"As per Clause 1.3 of Part B of the ‘Scheme of Arrangement'- “All immovable properties of the Demerged Company in relation to the Demerged Undertaking including land together with the buildings and structures standing thereon and rights and interests in immovable properties of the Demerged Company in relation to the Demerged Undertaking, whether freehold or leasehold or otherwise and all documents of title, rights and easements in relation thereto shall stand vested in and/or be deemed to have been vested in the Resulting Company, by operation of Applicable Law. Such assets shall stand vested in the Resulting Company and shall be deemed to be and become the property as an integral part of the Resulting Company by operation of Applicable Law. The Resulting Company shall always be entitled to all the rights and privileges attached in relation to such immovable properties and shall be liable to pay appropriate rent, rates and Taxes and fulfil all obligations in relation thereto or as applicable to such immovable propertiesThe title to such properties shall be deemed lo have been mutated and recognized as that of the Resulting Company and the mere filing thereof with the appropriate registrar or sub registrar or with the relevant Government Authority if and as may be required shall suffice as record of continuing title with the Resulting Company and shall be constituted and deemed mutation and substitution hereof. The Resulting Company shall be entitled to the delivery and possession of all documents of title for such immovable properties in this regard. It is hereby clarified that all the rights and title and interest of the Demerged Undertaking in any lease hold properties shall without any further act. instrument or deed be vested to or be deemed to have been vested in the Resulting Company"".Accordingly, all the relevant immovable assets have been transferred in the books of accounts of NMDC Steel Ltd., the Resulting Company."

4. During the year 2022-23 a review of residual and useful life of PPE was done and as per the review there is no change recommended. The Useful life of all the PPE is as per schedule II except for the following PPE whose life as given under is determined as per technical assessment.

1. Unsecured redeemable Non-Convertible Taxable Bonds in the nature of debentures, NMDC Limited Senes I 2020 of the face value of Rs. 10,00,000/- each (NCD’s) for an aggregate amount of Rs.523.80 crores at an interest rate of 7.30% for a tenure of 5 years have been allotUed on 28.08.2020. Subsequent to demerger and revision in the Rating from ' AAA' to ‘A-‘ the coupon rate has been revised to 8.80% w.e.f. 16.02.2023.

2. Regarding TERM Loan- NMDC Board in its 525th meeting held on 10.12.2019 has accorded approval for borrowing up to a limit of Rs.5,000 crores for capex requirements of the company by raising terms loans from Banks/ Financial Institutions etc.. Accordingly, Rupee term Loan facility (RTLl of Rs. 4476.20 crores was availed from State Bank of India (SBI) for part funding of Nagarnar Integrated Steel Plant (NISPI, at an interest rate fixed at 7.10% p.a till the Date of Commencement of Commercial Operation and there after 15 bps above the six months MCLR. NMDC. as a security, has hypothecated the entire Fixed Assets of the Project INISP) including Plant and Machinery, equitable mortgage of Land & Building lexcept forest land! and First charge on the entire cash flows of the NI5P. The availability period of the loan is 6 months from the Date of commencement of Commercial Operation repayable in 30 quarterly instalments. The Common Loan Agreement has been entered on 10.06.2021 with SBI for RTL not exceeding Rs. 4476.20 crore and a drawdown of Rs. 3294.50 crores has been made till 31.03.2023 against the loan.

2.32 Disclosures under Accounting Standards:

2.32.1 Ind AS 19 Employee Benefits:

As per the Scheme of Arrangement between NMDC Limited and NMDC Steel Limited Clause No.2.1 of Part B. all staff and workmen and employees of the demerged company employed in relation to the demerged undertaking, as may be identified by the Board of the demerged company in service on the effective date shall be deemed to have become staff, workmen, employees of the resulting company from the appointed date based on continuity of service.

Pending a decision by the Board on the above, all the employees posted at NISP Unit of NMDC Limited are being maintained in the rolls of NMDC. Accordingly, the expenses pertain to Salaries & welfare expenses post-demerger effective date i.e., from 13.10.2022 till 31.03.2023 of Rs 47.44 Cr is grouped under the head - IEDC Other Expenses.

2.32.2 Segment Reporting as per Ind AS-108

1. The Company had not commenced commercial production as of 31-03-2023 and no Profit and Loss has been reported. No reportable operating segments are identified as per Ind AS 108- “Operating Segment".

2.32.3 Disclosures-RevenueflndAS 115)

The Company had not commenced commercial production during the reporting period of FY 2022-23. Hence No disclosures under Ind AS 115.

2.32.4: Accounting policies, change in Accounting Estimates and Errors (As per Ind-AS 8):

I. Adoption of Accounting Policies

Prior to demerger of NISP, the financial statements of NISP were being prepared in line with the standalone accounting policies of NMDC Ltd. Therefore, Ihe Company (NMDC Steel Limited) has adopted the accounting policies of NMDC Ltd with certain logical changes to maintain the continuity.

