Auditor Report of NLC India Ltd.

Mar 31, 2025

We have audited the accompanying Standalone Financial
Statements of NLC INDIA LIMITED (“the Company”)
(“NLCIL”), which comprise the Standalone Balance Sheet as
at 31^st March, 2025, the Standalone Statement of Profit and
Loss (including other Comprehensive income), the Standalone
Statement of Changes in Equity and the Standalone Statement of
Cash Flows for the year then ended including a summary of the
material accounting policies and other explanatory information
in which are included the Returns for the year ended on that
date audited by the branch auditors of the Company’s branches
located at Talabira and Barsingsar (hereinafter referred to as
“Standalone Financial Statements”).

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

Basis for Opinion

We conducted our audit in accordance with the Standards on
Auditing (SAs) specified under Section 143(10) of the Act. Our
responsibilities under those Standards are further described in
the “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 India (“ICAI”) together
with the ethical requirements that are relevant to our audit of the
Standalone Financial Statements under the provisions of the Act
and the Rules thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and
the ICAI’s Code of Ethics. We believe that the audit evidence
obtained by us and the audit evidence obtained by the branch
auditors in terms of their reports referred to in “Other Matters”
section below, is sufficient and appropriate to provide a basis for
our opinion on the Standalone Financial Statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 59 (c) of the Standalone Financial
Statements, wherein the non-availability of adequate quantum
of land for lignite mining operations at Neyveli mines and power
generation have been elaborated upon. Such non-availability of
lignite mining land may cast significant uncertainties relating to
the operations of the Company, and eventually the Company’s
ability to continue as a going concern in future.

Our Opinion is not modified in respect of this matter.

Emphasis of Matter

We draw attention to the following matters in the Notes to the
Standalone Financial Statements:

1. Note 24(g), with regard to amount billed on VSVS to
DISCOMs and the matter is sub judice, the Company has
retained the regulatory deferral liability for the disputed
amount of ?386.51 Crore, along with accrued interest of
?16.52 Crore on the amount already received. Accordingly,
a total regulatory deferral liability of ?403.03 Crore has
been recognized as of March 31, 2025 in this regard.

2. Note 54, with regard to the determination of the transactions
with MSME vendors and balances thereof, have been
done based on the certificate received from the respective
parties as made available in the GEM Portal system. The
disclosures in respect of MSME vendors, interest liability
thereon as per MSME Act, Income tax computations
as such need to be ascertained from MSME Vendor are
computed manually and accounted accordingly.

3. We draw attention to Note 46 to the statement, which states
that the Company has filed tariff petitions for the control
period 2024-29 and truing-up petitions for the control
period 2019-24 within the statutory timelines.

4. Note 5 of the statement, which describes the Company’s
updated accounting policy for capitalization and
amortization of ongoing mine development costs. During
the current financial year, the Company has revised
its policy to provide that ongoing development costs
incurred after the Commercial Operation Date (CoD) of
the respective mines, as specified in the approved mining
plan, are classified as “Ongoing Development Cost” and
capitalized until the mine achieves Peak Rated Capacity
(PRC). These capitalized costs are amortized over a period
of 20 years from the date of capitalization or the life of the
mine, whichever is earlier. In this regard the company has
accounted an amount of H 64.7 Crore in CWIP.

5. Note 7(a)(b) which states that the during the Financial
Year the Company has exercised its rights issue option and
made additional investment of 33,17,49,798 equity shares
in its subsidiary, M/s Neyveli Uttar Pradesh Power Limited
(NUPPL), at H 10 per share, aggregating to H 331.75 Crore.
As a result, the total investment in the subsidiary as on
31^st March 2025 stood at H 2,969. 13 Crore.

6. Note 7(a)(c) which states that the during the Financial Year
the Company has subscribed to additional equity shares of
11,96,50,000 equity shares in its subsidiary, M/s NLC India
Renewable Limited (NIRL), at H 10 per share, aggregating
to H 119.65 Crore. As a result, the total investment in the
subsidiary as on 31^st March 2025 stood at H 119.75 Crore.

Our Opinion on the Standalone Financial Statements is not
modified in respect of the above matters.

As reported by the auditor of the Talabira Branch in
their Independent Auditor’s Report dated 13th May,
2025 is below:

Note no. 23 (b) of notes to Financial Statements- regarding
provision made during the year, against disputed mining
charges and HPC wages amounting to H 160.10 Crore.

Opinion of the auditors of the branches with respect to
branches’ financial statements is not modified in respect of the
above matters.

Key Audit Matters

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

The following have been considered as Key Audit Matters:

Sl. No. Key Audit Matter		Auditors’ Response
1	Expected Credit Loss on Trade Receivables Ind AS 109 - Financial instruments (Ind AS 109) requires the	Our audit procedures performed included the following:
	Company to provide for impairment of its financial instruments (designated as amortized cost or fair value through other comprehensive income) using the expected credit loss (ECL) approach. Such ECL allowance is required to be measured	• We understood the process of ECL estimation and tested the design and operating effectiveness of key controls around data extraction and validation;
	considering the guiding principles mentioned in the Standard.	• We, having regard to profile and the background of the
	In the process of applying such principles and other requirements of the Standard, a significant degree of judgment has been applied by the management. The ECL in respect of trade receivables represents management’s best estimate of the loss allowance. The ECL allowance is computed based on a	customers, collection of dues and the measures of the Govt(s) in regard to settlement of dues by such customers, understood the methodology used by the management to arrive at their ECL provision and examined certain assumptions used by the Company;
	simplified model considering ageing of trade receivables and	• We also tested the arithmetical accuracy and assessed the
	also trend of collection of dues.	judgments used in the management’s model used to calculate
	The calculation ofECL allowance is a complex area considering	provision for credit losses;
	the profile and background of customers and requires	• We have initiated confirmation of balances and the
	management to make significant assumptions on customer	differences, if any, were reconciled by the Management
	payment behaviour and other relevant risk characteristics	in respect of confirmations received. We have reviewed
	when assessing the historical information and estimating the	the same and noted on the explanations provided by the
	level and timing of expected future cash flows.	management in arriving at the loss allowance for the year
	The provision for ECL on trade receivables amounts to	ended 31st March, 2025; and
	H 267.95 Crore as at 31st March, 2025. Refer Note 10(a)(b) to	• We assessed the disclosures included in the Ind AS Financial
	the Standalone Financial Statements.	Statements with respect to such allowance/ estimate are in accordance with the requirements of Ind AS 109 and Ind AS 107 - Financial Instruments: Disclosures.

Sl. No. Key Audit Matter		Auditors’ Response
2	Property, Plant & Equipment and Intangible Assets
	Property, Plant and Equipment and Intangible Assets amounting	Our audit procedures performed included the following:
	to H 17587.96 Crore represents significant balances recorded in	• We evaluated the assumptions made by management in the
	the Balance Sheet in the Standalone Financial Statements.	determination of carrying values and useful lives to ensure
	There are areas where management judgement impacts the	that these are consistent with the principles of Ind AS 16 -
	carrying amount of property, plant and equipment, intangible	Property, Plant and Equipment and Ind AS 38 - Intangible
	assets and their respective depreciation / amortization rates.	Assets;
	These includes the decision to capitalise or expense costs;	• We assessed whether the carrying values and the useful lives
	the timeliness of the capitalization of the assets; useful life	were reasonable by challenging management’s judgements
	of the assets and the use of the management assumptions	through comparing the useful lives prescribed in Schedule II
	and estimates for the determination or the measurement and	to the Companies Act, 2013, rates/ guidelines prescribed
	recognition criteria for assets retired from active use.	by Central Electricity Regulatory Commission (CERC),
	Due to the materiality in the context of Balance Sheet of the	guidelines issued by Ministry of New and Renewable
	Company and the level of judgement and estimates required,	Energy (MNRE) and the useful lives of certain assets as per
	we consider this to be as area of significance and considered	the technical estimate of the management;
	to be a key audit matter. Refer Note 2 and 4 to the Standalone	• We compared the useful lives of each class of asset in the
	Financial Statements.	current year to the previous year to determine whether there were any significant changes in the useful lives of assets; • We tested the controls in place over the property, plant and equipment and intangible assets, evaluated the appropriateness of capitalisation policies, performed tests of details on costs capitalised and assessed the timeliness of capitalisation including decapitalisation of assets retired from active use and the application of the asset life; • In performing these substantive procedures, we assessed the judgements made by management including the nature of underlying costs capitalised; the appropriateness of asset lives applied in the calculation of depreciation and amortization; and • We have observed that the management has regularly reviewed the aforesaid judgments and there are no material changes.
3	Revenue from Operation - Sale of Power
	The company records revenue from sale of power as per	We have obtained an understanding of the CERC Tariff
	the principles enunciated under Ind AS 115, based on tariff	Regulations, orders, circulars, guidelines and the Company’s
	approved by the Central Electricity Regulatory Commission	internal circulars and procedures in respect of recognition and
	(CERC) as modified by the orders of Appellate Authorities.	measurement of revenue from sale of power comprising of
	This is considered as key audit matter due to the nature and	capacity and energy charges and adopted the following audit
	extent of estimates made as per the CERC Tariff Regulations,	procedures:
	which leads to recognition and measurement of revenue from	• Evaluated and tested the effectiveness of the Company’s
	sale of power being complex and judgemental.	design of internal controls relating to recognition and
	The Sale of Power amounts to H 7323.59 Crore for the year	measurement of revenue from sale of power.
	ended 31st March, 2025. Refer Note 25 to the Standalone	• Examined the Company’s material accounting policies with
	Financial Statements.	respect to assessing compliance with Ind AS 115 “Revenue from Contract with Customers”. • Verified the accounting of revenue from sale of energy based on provisional tariff computed as per the principles of CERC Tariff Regulations 2024. • Assessed the disclosures in accordance with the requirements of Ind AS 115 “Revenue from Contract with Customers”.

Sl. No. Key Audit Matter		Auditors’ Response
4	Financial Liabilities - Borrowings The standalone balance sheet as of 31st March, 2025, reflects financial liabilities-Borrowings totalling H 7524.97 Crore. These liabilities encompass various forms of borrowing, comprising bonds issued, bank borrowings, and foreign currency borrowings. Refer Note 17(a) and 21(a) of the Standalone Financial Statements. The above includes an amount of H 2518.23 Crore classified as current liabilities. There may be complex accounting requirements around the subsequent measurement, and presentation of financial liabilities. Evaluating the suitability of debt covenants and assessing the potential risk of covenant violations necessitates substantial auditor judgement.	Our key audit procedures included the following: • We have evaluated the appropriateness of the accounting policies and disclosures related to financial liabilities. • Tested the accuracy and completeness of financial liability balances by examining supporting documentation like debt agreements and analysed debt covenant calculations prepared by management and considered the existence of any potential breaches. • Assessed the adequacy of disclosures in the financial statements related to financial liabilities.
5	Inventory - Lignite and Stores & Spares; As at 31st March 2025, the Company held a significant quantity of lignite inventory at various stock points, along with a substantial balance of stores and spares used in operations and maintenance. Determination of lignite quantities and valuation involves complexities due to the nature of the material, volume of movement, and reliance on stock point level controls. Additionally, judgment is involved in estimating losses, applying appropriate valuation methods, and ensuring classification between capital and revenue for stores and spares. Given the materiality of inventories and the significant audit effort involved, this was considered a key audit matter.	Our audit procedures performed included the following: • Conducted walkthroughs and detailed review of inventory movement and control processes across all lignite stock points from excavation to consumption. • Performed physical verification of lignite at all stock points, and for stores & spares at selected locations as at year-end. • Reviewed excavation records, transfer records, consumption logs, and reconciliations maintained at each stock point. • Held discussions with officials at various stock points to understand operational processes and documentation flow. • Evaluated management’s inventory valuation methodology for compliance with applicable accounting standards. • Verified cost records, tested valuation rates, and reviewed aging and obsolescence of stores & spares. Assessed the adequacy of related disclosures in the financial statements.

Information other than the Standalone Financial
Statements and Auditors’ Report thereon

The Company’s Board of Directors is responsible for the
preparation of the other information. The other information
comprises the information included in the Directors’ Report
including Annexures to Directors’ Report and Business
Responsibility & Sustainability Report, but does not include
the Standalone Financial Statements, Consolidated Financial
Statements and our Auditors’ report thereon. The other
information is expected to be made available to us after the
date of this Auditors’ report.

Our opinion on the Standalone Financial Statements does not
cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the Standalone Financial
Statements, our responsibility is to read the other information
identified above when it becomes available and, in doing
so, consider whether the other information is materially
inconsistent with the Standalone Financial Statements or our
knowledge obtained in the audit, or otherwise appears to be
materially misstated.

On receipt of other information, if we conclude that there is a
material misstatement therein, we are required to communicate
the matter to those charged with governance and we shall:

(a) If the material misstatement is corrected, perform
necessary procedure to ensure the correction; or

(b) If the material misstatement is not corrected after
communicating the matter to those charged with
governance, take appropriate action considering
our legal rights and obligations, to seek to have the
uncorrected material misstatement appropriately brought
to the attention of users for whom this Auditors’ report
is prepared.

Responsibilities of Management and those charged with
Governance for the Standalone Financial Statements

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

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

These Board of Directors are also responsible for overseeing the
Company’s financial reporting process.

Auditors’ Responsibility for the Audit of the Standalone
Financial Statements

Our objectives are to obtain reasonable assurance about whether
the Standalone Financial Statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that

an audit conducted in accordance with SAs will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
these Standalone Financial Statements.

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

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

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

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

• Conclude on the appropriateness of management’s use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt
on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are
required to draw attention in our auditors’ report to the
related disclosures in the Standalone Financial Statements
or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up
to the date of our auditors’ report. However, future events
or conditions may cause the Company to cease to continue
as a going concern.

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

• Obtain sufficient appropriate audit evidence regarding the
financial information of the Company and its branches to
express an opinion on the Standalone Financial Statements.
We are responsible for the direction, supervision and
performance of the audit of the financial statements of the
Company, for which we are the independent auditors. In
respect of the branches included in the Standalone Financial
Statements, which have been audited by the respective
branch auditors who remain responsible for the direction,
supervision and performance of the audits carried out by
them. We remain solely responsible for our audit opinion.
Our responsibilities in this regard are further described in the
section titled ‘Other Matters’ in this audit report.

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

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

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

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

Other Matters

a. We did not audit the financial statements of two (2)
Branches located at Talabira and Barsingsar included in the
Statement, whose financial statements reflect total assets
of H 5745.93 Crore as at 31^st March, 2025 and total income
of H 2624.06 Crore for the year ended 31^st March, 2025,
total net profit before tax of H 909.21 Crore for the year
ended 31^st March, 2025 and total comprehensive income
of H 909.21 Crore for the year ended 31^st March 2025,
and net cash outflow of H 5.69 Crore for the year ended
31^st March, 2025 as considered in the Statement. The
financial statements of these Branches have been audited
by the branch auditors whose reports have been furnished
to us, and our opinion, in so far as it relates to the amounts
and disclosures included in respect of these Branches, is
based solely on the reports of such branch auditors and
the procedures performed by us as stated under Auditors’
Responsibilities section above.

b. The standalone financial statement for the year ended
March 31, 2024, have been audited by the predecessor joint
statutory auditors M/s. Manohar Chowdhry & Associates
and M/s. Sundaram & Srinivasan, who have expressed
an unmodified opinion on such standalone financial
statements of the Company based on their audit.

c. Certain Debit/Credit balances pertaining to Debtors/
Creditors are pending independent confirmation and
consequential reconciliation thereof.

d. Regulation 17(1) of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, mandates
that at least half of the directors on the board should be
independent directors. The Company has yet to fulfil
this requirement, leading to penalties imposed by the
Stock Exchanges.

e. During the year, the Company has not complied with
the requirements relating to the appointment of at
least 1 independent nominee director on the Board of
NLC Tamil Nadu Power Limited (NTPL) and Neyveli
Uttar Pradesh Power Ltd (NUPPL), which are unlisted
material subsidiaries, as required under Regulation 24(1) of
SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. In case of NUPPL it was complied up
to 31.10.2024.

f. Regulations 17(2A), 18(2), and 19(2A) of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations,
2015, mandate the presence of a minimum number of
independent directors in meetings of the Board, Audit
Committee and the Nomination and Remuneration
Committee (NRC). The Company complied with these
requirements during the FY except for the meeting
held during the period 01.11.2024 to 28.03.2025 due to
the expiry of the tenure of three Independent Directors
on 31.10.2024, and the subsequent appointment for the
position were made on 29.03.2025 therefore provisions
of the said regulations have been complied with as on
31.03.2025.

g. Due to the non-availability or non-functional condition of
the boiler bunker metering systems at the thermal power
stations, the same was not considered during the process
of year end physical inventory verification.

h. PPE includes mining land comprising certain blocks
of lands that are currently under excavation or already
excavated. The formal transfer of title in the revenue
records in the name of the Company for those blocks of
lands is yet to be completed. The Company is in possession
of the land based on an Award issued by the Government
of Tamil Nadu, and excavation activities are being carried
out accordingly. The process of submitting the necessary
documents to the relevant authorities for updating the
Company’s name in the revenue records is stated to be
in progress.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order,
2020 (“the Order”) issued by the Central Government of
India in terms of sub-section (11) of Section 143 of the
Act, we give in “Annexure-I” a statement on the matters
specified in paragraphs 3 and 4 of the said Order, to the
extent applicable.

