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Steel Authority of India Ltd.

BSE: 500113 Sector: Metals & Mining
NSE: SAIL ISIN Code: INE114A01011
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VOLUME 861449
52-Week high 121.10
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P/E 7.62
Mkt Cap.(Rs cr) 34,407
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OPEN 82.65
CLOSE 82.65
VOLUME 861449
52-Week high 121.10
52-Week low 63.60
P/E 7.62
Mkt Cap.(Rs cr) 34,407
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Steel Authority of India Ltd. (SAIL) - Auditors Report

Company auditors report

To the Members of Steel Authority of I ndia Limited

Comments Management's Replies
Report on the audit of the standalone financial statements
Qualified opinion
1. We have audited the accompanying standalone financial statements of Steel Authority of India Limited (‘the Company') which comprise the Balance Sheet as at 31st March 2022 the Statement of Profit and Loss (including Other Comprehensive Income) the Cash Flow Statement the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies notes and other explanatory information (hereinafter referred to as ‘standalone financial statements') in which are included the returns for the year ended on that date audited by the branch auditors of the Company's branches listed in Appendix 1.
2. In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the branch auditors as referred to in paragraph 20 below except for the effects / possible effects of the matters described in the Basis for Qualified Opinion section of our report 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 A ccounting Standards (‘I nd AS') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 and other accounting principles generally accepted in India of the state of affairs of the Company as at 31st March 2022 and its profit (including other comprehensive income) its cash flows and the changes in equity for the year ended on that date.
Basis for qualified opinion
3. As referred in note 47.2 (a) to the accompanying standalone financial statements the constitutional validity of the Entry Tax Act has been upheld by the Hon'ble Supreme Court and the matters relating to levy of entry tax are now pending before regular benches of the Supreme Court / Jurisdictional High Courts / assigned authorities. Pending decision by the other Courts the management is of the view that no adjustment is required in the accompanying standalone financial statements of the Company for the disputed entry tax demand in various states amounting to Rs 1419.51 crores as on 31st March 2022. However in the absence of sufficient appropriate evidence to support the management's view we are of the opinion that a provision for entry tax liability should be recognised in the standalone financial statements. The Nine Judge Bench of the Supreme Court. vide its order dated 11th November 2016 upheld the Constitutional validity of the Entry Tax legislations passed by the various Sates. However the Bench directed that certain other matters raised by the Petitioner such as discriminatory rates of tax tax on goods entering the landmass of India from another country etc. may be determined by regular benches hearing the matters. Accordingly various matters raised by SAIL are pending with High Court and the Supreme Court. Pending decision by the Courts the disputed Entry Tax liabilities of Rs 1419.51 crore have been treated by the Company as Contingent Liability.
4. As referred in note 47.2 (b) to the accompanying standalone financial statements current assets include advance of Rs 587.72 crores paid under dispute to Damodar Valley Corporation against the bills raised for supply of power for period upto 31st March 2017. The Company's view is that the cases are sub-judice and pending for adjudication before the various judicial authorities for a long time. Further the civil appeal filed
The matter is under litigation with Jharkhand State Electricity Regulatory Commission for finalisation of tariff pending which the management is of the view that the amount is fully recoverable and thus no adjustment is required in the accompanying standalone financial statements. However in the absence of sufficient appropriate evidence to support the management's contention of recoverability of these balances we are of the opinion that an allowance for possible non-recoverability of such advance should be created in the standalone financial statements. by DVC pertaining to tariff of 2004-09 against the Order of the Appellate Tribunal for Electricity (APTEL) have been dismissed by the Hon'ble Supreme Court of India vide its Order dated 3 rdD ecember 2018. Accordingly State Electricity Regulatory Commission (SERC) will finalise the retail tariff as directed by APTEL the financial implication of which can only be ascertained after the Tariff fixation by SERC. DVC filed its Retail Tariff Application in November'2020 along with application for Annual Revenue requirement before the Jharkhand State Electricity Regulatory C ommission for the period 2006-07 to 2011-12 and also seeking adjustment of revenue Gap/Surplus in the period of 2012-13 to 2014-
15. The Company has also filed their objections on 28th December 2020 to the aforesaid A pplication of DVC.
The above disputed demands stated at (3) and (4) contested on valid and bonafide grounds have been treated as contingent liabilities as it is not probable that present obligations exist as on 31st March 2022. Therefore there is no adverse impact on Profit for the year.

5. Impact of all the above qualifications on the standalone financialstatements for the year ended 31st March 2022 is as under:

(Amounts in Rs crores)

Particulars Reported balances As at 31st March 2022 Balances after impact of all the qualifications which are quantified
Other equity 47886.61 46384.56
Deferred tax liability 5259.93 4754.75
Other current assets 2322.16 1734.44
Other current liabilities 4076.75 5496.26

The audit report on the standalone financial statements for the yearended 31st March 2021 was also modified in respect of above matters.

6. In relation to the matter described in Note 49.16 to the accompanying standalone financial statements the following qualification paragraph is given on the financial statements of Durgapur Steel Plant a branch of the Company which is reproduced by us as under: The process of reconciliation of balances under GI/IR has been duly completed to the satisfaction of Auditor.
"Management is in the process of reconciling the Goods Receipt/ Invoice R eceipt – GR/ IR accounts (grouped under Trade Payables/ payables for capital works). The balance outstanding as on 31st March 2022 is Rs 101.54 crores (31st March 2021 – Rs 304.08 crores). As part of the process the plant has written back an amount of Rs 186.16 crores during the year ended 31st March 2022. In absence of requisite supporting documentation we are unable to comment on the accuracy and completeness of the amount written back and the resultant impact of the ongoing reconciliation on the accompanying standalone financial statements and related internal control over financials reporting".
7. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of theAct. Our responsibilities under those standards are further described in the ‘Auditors' Responsibilities for the Audit of the Standalone Financial Statements' section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of I ndia (‘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 Code of Ethics. We believe that the audit evidence we have obtained and that obtained by the branch auditors in terms of their reports referred to in paragraph 20 of the O ther Matter section below is sufficient and appropriate to provide a basis for our qualified opinion.
Emphasis of matters
8. We draw your attention to the following matters:
(i) note 49.2 to the accompanying standalone financial statements which describes that the revenue from operations include sales to Government agencies aggregating to Rs 6237.41 crores for the year ended 31st March 2022 (cumulative upto 31st March 2022 of Rs 21163.29 crores) which is recognised on the basis of provisional prices as per the terms of sales with such Government agencies.
(ii) note 49.14 to the accompanying standalone financial statements which describes that these standalone financial statements include the financial information for the quarter ended 30th June 2021 of the erstwhile Raw Materials Division (‘the Division') of the Company that got disintegrated and merged with the Rourkela Steel Plant Bokaro Steel Plant and Bhilai Steel Plant (‘together referred to as the Plants') of the Company with effect from 1st July 2021. Such financial information was subjected to a limited review by the erstwhile auditors of the Division and have now been audited by the joint statutory auditors of the Company / auditors of the Plants as explained in the said note for the purpose of reporting on the complete set of standalone financial statements of the Company. However as further stated in the note the Company is in the process of referring the matter to the Comptroller and Auditor General of India for the appointment of the auditors of the Division as required under Section 139 (5) of the Act.
Our opinion is not modified in respect of these matters.
Key audit matters
9. Key audit matters are those matters that in our professional judgment and based on the consideration of the reports of the branch auditors as referred to paragraph 20 below were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.

