The first step of the sequence is involved with electrophilic substitution reaction. Nitro group is deactivating group and methyl group is activating group, hence, the substitution reaction takes place with respect to methyl group. In the second step nitro group is reduced to amine group with hydrogen in the presence of palladium metal. The aniline undergo diazotisation in the third step.The diazonium salt loses nitrogen gas in the presence of ${\mathrm{H}}_3{\mathrm{PO}}_2$.