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

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

b. In our opinion, proper books of account as required
by law have been kept by the Company so far as
it appears from our examination of those books
including for the matters stated in the paragraph
2(k)(vi) below on reporting under Rule 11(g) of
the Companies (Audit and Auditors) Rules, 2014,
as amended;

c. The reports on the accounts of the Branch Offices
of the Company audited under Section 143(8) of the
Act by the Branch Auditors have been sent to us and
have been properly dealt with by us in preparing
this report;

d. The Balance Sheet, the Statement of Profit and
Loss (including Other Comprehensive Income), the
Statement of Changes in Equity and the Statement of
Cash Flows dealt with by this Report are in agreement
with the books of account;

e. In our opinion, the aforesaid Standalone Financial
Statements comply with the Ind AS specified under
Section 133 of the Act;

f. The matter described in the “Material Uncertainty
Related to Going Concern” paragraph above, in
our opinion, may not have an adverse effect on the
functioning of the Company;

g. The Company being a Government Company, the
provisions of Section 164(2) of the Act relating to
disqualification of directors is not applicable in view
of the Notification No: G.S.R, 463(E) dated 5^th June,
2015, issued by the Ministry of Corporate Affairs;

h. The modifications relating to the maintenance of
accounts and other matters connected therewith are
as stated in the paragraph 2(b) above on reporting
under Section 143(3) of the Act and paragraph
2(k)(vi) below on reporting under Rule 11(g) of
the Companies (Audit and Auditors) Rules, 2014,
as amended;

i. With respect to adequacy of the internal financial
controls over financial reporting of the Company and
the operating effectiveness of such controls, we give
our report in “Annexure-II”. Our report expresses an
unmodified opinion on the adequacy and operating
effectiveness of the Company’s internal financial
controls over financial reporting with reference to
Standalone Financial Statements;

j. The Company being a Government Company,
the provisions of Section 197 of the Act relating
to managerial remuneration is not applicable in
view of the Notification No: G.S.R, 463(E) dated
5^th June, 2015, issued by the Ministry of Corporate
Affairs. Accordingly, reporting in accordance with
requirement of provisions of Section 197(16) of the
Act is not applicable to the Company; and

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

i. The Company has disclosed the impact of
pending litigations on its financial position in
its Standalone Financial Statements - Refer to
Note 52 to Standalone Financial Statements;

ii. The Company has long term contracts for coal
mining, power sale, lignite / coal sale, O&M
/ AMC Contracts, project execution etc. The
Company has assessed all these contracts as at
31^st March, 2025, and concluded that there were
no material foreseeable losses that needs to be
considered on account of these contracts. The
Company did not have any derivative contracts
as at 31^st March, 2025;

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

iv. (a) The Management has represented that,

to the best of its knowledge and belief,
no funds (which are material either
individually or in the aggregate) have
been advanced or loaned or invested
(either from borrowed funds or share
premium or any other sources or kind of
funds) by the Company to or in any other
person or entity, including foreign entity
(“Intermediaries”), with the understanding,
whether recorded in writing or otherwise,
that the Intermediary shall, whether,
directly or indirectly lend or invest in

other persons or entities identified in any
manner whatsoever by or on behalf of the
Company (“Ultimate Beneficiaries”) or
provide any guarantee, security or the like
on behalf of the Ultimate Beneficiaries;

(b) The Management has represented, that,
to the best of its knowledge and belief,
no funds (which are material either
individually or in the aggregate) have
been received by the Company from
any person or entity, including foreign
entity (“Funding Parties”), with the
understanding, whether recorded in
writing or otherwise, that the Company
shall, whether, directly or indirectly,
lend or invest in other persons or entities
identified in any manner whatsoever by or
on behalf of the Funding Party (“Ultimate
Beneficiaries”) or provide any guarantee,
security or the like on behalf of the
Ultimate Beneficiaries; and

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

v. (a) The final dividend paid by the Company
during the year, which pertains to previous
year 2023-24 is in accordance with Section
123 of the Act, to the extent it applies to
payment of dividend;

(b) The interim dividend declared and paid by
1heComparydurirgheyeaii^Bcco[dancewiltSec1iord23
of the Act; and

(c) The Board of Directors of the Company
have proposed final dividend for the year
2024-25 which is subject to the approval
of the Members at the ensuing Annual
General Meeting. The amount of dividend
proposed is in accordance with section 123
of the act, until the date of this report.

However, the aggregate of interim dividend
paid by the Company during the FY 2024-25
and proposed dividend for the FY 2024-25
is less than the minimum dividend criteria
prescribed under the guidelines issued by
Department of Investment & Public Asset
Management (DIPAM). The Company vide its
letter dated 14^th March, 2025 had applied for
exemption from payment of minimum dividend
for the FY 2024-25 as prescribed under DIPAM
guidelines and the same is pending for approval.

vi. Based on our examination, which included test
checks, the Company has used SAP accounting
software for maintaining its books of account,
which has a feature of recording audit trail
(edit log) facility and the same has operated
throughout the year. During the course of our
audit, we did not come across any instances
of the audit trail feature being tampered with
and the audit trail has been preserved by the
Company as per the statutory requirements for
record retention.

Further, in relation to the 7 external applications that were
integrated with SAP accounting software, in connection
with Auction & Tender System, Integrated Weighment
Tracking System, Employees Advance and Reimbursement
Claims, GST Central Invoicing System & House Allotment,
Rent Accounting & other Township related Management
System, based on the audit procedures, information and
explanation given to us, we confirm that the audit trail (edit
log) facility has been enabled from August 6, 2024 and the
audit trail has been preserved by the Company as per the
statutory requirements for record retention.

3. As required by Section 143(5) of the Act, our comments
in regard to the directions and sub-directions issued by
the Comptroller and Auditor General of India is given in
“Annexure - III”.

For Sundaram & Srinivasan For Chaturvedi & Co LLP

Chartered Accountants Chartered Accountants

Firm Regn. No. 004207S Firm Regn. No. 302137E/E300286

P Menakshi Sundaram Amit Kumar

Partner Partner

M No. 217914 M No. 318210

UDIN: 25217914BMKYLH6945 UDIN: 25318210BMRKGB9568

Place: Chennai

Date: 19^th May, 2025

---

Mar 31, 2024

We have audited the accompanying Standalone Financial Statements of NLC INDIA LIMITED ("the Company") ("NLCIL"), which comprise the Standalone Balance Sheet as at 31^st March, 2024, the Standalone Statement of Profit and Loss (including other Comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year ended including a summary of the material accounting policies and other explanatory information which are included in the Returns for the year ended on that date audited by the branch auditors of the Company''s branches located at Talabira and Barsingsar (hereinafter referred to as "Standalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 ("Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March, 2024, its profit (including other comprehensive income), the changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the "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 India ("ICAI") together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us and the audit evidence obtained by the branch auditors in terms of their reports referred to in "Other Matters" section below, is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 60 (c) of the Standalone Financial Statements, wherein the non-availability of adequate quantum of land for lignite mining operations at Neyveli mines and power generation have been elaborated upon. Such non-availability situation may cast significant uncertainties relating to the operations of the Company and eventually the Company''s ability to continue as a going concern in future.

Our Opinion is not modified in respect of this matter.

Emphasis of Matter

We draw attention to the following matters in the Notes to the Standalone Financial Statements:

1. Note 10(a)(e), with regard to amount billed on VSVS to DISCOMs and pending adjudication, the Company considers the entire outstanding amount of ^ 318.12 Crore as recoverable.

2. Note 54, with regard to the determination of the transactions with MSME vendors and balances thereof, have been done based on the certificates received from the respective parties as made available in the GEM Portal system. The disclosures in respect of MSME vendors, interest liability thereon as per MSME Act, Income tax computations as such need to be ascertained from MSME Vendors are computed manually and accounted accordingly.

3. Note 17(a)(k), where the Company has to raise 25% of incremental borrowings by way of issuance of debt securities, the Company after considering its liquidity position and the size of the Bond requirement, the Company did not raise funds by way of issuing any debt securities during FY 2023-24.

Our Opinion on the Standalone Financial Statements is not modified in respect of the above matters.

As reported by the auditor of the Talabira Branch in their Independent Auditor''s Report dated 14^th May, 2024 is below:

We draw attention to Note 23(c) in the Notes to the Standalone Financial Statements regarding provision made during the year, towards

differential mining charges and HPC wages amounting to ^ 162.30 Crore which are under dispute.

Opinion of the auditor of the branch with respect to branch''s financial statements is not modified in respect of the above matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, 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. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

The following have been considered as Key Audit Matters:

Sl. No.	Key Audit Matter	Auditors'' Response
1.	Contingent Liabilities and Commitments
	Assessment of provisions and contingent liabilities in respect of certain	In	view of the significance of the matter, we performed the
	litigations including direct and indirect taxes, various claims filed by other	following key audit procedures:
	parties not acknowledged as debt.	•	Testing the design and operating effectiveness of controls
	A high level of judgement is required in estimating the amount of provisioning.		relating to taxation and contingencies;
	The Company''s assessment is supported by the facts of matter, their own judgement, experience and independent legal advice wherever considered necessary. Accordingly, unexpected adverse outcomes which may significantly	•	We evaluated management''s judgements in respect of estimates of provisions, exposures and contingencies;
	impact the reported profit and net assets are disclosed.	•	In understanding and evaluating management''s judgements,
	A sum of ^ 34,370.17 Crore have been considered by the Company towards		we have utilized our internal tax experts;
	contingent liability and commitments representing claims of third parties.	•	We have also examined the status of recent and current tax
	Refer Note 52 of the Standalone Financial Statements.		assessments and enquiries, the outcome of previous claims,
	Included in the above, is a sum of ^ 7,329.38 Crore that has been considered by the Company towards contingent liability which includes claims of third party''s		judgemental positions taken in tax returns and developments in the tax environment; and
	compensation for land acquisition (disclosed as “From Others"). The Company	•	Additionally, we also evaluated the adequacy of disclosures
	has not accepted the said claims which are contested in legal proceedings and		on provisions and contingencies made in the Standalone
	are pending for disposal by the appellate authorities.		Financial Statements in accordance with Ind AS 37 -
	Further, there are several items of disputes pending in various appellate forums in respect of determination and quantification of liability towards direct and indirect taxes by the departments. Liabilities in respect of disputed demands are considered only as contingent liabilities pending the outcome of the decision of the appellate authorities. The total unpaid amount of disputed liabilities on account of Direct and Indirect taxes (including land tax) is ^ 1,420.27 Crore.		Provisions, Contingent Liabilities and Contingent Assets.
2	Capital Work in Progress - Projects on hold
	Accuracy of impairment provisions in respect of exploration and evaluation	Our audit procedures performed included the following:
	assets and projects under “Capital work in progress" which involves critical judgement of the management in respect of feasibility of ongoing projects.	•	We obtained the details of project expenses of Bithnok and BTPSE project from the management;
	The Standalone Financial Statements include relevant disclosures that identify and explain the amounts arising from such feasibility study. Refer Note 5 to the Standalone Financial Statements.	•	Noted that the total project cost comprises of land amounting to ^ 194.75 Crore, capital advances of ^ 129.25 Crore and CWIP of ^ 50.66 Crore; and
	Further, an aggregate amount of ^ 374.66 Crore towards land, capital advance and CWIP relate to Bithnok and BTPSE which are currently on hold, on account of cancellation of contract by the end customer.	•	Reviewed the basis of provision of ^ 70.62 Crore made as at 31st March, 2024.
3	Expected Credit Loss on Trade Receivables
	Ind AS 109 - Financial instruments (Ind AS 109) requires the Company to provide	Our audit procedures performed included the following:
	for impairment of its financial instruments (designated as amortized cost or	•	We understood the process of ECL estimation and tested the
	fair value through other comprehensive income) using the expected credit loss		design and operating effectiveness of key controls around
	(ECL) approach. Such ECL allowance is required to be measured considering the		data extraction and validation;
	guiding principles mentioned in the Standard.	•	We, having regard to profile and the background of the
	In the process of applying such principles and other requirements of the Standard,		customers, collection of dues and the measures of the
	a significant degree of judgement has been applied by the management. The ECL		Govt(s) in regard to settlement of dues by such customers,
	in respect of trade receivables represents management''s best estimate of the		understood the methodology used by the management to
	loss allowance. The ECL allowance is computed based on a simplified model		arrive at ECL provision and examined certain assumptions
	considering ageing of trade receivables and also trend of collection of dues.		used by the Company;
	The calculation of ECL allowance is a complex area considering the profile	•	We also tested the arithmetical accuracy and assessed
	and background of customers and requires management to make significant		the judgements used in the management''s model used to
	assumptions on customer payment behaviour and other relevant risk characteristics when assessing the historical information and estimating the level and timing of expected future cash flows.		calculate provision for credit losses;

Sl. No.	Key Audit Matter	Auditors'' Response
	The provision for ECL on trade receivables amounts to ^ 383.91 Crore as	•	We have initiated confirmation of balances and the
	at 31st March, 2024. Refer Note 10(a)(c) to the Standalone Financial Statements.		differences, if any, were reconciled by the Management in respect of confirmations received. We have reviewed the same and noted on the explanations provided by the management in arriving at the loss allowance for the year ended 31st March, 2024; and
		•	We assessed the disclosures included in the Ind AS Financial Statements with respect to such allowance/ estimate are in accordance with the requirements of Ind AS 109 and Ind AS 107 - Financial Instruments: Disclosures.
4	Property, Plant & Equipment and Intangible Assets
	Property, Plant and Equipment and Intangible Assets amounting to	Our audit procedures performed included the following:
	^ 18,056.80 Crore represents significant balances recorded in the Balance Sheet in the Standalone Financial Statements.	•	We evaluated the assumptions made by management in the determination of carrying values and useful lives to ensure
	There are areas where management judgement impacts the carrying amount		that these are consistent with the principles of Ind AS 16 -
	of property, plant and equipment, intangible assets and their respective		Property, Plant and Equipment and Ind AS 38 - Intangible
	depreciation / amortization rates.		Assets
	These include the decision to capitalise or expense costs; the timeliness	•	We assessed whether the carrying values and the useful
	of the capitalization of the assets; useful life of the assets and the use of		lives were reasonable by challenging management''s
	the management assumptions and estimates for the determination or the		judgements through comparing the useful lives prescribed
	measurement and recognition criteria for assets retired from active use.		in Schedule II to the Companies Act, 2013, rates/ guidelines
	Due to the materiality in the context of Balance Sheet of the Company and the level of judgement and estimates required, we consider this to be as area of significance and considered to be a key audit matter. Refer Note 2 and 4 to the Standalone Financial Statements.		prescribed by Central Electricity Regulatory Commission (CERC), guidelines issued by Ministry of New and Renewable Energy (MNRE) and the useful lives of certain assets as per the technical estimate of the management;
		•	We compared the useful lives of each class of asset in the current year to the previous year to determine whether there were any significant changes in the useful lives of assets;
		•	We tested the controls in place over the property, plant and equipment and intangible assets, evaluated the appropriateness of capitalisation policies, performed tests of details on costs capitalised and assessed the timeliness of capitalisation including decapitalisation of assets retired from active use and the application of the asset life;
		•	In performing these substantive procedures, we assessed the judgements made by management including the nature of underlying costs capitalised; the appropriateness of asset lives applied in the calculation of depreciation and amortization; and
		•	We have observed that the management has regularly reviewed the aforesaid judgements and there are no material changes.
5	Financial Liabilities - Borrowings
	The Balance Sheet as at 31st March, 2024, reflects financial liabilities-Borrowings	Our	key audit procedures included the following:
	totaling ^ 7,968.77 Crore. These liabilities encompass various forms of borrowings, comprising bonds issued, bank borrowings, and foreign currency borrowings. Refer Note 17(a) and 21(a) of the Standalone Financial Statements.	•	We have evaluated the appropriateness of the accounting policies and disclosures related to financial liabilities.
	The above includes an amount of ^ 913.49 Crore classified as current liabilities.	•	Tested the accuracy and completeness of financial liability balances by examining supporting documentation like
	There may be complex accounting requirements around the subsequent		debt agreements and analysed debt covenant calculations
	measurement and presentation of financial liabilities.		prepared by management and considered the existence of
	Evaluating the suitability of debt covenants and assessing the potential risk of		any potential breaches.
	covenant violations necessitates substantial auditor judgement.	•	Assessed the adequacy of disclosures in the financial statements related to financial liabilities.