10. In addition to the matters described in the Basis for QualifiedOpinion section we have determined the matters described below to be the key auditmatters to be communicated in our report.

Key audit matter How our audit addressed the key audit matter
Provisions and contingent liabilities relating to ongoing litigations Our audit procedures included but were not limited to the following:
The Company is subject to a number of legal regulatory and tax cases for which final outcome cannot be easily predicted and which could potentially result in significant liabilities. – Obtained understanding of the process of identification and measurement of provisions and contingent liabilities relating to ongoing litigations implemented by the Management through various discussions held with Company's legal and finance personnel.
Management's disclosures with regards to provisions and contingent liabilities relating to ongoing litigations are presented in note 47 read with note 3.18 to the Company's standalone financial statements. – Tested the design and operating effectiveness of the controls put in place by the management in relation to assessment of the outcome of the pending litigations.
The assessment of whether a liability is recognised as a provision or disclosed as a contingent liability in the standalone financial statements is inherently subjective and requires significant management judgement in determination of the cash outflows from the business interpretation of applicable laws and regulations and careful examination of pending assessments at various levels of regulatory authorities. – Inspected the summary of litigation matters and discussed key developments during the year with the Company's Legal and Finance personnel.
Since the amounts involved are significant and due to the range of possible outcomes leading to high estimation uncertainty that requires significant management and auditor judgement this matter is considered to be a key audit matter for the current year audit. – Inspected and evaluated where applicable external legal and/ or regulatory advice sought by the Company. Obtained direct confirmations from the dealing lawyers for certain material ongoing litigations.
– Discussed and challenged the management's assessment of the likelihood magnitude and accounting of any liability that may arise in certain material cases. Accordingly we reviewed the amount of provisions recognised and contingent liabilities disclosed in the standalone financial statements and exercised our professional judgment to assess appropriateness of such conclusions involving experts as required.
– Evaluated the adequacy of disclosures made in the Company's standalone financial statements in accordance with the applicable accounting standards.
Property plant & equipment and intangible assets (including capital work in progress) Our audit procedures included but were not limited to the following:
As at 31st March 2022 the Company has Property Plant and Equipment (‘PPE') Intangible Assets (‘IA') and C apital Work- in-Progress (‘CWIP ') with carrying values of Rs 68362.72 crores Rs 1459.35 crores and Rs 4016.72 crores respectively as disclosed in note 4 note 7 and note5 of the accompanying standalone financial statements. R efer note 3 for the accounting policies adopted by the Company for recognition and measurement of such non-current assets. – Obtained an understanding of the management's process of recording the transactions pertaining to capital expenditure incurred by the C ompany and evaluated the accounting policies adopted by theCompany in accordance with the requirements of Ind AS 16 and Ind AS 38.
Determination of the carrying values and their respective depreciation and amortisation amounts of PPE IA and CWIP requires considerable management judgement. These include the decisions to capitalise or expense costs the annual asset life review the timeliness of the capitalisation of assets and the use of management's assumptions and estimates for the determination and measurement of assets retired from active use in accordance with the requirements of I nd AS 16 - Property Plant and Equipment (‘Ind AS 16') and Ind AS 38 - Intangible Assets (‘I nd AS 38'). – Tested the design and operating effectiveness of the controls put in place by the management in relation to the above process.
– Tested the amounts capitalised during the year on a sample basis by inspecting supporting documents and evaluating whether assets capitalised satisfied the recognition criteria and were recgonised accurately in the correct periods and with correct amounts.
Property plant & equipment and intangible assets (including capital work in progress) Our audit procedures included but were not limited to the following:
As at 31st March 2022 the Company has Property Plant and Equipment (‘PPE') Intangible Assets (‘IA') and C apital Work- in-Progress (‘CWIP ') with carrying values of Rs 68362.72 crores Rs 1459.35 crores and Rs 4016.72 crores respectively as disclosed in note 4 note 7 and note5 of the accompanying standalone financial statements. R efer note 3 for the accounting policies adopted by the Company for recognition and measurement of such non-current assets. – Obtained an understanding of the 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.
Determination of the carrying values and their respective depreciation and amortisation amounts of PPE IA and CWIP requires considerable management judgement. These include the decisions to capitalise or expense costs the annual asset life review the timeliness of the capitalisation of assets and the use of management's assumptions and estimates for the determination and measurement of assets retired from active use in accordance with the requirements of I nd AS 16 - Property Plant and Equipment (‘Ind AS 16') and Ind AS 38 - Intangible Assets (‘I nd AS 38'). – Tested the design and operating effectiveness of the controls put in place by the management in relation to the above process.
The carrying value of CWIP also includes balances pertaining to long-term projects which requires careful examination of continuity and viability of such projects. Considering the significance of the 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. – Tested the amounts capitalised during the year on a sample basis by inspecting supporting documents and evaluating whether assets capitalised satisfied the recognition criteria and were recgonised accurately in the correct periods and with correct amounts.
– Reviewed the judgments made by management in determination of carrying values of the specified non-current assets including the nature of underlying costs capitalised determination of realisable value of the assets retired from active use the appropriateness of useful lives applied in the calculation of depreciation as determined by technical assessment by management and external technical experts where required and evaluation of appropriateness of long standing CWIP balances pertaining to long-term projects.
– Evaluated the appropriateness and adequacy of the related disclosures in the standalone financial statements in accordance with the applicable accounting standards
By-products inventory Our audit procedures included but were not limited to the following:
Refer to note 3.8 of summary of significant accounting policies and other explanatory information for accounting policy for valuation of by-products amounting to Rs 4924.71 crores as at 31st March 2022 and significant accounting judgements estimates and assumptions related thereto and the note 3.24.4 of the standalone financial statements. – Obtained an understanding of the processes and procedures including controls relating to sub grade fines iron and steel scrap embedded in BF slag and LD slag and slime containing iron ore fines (‘by-products').
Inventories of by-products mainly consist of sub- grade fines iron and steel scrap embedded in BF slag and LD slag and slime and tailings containing iron ore fines which are accumulated in stock piles. – Evaluated the accounting policy adopted by the Company for valuation of the by-product inventory in accordance with the requirements of Ind AS 2 Inventory in conjunction with the EAC Opinions obtained by the management.
Further as explained in notes 49.11 pursuant to the order of Ministry of Mines Government of I ndia dated 16th September 2019 certain by-products were allowed to be sold and hence were valued for the first time in the previous years. – In assessing management's assessment of the value of by- products we discussed in detail with the management to understand the procedures adopted in ascertaining the quantity and quality (including gradation) of the by- products considered for valuation.
The management of the Company also sought the opinion of Expert Advisory Committee of the ICAI (‘EAC Opinions') in the previous year and current year on recognition and measurement of by-product inventories. – Management's estimate of the NRV was verified with reference to the average selling price (ASP) published by the Indian Bureau of Mines. We also obtained technical analysis report from external experts sought by management for determining the quantity of by- products and the chemical analysis report used by the management for arriving at the quality (including gradation) of fines.
Valuation of such items requires management to exercise significant judgement in respect of use of estimates for determination of the quantity quality and valuation rate of these items. – Obtained management's working of estimated future sales / consumption used for classification of the by- product inventory between current and non- current and tested the underlying assumptions basis our understanding of the processing and further approvals required for sale of such inventory in addition to evaluating management's estimates on availability of demand for such by-products.
Further basis the expected future salability and plans for captive consumption of such by-product inventories the management has classified inventory expected to be sold / consumed after 12 months from the date of balance sheet being the operating cycle of the Company as non-current inventory. - Evaluated the appropriateness and adequacy of the related disclosures in the standalone financial statements in accordance with the applicable accounting standards.
Owing to the insignificant movement in sales / consumption of such by-products inventory the materiality of the carrying value thereof and the complexities discussed above we have considered this area as a key audit matter in the current year audit.
Further the management's assessment of classification and valuation of aforesaid inventory as described in note 49.11 is considered fundamental to the understanding of the users of the standalone financial statements.