2.32.5: Related Party Disclosures (lndAS-24): i) List of related parties*.

A. The Company is not having any Subsidiaries, JV’s and Associate Companies.

B. NMDC Limited:

NMDC Steel Limited was a subsidiary of NMDC Limited upto the previous year ended 31-03-2022. However as per the Scheme of Arrangement (effective from 13-10-20221 between NMDC Limited and NMDC Sleet Limited, the Nagarnar Steel Plant got demerged from NMDC Limited and all the assets and Liabilities transferred to NMDC Steel Limited as per the Scheme of arrangement wilh the appointed date as 01.04.2021.

The Functional Directors and Govt. Nominee Directors of NMDC Limited are the Directors on Board of NMDC Steel Limited also.

2.32.7 Discontinuing Operations |lndAS-105)

The Company has not yet started its Commercial production as of 31.03.2023. There are no Discontinued Operations.

2.32.8 Intangible Assets (lndAS-38): R&D:

The Company has not yet started its commercial Production as of 31.03.2023. There are no R&D activities at present.

2.32.9 Impairment of Assets (Ind AS - 36):

The Steel Plant is in the construction phase as of 31.03.2023 and hence Impairment of Assets is not identified.

2.32.10 Provisions. Contingent Liabilities and Contingent Assets (lndAS-37):

Necessary details in regard to provisions have been disclosed in notes 2.14.4,2.17& 2.31.

2.33: Disclosure as required under Regulation 34(3! and 53(f) of 5EBI (LODR) Regulations, 2015.

2.33.1 Loans and advances in the nature of loans to Subsidiaries/Jvs’ where there is no repayment schedule or no interest: There are no Subsidiaries / JV's. as of 31 -03-2023.

2.33.2 There are no Investments by the loanees as mentioned in 2.33.1 in the shares of NMDC Steel Ltd.

2.33.3 Loans to Associate Companies

There are no Associate Companies as of 31-03-2023.

2.33.4 There are no loans and advances in the nature of loans to firms/companies in which directors are interested except as stated above.

2.34 Others:

2.34.1: Scheme of Arrangement:

The demerger scheme of arrangement between NMDC Limited ("Demerged Company") and NMDC Steel Limited (NSLI ("Resulting Company" or the "Company") and their respective shareholders and creditors (the "Scheme") pursuant to the provisions of the Section 230-232 of the Companies Act. 2013 ("Act"), other applicable provisions and rules thereof thereunder (hereinafter referred to as the “Scheme"), involving demerger of NMDC Iron & Steel Plant Business Undertaking ("Demerged Undertaking" or “NISP") from Demerged Company to the Resulting Company has been duly sanctioned by the Ministry of Corporate Affairs CMCA I vide its order dated 06 October 2022 ("Order"). NMDC Limited received the Order on 11 October 2022 and filed the same with the concerned Registrar of Companies on 13 October 2022. Hence, the Scheme is operative from 13 October 2022 (Effective Date). The Appointed Date of the Scheme is 01 April 2021. Accordingly, with effect from the Appointed Date, the entire Demerged Undertaking of NMDC Limited has been transferred and vested into NMDC5teel Limited.

As per the share swap ratio approved in the Order, the Company has issued 1 (one) equity share of the Company ot Rs. 10 each fully paid-up for every 1 (Onel equity share held in the Demerged Company of Rs. 1 each fully paid-up.

Further, as per the Order, the existing Issued Share Capital of Rs. 11,00,000 consisting of 1,10,000 shares of 10 each held by Demerged Company shall stand cancelled on allotment of equity shares under share swap ratio.

The assets and liabilities pertaining to the Demerged Undertaking, transferred to and vested in the Resulting Company pursuant to the Scheme are recorded at their respective carrying values as appearing in the books of the Demerged Company.

Accordingly, the share capital account has been credited with the aggregate face value of the shares issued to the shareholders of Demerged Company pursuant to the Scheme and the difference has been accounted in the appropriate reserves within "Other Equity".

2.34.2: Disinvestment of NMDC Steel Limited:

Cabinet Committee on Economic Affairs ("CCEA"). in its meeting dated October 27. 2016, gave in-principle approval for strategic disinvestment ("Strategic Disinvestment"! of several CPSEs including the NISPunit of NMDC Ltd. Subsequently, on October 14, 2020, CCEA gave its ’in-principle’ approval to the demerger of NISP from NMDC and strategic disinvestment of the resulting entity by selling entire stake of Government of India I’Gol").

