 164(2) of the Act, in respect of disqualification of directors are not applicable to the company, being a Government company in terms of notification no: -G.S.R.463(F> dated 5th June 2015 issued by Ministry of Corporate Affairs, Government of India.

0 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 -A."

2. 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, as amended in our opinion and to the best of our information and according to the explanations given to us:

a) The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements - Refer Note 2.31 to the financial statements.

b) The company has made provisions, as required under the applicable lav/ or accounting standards, for material foreseeable losses, if any, on long-term contracts.

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

d)

(i) The management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes of accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), v/ith the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified In any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(ii) The management has represented, that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ics), including foreign entities ("Funding Parties"), with the understanding, whether recorded in v/riting or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner v/hatsoever 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

(iii) Based on such audit procedures 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) contain any material mis-statement.

c) No dividend has been declared / paid during the year, accordingly provisions of section 123 of the Act, are not applicable.

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

4. With respect to the other matters to be included in the auditor''s report in accordance with the requirements of Section 197(16) of the Act, as amended:

We are informed that the provisions of section 197 read with Schedule V of the Act, relating to managerial remuneration arc not applicable to the company, being a Government Company, in terms of Ministry of Corporate Affairs notification no- G.S.R.(E) 5th June 2015.

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

N G Rao & Associates Chartered Accountants FRN: 009399S

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Partne^

M.No. 207300 Place: Hyderabad

UDIN: 23207300BGVDRH4232 Date: 24^,h July, 2023