Information other than the financial statements and auditors'report thereon

11. The C ompany's Board of Directors are responsible for theother information. The other information comprises the information included in the AnnualReport but does not include the standalone financial statements and our auditors'report thereon. The Annual Report is expected to be made available to us after the date ofthis auditors' report. Our opinion on the standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

Responsibilities of Management and Those Charged with Governance forthe standalone financial statements

12. The accompanying standalone financial statements have been approvedby the Company's Board of Directors. The Company's Board of Directors areresponsible for the matters stated in section 134(5) of the Act with respect to thepreparation and presentation of these standalone financial statements that give a true andfair view of the financial position financial performance including other comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind ASspecified under section 133 of the Act and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of theCompany 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

13. In preparing the standalone financial statements the Board ofDirectors are responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless the Board of Directors either intend to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

14. Those Board of D irectors are also responsible for overseeing theCompany's financial reporting process.

Auditors' responsibilities for the audit of the standalonefinancial statements

15. Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditors' report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards on Auditing will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone financial statements. 16. As part of an audit in accordance with Standards onAuditing specified under section 143(10) of the Act we exercise professional judgmentand maintain professional skepticism throughout the audit. We also: dentifyI and assessthe risks of material misstatement of the standalone financial statements whether due tofraud or error design and perform audit procedures responsive to those risks and obtainaudit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error as fraud may involve collusion forgery intentional omissionsmisrepresentations or the override of internal control;

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system with reference to standalonefinancial statements in place and the operating effectiveness of such controls;

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

Conclude on the appropriateness of Board of Directors' use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditors'report to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditors' report.However future events orconditions may cause the Company to cease to continue as a going concern;

Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation;

Obtain sufficient appropriate audit evidence regarding the financialinformation / inancial statements of the Company and its branches to express an opinion onthe standalone financial statements. We are responsible for the direction supervision andperformance of the audit of financial information of the Company and such branchesincluded in the standalone financial statements of which we are the independent auditors.For the other branches included in the standalone financial statements which have beenaudited by the branch auditors such branch auditors remain responsible for the directionsupervision and performance of the audits carried out by them. We remain solelyresponsible for our audit opinion.

17. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deffciencies in internal control that we identify during ouraudit.

18. We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

19. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other matter

20. We did not audit the annual financial statements / financialinformation of eleven branches / units / marketing regions included in the standalonefinancial statements whose annual financial statements/ financial information reflectstotal assets and net assets of Rs 56600.50 crores and Rs 30665.77 crores respectively asat 31st March 2022 and total revenues of Rs 39506.31 crores total net profitafter tax of Rs 7568.75 crores total comprehensive income of Rs 7580.83 crores and cashoutflows (net) of Rs 12.75 crores for the year then ended as considered in the standalonefinancial statements. These financial statements / financial information have been auditedby the branch auditors whose reports have been furnished to us by the management and ouropinion on the standalone financial statements in so far as it relates to the amounts anddisclosures included in respect of branches and our report in terms of sub-section (3) ofsection 143 of the Act in so far as it relates to the aforesaid branches is based solelyon the report of such branch auditors.

Our opinion on the above standalone financial statements and our reporton other legal and regulatory requirements below are not modified in respect of the abovematters with respect to our reliance on the work done by and the reports of the branchauditors.