Information other than the Standalone Financial Statements and Auditors'' Report thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Directors'' Report including Annexures to Directors'' Report and Business Responsibility & Sustainability Report, but does not include the Standalone Financial Statements, Consolidated Financial Statements and our Auditors'' report thereon. The other information is expected to be made available to us after the date of this Auditors'' report.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

On receipt of other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and we shall:

(a) If the material misstatement is corrected, perform necessary procedure to ensure the correction; or

(b) If the material misstatement is not corrected after communicating the matter to those charged with governance, take appropriate action considering our legal rights and obligations, to seek to have the uncorrected material misstatement appropriately brought to the attention of users for whom this Auditors'' report is prepared.

Responsibilities of Management and those charged with Governance for the Standalone Financial Statements

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

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

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

Auditors'' Responsibility for the Audit of the Standalone Financial Statements

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

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

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

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

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

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

• Obtain sufficient appropriate audit evidence regarding the financial information of the Company and its branches to express an opinion on the Standalone Financial Statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of the Company, for which we are the independent auditors. In respect of the branches included in the Standalone Financial Statements, which have been audited by the respective branch auditors who remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further described in the section titled ''Other Matters'' in this audit report.

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

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

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

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

Other Matters

a. We did not audit the financial statements of two (2) Branches located at Talabira and Barsingsar, included in the Standalone Financial Statements of the Company whose financial statements reflect total assets of ^ 4,052.73 Crore as at 31^st March, 2024 and total income of ^ 2,732.37 Crore for the year ended 31^st March, 2024, total net profit before tax of ^ 873.42 Crore for the year ended 31^st March, 2024 and total comprehensive income of ^ 873.42 Crore for the year ended 31^st March, 2024, and net cash inflows of ^ 0.71 Crore for the year ended 31^st March, 2024. The financial statements of these Branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these Branches, is based solely on the reports of such branch auditors and the procedures performed by us as stated under Auditors'' Responsibilities for the Audit of the Standalone Financial Statements section above.

b. Certain Debit/Credit balances pertaining to vendors are pending independent confirmation and consequential reconciliation thereof.

c. Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates that at least half of the directors on the board should be independent directors. The Company has yet to fulfil this requirement, leading to penalties imposed by the Stock Exchanges.

d. During the year, the Company has not complied with the requirements relating to the appointment of at least 1 independent nominee director on the Board of NLC Tamil Nadu Power Limited, which is an unlisted material subsidiary, as required under Regulation 24(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

e. Regulation 19A(1) of the Securities Contract (Regulation) Rules, 1957, stipulating a minimum public shareholding of 25%, remained unmet until 11^th March, 2024. Following this period of non-compliance, the Government of India has disinvested and reducing its stake by 7% through Offer For Sale (OFS).

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

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

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

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

b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books except for the matters stated in the paragraph 2(k)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, as amended;

c. The reports on the accounts of the Branch Offices of the Company audited under Section 143(8) of the Act by the Branch Auditors have been sent to us and have been properly dealt with by us in preparing this report;

d. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account;

e. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act;

f. The matter described in the "Material Uncertainty Related to Going Concern" paragraph above, in our opinion, may not have an adverse effect on the functioning of the Company;

g. The Company being a Government Company, the provisions of Section 164(2) of the Act relating to disqualification of directors is not applicable in view of the Notification No: G.S.R, 463(E) dated 5^th June, 2015, issued by the Ministry of Corporate Affairs;

h. The modifications relating to the maintenance of accounts and other matters connected therewith are as stated in the paragraph 2(b) above on reporting under Section 143(3) of the Act and paragraph 2(k)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, as amended;

i. With respect to adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our report in "Annexure-II". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting with reference to Standalone Financial Statements;

j. The Company being a Government Company, the provisions of Section 197 of the Act relating to managerial remuneration is not applicable in view of the Notification No: G.S.R, 463(E) dated 5^th June, 2015, issued by the Ministry of Corporate Affairs. Accordingly, reporting in accordance with requirement of provisions of Section 197(16) of the Act is not applicable to the Company; and

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

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer to Note 52 to Standalone Financial Statements;

ii. The Company has long term contracts for coal mining, power sale, lignite / coal sale, O&M / AMC Contracts, project execution etc. The Company has assessed all these contracts as at 31^st March, 2024, and concluded that there were no material foreseeable losses that needs to be considered on account of these contracts. The Company did not have any derivative contracts as at 31^st March, 2024;

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

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

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

v. (a) The final dividend paid by the Company during the year, which pertains to previous year 2022-23 is in accordance with Section 123 of the Act, to the extent it applies to payment of dividend;

(b) The interim dividend declared and paid by the Company during the year is in accordance with Section 123 of the Act; and

(c) The Board of Directors of the Company have proposed final dividend for the year 2023-24 which is subject to the approval of the Members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with Section 123 of the Act, as applicable.

However, the aggregate of interim dividend paid by the Company during the FY 2023-24 and proposed dividend for the FY 2023-24 is less than the minimum dividend criteria prescribed under the guidelines issued by Department of Investment & Public Asset Management (DIPAM). The Company vide its letter dated 23^rd February, 2024 had applied for exemption from payment of minimum dividend for the FY 2023-24 as prescribed under DIPAM guidelines and the same is pending for approval.

vi. Based on our examination, which included test checks, the Company has used SAP for maintaining its books of account, which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year. During the course of our audit, we did not come across any instances of the audit trail feature being tampered with.

Further, in relation to the 7 external applications that were integrated with SAP software, in connection with Auction & tender system, Integrated Weighment Tracking System, employees advance and reimbursement claims, GST Central Invoicing System & House Allotment, Rent Accounting & other Township related Management System, based on the audit procedures, we confirm that there is no audit trail (edit log) facility that was enabled (Refer Note No. 60(d) to the Standalone Financial Statements).

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 01, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31, 2024.

3. As required by Section 143(5) of the Act, our comments in regard to the directions and sub-directions issued by the Comptroller and Auditor General of India is given in "Annexure - III".

For Manohar Chowdhry & Associates, For Sundaram & Srinivasan,

Chartered Accountants, Chartered Accountants,

Firm Regn. No. 001997S Firm Regn. No. 004207S

M S N M Santosh P Menakshi Sundaram

Partner Partner

M No. 221916 M No. 217914

UDIN: 24221916BKFZOU6999 UDIN: 24217914BKBOTW1605

Place: Chennai Date: 15^th May, 2024

---

Mar 31, 2023

Key Audit Matters

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

The following have been considered as Key Audit Matters :

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Sl.No	| Key Audit Matter		Auditors'' Response
1.	Assessment of provisions and contingent liabilities in respect of certain litigations including direct and indirect taxes, various claims filed by other parties not acknowledged as debt. A high level of judgment is required in estimating the amount of provisioning. The Company''s assessment is supported by the facts of matter, their own judgment, experience and independent legal advice wherever considered necessary. Accordingly, unexpected adverse outcomes which may significantly impact the reported profit and net assets are disclosed. A sum of ^ 12,233.31 Crore have been considered by the Company towards contingent liability and commitments representing claims of third parties. Refer Note 49 of the Standalone Financial Statements. Included in the above, is a sum of ^ 5,297.57 Crore that has been considered by the Company towards contingent liability which includes claims of third party''s compensation for land acquisition (disclosed as “From Others"). The Company has not accepted the said claims which are contested in legal proceedings and are pending for disposal by the appellate authorities. Further, there are several items of disputes pending in various appellate forums in respect of determination and quantification of liability towards direct and indirect taxes by the departments. Liabilities in respect of disputed demands are considered only as contingent liabilities pending the outcome of the decision of the appellate authorities. The total unpaid amount of disputed liabilities on account of Direct and Indirect taxes (including land tax) is ^ 1,566.74 Crore.	In view of the significance of the matter, we performed the following key audit procedures: • Testing the design and operating effectiveness of controls relating to taxation and contingencies; • We evaluated management''s judgements in respect of estimates of provisions, exposures and contingencies; • In understanding and evaluating management''s judgements, we have utilized our internal tax experts; • We have also examined the status of recent and current tax assessments and enquiries, the outcome of previous claims, judgmental positions taken in tax returns and developments in the tax environment; and • Additionally, we also evaluated the adequacy of disclosures on provisions and contingencies made in the Standalone Financial Statements in accordance with Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets.
2.	Project activities of Bithnok and BTPSE project: Accuracy of impairment provisions in respect of exploration and evaluation assets and projects under “Capital work in progress" which involves critical judgment of the management in respect of feasibility of ongoing projects.	Our audit procedures performed included the following: • We obtained the details of project activities of Bithnok and BTPSE project from the management;
	The Standalone Financial Statements include relevant disclosures that identify and explain the amounts arising from such feasibility study. Refer Note 5 to the Standalone Financial Statements.	•	Noted that the total project cost comprise of land amounting to ^ 194.75 Crore, capital advances of ^ 129.25 Crore and CWIP of ^ 50.66 Crore; and
	Further, an aggregate amount of ^ 374.66 Crore towards land, capital advance and CWIP relate to Bithnok and BTPSE which are currently on hold, on account of cancellation of contract by the end customer.	•	Reviewed the basis of provision of ^ 70.62 Crore made as at 31st March, 2023.

Sl.No	Key Audit Matter		Auditors'' Response
3.	Expected Credit Loss on Trade Receivables Ind AS 109 - Financial instruments (Ind AS 109) requires the Company to provide for impairment of its financial instruments (designated as amortized cost or fair value through other comprehensive income) using the expected credit loss (ECL) approach. Such ECL allowance is required to be measured considering the guiding principles mentioned in the Standard. In the process of applying such principles and other requirements of the Standard, a significant degree of judgment has been applied by the management. The ECL in respect of trade receivables represents management''s best estimate of the loss allowance. The ECL allowance is computed based on a simplified model considering ageing of trade receivables and also trend of collection of dues. The calculation of ECL allowance is a complex area considering the profile and background of customers and requires management to make significant assumptions on customer payment behaviour and other relevant risk characteristics when assessing the historical information and estimating the level and timing of expected future cash flows. The provision for ECL on trade receivables amounts to ^ 196.55 Crore as at 31st March, 2023. Refer Note 10(a)(c) of the Standalone Financial Statements.	Our audit procedures performed included the following: • We understood the process of ECL estimation and tested the design and operating effectiveness of key controls around data extraction and validation; • We, having regard to profile and the background of the customers, collection of dues and the measures of the Govt(s) in regard to settlement of dues by such customers, understood the methodology used by the management to arrive at their ECL provision and examined certain assumptions used by the Company; • We also tested the arithmetical accuracy and assessed the judgments used in the management''s model used to calculate provision for credit losses; and • We assessed the disclosures included in the Ind AS Financial Statements with respect to such allowance/ estimate are in accordance with the requirements of Ind AS 109 and Ind AS 107 - Financial Instruments: Disclosures.
4.	Property, Plant & Equipment and Intangible Assets Property, Plant and Equipment and Intangible Assets represent significant balances recorded in the Balance Sheet in the Standalone Financial Statements. There are areas where management judgement impacts the carrying amount of property, plant and equipment, intangible assets and their respective depreciation / amortization rates. These includes the decision to capitalise or expense costs; the timeliness of the capitalization of the assets; useful life of the assets and the use of the management assumptions and estimates for the determination or the measurement and recognition criteria for assets retired from active use. Due to the materiality in the context of Balance Sheet of the Company and the level of judgement and estimates required, we consider this to be as area of significance and considered to be a key audit matter.	Our audit procedures performed included the following: • We evaluated the assumptions made by management in the determination of carrying values and useful lives to ensure that these are consistent with the principles of Indian Accounting Standards (Ind AS) 16 Property, Plant and Equipment and (Ind AS) 38 Intangible Assets; • We assessed whether the carrying values and the useful lives were reasonable by challenging management''s judgements through comparing the useful lives prescribed in Schedule II to the Companies Act, 2013, rates/ guidelines prescribed by Central Electricity Regulatory Commission (CERC), guidelines issued by Ministry of New and Renewable Energy (MNRE) and the useful lives of certain assets as per the technical estimate of the management; • We compared the useful lives of each class of asset in the current year to the previous year to determine whether there were any significant changes in the useful lives of assets;
		•	We tested the controls in place over the property, plant and equipment and intangible assets, evaluated the appropriateness of capitalisation policies, performed tests of details on costs capitalised and assessed the timeliness of capitalisation including decapitalisation of assets retired from active use and the application of the asset life;
		•	In performing these substantive procedures, we assessed the judgements made by management including the nature of underlying costs capitalised; the appropriateness of asset lives applied in the calculation of depreciation and amortization; and
		•	We have observed that the management has regularly reviewed the aforesaid judgments and there are no material changes.

Information Other than the Standalone Financial Statements and Auditors'' Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Directors'' Report including Annexures to Directors'' Report and Business Responsibility & Sustainability Report, but does not include the Standalone Financial Statements, Consolidated Financial Statements and our Auditors'' report thereon. The other information is expected to be made available to us after the date of this Auditors'' report.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

On receipt of other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and we shall:

(a) If the material misstatement is corrected, perform necessary procedure to ensure the correction; or

(b) If the material misstatement is not corrected after communicating the matter to those charged with governance, take appropriate action considering our legal rights and obligations, to seek to have the uncorrected material misstatement appropriately brought to the attention of users for whom this Auditors'' report is prepared.

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

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

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

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

Auditors'' Responsibilities for the audit of the Standalone Financial Statements

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

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

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

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

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

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

• Obtain sufficient appropriate audit evidence regarding the financial information of the Company and its branches to express an opinion on the Standalone Financial Statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the Standalone Financial Statements of which we are the independent auditors. For the branches included in the Standalone Financial Statements, which have been audited by the branch auditors, such branch auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further described in the section titled ''Other Matter'' in this audit report.

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

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

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

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

Other Matters

We did not audit the financial statements of two (2) Branches located at Talabira and Barsingsar, included in the Standalone Financial Statements of the Company whose financial statements reflect total assets of ^ 3,406.85 Crore as at March 31, 2023 and total income of ^ 2,589.15 Crore for the year ended 31^st March, 2023, total net profit before tax of ^ 949.16 Crore for the year ended 31st March, 2023 and total comprehensive income of ^ 917.21 Crore for the year ended 31st March, 2023 and net cash inflows of ^ 4.72 Crore for the year ended 31st March, 2023. The financial statements of these Branches have been audited by the branch auditors whose reports have been furnished to us and our opinion in so far as it relates to the amounts and disclosures included in respect of these Branches, is based solely on the report of such branch auditors and the procedures performed by us as stated under Auditors'' Responsibilities for the Audit of the Standalone Financial Statements section above.

