To
The Members NMDC Limited Hyderabad
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS Financial Statements of NMDC Limited("the Company") which comprises the Balance Sheet as at 31st March 2017 theStatement of Profit and Loss (Including Other Comprehensive Income) the Statement of CashFlows and the Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information (herein after referredto as "Standalone Ind AS Financial Statements") which supersedes our earlierIndependent Auditor's report dated 25th May 2017 in the light of the observations of theComptroller and Auditors General of India u/s 143 (6) (b) of the Companies Act 2013 readwith subsection 5 of Section 143.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS Financial Statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in the equity of the company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued there under.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS Financial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on those standalone Ind AS FinancialStatements based on our audit.
We have taken into account the provisions of the Act the Accounting and AuditingStandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone Ind AS Financial Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS Financial Statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS Financial Statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS Financial Statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASFinancial Statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS Financial Statements.
Opinion
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS Financial Statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at March 31 2017 and its financial performanceincluding other comprehensive income its Cash Flow and Changes in Equity for the yearended on that date.
Other Matter
1. The comparative financial information of the Company on the transition date openingBalance Sheet as at 1st April 2015 included in these Standalone Ind AS FinancialStatements are based on the previously issued statutory Financial Statements prepared inaccordance with the Companies (Accounting Standards) Rules 2006 audited by thepredecessor auditor whose report dated 23.05.2015 for the year ended 31st March 2015expressed an unmodified opinion on the said standalone Financial Statements as adjustedfor the differences in the accounting principles adopted by the Company on the transitionto the Ind AS which have been audited by us.
2. We did not audit the Financial Statements/ information of 6 branches included in thestandalone Financial Statements of the Company whose Financial Statements / financialinformation reflect total assets of Rs.18031.42 Crore as at 31st March 2017 and totalrevenues of Rs.8887.37 Crore for the year ended on that date as considered in thestandalone Financial Statements. The Financial Statements/information of these brancheshas been audited by the branch auditors whose reports have been furnished to us and ouropinion in so far as it relates to the amounts and disclosures included in respect ofthese branches is based solely on the report of such branch auditors.
Our opinion is not qualified in respect of this matter.
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) ofSection 143 of the Act we give in the "ANNEXURE A" a statement on the mattersspecified in the paragraphs 3 and 4 of the Order.
2. As required by Section 143 (5) of the act we give in "ANNEXURE - B" astatement on the matters specified by the Comptroller and Auditor General of India for theCompany.
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 bestof 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 theCompany so far as it appears from our examination of those books and reports of otherauditors.
c) The reports on the accounts of the branch offices of the Company audited underSection 143 (8) of the Act by branch auditors have been sent to us and have been properlydealt with by us in preparing this report.
d) The Balance Sheet the Statement of Profit and Loss and the statement of Cash Flowand statement of the Changes in Equity dealt with by this report are in agreement with thebooks of account;
e) In our opinion the aforesaid standalone Ind AS Financial Statements comply with theAccounting Standards specified under Section 133 of the Act read with relevant rulesissued there under;
f) As per notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of
Corporate Affairs Government of India Section 164(2) of the Companies Act 2013 isnot applicable to the Company;
g) With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in "ANNEXURE - C".
h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its standalone Ind AS Financial Statements;
ii. The Company has made provisions as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts;
iii. There are no amounts required to be transferred to the Investor Education andProtection Fund by the Company.
iv. The Company has provided requisite disclosures in its standalone Ind AS FinancialStatements as to holdings as well as dealings in specified bank notes during the periodfrom 8th Nov 2016 to 30th Dec 2016 and these are in accordance with the books of accountsmaintained by the Company.
For Tej Raj & Pal
Chartered accountants ICAI Reg No: 304124E
CA Dinakar Mohanty
Partner Membership No. 059390 Place : Bhubaneswar Date : 11.07.2017
"Annexure A" to the Independent Auditor's Report
Referred to in paragraph 1 under the heading 'Report on Other Legal & RegulatoryRequirement' of our report of even date to the Financial Statements of the Company for theyear ended March 31 2017:
(1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company is in the process of carrying out physical verification of fixedassets a regular programme of physical verification of its fixed assets by which all thefixed assets are physically verified by the management over a period of three years. Inour opinion the periodicity of the physical verification is reasonable having regard tothe size of the company and the nature of fixed assets. In accordance with this programcertain fixed assets were verified during the year and no material discrepancies have beennoticed on such verification.