Report on other legal and regulatory requirements

21. Based on our audit and on the consideration of the reports of thebranch auditors as referred to in paragraph 20 above we report that the provisions ofsection 197 read with Schedule V to the Act are not applicable to the Company since theCompany is a Government company as defined under section 2(45) of the Act. Accordinglyreporting under section 197(16) is not applicable.

22. As required by the Companies (Auditor's Report) Order 2020(‘the Order') issued by the Central G overnment of I ndia in terms of section143(11) of the Act we give in the ‘Annexure 1' a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.

23. Further to our comments in ‘Annexure 1' asrequired by section 143(3) of the Act based on our audit and on the consideration of thereports of the branch auditors as referred to in paragraph 20 above we report to theextent applicable that:

a) We have sought and except for the matters described in the Basis forQualified Opinion section obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit of theaccompanying standalone financial statements;

b) Except for the effects / possible effects of the matters describedin the Basis for Qualified Opinion section in our opinion proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books and proper returns adequate for the purposes of our audit have been receivedfrom the branches not visited by us;

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

d) The standalone financial statements dealt with by this report are inagreement with the books of account and with the returns received from the branches notvisited by us;

e) Except for the effects / possible effects of the matters describedin the Basis for Qualified Opinion section in our opinion the aforesaid standalonefinancial statements comply with I nd AS specified under section 133 of the Act;

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

g) The qualification relating to the maintenance of accounts and othermatters connected therewith are as stated in the Basis for Qualified Opinion section;

h) With respect to the adequacy of the internal financial controls withreference to standalone financial statements of the Company as on 31st March2022 and the operating effectiveness of such controls refer to our separate report in ‘Annexure2' wherein we have expressed a modified opinion; and

i) With respect to the other matters to be included in theAuditors' Report in accordance with rule 11 of the C ompanies (Audit and Auditors)Rules 2014 (as amended) in our opinion and to the best of our information and accordingto the explanations given to us and based on the consideration of the reports of thebranch auditors as referred to in paragraph 20 above:

i. Except for the effects of the matters described in paragraphs 3 and4 of the Basis for Qualified Opinion section the standalone financial statements disclosethe impact of pending litigations on the standalone financial position of theC ompany asat 31st March 2022 as detailed in note 47 to the standalone financialstatements;

ii. The Company as detailed in note 43(ii)(C) to the standalonefinancial statements has made provision as at 31st March 2022 as requiredunder the applicable law or accounting standards for material foreseeable losses if anyon long-term contracts including derivative contracts;

iii. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31st March 2022 except Rs 1.00 crore pertaining to unclaimed matured deposits which was required to be deposited in the I nvestor Education and Protection Fund during the year ended 31st March 2018 and which has not been deposited till 31st March 2022; The matured deposit has already been claimed by the successors/relatives of the individuals but is pending for submission of document of proof of legal heir by the claimants. Appropriate procedure is being followed for refunding the matured deposit to the legal heirs.

iv. a. The management has represented that to the best of itsknowledge and belief as disclosed in note 51.7 (a) to the standalone financialstatements no funds have been advanced or loaned or invested (either from borrowed fundsor securities premium or any other sources or kind of funds) by the Company to or in anyperson(s) or entity(ies) including foreign entities (‘the intermediaries')with the understanding whether recorded in writing or otherwise that the intermediaryshall whether directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever by or on behalf of the Company (‘the UltimateBeneficiaries') or provide any guarantee security or the like on behalf the UltimateBeneficiaries;

b. The management has represented that to the best of its knowledgeand belief as disclosed in note 51.7 (b) to the standalone financial statements no fundshave been received by the Company from any person(s) or entity(ies) including foreignentities (‘the Funding Parties') with the understanding whether recorded inwriting or otherwise that the Company shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party (‘Ultimate Beneficiaries') or provide any guarantee securityor the like on behalf of the Ultimate Beneficiaries; and

c. Based on such audit procedures performed as considered reasonableand appropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the management representations under sub-clauses (a) and (b) above containany material misstatement.

24. The interim/final dividends paid by the Company during the yearended 31st March 2022 in respect of such dividend declared for the previousyear is in accordance with section 123 of the Act to the extent it applies to payment ofdividend and as stated in notes 44 and 49.13 to the accompanying standalone financialstatements the Board of Directors of the Company have proposed final dividend for theyear ended 31st March 2022 which is subject to the approval of the members atthe ensuing Annual G eneral Meeting. The dividend declared is in accordance with section123 of the Act to the extent it applies to declaration of dividend.

25. As required by section 143(5) of the Act we given in ‘Annexure3' a statement on the matters specified in the directions issued by theComptroller and Auditor General of India in respect of the Company.

Appendix 1
List of branches / units / marketing regions audited by branch auditors
1. Central Marketing Organisation – Southern Region
2. Central Marketing Organisation – Western Region
3. Central Marketing Organisation – Eastern Region
4. Central Marketing Organisation – Transportation & Shipping
5. R&D Centre Ranchi
6. Rourkela Steel Plant
7. IISCO Steel Plant Burnpur
8. Salem Steel Plant
9. Vishweswaraya Iron and Steel Plant
10. SAIL Refractories Unit
11. C handrapur Ferro Alloy Plant

Annexure 1 referred to in Paragraph 22 of the IndependentAuditor's Report of even date to the members of Steel Authority of India Limited onthe standalone financial statements for the year ended 31st March 2022

In terms of the information and explanations sought by us and given by the Company and the books of account and records examined by us in the normal course of audit and to the best of our knowledge and belief and on the consideration of the reports of the branch auditors we report that:
(i) (a) (A) The Company has maintained proper records showing full particulars including quantitative details and situation of property plant and equipment right of use assets and investment property except in respect of certain lands where area and location needs to be updated in the fixed assets register. Further the area in respect of these lands need to be reconciled with the records of the authorities in the respective States and wherein as informed to us by the management the delay is due to procedural matters involved. Necessary action is being taken to update location and extent of area in respective plants in fixed assets registers. This is a continuous process.
(B) The Company has maintained proper records showing full particulars of intangible assets.
(b) The Company has a regular program of physical verification of its property plant and equipment right of use assets and investment property under which the assets are physically verified in a phased manner over a period of three years which in our opinion is reasonable having regard to the size of the C ompany and the nature of its assets. In accordance with this program certain property plant and equipment right of use assets and investment property were verified during the year and no material discrepancies were noticed on such verification. However there are certain land and buildings which are under encroachment / unauthorised occupation and hence were not subjected to physical verification. Necessary action is being taken to evict the occupants from land and building under encroachment / unauthorized occupation.

