The Members of Key Corp Limited.
Report on the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of KEY CORP LIMITED("the Company") which comprise the Balance Sheet as at 31st March2020 the Statement of Profit and Loss including the Statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the financial statements including a summary of significant accountingpolicies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 as amended (the Act*) in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2020 its profit for theperiod its cash flows and the changes in equity for the year ended on that date.
2. Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with Standardson Auditing (SAs) as specified under section 143(10) of the Act. Our responsibilitiesunder those Standards are further described in the 'Auditor's Responsibilities for theAudit of the Ind AS Financial Statements' section of our report. We are independent of theCompany in accordance with the 'Code of Ethics' issued by the Institute of CharteredAccountants of India ("ICAI") together with the ethical requirements that arerelevant to our audit of financial statements under the provisions of the Act and Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained are sufficient and appropriate to provide a basis for our audit opinion on theInd AS financial statements.
3. Emphasis of Matter
We draw attention to Note No. 25 to the Ind AS financial statements wherein it isstated that "In accordance with the moratorium policy .advocated by the Reserve Bankof India (RBI) guidelines dated March 27 2020 April 17 2020 and May .23 2020 relatingto 'COVID-19 Regulatory Package' the Company has granted moratorium upto three monthson the payment of installments falling due between March 1 2020 and August 31 2020 toall eligible borrowers. In respect of accounts overdue but standard as 29 February 2020where moratorium benefit has been granted the staging of those
accounts at 31 March 2020 is based on the days past due status asr on 29 February 2020.Based on an assessment by the Company this relaxation has not been deemed to beautomatically triggering significant increase in credit risk. The Company continues torecognize interest income during the moratorium period and in the absence of other creditrisk indicators the granting of a moratorium period does not result in accounts becomingpast due and automatically triggering Stage 2 or Stage 3 classification criteria".
Our opinion is not modified in respect of this matter.
4. Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements for the financial year ended31st March 2020. These matters were addressed in the context of our audit ofthe Ind AS financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context
We have determined the matters described below to be the key audit matters to beCommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the Ind AS financial statements section of ourreport including in relation to these matters. Accordingly our audit included theperformance of procedures designed to respond to our assessment of the risks of materialmisstatement of the Ind AS financial statements. The results of our audit proceduresincluding the procedures performed to address the matters below provide the basis for ouraudit opinion on the accompanying Ind AS financial statements.
|s. No. Key Audit Matters ||How our audit addressed the key audit matter |
|1. . Transition to Ind AS Accounting framework fRefer Note No. 26 of the Ind ASfinanciai statements): || Read the Ind AS impact assessment performed by the Management and the resultant changes made to the accounting policies considering the requirements of the new framework. |
|The Company has adopted Ind AS from i April 2019 with an effective date of 1 April 2018 for such transition. For periods up to and including the year ended 31 March 2019 the Company had prepared and presented its financial statements in accordance with the erstwhile generally accepted accounting principles in India (Indian GAAP). To give effect of the transition to Ind AS these financial statements for the year ended 31 March 2020 together with the comparative financial information for the previous year ended 31 March 2019 and the transition date Balance Sheet as at . 1 April 2018 have been prepared under Ind AS. The transition has involved significant change in the Company's accounting policies and processes for financial reporting including generation of supportable information and applying estimates to inter alia determine impact of Ind AS on accounting and disclosure requirements prescribed under the extant Reserve Bank of India (RBI) directions. || Evaluated the exemptions and exceptions allowed by Ind AS and applied by the Management in applying the first-time adoption principles of Ind AS 101 in respect of fair valuation of assets and liabilities existing as at transition date. |
|In view of the complexity involved Ind AS transition and the preparation of financial statements subsequent to the transition date have been areas of key focus in our audit. || Tested the accounting adjustments posted as at the transition date and in respect of the previous year to convert the financial information reported under erstwhile Indian GAAP to Ind AS. |
|2. Accounting for Payment of Gratuity (Refer Note No. life) of the Ind AS fuiaodaL statements): || We Tested the disclosures prescribed under Ind AS. |
|The provision for retirement benefits for gratuity is made as per the Payment of Gratuity Act 1972. The Indian Accounting Standard-19 prescribed by the Central Government is applicable to the company in its entirely as the company is a listed company. || Have verified the provision of gratuity in accordance with the accounting policy followed by the company to ensure that the provision is as advocated by the Payment of Gratuity Act 1972. |