(c) As the physical verification is in process the shortage/excess arising out of thesame will be dealt with in the books on completion of verification. According to theinformation and explanations given to us and on the basis of our examination of therecords of the Company as to whether the title deeds of immovable properties are held inthe name of the Company our observations are listed below:
| Sl. No. | Description of Assets | Type of Asset | Area | Amount (in Rs. Crores) | Remarks |
| 01 | General / Social Amenities for which no comments passed | Leasehold Lands (in Acres) | 2337.91 | 1.87 | |
| | Building (Net Block) | | 80.27 | Gross Block |
| 02 | General Amenities for which Company holds possession letter issued by Joint Secretary | Leasehold Lands (in Acres) | 6826.25 | 17.66 | 100.16 Crores |
| 03 | General Amenities for which Company holds possession letter issued by Mining Officer | Mining Lease (in Acres) | 3216.07 | 120.72 | |
| 04 | General Amenities for which Company holds possession letter issued by Chief Secretary Mining Resources | Leasehold Lands (in Acres) | 784.94 | 0.0018 | |
| 05 | General / Social Amenities for which no comments passed | Free Hold Land (in Acres) | 400.06 | 129.36 | |
| | Building (Net Block) | | 75.73 | Gross Block- |
| | | | | 101.60 Crores |
| 06 | Industrial land having Provisional allotment letters of 13.43 Acres. | Freehold Land (in Acres) | 11.35 | 139.21 | |
| 07 | Industrial Land of 26.39 Acres Purchased from M/s Allyn Watches Ltd. | Freehold Land (in Acres) | 24.23 | 5.88 | |
| 08 | Industrial land of 1.32 Acres acquired from Chhattisgarh Housing Board | Freehold Land (in Acres) | 1.43 | 0.83 | |
| | Total | 13602.24 | 571.53 | |
(2) (a) The management has conducted the physical verification of inventory atreasonable intervals.
(b) The discrepancies noticed on physical verification of the inventory as compared tobooks records which has been properly dealt with in the books of account were notmaterial.
(3) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not granted any loans securedor unsecured to companies firms Limited Liability Partnerships or other parties coveredin the register maintained under Section 189 of the Companies Act 2013. Accordingly theprovisions of clause (3) (iii) (a) to (c) of the order are not applicable to the Companyand hence not commented upon.
(4) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 185 and 186 of the Companies Act 2013in respect of loans investments guarantees and security.
(5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.
(6) The Central Government has prescribed the maintenance of cost records under Section148(1) of the Act. Company is generally maintaining proper cost records as specified bythe 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 ourexamination of the books of account and records the Company has been generally regularin depositing undisputed statutory dues including Provident Fund Employees StateInsurance Income - Tax Sales tax Service Tax Duty of Customs Duty of Excise Valueadded Tax Cess and any other statutory dues with the appropriate authorities. Accordingto the information and explanations given to us no undisputed amounts payable in respectof the above were in arrears as at March 31 2017 for a period of more than six monthsfrom the date on when they become payable.
(b) According to the information and explanation given to us there are no dues ofincome tax sales tax service tax duty of customs duty of excise value added taxoutstanding on account of any dispute except the followings:
| Unit | Name of Statue | Nature of Dues | Period | Forum where Dispute is Pending | Amount (In Rs. Crores) |
| Kirandul | The Finance Act 1994 | Service Tax | July 2012 -June 2014 | The Appellate Tribunal | 10.40 |
| The Finance Act 1994 | Service Tax on Royalty | 2016-17 | Jabalpur High Court & Karnataka High court | 46.89 |
| MP Commercial Tax Act | Commercial Act | 2002-03 2005-06 2008-09 | Dy. Commissioner of Commercial Tax (Appeal) | 1.60 |
| Donimalai | Karnataka Sales Tax Act 1957 | Tax on ERP Licenses | 1991-92 1992-93 | Dy. Commissioner of Commercial Tax Bellary | 0.51 |
| Donimalai | Karnataka Forest Act 1963 | Forest Development Tax | 2008-09 to 2010-11 | Hon'ble Supreme Court of India | 243.69 |
| Central Excise Customs and Service tax | Service Tax | 2012-13 to till date | Commissioner of Central Excise (Appeals) | 0.20 |
| Panna | Royalty | Service Charges | 2004-05 | Diamond Officer | 0.89 |
| Commercial Tax | Sales & Entry Tax | 2012-13 & 2013-14 | DCIT Sagar | 0.42 |
| Commercial Tax | Sales Tax | 2014-15 | DCIT Sagar | 0.04 |
| Income Tax | TDS | 2007-08 to 2016-17 | DCIT(TDS) Jabalpur | 0.68 |
| Bacheli | The Finance Act 1994 | Service Tax | July 2012- June 2014 & 01.04.2016- 31.03.2017 | The Appellate Tribunal & Jabalpur High-Court | 108.03 |
| Head Office | Income Tax Act 1961 | Income Tax | 2013-14 2012-13 2011-12 2010-11 & 2009-10 | CIT(A) | 368.45 |
| | | 2010-11 2005-06 1990-00 & 2001-02 2006-07 to 2009-10 | High Court | 1263.28 |
| | | 2011-12 | ITAT Hyderabad | 30.80 |
| The Finance Act 1994 | Service Tax | 01.10.2013 to 30.09.2014 & 01.10.2007 to 31.10.2012 | CESTAT | 28.28 |
| | | 01.07.2012 to 31.03.2015 | COM.(A) Mysore | 0.17 |
| | | Total | | 2104.65 |
(8) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks. The Company has not taken anyloan either from financial institutions or from the government and has not issued anydebentures.