Our Opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

India in terms of sub-section (11) of section 143 of the Act, we give in "Annexure-I" a statement on the matters

specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

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

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

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

c. The reports on the accounts of the Branch Offices of the Company audited under Sec 143(8) of the Act by the Branch Auditors have been sent to us and have been properly dealt with by us in preparing this report;

d. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account;

e. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS;

f. The matter described in the "Material Uncertainty Related to Going Concern" paragraph above, in our opinion, may not have an adverse effect on the functioning of the Company;

g. The Company being a Government Company, the provisions of Sec 164(2) of the Act relating to disqualification of directors is not applicable in view of the Notification No: G.S.R, 463(E) dated June 05, 2015, issued by the Ministry of Corporate Affairs;

h. There is no qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith;

i. With respect to adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our report in "Annexure-II". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting with reference to Standalone Financial Statements;

j. The Company being a Government Company, the provisions of Sec 197 of the Act relating to managerial remuneration is not applicable in view of the Notification No: G.S.R, 463(E) dated 5t^h June, 2015, issued by the Ministry of Corporate Affairs. Accordingly, reporting in accordance with requirement of provisions of section 197(16) of the Act is not applicable to the Company; and

k. With respect to the other matters to be included in the Auditors'' Report in accordance with Rule 11

of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our

information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer to Note 49 to Standalone Financial Statements;

ii. The Company has long term contracts for coal mining, power sale, project execution etc. However as at 31^st March, 2023, there were no material foreseeable losses on those contracts. The Company did not have any derivative contracts as at 31st March, 2023;

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

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

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

v. (a) The final dividend paid by the Company during the year, which pertains to previous year 2021-22 is in accordance with Section 123 of the Act, to the extent it applies to payment of dividend;

(b) The interim dividend declared and paid by the Company during the year is in accordance with Section 123 of the Act; and

(c) The Board of Directors of the Company have proposed final dividend for the year 2022-23 which is subject to the approval of the Members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from 1st April, 2023 and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended 31st March, 2023.

3. As required by Sec 143(5) of the Act, our comments in regard to the directions and sub-directions issued by the Comptroller and Auditor General of India is given in "Annexure - III".

4. During the year, the Company has not complied with the requirements relating to the composition of the Board with respect to independent directors, as required under Regulation 17(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

For R.Subramanian and Company LLP, For Manohar Chowdhry & Associates,

Chartered Accountants, Chartered Accountants,

Firm Regn. No. 004137S/S200041 Firm Regn. No. 001997S

R. Kumarasubramanian M.S.N.M.Santosh

Partner Partner

M No.021888 M No. 221916

UDIN: 23021888BGSROQ2278 UDIN: 23221916BGXUSU7521

Place: Chennai Date: 19^th May, 2023

---

Mar 31, 2022

Opinion:

We have audited the accompanying Standalone Financial Statements of NLC India Limited ("the Company") ("NLCIL"), which comprise the Standalone Balance Sheet as at March 31, 2022, the Standalone Statement of Profit and Loss (including other Comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended including a summary of the significant accounting policies and other explanatory information in which are included the Returns for the year ended on that date audited by the branch auditors of the Company''s branches located at Talabira and Barsingsar (hereinafter referred to as "Standalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 ("Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2022, the profit (including other comprehensive income), the changes in equity, and its cash flows for the year ended on that date.

Basis for Opinion:

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the "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 India ("ICAI") together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us and the audit evidence obtained by the branch auditors in terms of their reports referred to in "other matters" section below, is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern:

We draw attention to Note 61(c) of the Standalone Financial Statements, which indicates the challenges faced by the Company with reference to acquisition of further lands due to legislative changes and the resistance of land owners for higher compensation / employment opportunities etc. In the eventuality of the Company unable to acquire requisite lands, there would be a material uncertainty on the operations of the Company, which may cast significant doubt on the Company''s ability to continue as a going concern in future. However, in order to overcome the challenges, the Company has revised its compensation and Rehabilitation and Resettlement (R&R) policy and various other welfare measures, to continue on further land acquisitions, which would sustain mining operations and power generation, without any disruptions.

Our Opinion is not modified in respect of this matter.

Emphasis of Matter

We draw attention to the following matters in the Notes to the Standalone Financial Statements:

1. Note 2(j) with regards to capitalization of Talabira II & III Coal mines.

2. Note 10(A)(c) regarding the provision towards loss allowance on outstanding trade receivables for the year ended March 31, 2022, pending receipt of confirmation of balances and completion of exercise of the reconciliation of balances and resolving various issues, in respect of which actions have been initiated.

3. Note 11 and 31(a) relating to recognition of income tax expense for the year ended March 31, 2022, which has been paid under the Direct Tax Vivad Se Vishwas Act, 2020 (VSVS) towards settlement of income tax disputes and consequent recovery action being initiated from the beneficiaries as per CERC tariff regulations.

4. Note 13(b)/ 22(c) where the Company had filed truing up petition for the Tariff period 2014- 19 for its Neyveli Mines. Central Electricity Regulatory Commission (CERC) has issued True up order during March 2022 and corrigendum for the same during April, 2022 for tariff period 2014-19. The Company is seeking clarification from Ministry of Coal and also filed a review petition before the commission. Pending disposal of the review petition, the impact of the order has been deferred.

5. Note 13(c)/ 22(d) where the Company has filed truing up petition for the tariff period 2014 - 19 for its Thermal stations in December, 2019. Any adjustment arising out of the same shall be considered in the books of accounts on receipt of order from CERC.

6. Note 13(e)/ 30(b) wherein an amount of ?165.78 Crore being 50% of the mine closure deposit including interest for the five-year period from FY 2016-17 to FY 2020-21 was considered on a provisional basis under the head Regulatory income during the FY 2020-21 pending filing of claim with coal controller. Further, an amount of ?22.22 Crore has been provisionally considered as regulatory income for the FY 2021-22.

7. Note 13(f) regarding the Deferred Tax Liability materialized from FY 2019-20 onwards is yet to be considered in the Financials, pending finalization of the claim amount from beneficiaries.

8. Note 23(d) with respect to determination of lignite transfer price wherein adjustments which may arise out of revision of lignite price, if any, will be recognized upon filing of petition with CERC and/or disposal of petition by CERC, as the case may be.

9. Note 62 regarding the management''s assessment of impact on financial position of the Company due to COVID 19 pandemic.

Our Opinion on the Standalone Financial Statements is not modified in respect of the above matters.

As per branch auditor''s report of Talabira branch submitted to us:

10. Note 30(d) with respect to income of ?48.59 Crore, booked on account of "Regulatory Deferral Account Balance Income" on the basis of management approval, but the petition is yet to be filed with CERC for further orders. Opinion of the auditor of the branch with respect to the branch financial statements is not modified in respect of the above matter.

Key Audit Matters:

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

The following have been considered as Key Audit Matters:
Sl no.	Key Audit Matter	Auditors'' Response
1	Assessment of provisions and contingent liabilities in respect of certain litigations including direct and indirect taxes, various claims filed by other parties not acknowledged as debt. A high level of judgment is required in estimating the amount of provisioning. The Company''s assessment is supported by the facts of matter, their own judgment, experience and independent legal advice wherever considered necessary. Accordingly, unexpected adverse outcomes which may significantly impact the reported profit and net assets are disclosed. A sum of f8,406.74 Crore have been considered by the Company towards contingent liability and commitments representing claims of third parties. Refer Note 53 of the Standalone Financial Statements. Included in the above, is a sum of f4,864.05 Crore that has been considered by the Company towards contingent liability which includes claims of third party''s compensation for land acquisition. The Company has not accepted the said claims which are contested in legal proceedings and are pending for disposal by the appellate authorities. Further, there are several items of disputes pending in various appellate forums in respect of determination and quantification of liability towards direct and indirect taxes by the departments. Liabilities in respect of disputed demands are considered only as contingent liabilities pending the outcome of the decision of the appellate authorities. The total unpaid amount of disputed liabilities on account of Direct and Indirect taxes (including land tax) is f 630.60 Crore.	In view of the significance of the matter, we performed the following key audit procedures: • Testing the design and operating effectiveness of controls relating to taxation and contingencies; • We evaluated management''s judgements in respect of estimates of provisions, exposures and contingencies; • In understanding and evaluating management''s judgements, we have utilized our internal tax experts. • We have also examined the status of recent and current tax assessments and enquiries, the outcome of previous claims, judgmental positions taken in tax returns and developments in the tax environment; and • Additionally, we also evaluated the adequacy of disclosures on provisions and contingencies made in the Standalone Financial Statements in accordance with Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets.
2	Project activities of Bithnok and BTPSE project: Accuracy of impairment provisions in respect of exploration and evaluation assets and projects under "Capital work in progress" which involves critical judgment of the management in respect of feasibility of ongoing projects. The Standalone Financial Statements include relevant disclosures that identify and explain the amounts arising from such feasibility study. Refer Note 5 to the Standalone Financial Statements. Further, an aggregate amount of f388.98 Crore towards land, capital advance and CWIP relate to Bithnok and BTPSE which are currently on hold, on account of cancellation of contract by the end customer and the eventual litigation with the EPC contractor appointed by the Company. The EPC contractor has made certain claim against for which the Company has made some counter claims. However, in the meantime the Company has admitted a sum of f29.98 Crore as payable and accordingly provided the same for the year ended March 31,2022. During the year, the Company has made encashment of BG amounting to f36.99 Crore. The Company made further claim towards encashment of BG amounting to f126.27 crore for which the Company could not encash due to the direction of Hon''ble Supreme Court to extend the validity of BG. Pending disposal of the case, a provision of f 114.79 Crore has been made against the said advance, for which the said BG issued has been provided, for the year ended March 31,2022.	Our audit procedures performed included the following: • We obtained the details of project activities of Bithnok and BTPSE project from the management; • Reviewed the correspondence with EPC contractor and the details of claims made against the Company and counter claims made by the Company; • Took note of the counter points of the Company against claim made by EPC contractor; and • Reviewed the basis for provision of f29.98 Crore and f114.79 Crore made for the year ended March 31, 2022.

Sl no.	Key Audit Matter	Auditors'' Response
3	Expected Credit Loss on Trade Receivables:	Our audit procedures performed included the
	Ind AS 109 - Financial instruments (Ind AS 109) requires	following:
	the Company to provide for impairment of its financial	• We understood the process of ECL estimation and
	instruments (designated as amortized cost or fair value	tested the design and operating effectiveness of
	through other comprehensive income) using the expected credit loss (ECL) approach. Such ECL allowance is required	key controls around data extraction and validation;
	to be measured considering the guiding principles	• The computation is based on ageing reports
	mentioned in the Standard.	derived from SAP;
	In the process of applying such principles and other	• We, having regard to profile and the background of
	requirements of the Standard, a significant degree of	the customers, collection of dues and the measures
	judgment has been applied by the management. The ECL	of the Govt(s) in regard to settlement of dues by
	in respect of trade receivables represents management''s	such customers, understood the methodology
	best estimate of the loss allowance. The ECL allowance is	used by the management to arrive at their ECL
	computed based on a simplified model considering ageing	provision and examined certain assumptions used
	of trade receivables and also trend of collection of dues.	by the Company;
	The calculation of ECL allowance is a complex area	• We also tested the arithmetical accuracy and
	considering the profile and background of customers and	assessed the judgments used in the management''s
	requires management to make significant assumptions	model used to calculate provision for credit losses;
	on customer payment behaviour and other relevant risk characteristics when assessing the historical information	and
	and estimating the level and timing of expected future	• We assessed the disclosures included in the Ind
	cash flows.	AS Financial Statements with respect to such allowance/ estimate are in accordance with the
	The provision for ECL on trade receivables amounts to	requirements of Ind AS 109 and Ind AS 107 -
	?501.51 Crore as at March 31,2022.	Financial Instruments: Disclosures.
4	Direct Tax Vivad Se Vishwas Act, 2020 (VSVS)	Our audit procedures performed included the following:
	(A)	(A) On VSVS
	The Company has opted the VSVS for settlement of income	• Verified all the assessment orders passed, which are
	tax disputes and has filed the relevant details before the income tax department. In consequence of the same, the	subject to VSVS;
	Company has remitted a sum of J730.91 Crore during the	• Verified the appeals pending against various forums
	years 2019-20 and 2021-22.	and the status of the same;
	Upon due scrutiny, the income tax department has	• Analysed the various issues for which Company has
	accepted the application and issued Form-5 as per the provisions of VSVS, thereby concluding the disputes.	opted for VSVS; • Verified the Forms (Form 1, 2, 3 and 4) filed by the Company under VSVS; • Verified the payments made under VSVS; • Verified Form-5 issued by the income tax department; and • Understood the reasons for pending tax litigations, which are not subjected to VSVS.
	(B)	(B) On recovery of VSVS tax from beneficiaries
	Exceptional item includes ?389.97 Crore on account of	• We have obtained an understanding of the CERC tariff
	income tax recoverable from the beneficiaries as per the	Regulations, orders, circulars, guidelines, procedures
	CERC tariff Regulations, for different Tariff periods due to	and power purchase agreements entered in respect
	payments/adjustments relating to earlier periods pursuant to opting of VSVS. Pending billing to beneficiaries, the said	of recoverability of income tax paid from beneficiaries;
	amount has been considered as unbilled revenue as on	• Evaluated and tested the effectiveness of the
	March 31, 2022 and is grouped under other current assets.	Company''s design of internal controls relating to recognition and measurement of revenue; • We involved our internal tax experts to understand and evaluate the recoverability of income tax paid from beneficiaries, review legal precedence in this regard; • We have gone through the expert opinion obtained by the management in this regard; and • Verified the accounting of revenue for amount recoverable from beneficiaries.

Sl no.	Key Audit Matter	Auditors'' Response
5	Amortisation of Freehold Land The accounting policy followed by the Company until FY 2020-21 provides that no depreciation to be charged on freehold land. With effect from April 01, 2021, the Company has changed its accounting policy to amortise freehold land on the basis of minerals extracted during the year to the total estimated minable reserves of the said quantum of land used for mining in the year under review as certified by Technical experts. This change in the accounting policy has significant impact on the financial statements and considering this as material prior period item, the Company has restated previous year financials as well the opening reserves as on 01.04.2020.	Our audit procedures performed included the following: • Read the Company''s accounting policy with respect to depreciation in accordance with Ind AS 16 -Property, Plant and Equipment; • Analysed the data from the certificates issued by technical experts including the total estimated lignite reserves vis-a-vis lignite actually extracted during each year; • Analysed the industry norms on similar matter and the appropriate treatment recognized; • Evaluated the key assumptions made including land available for mining and minable reserves available; • Review of the workings done in this regard including mathematical accuracy; and • Checked the compliance and disclosure requirements as per Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.

Information other than the Standalone Financial Statements and Auditors'' Report thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Directors'' Report including Annexures to Directors'' Report and Responsibility Report, but does not include the Standalone Financial Statements and our Auditors'' report thereon. The other information is expected to be made available to us after the date of this Auditors'' report.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express anyform of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

On receipt of other information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and we shall:

(a) If the material misstatement is corrected, perform necessary procedure to ensure the correction; or

(b) If the material misstatement is not corrected after communicating the matter to those charged with governance, take appropriate action considering our legal rights and obligations, to seek to have the uncorrected material misstatement appropriately brought to the attention of users for whom this Auditors'' report is prepared.

Responsibilities of Management and those charged with Governance for the Standalone Financial Statements

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

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

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

Auditors'' Responsibility for the Audit of the Standalone Financial Statements

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

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

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

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

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

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

• Obtain sufficient appropriate audit evidence regarding the financial information of the Company and its branches to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the standalone financial statements of which we are the independent auditors. For the branches included in the standalone financial statements, which have been audited by the branch auditors, such branch auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further described in the section titled ''Other Matter'' in this audit report.

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

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

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

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

Other Matter

We did not audit the financial statements of two (2) Branches included in the Standalone Financial Statements of the Company whose financial statements reflect total assets of ? 2,463.55 Crore as at March 31,2022 and total revenues of ? 1,454.20 Crore for the year ended March 31, 2022, total net profit before tax of ? 545.58 Crore for the year ended March 31, 2022 and total comprehensive income of ? 561.61 Crore for the year ended March 31,2022, and net cash out flows of ? 4.35 Crore for the year ended March 31, 2022. The financial statements of these Branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these Branches, is based solely on the report of such branch auditors and the procedures performed by us as stated under Auditors'' Responsibilities for the audit of the Standalone Financial Statements section above.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2020 ("the Order") issued by the Central Government of India

in terms of sub-section (11) of section 143 of the Act, we give in "Annexure-I" a statement on the matters specified in

paragraphs 3 and 4 of the said Order, to the extent applicable.