As per the Preliminary Information Memorandum and Request for Expression of Interest invited, GOI had decided to divest its 50.79% shareholding in Resulting Company I'NMDC Steel Limited" or "N5L") along with management control to strategic buyer. Additionally, Gol shall offer 10% stake in Resulting Company to NMDC Limited after the strategic buyer has been identified through the bidding process.

2.34.3: Change of Coupon rate for NCDs:

The Non-Convertible Debentures of Rs. 523.80 Cr were issued by NMDC Ltd at a coupon rate of 7.30% for a tenure of 5 years from the date of allotment i.e., 28th Aug,2020 to meet the capex requirement of the Steel Plant. The NCDs are unsecured, non-cumulative. non-convertible, redeemable taxable bonds of Rs. 10 Lakhs each (Series I-2020I issued at face value offered for private placement. The bonds are rated by ICRA Limited as "ICRA AAA" (pronounced as "ICRA Triple A” with outlook on the long term is stable) And India Rating and Research Private Limited as IND AAA" (pronounced as "IND Triple A" with outlook on the long term is stable) at the time of Issue by NMDC Ltd.

Post-demerger of NISP from NMDC and part of NSL, the rating agencies M/s ICRA Limited and M/s India Ratings & Research have downgraded the ratings to ICRA A" on Rating watch with Developing Implications and Ind A-/Stable" respectively. As the lowest credit rating i.e.. "A-“ has been downgraded from AAA", by six notches and therefore the coupon rate works out to 8.80% from the existing rate of 7.30%. The above coupon rate of 8.80% is payable from 16th Feb’2023 i.e., from the date of downgrade of the Rating. Accordingly, the additional financial implication of Rs. 0.95 Cr has been provided for in the FY 2022-23.

2.34.4Term Loan:

NMDC Board in its 525th meeting held on 10.12.2019 has accorded approval for borrowing up to a limit of Rs.5,000 crores for capex requirements of the company by raising terms loans from Banks/ Financial Institutions etc.. Accordingly, Rupee term Loan facility (RTL) of Rs. 4476.20 crores were availed from State Bank of India (SBI) for part funding of Nagarnar Integrated Steel Plant {NISPl, at an interest rate fixed at 7.10% p.a till the Date of Commencement of Commercial Operation and there after 15 bps above the six months MCLR. NMDC Ltd., as a security, has hypothecated the entire Fixed Assets of the Project (NISPl including Plant and Machinery, equitable mortgage of Land & Building (except forest landl and First charge on the entire cash flows of the NISP. The availability period of the loan is 6 months from the Date of commencement of Commercial Operation repayable in 30 quarterly instalments.

The common Loan agreement has been entered on 10.06.2021 with SBI for RTL not exceeding Rs. 4476.20 crore and a drawdown of Rs.3294.50 crores have been made till 31.03.2023 against the loan.

2.34.5 CSR Expenditure:

The Company had not commenced the commercial operation as ot 31.03.2023 and accordingly, the average PBT for last three years is NIL. Therefore, as per Sec 135 & Sec 198 of the Companies Act‘2013, which requires spending of at least 2% of the last three years' average PBT on CSR is not applicable on the company for FY 2022-23.

2.34.6 Cost Audit Applicability:

The Company has not commenced its commercial production as of 31-03-2023 and the Sates Turnover during FY 2022-23 is Nil. Hence maintenance of the cost recordsas per Section 148 of the Companies Act 2013 is not applicable.

11 Assets that are not financial assets (such as receivables from statutory authorities, prepaid expenses, advances paid and certain other receivables] as at March 31.2023 and March 31,2022 respectively are not included.

2| Other liabilities that are not financial liabilities Isuch as statutory dues payable, advances from customers and certain other accruals) as at March 31,2023 and March 31,2022 respectively are not included.

The carrying amounts of above financial assets and liabilities are considered to be same as their fair value, due to their short-term nature.

2.34.9 Financial Risk Management Risk Management Framework

The Company' is exposed to various risks in relation to financial instruments. The Company sets appropriate risk limits and contcots and monitor risks and adherence to limits. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their rotes and obligations.

A. CREDITRISK:

Credit risk is the risk that counterparty will not meet its obligations to the Company under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its receivables, deposits with banks and Loans Credit Risk Management:

Receivables

The Company is in the construction stage and on verge of commissioning. Since Commercial production has not yet started, there are no receivables as yet.

Cash and Cash Equivalent

Credit risk related to cash and cash equivalents is managed by the company's treasury department in accordance with DPE guidelines & company's policy. Investments are made only with scheduled commercial banks having a minimum net worth of Rs 500 Cr and diversifying the bank deposits.

Other Financialassets

Other financial assets include loans and advances to employees and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amountsare within defined limits.

B. Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Besides Investments in FD's is made with different maturity to ensure Liquidity. The Company is in talks with banks to obtain Working Capital & Rupee Term Loans for meeting its obligations. Any Delay in Commercial Operations/Sanction of Loans could lead to Liquidity risk.