(9) Based upon the audit procedures performed and the information and explanationsgiven by the management the Company has not raised monies by way of initial public offeror further public offer including debt instruments and term loans. Accordingly theprovisions of Clause 3 (ix) of the Order are not applicable to the Company and hence notcommented upon.
(10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the Company by itsofficers or employees has been noticed or reported during the year.
(11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Companies Act.
(12) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofClause 4 (xii) of the Order are not applicable to the Company.
(13) In our opinion all transactions with the related parties are in compliance withSection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable Accounting Standards.
(14) Based upon the audit procedures performed and the information and explanationsgiven by the management the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of Clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
(15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with him.
Accordingly the provisions of Clause 3 (xv) of the Order are not applicable to theCompany and hence not commented upon.
(16) In our opinion the Company is not required to be registered under Section 45 IAof 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 Dinakar Mohanty
Partner Membership No. 059390
Place : Bhubaneswar Date : 11.07.2017
"Annexure B" to the Independent Auditor's Report of Even Date on theFinancial Statements of NMDC Limited
Report on the Directions of the Comptroller and Auditor General of India required undersub Section 5 of Section 143 of the Companies Act 2013 ("the Act")
| S No. | Point | Reply |
| 1. | Whether the Company has the clear title / lease deeds for freehold and leasehold respectively. If not please state the area of freehold and leasehold land for which the title / lease deeds are not available. | 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: |
| | 1. General/Social Amenities for which no comments passed: |
| | A. Leasehold Lands (in Acres) measuring 2337.913 (Acres) amounting to Rs.1.87 Crores. |
| | B. Building with Gross Block Rs.100.16 Crores and Net Block Rs.80.27 Crores. |
| | 2. General Amenties for which Company holds possession letter issued by Joint Secretary Mining Resources Department Raipur: |
| | A. Leasehold Lands (in Acres) measuring 6826.25 (Acres) amounting to Rs.17.66 Crores. |
| | 3. General Amenties for which Company holds possession letter issued by Mining Officer District South Bastar Dantewada: |
| | A. Mining Lease (in Acres) measuring 3216.079 (Acres) amounting to Rs.120.72 Crores. |
| | 4. General Amenties for which Company holds possession letter issued by Chief Secretary Mining Resources Dept. M.P: |
| | A. Land Lease Hold of Dep No. 14 for Float Ore measuring 784.94 (Acres) amounting to Rs.0.0018 Crores. |
| | 5. General/Social Amenities for which no comments passed: |
| | A. Freehold Land (in Acres) measuring 400.06 (Acres) amounting to Rs.129.36 Crores. |
| | B. Building with Gross Block Rs.101.60 Crores and Net Block Rs.75.73 Crores. |
| | 6. Industrial land measuring 11.35 Acres amounting to Rs.139.31 Crores. |
| | 7. Industrial Land measuring 24.23 acres purchased from M/s Allyn Watches Ltd. amounting to Rs.5.88 Crores. |
| | 8. Industrial land measuring 1.43 Acres acquired from Chhattishgarh Housing Board amounting to Rs.0.83 Crores. |
| 2. | Whether there are any cases of waiver/write off of debts / loans / interest etc.?If yes the reasons therefore and the a m o u n t involved. | According to the information and explanations given to us and on the basis of our examination of the records of the Company there are no cases of waiver/write off of the debts/loans/interest etc. during the financial year 2016-17. |
| 3. | Whether proper records are maintained for inventories lying with third parties & assets received as gift / grant(s) f r o m Government or other authorities? | According to the information and explanations given to us and on the basis of our examination of the records of the Company there are no inventory lying with any third party nor there are any assets received as gifts / grants from government or other authorities during the financial year 2016-17. |
For Tej Raj & Pal
Chartered accountants ICAI Reg No: 304124E
CA Dinakar Mohanty
Partner Membership No. 059390
Place : Bhubaneswar Date : 11.07.2017
"Annexure C" to the Independent Auditor's Report of Even Date on theFinancial Statements of NMDC Limited
Report on the Internal Financial Controls under Clause (i) of Sub-Section 3 of Section143 of the Companies Act 2013 ("the Act").
We have audited the internal financial controls over financial reporting of NMDCLimited ("the Company") as of 31st March 2017 in conjunction with our audit ofthe Financial Statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India ('ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Auditors' Responsibility
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under Section 143 (10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the Financial Statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Financial Statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the Company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of Financial Statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the Financial Statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion the group has maintained in all material respects adequate internalfinancial controls over financial reporting and such internal financial control overfinancial reporting were operating effectively as of March 31st 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by The Institute of CharteredAccountants of India.
For Tej Raj & Pal
Chartered accountants
ICAI Reg No: 304124E
CA Dinakar Mohanty
Partner Membership No. 059390
Place : Bhubaneswar Date : 11.07.2017