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

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

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

c. The reports on the accounts of the Branch Offices of the Company audited under Sec 143(8) of the Act by the Branch Auditors have been sent to us and have been properly dealt with by us in preparing this report;

d. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account;

e. In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS;

f. The matter described in the "Material Uncertainty Related to Going Concern" paragraph above, in our opinion, may not have an adverse effect on the functioning of the Company;

g. The Company being a Government Company, the provisions of Sec, 164(2) of the Act relating to disqualification of directors is not applicable in view of the Notification No: G.S.R, 463(E) dated June 05, 2015, issued by the Ministry of Corporate Affairs;

h. There is no qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith;

i. With respect to adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our report in "Annexure-II";

j. The Company being a Government Company, the provisions of Sec 197 of the Act relating to managerial remuneration is not applicable in view of the Notification No: G.S.R, 463(E) dated June 05, 2015, issued by the Ministry of Corporate Affairs. Accordingly, reporting in accordance with requirement of provisions of section 197(16) of the Act is not applicable to the Company; and

k. With respect to the other matters to be included in the Auditors'' Report in accordance with Rule 11 of the Companies

(Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to

the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer to Note 53 of Standalone Financial Statements;

ii. The Company has long term contracts for coal mining, power sale, project execution etc. However as at March 31,2022, there were no material foreseeable losses on those contracts. The Company did not have any derivative contracts as at March 31, 2022;

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are

material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

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

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

v. (a) The final dividend paid by the Company during the year, which pertains to previous year 2020-21 is in

accordance with Section 123 of the Act, to the extent it applies to payment of dividend;

(b) The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with Section 123 of the Act; and

(c) As stated in Note 54 (c) to the Standalone Financial Statements, the Board of Directors of the Company have proposed final dividend for the year 2021-22 which is subject to the approval of the Members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

3. As required by Sec 143(5) of the Act, our comments in regard to the directions and sub- directions issued by the Comptroller and Auditor General of India is given in "Annexure - III".

4. During the year, the Company has not complied with the requirements relating to the composition of the Board, including failure to appoint woman director, as required under Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. However, the Company has complied with the requirement of Regulation 17(1)(a) with respect to appointment of independent woman director as at March 31, 2022.

For R Subramanian and Company LLP, For Manohar Chowdhry & Associates,

Chartered Accountants, Chartered Accountants,

Firm Regn. No. 004137S/S200041 Firm Regn. No. 001997S

R. Subramanian M.S.N.M.Santosh

Partner Partner

M No. 008460 M No. 221916

UDIN: 22008460AKBFDJ9190 UDIN: 22221916AJXKXU9603

Place: Chennai

Date* May 30, 2022

---

Mar 31, 2021

The Members of NLC INDIA LIMITED

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone Financial Statements of NLC INDIA LIMITED (“the Company”) (“NLCIL”), which comprise the Balance Sheet as at March 31,2021, the Statement of Profit and Loss (including other Comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information hereinafter referred to as Standalone Financial Statements.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2021, the Profit (Including other Comprehensive Income), the changes in Equity, and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the 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 is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to the following matters in the Notes to the Standalone Financial Statements:

Without qualifying our opinion:

1. Attention is invited to Note 10a (c) of the Standalone Financial Statements wherein management has estimated and considered a sum of ?322.76 crore as provision towards loss allowance on outstanding trade receivables for the period ended March 31, 2021, pending completion of exercise of reconciliation of balances arising out of counter claims, appropriation of remittances, disputed dues and consequential re-assessment of overall provision required.

2. Attention is drawn to Note 11 of the Standalone Financial Statements relating to Vivad Se Viswas Scheme (VSVS), regarding the settlement of income tax disputes, the company has submitted the relevant details with income tax department during January 2021 and remitted a sum of ?840.59 crore over the period, which are in the process of scrutiny and approval by the Income Tax department. Out of the disputed income tax paid, the Company is also eligible to prefer claim with its customers in accordance with the CERC tariff regulations. Pending requisite acceptance and approval in this regard from the income tax department and also preferring claim with the customers the amount paid as above has been carried forward.

3. Attention is invited to Note 13b of the Standalone Financial Statements in respect of the true up petition filed with CERC in the third quarter of FY 2019-20 for the Tariff period 2014-19, any adjustment arising out of the same shall be considered in the books of accounts on receipt of order from CERC.

4. Attention is drawn to Note 13d of the Standalone Financial Statements wherein an amount of ?165.78 crore being 50% of the mine closure deposit including interest for the five-year period 2016-17 to 2020-21 has been considered on a provisional basis under regulatory income pending filing of claim with coal controller.

5. Attention is drawn Note 23b of the Standalone Financial Statements regarding non-recognition of income of Deferred Tax Liability materialised for the period ended March 31,2020 and March 31,2021 pending reconciliation and confirmation from beneficiaries and the amount is not presently quantifiable.

6. Attention is drawn to Note 24f of the relating to fire accidents mentioned therein, including provisional settlements of ?50 crore by Insurance Company which is reckoned as income during the year ended March 31,2021.

7. Attention is drawn to Note 58c of the Standalone Financial Statements wherein CERC has raised substantive issues relating to the implementation of the impugned guidelines relating to existing lignite transfer pricing and consequential adjustments if any, that may arise are unascertainable at this stage.

8. Attention is drawn to Note 60 of the Standalone Financial Statements regarding material impact on the business of the Company due to the COVID-19 pandemic.

Our opinion on the Standalone Financial Statements is not modified in respect of the above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the

financial statements of the current period. These matters were addressed in the context of our audit of the financial

statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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

The following have been considered as Key Audit Matters:

Sl. No.	Key Audit Matters	Auditor''s Response
1.	Revenue recognition on Accounting of Surcharge on Renewable Energy NLCIL is supplying renewable power to TANGEDCO from various Solar plants situated at different places in Tamilnadu. Separate PPA''s have been signed with TANGEDCO in line with the guidelines available in this regard. Renewable power supply has started with 10 MW Solar at Neyveli since 2015-16 and subsequently other renewable plants were commissioned by NLCIL. In accordance with MoP guidelines issued with respect to appropriation of payments and also in accordance with PPA signed with TANGEDCO, NLCIL has considered an amount of ''148.49 crore (Previous year : Nil) as renewable surcharge in the books of accounts. The above amount of ''148.49 crore is disclosed under the head “Surcharge on sale of Power” in Note 24 to the Standalone financial statements.	Our procedures included but were not limited to: - Evaluating the design and implementation and testing the operating effectiveness of the relevant controls over recognition of revenue as per the terms of the agreements and ongoing assessment of possible outcome in case of disputes. - Evaluating the Management''s assessment with respect to realisation/certainty of realisation and test check of underlying regulation and agreements on a sample basis. Assessing adequacy and appropriateness of the disclosures in the standalone financial statements.
2.	Assessment of provisions and contingent liabilities in respect of certain litigations including direct and indirect taxes, various claims filed by other parties not acknowledged as debt. A high level of judgement is required in estimating the amount of provisioning. The Company''s assessment is supported by the facts of matter, their own judgment, experience and independent legal advice wherever considered necessary. Accordingly, unexpected adverse outcomes which may significantly impact the reported profit and net assets are disclosed. A sum of ''11,531.93 crore have been considered by the Company towards contingent liability and commitments representing claims of third parties. Refer Note 52 of the Standalone Financial Statements. Included in the above, is a sum of '' 2,420.95 crore that has been considered by the Company towards contingent liability which includes claims of third party''s compensation for land acquisition. The Company has not accepted the said claims which are contested in legal proceedings and are pending for disposal by the appellate authorities.	In view of the significance of the matter, we applied the following key audit procedures: - Testing the design and operating effectiveness of controls relating to taxation and contingencies. - We evaluated management''s judgements in respect of estimates of provisions, exposures and contingencies. - In understanding and evaluating management''s judgements, we deployed our tax specialists, considered third party advice received by the Company, wherever applicable, the status of recent and current tax assessments and enquiries, the outcome of previous claims, judgemental positions taken in tax returns and developments in the tax environment. - Additionally, we also evaluated the adequacy of disclosures on provisions and contingencies made in the Standalone Financial Statements in accordance with IND AS 37.

Sl. No.	Key Audit Matters	Auditor''s Response
	Further, there are several items of disputes pending in various appellate forums in respect of determination and quantification of liability towards direct and indirect taxes by the departments. Liabilities in respect of disputed demands are considered only as contingent liabilities pending the outcome of the decision of the appellate authorities. The total unpaid amount of disputed liabilities on account of Direct and Indirect taxes (including land tax) is ''439.34 crore vide Note 7(b) to Companies (Auditor''s Report) Order, 2016.
3.	Project activities of Bithnok and BTPSE project: Accuracy of impairment provisions in respect of exploration and evaluation assets and projects under “Capital work in progress” which involves critical judgement of the management in respect of feasibility of ongoing projects, The Standalone Financial Statements include relevant disclosures that identify and explain the amounts arising from such feasibility study. Refer Note 5 to the Standalone Financial Statements. Further, an aggregate amount of '' 422.18 crore towards land, capital advance and CWIP relate to Bithnok and BTPSE which are currently on hold	Branch Auditors comments are reproduced below: We obtained the details of project activities of Bithnok and BTPSE project from the management. We noted that as on 31-03-2021 Company has incurred capital expenditure of ''319.25 crore and ''102.93 crore for Bithnok and BTPSE projects respectively which includes payment towards land of ''176.92 crore and Capital Advances of ''166.47 crore. Management of the Company has replied that discussions with Government of Rajasthan and M/s Reliance Infrastructure Ltd., by NLCIL''s top level management for revival of the project are under process. However, based on the decision of management since the project is on hold since June 2017, no revenue expenses has been capitalised to the project cost during F.Y 2020-21. In the FY 2020-21 expenses incurred in relation to these projects have been charged to the Profit & Loss Account of Barsingsar Project. Simultaneously Incomes/ Foreign Currency Exchange Gain/Loss on Encashment of Bank Guarantee received against Capital Advances has been recognised in the Profit and Loss Account of Barsingsar Project.

Information other than the Financial Statements and Auditor''s Report thereon

The Company''s management and Board of Directors is responsible for the other information in the Annual Report, comprising of the Director''s report and its annexures, but does not include the Standalone Financial Statements and our auditor''s report thereon. The Director''s report is expected to be made available to us after the date of this Auditors'' Report.

Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

When we read the Director''s report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary actions as required under applicable laws and regulations.

Responsibilities of Management and those charged with Governance for the Standalone Financial Statements

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

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

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

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

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

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

we also:

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

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

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

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

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

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

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

Other Matter

We did not audit the financial statements of two (2) Branches included in the Standalone Financial Statements of the Company which reflected total assets of ?2,789.68 crore as at March 31,2021 total revenues of ? 465.76 crore for the year ended on that date and a net profit before tax of ?128.32 crore for the year ended on that date. The financial statements of those Branches have been audited by the Branch auditors whose report has been furnished to us and our opinion, in so far as it relates to the amounts and disclosures included in respect of this Branches, is based solely on the report of such Branch Auditors. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 (the Order) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in Annexure-I a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

2. As required by Section143(3) of the Act, we report that:

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

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

c. The reports on accounts of the Branch Office of the Company audited under Sec 143(8) of the Act by the Branch Auditor have been sent to us and have been properly dealt with by us in preparing this report.

d. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of accounts.

e. In our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015 as amended.

f. As per Notification No: G.S.R 463(E) dated June 05, 2015, subsection (2) of Sec 164 of the Companies Act, 2013 is not applicable to Government Companies.

g. With respect to adequacy of the internal financial control over financial reporting of the Company and the operating effectiveness of such controls, we give our report in Annexure-II. With reference to the Standalone Financial Statements our report expresses an unmodified opinion on the effectiveness of the Company''s internal financial controls over financial reporting.

h. As per Notification No. GSR 463(E) dated June 05, 2015, issued by the Ministry of Corporate Affairs, Government of India, Section 197 of the Act is not applicable to the Government Companies. Accordingly, reporting in accordance with requirement of provisions of section 197(16) of the Act is not applicable on the Company.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer to Note 52 to Standalone Financial Statements.

ii. The Company has long term contracts for coal mining, power sale, project execution etc. However as at March 31,2021 there were no material foreseeable losses on those contracts. The Company did not have any derivative contracts as at March 31,2021.

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

3. As required by Sec 143(5) of the Companies Act, 2013, our comments in regard to the directions and sub-directions

issued by the Comptroller and Auditor General of India is given in Annexure III.

For M/s. PKKG BALASUBRAMANIAM & ASSOCIATES For M/s. R SUBRAMANIAN AND COMPANY LLP

Chartered Accountants Chartered Accountants

Firm Regn. No. 001547S Firm Regn. No. 004137S/S200041

R H S Ramakrishnan R. Subramanian

Partner Partner

M No. 021651 M No. 008460

UDIN: 21021651AAAAAS9109 UDIN: 21008460AAAABB2251

Place: Neyveli

Date: June 28, 2021

---

Mar 31, 2019

Report on the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of NLC INDIA LIMITED (Formerly Neyveli Lignite Corporation Limited) (“the Company”), which comprise the Balance Sheet as at 31st March, 2019, the Statement of Profit and Loss (including other Comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs (financial position) of the Company as at 31st March, 2019, and its profit, total comprehensive income, changes in equity and its Statement of cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 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 is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

The following have been considered as Key Audit Matters of Holding Company - NLC India Limited

Sl. No.	Key Audit Matters	Auditor’s Response
1.	Revenue recognition on sale of power to entities (DISCOMS) and the disclosure requirements vis-a-vis the requirements for complying with IND AS-114-Regulatory Deferral Accounts & IND AS-115 -Revenue from Contracts with Customers. The Central Electricity Regulatory Commission (CERC)/ State Electricity Regulatory Commission (SERC) determine the tariff rates to be charged by the company for the sale of thermal and renewable power respectively. Tariff rates for sale of thermal power are determined by CERC for a block of 5 years and the rates prescribed for the block period 2014-2019 have been considered by the Company for recognising the revenue under operating income - sale of power. The tariff for thermal power includes lignite transfer price which is determined in accordance with the guidelines issued by the Ministry of Coal (MoC). In addition to the recognition of revenue as stated above, the Company recognises certain items of income / expenditure in accordance with Mandatory Accounting Standard - IND AS 114 - Regulatory Deferral Accounts. Accordingly, the Company has recognised Rs. 859.41 crore as Net Movement in Regulatory Deferral Account balances in the Statement of Profit and Loss with a corresponding impact under Regulatory Deferral Assets/Liabilities. Refer Note Nos.1 (XV) & 1 (XXVI) and Note No.29 of the standalone Financial statements.	We have analysed the accounting principles consistently followed by the Company for recognition of the revenue arising on sale of power, commencing from financial year 2016-17 where in the Company has opted for complying with IND AS 114 (Regulatory Deferral Accounts). It is observed by us that the accounting policy followed by the company for revenue recognition is in accordance with the principles laid down by IND AS 114 dealing with recognition of revenue by companies whose tariff rates are governed by the orders of a rate regulator which in this case is Central Electricity Regulatory Commission / State Electricity Regulatory Commission. It is observed that the consideration of various items under “Net movement in regulatory deferral account balances” and the treatment in the audited accounts are in compliance with the accounting principles laid down in INDAS 114.
2.	Accounting of Surcharge Due from entities (DISCOMS) for any delay in the settlement of claims due to the Company results in levy of surcharge in accordance with the terms and conditions of the agreement entered into for the sale of power. For the financial year 2018-19 the Company has recognised a sum of Rs.. 478.37 crore as surcharge under other income - Refer Note No.23 - on Financial statements.	Accounting of surcharge was examined by us to ensure that all the material amounts of surcharge accounted by the Company as income were in accordance with the terms and conditions of the contracts entered into by the Company with DISCOMS.
3.	Disputed Tax demands - Direct and Indirect taxes and measurement and the related disclosure in accordance with IND AS - 37 Provisions, Contingent Liabilities and Contingent Assets. There are several items of disputes pending in various appellate forums in respect of determination and quantification of liability towards direct and indirect taxes by the departments. Liabilities in respect of disputed demands are considered only as contingent	Details of the tax liabilities contested in the appeals were obtained and analyzed by us to ensure that the amount of Rs. 368.78 crore disclosed under contingent liability had not become ascertained liability as on 31-03-2019. - Orders of the Appellate authorities for the adjudication of similar items in the earlier accounting years in favor of the Company were perused to evaluate the similarity of the facts and also to

	liabilities pending the outcome of the decision of the appellate authorities. The total amount of disputed liabilities on account of Direct and Indirect taxes as disclosed in Note No.53 is Rs. 368.78 core.	ensure the disclosure of the disputed demands under contingent liability was in accordance with the requirements of IND AS-37, Provisions, Contingent Liabilities and Contingent Assets - The contention of the management as to the contingent nature of liabilities was also analysed in the light of expert legal opinion obtained by the Company.
4.	Amounts disclosed under contingencies and commitments -from others - Note No.53. A sum of Rs.. 11,434.18 crore has been considered by the Company under the above head. This sum represents claims of third parties including the compensation for land acquisition and contractors. The Company has not accepted the said claims which are contested in legal proceedings and are pending for disposal by the appellate authorities.	We have verified the list of claims made by third parties. Status of the appeals filed and pending for disposal as on 31st March 2019 was analysed. It was observed that there was no change in the status as compared to 31st March 2018.
5.	Amount of Rs.. 349.13 crore included under Capital Work in Progress (project Put on Hold), Bithnokand BTPSE Project.	We have obtained the details of project activities of Bithnok and BTPSE project from the management. We have noted that the company has incurred capital expenditure of Rs.. 349.13 crore and Rs. 168.17 crore in Bithnok and BTPSE project respectively which includes land of Rs.. 176.92 crore and capital advance of Rs. 261.72 crore. On the basis of clarification received from management, current year expenses also have been capitalised in the project cost. We have obtained the information from records and found that Rajasthan government has accorded in-principle approval for revival of the project with certain conditions. We have obtained the management reply that the discussions with Rajasthan Government and M/s. Reliance Infrastructure Limited by NLCIL’s top level management for revival of the project are under progress.