(c) The title deeds of all the immovable properties (includinginvestment properties) held by the Company (other than properties where the Company is thelessee and the lease agreements are duly executed in favour of the lessee) disclosed inthe financial statements are held in the name of the Company except for the followingproperties for which the Company's management is in the process of getting theregistration in the name of the Company:

Description of property Gross carrying value (Rs inCr) Held in name of Whether promoter director or their relative or employee Period since held Reason for not being held in name of company
Freehold land 10.29 Various Parties No 1986-2008 Mutation is pending
Freehold land 0.09 Various Parties No 1954-1974 Mutation is pending
Freehold land 0.01 Asian Refractories No 05-04-1963 Rehabilation on behalf of Dept. of Industries Bihar
Freehold land 0.12 Assam Sikiminate and Bharat Refractories Ltd No 11-02-1976 & 30-04-1978 N.A.
Freehold land 0.13 Indian Firebricks & I nsulation Company Ltd No 15-09-1960 N.A.
Freehold land 7.56 Tamil Nadu State Government No 1972-80 Land was aquired from private owners by Tamil Nadu State Government & Land owned by State Government was also transferred to salem plant for which no title deed was executed but as per state records land is registered under name of Salem Steel plant
Freehold land 126.24 Jharkhand State Govt. No 1960 MOU signing formalities awaited between Jharkhand State Govt. & SAIL/ Bokaro Steel Plant
Freehold land Freehold land 0.96 0.13 Government of West Bengal Triveni Structural Limited No No 1963 25-02-1970 Pending registration Pending registration
Description of property Gross carrying value (Rs inCr) Held in name of Whether promoter director or their relative or employee Period since held Reason for not being held in name of company
Freehold land 3.85 Chennai Metro Development Authority No 06-03-1995 Pending Registration
Freehold land 0.06 Southern Railway No 31-03-1984 Pending Registration
Building 0.28 Ashok Sankar Bhatnagar (HUF) No 01-08-2019 Pending Registration

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

Description of property Right of Use Asset Value Location Details of Lessor Period since held Reason for non- execution of lease agreement
Leasehold Land 0.49 Burnpur Government of West Bengal 01-08-2011 Lease property right in the name of sail for 99 yrs
Leasehold Land 0.20 Ranchi Mecon Ltd 1979-80 Held by Mecon Ltd(As per Act. No 16 of 1978)
Leasehold Land 147.81 Rourkela Uttar Pradesh State Industrial Development Corporation ( UP SIDC) 01-02-2009 Litigation with UPSIDCU.P.
Leasehold Land 3.28 Rourkela Government of Odisha 1960 Absence of Lease Agreement with Govt. of Odisha
Leasehold Land 15.07 Bhillai State of Chhattisgarh March 2013 Taken up with Concerned authorities
Leasehold Land 16.80 Kolkata K olkata Port Trust 07-05-2014 Pending Registration
Leasehold Land 11.97 Vishakha- patnam Vizag Seaport Pvt Limited 27-07-2004 Pending Registration
Leasehold Land 0.91 Jammu Jammu & Kashmir Govt 05-07-1968 Pending Registration
Leasehold Land 0.67 Kanpur Kanpur Development Authority 1986 Pending Registration
Leasehold Land 23.04 Kolkata Kolkata Metropolitan Development Authority 09-10-2009 Pending Registration
Leasehold Land 0.48 Durgapur State Government of west Bengal 1956-57 Pending with state govt for 1872.39 acres as informed matter taken up with the said govt.

(d) The Company has not revalued its Property Plant and Equipment andRight of Use assets or intangible assets during the year.

(e) No proceedings have been initiated or are pending against theCompany for holding any benami property under the Benami Transactions (P rohibition) Act1988 (45 of 1988) and rules made thereunder. Accordingly reporting under clause 3(i)(e)of theO rder is not applicable to the Company.

(ii) (a) The management has conducted physical verification ofinventory at reasonable intervals during the year except for inventory lying with thirdparties. In our opinion the coverage and procedure of such verification by the managementis appropriate and no discrepancies of 10% or more in the aggregate for each class ofinventory were noticed. I n certain cases the bulk inventories have been verified on thebasis of visual surveys/estimates. For inventory lying with third parties at the year-endwritten confirmations have been obtained by the management.

(b) The Company has a working capital limit in excess of Rs 5 croresanctioned by banks based on the security of current assets. The quarterly statements inrespect of the working capital limits have been filed by the Company with such banks andsuch statements are not in agreement with the books of account of the Company for therespective periods which were subject to audit/review as summarized below: (Rs incrores)

Name of the Bank / financial institution Working capital limit sanc- tioned Nature of current assets offered as security Quarter ended Amount disclosed as per return Amount as per books of accounts Difirences Remarks/ Reason if any
Consortium of banks led by State 10000 Stock and trade receivables 30th June 2021 20566 23069 (2503) As informed to us by the management the information to the banks was provided based on provisional numbers
Bank of India 30th September 2021 24015 23809 206
31st December 2021 25656 25611 45
31st March 2022 24826 24033 793

(iii) (a) The Company has provided advances in the nature of loans totwo companies. The details of the same are given below. Further the Company has notprovided any guarantee or security to companies firms Limited Liability Partnerships(LLPs) or any other parties during the year.

Particulars Advances in nature of loans
Aggregate amount during the year
- Jointly Controlled Entities -
Balance outstanding as at balance sheet date
- Jointly Controlled Entities 8.10

(b) The investments made guarantees provided security given and termsand conditions of the grant of all loans and advances in the nature of loans andguarantees provided are not prima facie prejudicial to the Company's interest.

(c) In respect of loans and advances in the nature of loans granted bythe C ompany the schedule of repayment of principal and payment of interest has beenstipulated and the repayments / receipts of principal and interest are regular.

(d) There is no overdue amount in respect of loans or advances in thenature of loans granted to such companies.

(e) The Company has granted loan which had fallen due during the yearand was repaid on or before the due date. Further no fresh loans were granted to anyparty to settle the overdue loans / advances in nature of loan.

