MMTC Audit Qualification on Anglo Coal Provision

Turnover/Total Income: Unaffected by qualification - remains at ₹146.12 crore (both un-audited and adjusted)
Total Expenditure: Increases from ₹21.57 crore to ₹104.39 crore after adjustment (+₹82.82 crore)
Net Profit/(Loss): Decreases from ₹93.73 crore profit to ₹10.91 crore profit after adjustment (-₹82.82 crore)
Earnings Per Share: Decreases from ₹0.62 to ₹0.07 after adjustment
Total Assets: Unaffected - remains at ₹2532.79 crore
Total Liabilities: Unaffected - remains at ₹2532.79 crore
Net Worth: Decreases from ₹1834.36 crore to ₹1751.54 crore after adjustment (-₹82.82 crore)

Turnover/Total Income: Unaffected - remains at ₹146.12 crore
Total Expenditure: Increases from ₹21.57 crore to ₹104.39 crore after adjustment (+₹82.82 crore)
Net Profit/(Loss): Decreases from ₹104.24 crore profit to ₹21.42 crore profit after adjustment (-₹82.82 crore)
Earnings Per Share: Decreases from ₹0.69 to ₹0.14 after adjustment
Total Assets: Unaffected - remains at ₹2964.9 crore
Total Liabilities: Unaffected - remains at ₹2964.9 crore
Net Worth: Decreases from ₹2266.47 crore to ₹2183.65 crore after adjustment (-₹82.82 crore)

Type of Qualification: Qualified Opinion

Frequency: Repetitive (previous qualification in audit report for quarter and year ended 31st March 2026 dated 29th May 2026)

Specific Matter: Non-recognition of provision for Anglo Coal liability amounting to ₹82.82 crore. Auditors contend that:

The estimated present obligation amounts to ₹170.58 crore as of 17.11.2025
Company has recognized provision of only ₹87.76 crore
Shortfall of ₹82.82 crore has been included in contingent liabilities instead of being provided for
This constitutes departure from accounting standards prescribed under section 133 of the Act
Had provision been made: provisions would increase by ₹82.82 crore and shareholders' funds would decrease by ₹82.82 crore

Legal Chronology:

Original deposit: ₹1088.62 crore made in July 2022 pursuant to Delhi High Court orders dated 06.05.2022 and 07.07.2022
Comprising: ₹1087.76 crore via Demand Draft dated 20.07.2022 + ₹0.86 crore from Bhubaneswar bank account
Delhi High Court order dated 09.05.2025: Allowed Anglo to withdraw deposited amount with accrued interest after two weeks
Company's SLP dismissed by Supreme Court on 03.11.2025
Company application filed on 03.11.2025 admitting liability of ₹1169.14 crore (including interest up to 01.11.2025)
Delhi High Court order dated 10.11.2025: ₹1000 crore released to Anglo on 17.11.2025
Estimated remaining liability as of 17.11.2025: ₹170.58 crore (including interest)

Management respectfully disagrees with the qualification and provides the following rationale:

Legal Context:

(i) Applicable USD exchange rate

(ii) Methodology for determination of final payable amount

Management contends these calculations cannot be construed as final crystallization or unconditional acceptance of liability

Interest Accrual Argument:

Against original deposit of ₹1088.62 crore, substantial interest accrual of approximately ₹259.74 crore had accrued up to 01.11.2025 while amount remained with court
This accrued interest is available for adjustment against any additional amount that may become payable
Management assesses no separate incremental outflow expected for the alleged differential liability of ₹82.82 crore

Accounting Standards Compliance:

Management references Ind AS 37 "Provisions, Contingent Liabilities and Contingent Assets"
Argues condition (b) not satisfied: no probable outflow of resources for ₹82.82 crore considering accrued interest available with court
Maintains incremental amount beyond original deposit remains subject to:
Adjudication by Hon'ble Court
Judicial clarification on applicable exchange rate and methodology
Adjustment against accrued interest with court
Believes disclosure as contingent liability is appropriate

Explicitly Quantified: ₹82.82 crore provision shortfall

Contingent Exposure: The disputed amount remains subject to final judicial determination

Cash Flow Implications: Management asserts no incremental outflow expected due to accrued interest coverage

Place: New Delhi

Date: 11.08.2026