Management’s Responsibility for the Standalone Financial Statements

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

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

The Board of Directors is also responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibility

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

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

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

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

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

- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the financial statements 29, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

Emphasis of Matter

We draw attention to the Note No.29 -Net movement in regulatory deferral account balances Income/expenses -to the Standalone financial statements:

a. As explained in the said note, a sum of Rs.. 131.29 crore along with period cost has been de-recognised under regulatory deferral liabilities during the current financial year on account of redetermination of the estimated liabilities arising out of orders of CERC in respect of sharing of incentives and revenue on sale of lignite to outsiders respectively and inclusion of the said amount under Regulatory deferral income

b. Our opinion is not modified in respect of the said matter.

Other Matter

We did not audit the financial statements of One (1) Branch included in the Standalone Financial Statements of the Company which reflected a total asset of Rs.. 1,628.51 crore as at March 31,2019 and a total revenue of Rs. 188.81 crore for the year ended on that date. The financial statements of this Branch have been audited by the Branch auditor whose report has been furnished to us and our opinion, in so far as it relates to the amounts and disclosures included in respect of this Branch, is based solely on the report of such Branch Auditor.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in Annexure-I a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

2. As required by Section143(3)of the Act, we report that:

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

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

(c) The reports on accounts of the Branch Office of the Company audited under Sec 143(8) of the Act by the Branch Auditor have been sent to us and have been properly dealt with by us in preparing this report.

(d) The Balance Sheet, the Statement of Profit and Loss, Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of accounts.

(e) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

(f) As per Notification No: G.S.R 463(E) dated 05.06.2015, subsection (2) of Sec 164 of the Companies Act, 2013 is not applicable to Government Companies.

(g) With respect to adequacy of the internal financial control over financial reporting of the company and the operating effectiveness of such controls, we give our report in Annexure-II. Our report expresses an unmodified opinion on the operating effectiveness of the Company’s internal financial controls over financial reporting.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements-Refer to Note 51 to financial statements.

ii. The Company has long term contracts for coal mining, power sale, project execution etc. However as at March 31, 2019 there were no material foreseeable losses on those contracts. The company did not have any derivative contracts as at March 31,2019

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

3. As required by Sec 143(5) of the Companies Act, 2013, our comments in regard to the directions and sub-directions issued by the Comptroller and Auditor General of India is given in Annexure-III.

Annexure-I to Independent Auditors’ Report

Statement of matters specified in Para 3 & 4 of the order referred to in sub-section (11) of section 143

The Annexure referred to in our report to the members of NLC INDIA LTD, (the Company’) for the year Ended on 31.03.2019:

1. Fixed Assets

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

b. The Company is having a regular programme of physical verification of all fixed assets (Property, Plant and Equipment) over a period of 2 years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

2. Inventory

The inventory has been physically verified at reasonable intervals by the management. No material discrepancies were noticed during such verification.

3. Transactions of loans with parties covered by register referred to in section 189

The Company has granted unsecured loan to a subsidiary Company and to a director of the Company covered by the register maintained under section 189 of the Companies Act, 2013:

a. In our opinion, the terms and conditions of grant of the loans are not prejudicial to the interest of the Company.

b. According to the information and explanations given to us, the schedule of repayment of principal and payment of interest has been stipulated while granting such loans and the repayment/receipts are regular.

c. No amounts are overdue for more than 90 days.

4. Compliance with section 185 & 186 in respect of Loans and Investments

The Company has not advanced loans, given guarantees or security or made any investment in contravention of section 185 and/or section 186 of the Companies Act, 2013.

5. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules made there under are not applicable to the Company.

6. Maintenance of Cost Records

The Central Government has prescribed the maintenance of cost records U/s. 148(1) of the Companies Act, 2013 in respect of Electricity Industry and Lignite. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

7. Statutory dues

a. The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on the information and explanations given to us the Company has laid down system and procedures regarding deposit of PF and ESI dues relating to contractors’ workers. The Company has generally been regular in depositing Income-tax, Sales Tax, Service Tax, duty of customs, duty of excise, value added tax, cess, GST and any other statutory dues to the appropriate authorities.

Based on information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess, gSt and any other statutory dues were outstanding as at 31st March 2019 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty, Value Added Tax, Cess and GST which have not been deposited on account of any dispute except as reported below:

Name of the Statute	Nature of Dues	Demand Amount (Rs. in lakh)	Amount Deposited under Protest (Rs.in lakh)	Period to which the amount relates	Forum where dispute is pending
Customs Act, 1962	Customs Duty	2685.00	983.00	-	CESTAT
		7481.82	-	AY 2013-14	ITAT
Income Tax Act	Income Tax	6814.83	-	AY 2014-15	ITAT
		3089.11	617.82	AY 2011-12	CIT(A)
		12936.47	2587.29	AY 2015-16	CIT(A)
		651.47	130.29	AY 2016-17	CIT (A)
		89.56	6.72	Apr 2009 to Jun 2012	CESTAT
		51.34	7.00	Jul 2012 to Mar 2014	CEC(A)
Finance Act, 1994	Service Tax	852.59	63.94	Jul 2012 to Mar 2015	CESTAT
		366.59	27.49	Jul 2012 to Mar 2014	CESTAT
		25.54	2.55	Apr 2014 to Mar 2015	CESTAT
		9.24	0.92	Apr 2014 to Mar 2015	CEC(A)
		121.37	12.14	Apr 2014 to Mar 2015	CEC(A)
		205.62	-	Jun 2008 to Mar 2012	CESTAT
		72.83	5.46	Apr 2015 to June 2017	CEC(A)
		1417.27	106.30	Apr 2015 to June 2017	CEC(A)
		8.05	0.60	Apr 2015 to June 2017	CEC(A)

8. Repayment of Loans

The Company has not defaulted in repayment of loans or borrowing to a financial institution, bank, government or dues to debenture holders during the relevant financial year.

9. Raising of monies through Public Offer and/or Term Loans

According to the information and explanations given to us, the monies raised by way of term loans were applied for the purposes for which those were raised.

10. Frauds

According to the information and explanations given to us, no fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.

11. Managerial Remuneration

As per Notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 of the Act is not applicable to the Government Companies. Accordingly, provisions of clause 3 (xi) of the Order are not applicable to the Company.

12. Compliance with Net Owned Funds Ratio & unencumbered term deposits

The Company is not a Nidhi Company and hence the provisions para 3(xii) of the order referred to in Companies (Auditor’s Report) Order, 2016 issued by the Central Government of India in terms of subsection (11) of Section 143 of the Act do not apply to the Company.

13. Transaction with Related Parties

In our opinion all transactions with the related parties are in compliance with the provision of section 177 and 188 of Companies Act, 2013 wherever applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

14. Preferential Allotment or Private Placement

The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

15. Non-cash transactions

The Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.

16. Registration with Reserve Bank of India

The Company is not carrying any activities which require registration under section 45-IAof the Reserve Bank of India Act, 1934.

The following to be considered as a part of the above auditor’s report.

Para 1: Fixed Assets (Annexure I to Independent Auditor’s Report)

(c) The Company is in possession of title deeds/assignment deeds/GOs in respect of immovable properties. However due to enormous volume of documents held by the company for acquisition of land, all the title deeds could not be fully verified by us. As per expert legal opinion, the ownership of the land acquired between the incorporation of the company to the year 1977 and between the years 1997 to 2001 is subject to conditions attached by Govt. of Tamil Nadu to the respective assignment deeds.

Sl. No.	Details	As in Audit Report	To be changed to
1	Auditors Responsibility (Bullet Point No. 5)	The Numeric Rs.29’ inadvertently appears	The numeric Rs.29’ to be deleted
2	Report on Other Legal and Regulatory Requirements	In point no. h (i) ‘Refer to Note 51’	To be read as Refer to Note no. 53

We have audited the internal financial controls over financial reporting of NLC INDIA LIMITED (formerly Neyveli Lignite Corporation Limited) (“the Company”) as of March 31, 2019 in connection with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We have conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Other Matter

We did not audit the Internal Financial Control over Financial Reporting of ONE (1) branch included in the standalone financial statements of the Company. The adequacy of internal financial controls system over financial reporting and the operating effectiveness of such internal financial controls over financial reporting conducted by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion is not modified in respect of this matter.

FOR M/s. CHANDRAN & RAMAN FOR M/s. PKKG BALASUBRAMANIAM & ASSOCIATES

Chartered Accountants Chartered Accountants

Firm Regn. No.000571S Firm Regn. No.001547S

S. PATTABIRAMAN C. RAMESH

Partner Partner

M No.014309 M No.025985

Place : Neyveli

Date :30th May 2019

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Mar 31, 2018

We have audited the internal financial controls over financial reporting of M/s. NLC INDIA LIMITED (formerly Neyveli Lignite Corporation Limited) (“the Company”) as of March 31, 2018 in connection with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the Auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Other Matter

We did not audit the Internal Financial Control over Financial Reporting of ONE (1) branch included in the standalone financial statements of the Company. The adequacy of internal financial controls system over financial reporting and the operating effectiveness of such internal financial controls over financial reporting conducted by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion is not modified in respect of this matter.

FOR CHANDRAN & RAMAN FOR PKKG BALASUBRAMANIAM & ASSOCIATES

Chartered Accountants Chartered Accountants

Firm Regn No. : 000571S Firm Regn No.: 001547S

S. PATTABIRAMAN C SURESH

Partner Partner

M No.014309 M No.204602

Place : Chennai

Date :28^th May 2018

---

Mar 31, 2017

Report on the Financial Statements

We have audited the accompanying standalone Ind AS financial statements of M/s. NLC INDIA LIMITED (formerly Neyveli Lignite Corporation Limited) (“the Company”), which comprise the Balance Sheet as at 31^st March, 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

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

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs (financial position) of the Company as at 31^st March, 2017, and its profit, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the standalone Ind AS financial statements:

a) Note No: 49 to the financial statements regarding implementation of Ind AS 114 Regulatory Deferral Accounts, wherein the resulting adjustments of giving effect to CERC Orders has been recognised in the retained earnings for the years prior to transition date i.e., 01.04.2015. The adjustments relating to the FY 2015-16 & FY 2016-17 are recognised in the Statement of Profit & Loss under Net Movement in Regulatory Deferral Account Balances.

b) Note No: 46 to the financial statements regarding the change in accounting policy during the year whereby the expenditure incurred on operation and maintenance (excluding interest and depreciation) of Lignite Handling System is being treated as a part of Lignite Cost as against the earlier practice of treating the said expenditure as a cost attributable to thermal stations.

Our opinion is not modified in respect of these matters.

Other Matter

We did not audit the financial statements of ONE (1) branch included in the standalone Ind AS financial statements of the company whose financial statement reflects a total assets of Rs.2,403.24 crore as at 31^st March 2017 and total revenue of Rs.593.39 crore for the year ended on that date, as considered in the standalone Ind AS financial statements. The financial statements of this branch has been audited by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion is not modified in respect of this matter.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in Annexure-I a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

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

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

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

c) The report on accounts of the branch office of the company audited U/s.143(8) of the Act by the branch auditor has been sent to us and has been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss, the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

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

f) As per the Notification No. G.S.R. 463(E) dated 05.06.2015, sub-section (2) of Section 164 of the Companies Act, 2013 is not applicable to Government Companies.

g) With respect to the adequacy of internal financial control systems and the operating effectiveness of such controls, we give our Report in Annexure-II.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 20 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

iv. The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8^th November 2016 to 30^th December 2016. As stated in Note No. 54 to the financial statements and as represented to us by the Management, the Company has received amounts aggregating Rs.6,64,000 from transactions made in Specified Bank Notes.

3. As required by section 143(5) of the Companies Act, 2013, our comments in regard to the directions and sub-directions issued by the Comptroller and Auditor General of India is given in Annexure-III.

Annexure-I to Independent Auditors’ Report

Statement of matters specified in Para 3 & 4 of the order referred to in sub-section (11) of section 143

1. Fixed Assets

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

b. The Company has a policy of verifying all the fixed assets once in five years. For the cycle 2011-12 to 2015-16, physical verification of all the fixed assets has been carried out during the financial years 2015-16 & 2016-17. Pending reconciliation of discrepancies observed on physical verification conducted a sum of Rs.1.38 crore has been provided for. Material discrepancies, if any, will be adjusted as and when determined.

c. According to the information and explanations given to us, the company is in possession of title deeds/assignment deeds/GO’s in respect of immoveable properties, except as detailed below. However, due to the enormous volume of the documents held by the company for acquisition of land, all the title deeds could not be fully verified.

(Rs. in crore)

Nature of Immoveable Property	Total No of cases	Gross Block as on 31.03.2017	Net Block as on 31.03.2017	Remarks, if any
Building - Leasehold	1	2.10	1.31	Registration of Lease Deed pending

2. Inventory

The inventory has been physically verified during the year by the management. No material discrepancies were noticed.

3. Transactions with parties covered by register referred to in section 189

The Company has granted unsecured loan to a subsidiary Company and to a director of the Company covered by the register maintained under section 189 of the Companies Act, 2013.

a. In our opinion, the terms and conditions of grant of the loans are not prejudicial to the interest of the Company.

b. According to the information and explanations given to us, the schedule of repayment of principal and payment of interest has been stipulated while granting such loans and the repayment/receipts are regular.

c. No amounts are overdue for more than 90 days.

4. Compliance with section 185 & 186 in respect of Loans and Investments

The Company has not advanced loans, given guarantees or security or made any investment in contravention of section 185 and/or section 186 of the Companies Act, 2013.

5. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules made there under are not applicable to the Company.

6. Maintenance of Cost Records

The Central Government has prescribed the maintenance of cost records U/s. 148(1) of the Companies Act, 2013 in respect of Electricity Industry and Lignite. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

7. Statutory dues

a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on the information and explanations given to us the Company has laid down system and procedures regarding deposit of PF and ESI dues relating to contractors’ workers. The Company has generally been regular in depositing Income-tax, Sales Tax, Service Tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities.

Based on information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues were outstanding as at 31^st March 2017 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty, Value Added Tax and Cess which have not been deposited on account of any dispute except as reported below:

Name of the Statute	Nature of Dues	Demand Amount (Rs. In lakh)	Amount Deposited under Protest (Rs. In lakh)	Period to which the amount relates	Forum where dispute is pending
Rajasthan Finance Act, 2006	Land Tax	57.53	28.76	2008-09	Tax Board, Ajmer
		173.73	63.28	2009-10
		173.73	86.86	2010-11
		192.92	99.96	2011-12
		192.92	99.96	2012-13
Customs Act	Customs Duty	2685.00	983.00	-	CESTAT
Finance Act, 1994	Service Tax	89.56	6.72	April 2009 to June 2012	CESTAT
		10.18	-		CEC(A)
		51.34	3.85	July 2012 to March 2014	CEC(A)
		1.11	0.08	April 2012 to June 2012	CEC(A)
		852.59	63.94	July 2012 to March 2015	CESTAT
		366.59	27.94	July 2012 to March 2014	CESTAT
		492.56	36.94	April 2013 to Sep 2013	CESTAT
		205.62	-	June 2008 to March 2012	CESTAT
		72.57	-	April 2015 to March 2016	CESTAT
Income Tax Act	Income Tax	17351.42	10542.43	AY 2013-14	CIT(A)
		13455.23	-	AY 2014-15	CIT(A)
The Central Excise Act, 1944	Excise Duty	29.03	2.18	Nov. 2011 to Sep. 2012	CEC(A)

8. Repayment of Loans

The Company has not defaulted in repayment of loans or borrowing to a financial institution, bank, government or dues to debenture holders during the relevant financial year.