(f) The Company has not granted any loan or advances in the nature ofloans which are repayable on demand or without specifying any terms or period ofrepayment.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 186 of the Act inrespect of loans investments guarantees and security as applicable. Further theCompany has not entered into any transaction covered under section 185.

(v) The Company has not accepted any deposits or there is no amountwhich has been considered as deemed deposit within the meaning of sections 73 to 76 of theAct and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglyreporting under clause 3(v) of the Order is not applicable to the Company.

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

(vii) (a) I n our opinion and according to the information andexplanations given to us undisputed statutory dues including goods and services taxprovident fund employees' state insurance income-tax sales-tax service tax dutyof customs duty of excise value added tax cess and other material statutory dues asapplicable have generally been regularly deposited with the appropriate authorities bythe Company though there have been slight delays in a few cases. Further no undisputedamounts payable in respect thereof were outstanding at the year-end for a period of morethan six months from the date they became payable.

(b) According to the information and explanations given to us thereare no statutory dues referred in sub-clause (a) which have not been deposited with theappropriate authorities on account of any dispute except for the following:

(Rs incrores)

Name of the statute Nature of dues Gross Amount Amount paid Amount disclosed as per return Amount as per books of accounts
Sales tax laws Sales tax 3.09 - 1989-90 1991-92 Supreme Court
357.47 25.82 1987-91 1992-93 1996-98 2004-05 2009-14 High court
818.29 102.64 1990-92 1993-99 2001-17 Tribunal
3.61 2.46 2006-07 2009-10 2011-12 2016-17 Additional Commissioner (Appeals)
6.81 3.01 1997-99 2014-15 Additional Commissioner
15.34 0.96 1984-85 1995-96 1997-99 2006-11 2012-15 Commissioner (Appeal)
42.62 5.27 1987-88 1996-98 2007-14 2015-18 2019-20 Commissioner of Sales tax
38.50 1.76 1993-94 1995-96 2007-18 Joint commissioner
0.17 - 1984-85 Assistant Commissioner
Central Excise Act 1944 Excise D uty 237.65 3.98 1991-96 2001-03 2005-06 2007-08 2011-12 2014-16 Supreme Court
188.75 - 1997-98 2000-01 2002-03 2006-12 2013-14 High C ourt
5346.13 22.32 1992-93 1996-2019 Tribunal
29.8 0.23 1988-89 2004-05 2007-08 2014-15 2016-18 2021-22 Commissioner (Appeal)
5.77 1.19 1993-94 1998-99 2004-18 Commissioner
Finance Act1994 Service tax 36.56 - 2004-05 High C ourt Tribunal
251.92 0.45 2001-04 2012-17
4.53 0.13 2011-17 2021-22 Commissioner (Appeal)
Customs Act1962 Customs D uty 1.65 - 2008-09 High C ourt Tribunal
4.3 - 2009-10 2015-16 2017-18 2020-21
Income Tax Act1961 Income tax 310.24 - 1998-2010 High C ourt Income tax A ppellate Trbunal
382.88 2.18 2003-04 2006-07 2009-11 2013-14
429.88 38.45 2011-17 Commissioner (Appeals)
Goods and Service tax Act 2017 Goods and Service tax 27.24 - 2017-18 High Court
Employee State Insurance Act1947 Employee State insurance 66.71 - 1999-2007 Employee State insurance Court
Employees Provident Fund Act1952 Provident Fund 0.69 - 1998-99 High C ourt
Municipal Corporation Act1956 Property tax 885.67 - 2015-21 High C ourt
Odisha Entry Tax Act1999 Entry Tax 164.98 76.02 2008- 2017 Supreme Court
276.47 17.9 2008-14 High C ourt
28.61 6.7 2004-10 Sales taxTribunal
40.48 4.02 2005-07 Additional
2013-15 Commissioner
Chhattisgarh Entry Tax Act 1976 Entry tax 3278.84 2164.2 1990-91 2008-09 High C ourt
Onwards
597.7 122.56 2010-15 Commercial Tax Tribunal
6.21 2.03 2013-2017 AdditionalCommissioner Commercial Tax (Appeal)
Jharkhand Act No. 11 2011 Entry Tax 86.23 - 2001-02 2012-18 High Court
Uttar Pradesh tax on Entry Tax 0.33 0.13 2008-11 High C ourt
Entry of goods into Local areas Act 2007 0.83 - 2013-14 Tribunal (Appeal)
HP Entry Tax Act 2010 Entry tax 3.18 0.25 2010-11 Deputy Excise and taxation Commissioner Appeals
Chhattisgarh (Adhosanrachna Vikas avam Paryavaran) Environment Cess 190.72 190.72 2006-07 to 2021-22 High C ourt
Upkar Adhiniyam 2005
Chhattisgarh Upkar (Sansodhan) Adhiniyam2004 Energy Development Cess 215.97 - Dec-2006 onwards Supreme Court
Forest (Conservation) Act1980 NPV 96.28 96.28 2017-18 Supreme Court
Chhattisgarh Upkar (Sansodhan) Adhiniyam 2004 Consolidated Tax 2.77 0.15 2021-22 High C ourt
CG Municipal Corporation Act1956 Consolidated Tax 0.72 0.72 2001-02 to 2009-10 High C ourt
Other Statutory Dues Forest develop- ment tax 5.01 - 2010-11 Supreme Court
Stamp Duty 2320.40 - 1992 High C ourt
Transit Pass- 99.64 54.86 2001-02 to High C ourt
Chhattisgarh October
Transit (Forest Produce) Rules 2001 2012
Other Statutory Dues Octroi 21.77 - 1992-93 to 1999-2000 High C ourt
Others 24.53 0.13 2000-2016 High Court /C ivil courts

(viii) According to the information and explanations given to us notransactions were surrendered or disclosed as income during the year in the taxassessments under the Income Tax Act 1961 (43 of 1961) which have not been recorded inthe books of accounts.

(ix) (a) A ccording to the information and explanations given to usthe C ompany has not defaulted in repayment of its loans or borrowings or in the paymentof interest thereon to any lender.

(b) According to the information and explanations given to us andrepresentation received from the management of the Company and on the basis of our auditprocedures we report that the Company has not been declared a willful defaulter by anybank or financial institution or other lender.

(c) In our opinion and according to the information and explanationsgiven to us money raised by way of term loans were applied for the purposes for whichthese were obtained.