|In formulating the accounting policy regarding employee benefits the management of the company were motivated by the fact that average number of employees at any time during the year was less than 50. In similar circumstances unlisted company have been to calculate and account for the accrued liability under the head (Gratuity) by some other rational method. Provision of the Payment of Gratuity Act 1972 gives one such method. || We read and assessed the Company's accounting policies for impairment/write-off of financial assets. |
|The management of the company decided to continue with the same accounting policy as it still feels that the size of the company does not make it feasible to provide gratuity by way of Actuarial Valuation. Considering the significance of the matter relating to making adequate provision regarding post employment benefit in the nature of Gratuity the same is considered to be a key audit matter. || We tested the criteria for staging of loans based on their past due status to check compliance with the requirement of Ind AS-109. |
|3. Impairment of Financial Assets (Expected Credit Loss) (Refer Note No.161 of Ind AS of the financial statements-. Ind AS-109 requires the company to recognise impairment loss allowance towards its financial assets (designated at amortized cost and fair value through other comprehensive income) using the expected credit loss approach. Consequently during the year the company has identified an impairment of financial asset to the tune of Rs 669258/-. In the opinion of the management of the company the expected credit loss is to the extent 100% and accordingly the same has been written off. Considering the significance of such impairment to the overall financial statements and the degree of estimation involved in computation of expected credit loss in respect of the said financial asset the same is considered to be the key audit matter. || We evaluated the reasonableness of the management estimate by understanding the process of expected credit loss estimation and tested the controls around data extraction and validation. |
5. Information Other Than The Financial Statements And Auditor's Report thereon
The other information comprises the information included in the Annual Report but doesnot include the Ind AS financial statements and our auditors' report thereon. TheCompany's Board of Directors is responsible for the other information.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether such other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
6. Responsibilities of Management and Those Charged with Governance for the Ind ASFinancial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these Ind AS financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including Indian AccountingStandards (Ind AS) specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Ind AS financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
In preparing the Ind AS financial statements management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
7. Auditor's Responsibilities for the Audit of the Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of this Ind AS financial statement.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign 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 companyhas adequate internal financial controls with reference to financial statements in placeand the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe 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'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Financial Statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the Ind AS Financialstatements for the financial year ended 31st March 2020 and are therefore thekey audit matters. We describe these matters in our Auditor's Report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
8. 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 section 143(11) of the Act we givein the Annexure "A" a statement on the matters specified in paragraphs 3 and 4of 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 bestof 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 theCompany so far as it appears from our examination of those books;
c) The Balance Sheet the Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this report are in agreement with the books of account;
d) In our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under section 133 of the Act read with Companies (Indian AccountingStandards)Rules 2015 as amended; except non compliance of IND AS-19 "EmployeeBenefits" to the extent that the provisions for retirement benefits for Gratuity aremade as per The Payment of Gratuity Act1972 and not in the manner prescribed in INDAS-19.
e) On the basis of the written representations received from the directors as on March31 2020 and taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2020 from being appointed as a director in terms of section164(2) of the Act;
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company with reference to these Ind AS financial statements and theoperating effectiveness of such controls refer to our separate report in "AnnexureB" to this report.
g) In our opinion the managerial remuneration for the year ended 315*March 2020 has been paid/provided by the Company to its directors in accordance with theprovisions of section 197 read with Schedule V to the Act;
h)With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors') Rules2014 in our opinionand to the best of our information and according to the explanations given to us:
(i) There are no pending litigations on the company in respect of which a provision isrequired to be made.
(ii) The Company has made provisions as required by applicable law or IND AS formaterial foreseeable losses if any on long term contracts including derivativecontracts.
(iii) There are no amount required to be transferred to Investor Education andProtection Fund by the Company.
| ||For VINAYAK TANDON & ASSOCIATES |
| ||Chartered Accountants |
| ||(FRN: 006751C) |
|PLACE: KANPUR ||(CA. VINAYAK TANDON) |
|DATED: 27.06.2020 ||Partner |
| ||Membership No. 072968 |
| ||UD1N: |