C. Market Risk:

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.

Foreign Currency risk:

The Company has not yet started its commercial production as of 31 -03-2023. The company does not carry any material exposure to currency fluctuation risk.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates".

Long term borrowings are normally at fixed rates & the conditions of borrowings specify the change in the interest rates on occurrence of events such as start of commercial production & changes in the rating of company.

The Company’s exposure to interest rate risk is subject to Credit Rating.

Note No. 2.34.10 CAPITAL MANAGEMENT:

Risk Management:

The primary objective of the Company's capital management is to maximise the shareholders' value. The Company's objectives when managing the capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.

The Board ‘s policy is to maintain a strong capital base so as to maintain investor, creditor and marked confidence and to sustain future development of the business. The Board of Directors and senior management monitors the return on capital, which the Company defines as result from operating activities divided by total shareholders' Equity. However, the project is in construction stage and on the verge of commissioning. The Company has not yet started commercial production.

During the period under review and based on the documents, forms made available to me and the explanations/assurances provided by the management, the Company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above subject to the following observations:

a. Pursuant to the provisions of Section 149 (4) of the Companies Act, 2013 and Regulation 17 (1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and pursuant to the Clause no. 3.1.4 of DPE Guidelines issued by Department of Public Enterprises, in case where the Chairman of the Board is executive then at-lcast half of the Board shall be Independent Directors. However, it has been observed that there were no Independent Directors on the Board of the Company as required under aforesaid provisions/regulations.

b. Pursuant to the provisions of Regulation 17 (1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 every top 500 Listed entity shall have at-leasl one Women Independent Director on its Board. However, it has been observed that there was no Women Independent Director on the Board of the Company.

c. Pursuant to the provisions of Section-177 of the Companies Act, 2013,

Regulation 18 of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 and Clause No. 4.1 of DPE Guidelines issued by Department of Public Enterprises; the Company was required to Constitute Qualified and an Independent Audit committee. However, it has been observed that in absence of independent Director on the Board the Company has not constituted any Audit Committee and not complied the other provisions relating to Audit Committee.

d. Pursuant to the provisions of Sec-178 of the Companies Act, 2013,

Regulation 19 of Lhc SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 and Clause No. 5.1 of DPE Guidelines issued by Department of Public Enterprises, the Company was required to Constitute NRC/Remuneration committee. However, if has been observed that in absence of independent Director on the Board of the Company, the Company has not constituted any NRC/Remuneration Committee and not complied the other provisions relating to NRC/ Remuneration Committee.

e. Pursuant to the provisions of see-178 of the Companies Act, 2013,

Regulation 20 of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015, the Company was required to constitute the Stakeholders Relationship Committee. However, if has been observed that the Company has not constituted any Stakeholder Relatfat&ap, Committee till the end of the financial year. >

/. Pursuant to the provisions of Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. being covered under top 1000 Listed Company the Company was required to constitute the Risk Management Committee. However, it has been obsen/ed that the Company has not constituted any Risk Management Committee.

g. As per the secretarial standards, the notice of Board meeting is required to be given at least 7 (seven) days in advance of the meeting. However, during the financial year there were some instances the meetings of the Board were convened at a shorter notice. It was replied by the management that whenever meeting convened at shorter notice, it was always convened with the consent of the Board members.

Subject to observations as aforesaid. I further report that:

Subject to my observations given in para no. (a) & fb) above, I report that the Board of Directors of the Company is duly constituted as per the Articles of Association of the Company. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. In term of the Article of Associations of the Company all appointments to the Board are made by Honhlc President of India through its administrative Ministry i.e. Ministry of Steel.

1 further report that there exists a system for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. Majority decision is carried through while the dissenting members' views, if any, are captured and recorded as part of the minutes.

1 further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

1 further report that for the financial year 2022-23, National Stock Exchange of India Limited imposed fine of Rs. 4,40,000/- including GST for non-compliance of the requirements pertaining to the Compositions of the Board of Directors including Women Independent Director as per the Regulation 17(1), Constitution of Audit Committee as per the Regulation 18 (1), constitution of Nominations and Remunerations Committee as per the Regulation 19(1) &(2), constitution of Stakeholder Relationship Committee as per the Regulation 20(2)/(2A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. It has been replied by the Company to the Stock Exchange that the Company is Public Sector Enterprises (CPSE) comes under the administrativq^if^{i^''<)?>.Nv

Ministry of Steel, Government of India. As per the Article 74 of the Article of Associations of the Company, the President of India shall appoint all members of the Board of Directors and the appointments of Independent Directors are still awaited.

This report is to be read with my letter of even date which is annexed as Annexure A and forms an integral part of this report.