(d) In our opinion and according to the information and explanationsgiven to us and on an overall examination of the financial statements of the Companyfunds raised by the Company on short term basis have not been utilised for long termpurposes.

(e) According to the information and explanations given to us and on anoverall examination of the financial statements of the Company the Company has not takenany funds from any entity or person on account of or to meet the obligations of itssubsidiaries associate or joint ventures.

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

(x) (a) T he Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments) during the year. Accordinglyreporting under clause 3(x)(a) of the Order is not applicable to the Company.

(b) According to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or (fullypartially or optionally) convertible debentures during the year. A ccordingly reportingunder clause 3(x)(b) of the Order is not applicable to the Company.

(xi) (a) To the best of our knowledge and according to the informationand explanations given to us no fraud by the Company or on the Company has been noticedor reported during the period covered by our audit.

(b) No report under section 143(12) of the Act has been filed with theCentral Government for the period covered by our audit. (c) The whistle blower complaintsreceived by the Company during the year as shared with us by the management have beenconsidered by us while determining the nature timing and extent of audit procedures.

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

(xiii) In our opinion and according to the information and explanationsgiven to us all transactions entered into by the Company with the related parties are incompliance with sections 177 and 188 of the Act where applicable. Further the details ofsuch related party transactions have been disclosed in the standalone financialstatements as required under I ndian Accounting Standard (Ind AS) 24 R elated PartyDisclosures specified in Companies (Indian Accounting Standards) Rules 2015 as prescribedunder section 133 of the Act.

(xiv) (a) In our opinion and according to the information andexplanations given to us the Company has an internal audit system as required undersection 138 of theAct which is commensurate with the size and nature of its businessexcept that the Company needs to strengthen the internal audit system on certain aspectsbeing testing of the IT environment automated controls within the ERP system and enhanceddocumentation of the testing performed.

(b) We have considered the reports issued by the I nternal Auditors ofthe Company till date for the period under audit.

(xv) According to the information and explanation given to us theCompany has not entered into any non-cash transactions with its directors or personsconnected with them and accordingly provisions of section 192 of the Act are notapplicable to the Company.

(xvi) The C ompany is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934. Accordingly reporting under clause 3(xvi) of theOrder is not applicable to the Company.

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

(xviii) There has been no resignation of the statutory auditors duringthe year. Accordingly reporting under clause 3(xviii) of the Order is not applicable tothe Company.

(xix) According to the information and explanations given to us and onthe basis of the financial ratios ageing and expected dates of realisation of financialassets and payment of financial liabilities other information accompanying the standalonefinancial statements our knowledge of the plans of the Board of Directors and managementwe are of the opinion that no material uncertainty exists as on the date of the auditreport that Company is capable of meeting its liabilities existing at the date of balancesheet as and when they fall due within a period of one year from the balance sheet date.

We however state that this is not an assurance as to the futureviability of the company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the company as and when they fall due.

(xx) In our opinion and according to the information and explanationsgiven to us there is no unspent amount under sub-section (5) of Section 135 of theCompanies Act 2013 pursuant to any project. Accordingly clauses 3(xx)(a) and 3(xx)(b) ofthe Order are not applicable

(xxi) The reporting under clause (xxi) is not applicable in respect ofaudit of standalone financial statements of the Company. Accordingly no comment has beenincluded in respect of said clause under this report.

Annexure 2 to the Independent Auditors' Report on StandaloneFinancial Statements of Steel Authority of India Limited for the year ended 31stMarch 2022

Independent auditors' report on the internal financial controlswith reference to the financial statements under clause (i) of sub-section 3 of section143 of the Companies Act 2013 (‘the Act')

1. In conjunction with our audit of the standalone financial statementsof Steel Authority of India Limited (‘the Company') as at and for the year ended31st March 2022 we have audited the internal financial controls with referenceto financial statements of the Company as at that date.

Responsibilities of management and those charged with governance forinternal financial controls

2. The Company's Board of Directors are responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialC ontrols over Financial Reporting (‘the Guidance Note') issued by the Instituteof Chartered Accountants of India (‘the ICAI'). These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of theCompany's business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditors' responsibility for the audit of the internal financialcontrols with reference to financial statements

3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the ICAIprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements and the Guidance Noteissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements includes obtaining an understanding of suchinternal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditors' judgementincluding the assessment of the risks of material misstatement of the standalone financialstatements whether due to fraud or error.

5. We believe that the audit evidence we have obtained and the auditevidence obtained by the branch auditors in terms of their reports referred to in theOther matter paragraph below is sufficient and appropriate to provide a basis for ourqualified audit opinion on the Company's internal financial controls with referenceto financial statements.

Meaning of internal financial controls with reference to financialstatements

6. A company's internal financial controls with reference tofinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany's internal financial controls with reference to financial statements includethose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could havea material effect on the financial statements.

Inherent limitations of internal financial controls with reference tofinancial statements

7. Because of the inherent limitations of internal financial controlswith reference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected.Also projections of any evaluation of the internal financial controlswith reference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Qualified opinion

8. According to the information and explanations given to us and basedon the consideration of reports of the branch auditors the following material weaknesshas been identified as at 31st March 2022 with respect to a branch of theCompany. The possible effects of the following material weakness have been assessed asmaterial but not pervasive to these standalone financial statements: On the internalfinancial controls with reference to financial statements of Durgapur Steel Plant abranch of the Company issued by an independent firm of Chartered Accountants vide itsreport dated 23rd May 2022 reproduced by us as under:

"material weakness has been identified in the Plant'sinternal financial controls with reference to financial statements as on 31stMarch 2022 relating to the process of reconciliation of G oods Receipt/ Invoice Receipt -GR/IR accounts (grouped under Trade payables/ payable for capital works)." is

9. A ‘material weakness' is a de_ciency or a combination ofdeffciencies in internal financial controls with reference to financial statements suchthat there is a reasonable possibility that a material misstatement of the company'sannual or interim financial statements will not be prevented or detected on a timelybasis.

10. In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements as at 31stMarch 2022 based on the internal financial controls with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note issued by the ICAI and except for theeffects / possible effects of the material weakness described above on the achievement ofthe objectives of the control criteria the Company's internal financial controlswith reference to financial statements were operating effectively as at 31stMarch 2022.