9. Raising of monies through Public Offer and/or Term Loans

According to the information and explanations given to us, the monies raised by ways of issue of debt instruments and term loans were applied for the purposes for which those were raised.

10. Frauds

According to the information and explanations given to us no fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.

11. Managerial Remuneration

According to the information and explanations provided to us, the total Managerial remuneration paid/provided by the Company is within the overall maximum limit as specified section 197 read with Schedule-V to the Companies Act, 2013 and accordingly requirements as to obtaining requisite approval this section does not arise.

12. Compliance with Net Owned Funds Ratio & unencumbered term deposits

The Company is not a Nidhi Company and hence the provisions para 3(xii) of the order referred to in Companies (Auditor’s Report) Order, 2016 issued by the Central Government of India in terms of subsection (11) of Section 143 of the Act does not apply to the Company.

13. Transaction with Related Parties

In our opinion all transactions with the related parties are in compliance with the provision of section 177 and 188 of Companies Act, 2013 wherever applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

14. Preferential Allotment or Private Placement

The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

15. Non-cash transactions

The Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.

16. Registration with Reserve Bank of India

The Company is not carrying any activities which require registration under section 45-IA of the Reserve Bank of India Act, 1934.

FOR P.B. VIJAYARAGHAVAN & CO.,, FOR CHANDRAN & RAMAN

Chartered Accountants Chartered Accountants

Firm Regn. No. 004721S Firm Regn. No 00571S

P.B. Srinivasan S. Pattabiraman

Partner Partner

M No. 203774 M No. 014309

Date: 30.05.2017

Place: Chennai

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Mar 31, 2016

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

Management''s Responsibility for the Standalone Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

a) Note No: 24(A)(1)(i) to the financial statements regarding adoption of normal corporate tax rate instead of Minimum Alternate Tax rate for calculation of Return on Equity in tariff fixation under Central Electricity Regulatory Commission (CERC) regulation.

b) Note No: 24(A)(1)(ii) to the financial statements regarding the review order of Central Electricity Regulatory Commission (CERC) dated 21.01.2016 for refund of additional profit earned by sale of lignite to outside agencies over and above 85% capacity utilisation factor of Mine II Expansion and refund of incentive for the excess generation of power over and above the contemplated PLF in TPS II due to inclusion of pooled price of Mine II Expansion.

c) Note No: 24(A)(1)(iii) to the financial statements regarding the order of the Central Electricity Regulatory Commission (CERC) dated 14.03.2016 regarding disallowance of interest during construction period of Barsingsar Thermal Power Station.

d) Note No: 26(d) to the financial statements regarding Power tariff that final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order, which is not ascertainable at this stage.

Our opinion is not modified in respect of these matters.

Other Matter

We did not audit the financial statements of ONE (1) branch included in the standalone financial statements of the company whose financial statement reflects a total assets of Rs.1821.20 crore as at 31st March 2016 and total revenue of Rs.435.98 crore for the year ended on that date, as considered in the standalone financial statements. The financial statements of this branch has been audited by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion is not modified in respect of this matter.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 (''the Order'') issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in Annexure - I a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

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

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

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

c) The report on accounts of the branch office of the company audited U/s.143(8) of the Act by the branch auditor has been sent to us and has been properly dealt with by us in preparing this report.

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

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

f) As per the Notification No. G.S.R. 829(E) dated 21.10.2003, issued U/s. 620(1) of the Companies Act, 1956 and read with Section 465(2) of Companies Act,2013, Sub-section (2) of Section 164 of the Companies Act, 2013 is not applicable to Government Companies.

g) With respect to the adequacy of internal financial control systems and the operating effectiveness of such controls, we give our Report in Annexure-II .

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 24(A) to the financial statements;

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

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

3. As required by section 143(5) of the Companies Act, 2013, our comments in regard to the directions and sub-directions issued by the Comptroller and Auditor General of India is given in Annexure-III.

Statement of matters specified in Para 3 & 4 of the order referred to in sub-section (11) of section 143

1) Fixed Assets

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

b) The Company has a policy of verifying all the fixed assets once in five years. For the cycle 2006-07 to 2010-11, physical verification of all the fixed assets has been carried out during the financial year 2010-11. Pending reconciliation of discrepancies observed on physical verification conducted during the financial year 2010-11 a sum of Rs.0.41 crore has been provided for. For the cycle 2011-12 to 2015-16, the physical verification of fixed assets is in progress. Material discrepancies, if any, will be adjusted as and when determined.

c) According to the information and explanations given to us, the Company is in possession of title deeds/assignment deeds/GO''s in respect of immovable properties, except as detailed below. However, due to the enormous volume of the documents held by the Company for acquisition of land, all the title deeds could not be fully verified.

(Rs.in crore)

Gross Block Net Block

Nature of Immovable Total No. Remarks, as on as on Property of cases if any 31.03.2016 31.03.2016

Building - Leasehold 1 2.08 1.35 Registration of Lease Deed pending

Building - Freehold 1 26.25 25.94 Execution of Sale Deed is pending

2) Inventory

The inventory has been physically verified during the year by the management. No material discrepancies were noticed.

3) Transactions with parties covered by register referred to in section 189

The Company has granted unsecured loan to a subsidiary Company and to a Director of the Company covered by the register maintained under section 189 of the Companies Act, 2013.

a) In our opinion, the terms and conditions of grant of the loans are not prejudicial to the interest of the Company.

b) According to the information and explanations given to us, the schedule of repayment of principal and payment of interest has been stipulated while granting such loans and the repayment/receipts are regular.

c) No amounts are overdue for more than 90 days.

4) Compliance with section 185 & 186 in respect of Loans and Investments

The Company has not advanced loans, given guarantees or security or made any investment in contravention of section 185 and/or section 186 of the Companies Act, 2013.

5) Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules made there under are not applicable to the Company.

6) Maintenance of Cost Records

The Central Government has prescribed the maintenance of cost records U/s. 148(1) of the Companies Act, 2013 in respect of Electricity Industry and Lignite. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

7) Statutory Dues

a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on the information and explanations given to us the Company has laid down system and procedures regarding deposit of PF and ESI dues relating to contractors'' workers. The company has generally been regular in depositing Income-tax, Sales Tax, Service Tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities.

Based on information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues were outstanding as at 31st March 2016 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty, Value Added Tax and Cess which have not been deposited on account of any dispute except as reported below:

Amount Period to Forum Name Demand Nature of Deposited which where of the Amount the dues under protest the amount dispute is Statute (Rs.in lakh) (Rs.in lakh) relates pending

57.53 28.76 2008-09

Rajasthan 173.73 63.28 2009-10 Tax Board,

Finance Act, Land tax 173.73 86.86 2010-11 Ajmer 2006

192.92 99.96 2011-12

192.92 99.96 2012-13

Customs Act Customs Duty 3237.21 733.98 - CESTAT

89.56 6.72 April 2009 CESTAT to June 2012 10.18 - CEC(A)

Finance Act,

Service Tax July 2012 1994 51.34 3.85 to March 2014 CEC(A)

April 2012 1.11 0.08 CEC(A) to June 2012

The Central Nov 2011 Excise Act, Excise Duty 29.03 2.18 CEC(A) to Sep 2012 1944

8) Repayment of Loans

The Company has not defaulted in repayment of loans or borrowing to a financial institution, bank, government or dues to debenture holders during the relevant financial year.

9) Raising of monies through Public Offer and/or Term Loans

According to the information and explanations given to us, the monies raised by ways of issue of debt instruments and term loans were applied for the purposes for which those were raised.

10) Frauds

According to the information and explanations given to us no fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.

11) Managerial Remuneration

According to the information and explanations provided to us, the total Managerial remuneration paid/provided by the Company is within the overall maximum limit as specified section 197 read with Schedule V to the Companies Act, 2013 and accordingly requirements as to obtaining requisite approval this section does not arise.

12) Compliance with Net Owned Funds Ratio & unencumbered term deposits

The Company is not a Nidhi Company and hence the provisions para 3(xii) of the order referred to in Companies (Auditor''s Report) Order, 2016 issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act does not apply to the Company.

13) Transaction with Related Parties

In our opinion all transactions with the related parties are in compliance with the provision of section 177 and 188 of Companies Act, 2013 wherever applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

14) Preferential Allotment or Private Placement

The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

15) Non-cash transactions

The Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.

16) Registration with Reserve Bank of India

The Company is not carrying any activities which require registration under section 45-IA of the Reserve Bank of India Act, 1934.

Annexure-III to Independent Auditors'' Report

Comments in regard to the directions and sub-directions issued by the Comptroller and Auditor General of India

1. The company has been acquiring land through Government of Tamil Nadu. As per the legal opinion obtained by the company as regards the clear title the position is as under :-

Period during which land Statute under which the Mode of Nature of was acquired land was acquired acquisition ownership

From incorporation to 1977 The Land Acquisition Assignment Conditional Act, 1894 Deeds Ownership

1978 to 1996 The Land Acquisition Government Absolute owner Act, 1894 Notifications of the land

1997 to 2001 The Tamil Nadu Acquisition Government Conditional of Land for Industrial Notifications Ownership Purposes Act, 1997

2001 to 31.03.2016 The Tamil Nadu Acquisition Government Absolute owner of Land for Industrial Notifications of the land Purposes Act, 1997

2. During the year under audit, there were no cases of waiver/write off of debts/loans/interest etc.

3. There are no cases of inventories lying with third parties or assets received as gifts/grants from the Government or other authorities.

For M/s. P.B. VIJAYARAGHAVAN & CO., For M/s. CHANDRAN & RAMAN

Chartered Accountants Chartered Accountants

Firm Regn. No. 004721S Firm Regn No. 000571S



P.B. Srinivasan S. Pattabiraman

Partner Partner

M.No.: 203774 M.No.: 014309

Place : Chennai

Date : 26.05.2016

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Mar 31, 2015

We have audited the accompanying standalone financial statements of M/s. NEYVELI LIGNITE CORPORATION LIMITED("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, in which are incorporated the Returns for the year ended on that date audited by the branch auditor of the Company''s branch at Barsingsar.

Management''s Responsibility for the Standalone Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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

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

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

Opinion

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

Emphasis of Matter

We draw attention to the following matters in the Notes to the financial statements:

a) Note No: 11(c) to the financial statements regarding Capitalisation of Interest and Overheads for the delay in commissioning of Thermal Power Station-II Expansion project.

b) Note No: 23(b)(v)(b) to the financial statements regarding contingent liability of Rs. 147.56 crore under the scheme of Perform, Achieve and Trade (PAT) mechanism of the Energy Conservation Act, 2001 in respect of Thermal Power Station-I for exceeding the notified energy efficiency targets.

c) Note No: 25(e) to the financial statements regarding disputed liability based on the order of Central Electricity Regulatory Commission (CERC) dated 7-5-2015 for refund of incentive earned for the excess generation of power over and above the contemplated PLF in TPS-II and passing of the revenue earned on lignite sales from Mine-II to beneficiaries.

d) Note No: 23(a)(ii) to the financial statements regarding adoption of normal corporate tax rate instead of Minimum Alternate Tax rate for calculation of Return on Equity in tariff fixation under Central Electricity Regulatory Commission (CERC) regulation.

e) Note No: 25(d) to the financial statements regarding Power tariff that final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order, which is not ascertainable at this stage.

f) Note No: 37 to the financial statements regarding accounting of Foreign Exchange Rate Variation (FERV) recoverable from /payable to beneficiaries which is as per opinion of Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India (ICAI)

g) As per the requirements of section 135(1) of Companies Act, 2013, at least one director shall be an independent director on Corporate Social Responsibility Committee. In the absence of Independent Directors, this has not been complied with from 24th September 2014.

h) As per Companies (Appointment and Qualification of Directors) Rules, 2014, the Company is supposed to have appointed at least one woman director. However this has not been complied with.

Our opinion is not modified in respect of these matters.

Other Matters

We did not audit the financial statements of ONE(1) branch included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs. 1907.91 crore as at 31st March, 2015 and total revenues of Rs. 453.59 crore for the year ended on that date, as considered in the standalone financial statements. The financial statements of this branch has been audited by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion is not modified in respect of this matter.

Report on other Legal and Regulatory Requirements

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

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

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

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branch not visited by us.

(c) The report on the accounts of the branch office of the Company audited under Section 143 (8) of the Act by branch auditor has been sent to us and has been properly dealt with by us in preparing this report.

(d) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the branch not visited by us.

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

(f) As per the Notification No. G.S.R. 829(E) dated 21.10.2003, issued u/s. 620(1) of the Companies Act, 1956, Sub-section (2) of Section 164 of the Companies Act 2013 is not applicable to Government Companies.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 23 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

Annexure to Auditors'' Report

I. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the fixed assets once in five years. As explained to us, physical verification was carried out during the year 2010-11. Pending reconciliation of discrepancies observed on the physical verification, a sum of Rs. 0.41 crore has been retained as Provision for possible loss of asset.

II. Inventories

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

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

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

III. Transactions with persons covered by register maintained u/s 189 of the Companies Act, 2013

During the year the Company has not granted any loan to Companies, firms and other parties to be listed in the register maintained under Section 189 of the Companies Act, 2013. However in respect of loans granted in the earlier year repayment of principal and interest are regular as per the terms and conditions of the loan.

IV. Internal Control

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

V. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of sections 73 to 76 or any other provisions of the Companies Act 2013 and the rules made there under are not applicable to the Company.

VI. Cost Accounting Records

The Central Government has prescribed the maintenance of records under Section 148(1) of the Companies Act, in respect of Thermal Power Station Units and Mining Units. We are of the opinion that prima facie, the records prescribed under the Cost Accounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company for Thermal Power Station Units and the proforma specified therein for the year are under preparation. In the case of Mining Units, the records have been maintained to meet the requirements of the Companies (Cost Accounting Records) Rules, 2011. We have however not carried out a detailed verification of such records.

VII. Statutory Dues

(a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF and ESI dues relating to contractors'' workers.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues were outstanding as at 31st March 2015 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty, Value Added Tax and Cess which have not been deposited on account of any dispute except as reported below:

Amount Name Nature of Demand Deposited of the the dues Amount under protest Statute (Rs. in lakh) (Rs. in lakh)

57.53 28.76

Rajasthan 173.73 6328 Finance Act 2006 Land tax 173.73 86.86

192.92 99.96

192.92 99.96

Customs Act Customs Duty 3237.21 733.98

4147.97 200.00

16158.18 4800.00

Income Tax Income Tax 26539.89 - Act,1961 31586.31 22959.43

79.75 79.75

100.02 100.02

15.61 15.61

TNGST Sales Tax 2.02 2.02

Name Period to Forum of the which where Statute the amount dispute is relates pending

2008-09 Rajasthan Finance Act 2009-10 Tax Board, 2006 Ajmer 2010-11

2011-12

2012-13

Customs Act - CESTAT

AY 2010-11 CIT(A)

AY 2012-13 CIT(A) Income Tax Act,1961 AY 2009-10 CIT(A)

AY 2011-12 CIT(A)

AY 2001-02 ITAT

AY 2010-11 ITAT

2002-03 Tribunal TNGST

2003-04 Tribunal

(d) The Company has generally been regular in transfer of amounts required to be transferred to Investor Education and Protection Fund in accordance with relevant provisions of Companies Act, 2013.

VIII. Accumulated Losses

The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

IX. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or Debenture Holders.

X. The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

XI. In our opinion, the term loans have been applied for the purpose for which they were obtained.

XII. Frauds

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

For M/s. SREEDHAR, SURESH & For M/s. P.B. VIJAYARAGHAVAN & CO., RAJAGOPALAN, Chartered Accountants Chartered Accountants Firm Regn. No. 003957S Firm Regn. No. 004721S

K. Sreedhar P.B. Srinivasan Partner Partner M.No.: 024314 M.No.: 203774

Place : Chennai Date : 29.05.2015

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Mar 31, 2014

We have audited the accompanying financial statements of Neyveli Lignite Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material mis-statement.

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

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

Opinion

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

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

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

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

Emphasis of Matter

Attention is invited to:

a) Note No:11(c) to the Financial statements regarding Capitalisation of Interest and Overheads for the delayed project of Thermal Power Station II Expansion.

b) Note No:23(a) to the Financial statements regarding adoption of normal corporate tax rate instead of Minimum Alternative Tax rate for calculation of Return on Equity as per Central Electricity Regulatory Commission (CERC) Regulation.

c) Note No:25(d) & (e) to the Financial statements regarding Power tariff final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order, which is not ascertainable at this stage.

d) Note No: 37 to the Financial statements regarding accounting of Foreign Exchange Rate Variation (FERV) recoverable/payable from beneficiaries which is as per opinion of Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India (ICAI).