11. We have considered the material weakness identified and reportedabove in determining the nature timing and extent of audit tests applied in our audit ofthe standalone financial statements of the Company as at and for the year ended 31stMarch 2022 and the material weakness has affected our opinion on the standalone financialstatements of the C ompany and we have issued a qualified opinion on the standalonefinancial statements.

Other matter

12. We did not audit the internal financial controls with reference tofinancial statements in so far as it relates to eleven branches / units / marketingregions whose financial statements / financial information reflect total assets and netassets of Rs 56600.50 crores and Rs 30665.77 crores respectively as at 31stMarch 2022 and total revenues of Rs 39506.31 crores total net profit after tax of Rs7568.75 crores total comprehensive income of Rs 7580.83 crores and cash outflows (net)of Rs 12.75 crores for the year then ended as considered in the standalone financialstatements. The internal financial controls with reference to financial statements in sofar as it relates to such branches / units / marketing regions have been audited by branchauditors whose reports have been furnished to us by the management and our report on theadequacy and operating effectiveness of the internal financial controls with reference tofinancial statements for the Company under section 143(3)(i) of the Act in so far as itrelates to such branches / units / marketing regions is based solely on the reports of theauditors of such branches. Our opinion is not modified in respect of this matter withrespect to our reliance on the work done by and on the reports of the branch auditors.

Annexure 3 to the Independent Auditors' Report on StandaloneFinancial Statements of Steel Authority of India Limited for the year ended 31stMarch 2022

Comments

On the directions issued by the Comptroller and Auditor G eneral of India under sub section 143(5) of the Companies Act 2013 based on the verification ofrecords of the Company and information and explanations given to us and on considerationof the reports received from the branch auditors we report that:

Directions under Section 143(5) of Companies Act 2013

Matters Auditor's comments
1. Whether the Company has a system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. The Company uses SAP software for processing accounting transactions at five integrated steel plants Central Marketing Organisations and Head Office. In respect of other plants / units the Company uses legacy software systems.
Based on our audit and based on reports received from the branch auditors wherever the accounting transactions are based on workings outside IT system no instances of lack of integrity of accounts and no financial implications have been noted / reported.
2. Whether there is any restructuring of an existing loan or cases of waiver/write-off of debts/loans/interest etc. made by a lender to the Company due to the Company's inability to repay the loan? If yes the financial impact may be stated. As per information and explanations given to us by the management there was no restructuring of an existing loan or cases of waiver / write off of debts / loans / interest etc. made by a lender to the Company due to the Company's inability to repay the loan.
3. Whether funds received / receivable for specific schemes from Central / State agencies were properly accounted for / utilised as per its terms and conditions? List the cases of deviation. To the best of our information checks applied by us during the course of our audit and based on reports received from the branch auditors we are of the opinion that funds received / receivable for specific schemes from Central / State agencies were properly accounted for / utilised as per its terms and conditions.
4. Steel Authority of India Limited (SAIL) has valued the Inventory of 42.98 million tonnes sub-grade iron ore fines at Net Realizable Value amounting to `. 3791.18 crore in the Financial Statement of the Company for the year ended on 31st March 2020. Considering the slow movement and uncertainty in liquidation of the stock of sub-grade iron ore fines by the company during last two years from the old dump of sub-grade iron ore fines and absence of permission of the State Government of Jharkhand for sale of this fine from the mines located in the state following may be examined:
i) Whether valuation of such sub-grade iron ore fines is continued in the Balance Sheet of SAIL as on 31st March 2022. If yes it may be stated whether the valuation is appropriate and reasonable in view of quantum of sale and demand as well as age of the stock of sub-grade iron ore fines lying at different captive mines of the Company. Yes valuation of such sub-grade iron ore fines is continued in the Balance Sheet of Steel Authority of India Limited as on 31st March 2022.
As explained in note 49.11 of the standalone financial statements based on the opinions taken by the Company from the Additional Solicitor General of I ndia as well as the Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India (ICAI) the Company recognized these inventories as by-product inventory as at 31st March 2020 and since these inventories were generated over many years hence making it impracticable to ascertain the actual valuation the Company assigned a valuation to such inventories basis average selling price of similar sub-grade fines over the last 36 months as declared by Indian Bureau of Mines (IBM) a Government of I ndia organisation and as adjusted for royalty and other selling costs.
Comments
Further as explained in the note while on an overall basis during the current and the previous year there has been insignificant movement in the volume of such inventories there is significant market demand for sub-grade fines and the recent sales price trends are indicative of considerable margins over and above the carrying value of such inventories. The management also has plans to set up a beneficiation plant in future that will consume significant volume of sub-grade fines annually. Accordingly in view of the management there is no adjustment required in the carrying value of these inventories at this stage.
The management's assessment of classification and valuation of aforesaid inventory as described in note 49.11 is also considered fundamental to the understanding of the users of the standalone financial statements. Also refer to "Key audit matters" section of our main report.
ii) Whether there was sale of sizeable quantity in comparison with the entire quantity valued to determine the realistic market rate? There is insignificant movement of sub-grade iron ore fines during the year in comparison with the entire quantity valued. However for the reasons mentioned in note 49.11 in view of the management there is no adjustment required in the carrying value of these inventories at this stage.

For Tej Raj & Pal

For S. Jaykishan
Chartered Accountants Chartered Accountants
Firm Registration No. 304124E Firm Registration No. 309005E
Sd/- Sd/-
CA. B. Vijay CA. Vivek Newatia
Partner Partner
M.No. 214678 M.No. 062636
UDIN : 22214678A JOGWW4504 UDIN : 22062636AJLPPQ3664
Place : New Delhi Place : New Delhi
For Walker Chandiok & Co LLP For K A S G & Co.
Chartered Accountants Chartered Accountants
Firm Registration No. 001076N/N500013 Firm Registration No. 002228C
Sd/- Sd/- For and on behalf of Board of Directors
CA. Neeraj Sharma CA. Keshaw Kumar Harodia
Partner Partner
M.No. 502103 M.No. 034751 Sd/-
UDIN : 22502103AJKYRT9482 UDIN : 22034751AJLQXV7763 (Soma Mondal)
Place : New Delhi Place : New D elhi Chairman
Date: 23rd May 2022 Place: New Delhi
Date: 10thA ugust 2022

.