Our opinion is not qualified in respect of these matters mentioned above.

Report on other Legal and Regulatory Requirements

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

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

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

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from Rajasthan branch not visited by us. The Branch Auditor''s Report has been forwarded to us and has been appropriately dealt with.

c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the audited returns received from Rajasthan branch not visited by us.

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

e) As per the Notification No: G.S.R. 829(E) dated 21.10.2003, issued under Section 620(1) of the Companies Act, 1956, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 is not applicable to Government Companies.

f) As the Central Government is yet to notify Cess payable under section 441A, the reporting requirement under Section 227(3) (g) of the Companies Act, 1956, does not arise.

Annexure to Auditors'' Report

I. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the fixed assets once in five years. As explained to us, physical verification was carried out during the year 2010-11. Pending reconciliation of discrepancies observed on the physical verification, a sum of Rs.0.41 crore has been retained as Provision for possible loss of asset.

(c) During the year the Company had not disposed off substantial part of fixed assets.

II. Inventories

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

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

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

III. Transactions with persons covered by register maintained u/s 301 of the Companies Act, 1956

(a) The Company has not granted / taken any loan to / from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year Rs.5,00,000 or more.

(c) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Act.

IV. Internal Control

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

V. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

VI. Internal Audit System

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

VII. Cost Accounting Records

The Central Government has prescribed the maintenance of records under Section 209(1) (d) of the Companies Act, 1956 in respect of Thermal Power Station Units and Mining Units. We are of the opinion that prima facie, the books of accounts prescribed under the Cost Accounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company for Thermal Power Station Units and the proforma specified therein for the year are under preparation. In the case of Mining Units, the books of accounts have been maintained to meet the requirements of the Companies (Cost Accounting Records) Rules, 2011. We have however not carried out a detailed verification of such records.

VIII. Statutory Dues

(a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF and ESI dues relating to contractors'' workers.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except as reported below:

Amount Name Demand Nature of Deposited of the Amount the dues under protest Statute (Rs. in lakh) (Rs. in lakh)

57.53 28.76 Rajasthan Land tax 173.73 63.28 Finance Act, 173.73 86.86 2006

192.92 99.96

192.92 99.96

733.98

Customs Customs 3137.21 300.00 Act, 1962 duty (by way of bank guarantee)

Name of the Statue Period to Forum which where the amount dispute is relates pending

2008-09

Rajasthan Finance Act, 2006 2009-10 Tax Board, 2010-11 Ajmer 2011-12 2012-13

Customs Act, 1962 - CESTAT

IX. Accumulated Losses

The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

X. Funds from Banks/Financial Institutions/Public

(a) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(b) The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

(c) In our opinion, the term loans have been applied for the purpose for which they were raised.

(d) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the no funds raised on short term basis have been used for long term investment.

(e) According to the information and explanations given to us and the records examined by us, securities have been created in respect of bonds issued.

XI. Frauds

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

XII. Other Matters

The nature of the Company''s business/activities during the year was such that paragraphs 4 (xii), (xiii), (xiv), (xx) of Companies (Auditor''s Report) Order, 2003 are not applicable.

For M/s. SREEDHAR, SURESH & RAJAGOPALAN, For M/s. P.B. VIJAYARAGHAVAN & CO.,

Chartered Accountants Chartered Accountants

Firm Regn. No. 003957S Firm Regn. No. 004721S

S. SUBRAMANIAM P.B. SRINIVASAN

Partner Partner

M.No.: 025433 M.No.: 203774

Place : Chennai Date : 23.05.2014

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Neyveli Lignite Corporation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material mis-statement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material mis-statement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

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

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

Emphasis of Matter

Attention is invited to:

a) Note No:25(d) & (e) to the Financial statements. Final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order on power tariff, which is not ascertainable at this stage.

b) Note No:25(f) to the Financial statements. Pending receipt of CERC order regarding reduction in power sales of Rs.17.78 crore on account of deemed export benefit granted by Government of India has not been given effect.

Our opinion is not qualified in respect of these matters mentioned above.

Report on other Legal and Regulatory Requirements

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

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

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

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from Rajasthan branch not visited by us. The Branch Auditor''s Report has been forwarded to us and has been appropriately dealt with.

c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the audited returns received from Rajasthan branch not visited by us.

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

e) As per the Notification No: G.S.R. 829(E) dated 21.10.2003, issued under Section 620(1) of the Companies Act, 1956, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 is not applicable to Government Companies.

f) As the Central Government is yet to notify Cess payable under section 441A, the reporting requirement under section 227(3) (g) of the Companies Act, 1956, does not arise.

Annexure to Auditors'' Report

I. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the fixed assets once in five years. As explained to us, physical verification was carried out during the year 2010-11. Pending reconciliation of discrepancies observed on the physical verification done during the financial year 2012-2013, a sum of Rs.0.59 crore has been adjusted with the Provision amount of Rs.1.00 crore created in the previous year and the balance of Rs. 0.41 crore is available.

(c) During the year the Company had not disposed off substantial part of fixed assets.

II. Inventories

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

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

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

III. Transactions with persons covered by register maintained u/s 301 of the Companies Act, 1956

(a) The Company has not granted/taken any loan to/from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year Rs.5,00,000 or more.

(c) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Act.

IV. Internal Control

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

V. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

VI. Internal Audit System

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

VII. Cost Accounting Records

The Central Government has prescribed the maintenance of records under Section 209(1) (d) of the Companies Act, 1956 in respect of Thermal Power Station Units and Mining Units. We are of the opinion that prima facie, the books of accounts prescribed under the Cost Accounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company for Thermal Power Station Units and the proforma specified therein for the year are under preparation. In the case of Mining Units, the books of accounts have been maintained to meet the requirements of the Companies (Cost Accounting Records) Rules, 2011. We have however not carried out a detailed verification of such records.

VIII. Statutory Dues

(a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF and ESI dues relating to contractors'' workers.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except as reported below:

Amount Name Nature of Demand Deposited of the the dues Amount under protest Statute (Rs. in lakh) (Rs. in lakh)

57.53 28.76

Rajasthan Land tax 173.73 63.28 Finance Act, 173.73 86.86 2006

192.92 99.96

192.92 99.96

Customs Customs 2932.74 3000 Act,1962 duty (by way of bank guarantee)

Name of the Statute Period to Forum which where the amount dispute is relates pending

Rajasthan Finance Act,2006 2008-09

2009-10 Tax Board,Ajmer

2010-11

2011-12

2012-13

Customs Act, 1962 - CESTAT

IX. Accumulated Losses

The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

X. Funds from Banks/Financial Institutions/Public

(a) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(b) The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

(c) In our opinion, the term loans have been applied for the purpose for which they were raised.

(d) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(e) According to the information and explanations given to us and the records examined by us, securities have been created in respect of bonds issued.

XI. Frauds

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

XII. Other Matters

The nature of the Company''s business/activities during the year was such that paragraphs 4 (xii), (xiii), (xiv), (xx) of Companies (Auditor''s Report) Order, 2003 are not applicable.

For M/s. L.U.KRISHNAN & CO., For M/s. SREEDHAR, SURESH & RAJAGOPALAN,

Chartered Accountants Chartered Accountants

Firm Regn. No. 001527S Firm Regn. No. 003957S

S. Jothirajan K. Sreedhar

Partner Partner

M.No.: 211121 M.No.: 024314

Place : Chennai

Date : 28.05.2013

---

Mar 31, 2012

We have audited the attached Balance Sheet of NEYVELI LIGNITE CORPORATION LIMITED, as at 31st March 2012, the Statement of Profit and Loss and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

Further to ourcomments in theAnnexure referred to above, we report that

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(ii) In our opinion, proper books of account as required by law have been kept by the Company in so far as it appears from examination of those books and proper returns adequate for the purposes of our audit have been received from Rajasthan branch not visited by us. The Branch Auditors' Report has been forwarded to us and has been appropriately dealt with.

(iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from Rajasthan branch.

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

(v) As per the Notification No. G.S.R. 829(E) dated 21.10.2003, issued under section 620 (1) of the Companies Act 1956, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956, is not applicable to Government Companies.

(vi) As the Central Government is yet to notify Cess payable under Section 441 A, the reporting requirement under Section 227(3)(g) of the Companies Act, 1956 does not arise.

(vii) Attention is invited to:

a. note no: 24(d) & (e) to the financial statements. Final adjustment will be made in the accounts on receipt of Central Electricity Regulatory Commission (CERC) order on power tariff, which is not ascertainable at this stage.

b. note no: 24(f) to the financial statement regarding inclusion of Mine-ll Expansion expenditure in determining the energy charges in power sale on commissioning of Thermal Power Station-I I Expansion. Pending determination of revised energy charges, consequential adjustments may arise in future which is not ascertainable at this stage.

In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of Balance Sheet, of the State of Affairs of the Company as at 31 stMarch, 2012;

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

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

Annexure to Auditors' Report

I. Fixed Assets

(a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the fixed assets once in five years. As explained to us, physical verification was carried out during the year 2010-11. Pending reconciliation of discrepancies observed on the physical verification done during the financial year 2011 -2012, a sum of Rs. 1.00 crore has been created towards possible loss.

(c) During the year the Company had not disposed off substantial part of fixed assets.

II. Inventories

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

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

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

III. Transactions with persons covered by register maintained U/S 301 of the Companies Act, 1956

(a) The Company has not granted/taken any loan to/from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the yearRs.5,00,000 or more.

(c) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Act.

IV. Internal Control

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

V. Public Deposits

In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public and hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

VI. Internal Audit System

In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

VII. Cost Accounting Records

The Central Government has prescribed the maintenance of records under Section 209(1) (d) of the Companies Act, 1956 in respect of Thermal Power Station Units and Mining Units. We are of the opinion that prima facie, the books of accounts prescribed under the Cost Accounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company for Thermal Power Station Units and the proforma specified therein for the year are under preparation. In the case of Mining Units, the books of accounts prescribed under the Companies (Cost Accounting Records) Rules, 2011 are under preparation. We have, however, not carried out a detailed verification of such records.

VIII. Statutory Dues

(a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF dues relating to contractors' workers. The ESI Act does not apply to the Company.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 3151 March, 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute except as reported below:

Name Nature of Demand of the the dues Statute (Rs.in lakh)

57.53

Land tax 173.73

Rajasthan Finance Act, 173.73

2006 192.92

Customs Customs 2931.24 Act, 1962 duty

Name of the Amount Period to Forum Statute Deposited which where under protest the amount dispute is (Rs.in lakh) relates pending

Rajasthan 28.76 2008-09

Finance Act 63.28 2009-10 Tax Board,

2006 86.86 2010-11 Ajmer

99.96 2011-12

Customs 300 Act,1962 (by way of - CESTAT bank guarantee)

IX. Accumulated Losses

The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

X. Funds from Banks/Financial Institutions/Public

(a) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(b) The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

(c) In our opinion, the term loans have been applied forthe purpose for which they were raised.

(d) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the no funds raised on shortterm basis have been used for long term investment.

(e) According to the information and explanations given to us and the records examined by us, securities have been created in respect of bonds issued.

XI. Frauds

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

XII. Other Matters

The nature of the Company's business/activities during the year was such that paragraphs 4 (xii), (xiii), (xiv), (xx) of Companies (Auditor's Report) Order, 2003 are not applicable.

For M/s. L.U.KRISHNAN & CO., For M/s. SREEDHAR, SURESH & RAJAGOPALAN,

Chartered Accountants Chartered Accountants

Firm Regn. No. 001527S Firm Regn. No. 003957S

R. Aghoramurthy V.Suresh

Partner Partner

M.No. 007595 M.No. 026525

Place : Chennai

Date : 28.05.2012

---

Mar 31, 2010

We have audited the attached Balance Sheet of NEYVELI LIGNITE CORPORATION LIMITED, as at 31st March 2010,the Profit and Loss Account and also the Cash Flow Statementfortheyearendedonthat date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

Furtherto our comments in theAnnexure referred to above, we report that

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryforthe purposes of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the Company in so far as it appears from examination of those books and proper returns adequate for the purposes of our audit have been received from Rajasthan branch not visited by us. The Branch Auditors Report has been forwarded to us and has been appropriately dealt with.

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from Rajasthan branch.

(iv) In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub- section (3C) of Section 211 of the Companies Act, 1956, except:

Accounting Standard AS-6, regarding Depreciation Accounting in respect of unamortised depreciable amount not charged over the revised remaining useful life in respect of Specialised Mining Equipment (SME) existing on 31.08.2007 [the date of the order of the Ministry of Company Affairs reducing the rate of depreciation for SME from 11.31% to 6.33%]. Had this method of accounting been followed, the provision for depreciation for the period would have been lower by Rs.44.77crores. Accordingly profit for the year and fixed assets are understated to that extent.

(v) As per the Notification No.G.S.R. (E) dated 21.10.2003, issued under section 620 (1) of the Companies Act 1956, clause (g) of sub-section (1) of section 274 of the Companies Act, 1956, is not applicable to Government Companies.

(vi) As the Central Government is yet to notify Cess payable under Section 441 A, the reporting requirement under Section 227(3)(g) of the Companies Act, 1956 does not arise.

(vii) Attention is invited to Note No.18 of Schedule - 22, Notes on Accounts regarding accounting of sale of power by adopting provisional tariff. Pending final order on power tariff by Central Electricity Regulatory Commission (CERC), consequent adjustments, that may arise in future, are not ascertainable at this stage.

Subject to our comments in para (iv) and (vii) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) In the case of Balance Sheet, of the state of affairs of the company as at 31st March, 2010;

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

C)In the case of Cash Flow Statement,of the Cash Flows for the year ended on that date.

Annexure to the Auditors Report Referred to in paragraph 3 of our report of even date,

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) The Company has a policy of verifying all the Fixed Assets once in five years, which is reasonable having regard to the size of the Company and nature of its assets. As explained to us, physical verification has not been carried out during the year. Pending reconciliation of discrepancies observed on the physical verification done during the year 2006, a sum of Rs. 0.86 crore has been retained as provision towards possible losses.

(c) During the year the Company had not disposed off substantial part of fixed assets.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, thefrequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification as compared to book records.

(iii) The Company has not granted/taken any loan to/from Companies, firms and other parties listed in the register maintained under Section 301 of the Companies Act,1956.

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

(v) There were no transactions of purchase of goods and materials and sale of goods, materials and services in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year Rs.5,00,000 or more.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public hence the provisions of section 58A, 58AA or any other provisions of the Companies Act, 1956 and the rules made there under are not applicable to the Company.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has prescribed the maintenance of records under Section 209(1 )(d) of the Companies Act, 1956 in respect of Thermal Power Station Units and we are of the opinion that prima facie, the books of accounts prescribed underthe CostAccounting Records (Electricity Industry) Rules, 2001, have been maintained by the Company and the proforma specified therein for the year are under preparation. We have however not carried out a detailed verification of such records.

(ix) (a) The Company has generally been regular in depositing Provident Fund dues of its own employees. Based on information and explanations given to us the Company has laid down systems and procedures regarding deposit of PF dues relating to contractors workers. The ESI Act does not apply to the Company.

(b) Based on information and explanation given to us, no undisputed amounts payable in respect of Investors Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues were outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us there are no dues of Income Tax, Sales Tax, Customs duty, Wealth Tax, Excise Duty and Cess which have not been deposited on account of any dispute.

(x) The Company does not have accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Hence the question of maintenance of documents and records does not arise.

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

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions based on the records produced to us.

(xvi) In our opinion, the term loans have been applied forthe purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the no funds raised on short-term basis have been used for long-term investment.

(xviii) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and Companies covered in the register maintained undersection 301 of the Act.

(xix) According to the information and explanations given to us and the records examined by us, securities have been created in respect of bonds issued.

(xx) The Company has not raised any money through public issue. Hence the provisions of clause 4(xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

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

For GANESAN AND COMPANY, For L.U.KRISHNAN & CO.,

Chartered Accountants Chartered Accountants

Firm Regn. No. 000859S Firm Regn. No. 001527S

N.Venkatramani R. Aghoramurthy

Partner Partner

M.No.215145 M.No.007595

Place: Chennai Date: 27.05.2010