Note 1:- SIGNIFICANT ACCOUNTING POLICIES
General Information of the Company. -
ADS DIAGNOSTIC LIMITED was Incorporated on June 23, 1984 in New Delhi and has Its registered office at
114. Sant Nagar, East of Kattash, New Delhi 110065, India. The shares of the Company are listed on
Bombay Stock Exchange (BSE). Thr company Is engaged In tne business or trading of diagnostic medteal
consumables 6 electronic consumables, and services of -nodical equipment's h machines.
Significant Accounting Poltciat
1. Basis of preparation:
These financial statements hare been prepared In accordance with the Indian Accounting Standards
(referred to as “tnd AS"| as prescribed under Section 133 ol the Companies Act. 2013 read with Companies
i Indian Accounting Standardsi Rules as amended from time to time. The Company has adopted Ind AS 115,
Revenue from Contract with Customers with effect from 1st April 2018 ard It Is detailed In Significant
Accounting Policy No. 16 below.
The preparation of the Company's financial statements In conformity with Indian Accounting Standards
requires the Company to exerise its judgement In the process ol applying the accounting policies. It also
requires the use of accounting estimates and assumptions that effect the reported amounts of assets and
liabilities at the date of the financial statements. These estimates and assumptions are assessed on an
ongoing basis and are based on experience and relevant factors. Including expectations of future events
that are believed to be reasonable under the circumstances and presented under the historical cost
convention on accrual basis of accounting Accounting policies have been applied consistently to all
periods presented in these financial statements.
All assets and liabilities have been classified as current or non-current as per the operating cycle of the
company as per the guidance set out In the Schedule itl to the Companies Act, 2013.
2. Use of Estimates:
The preparation of financial statements require estimates and assumptions to be made that affect the
reported amount of asset and liabilities on the date of the financial statements and the reported amount
of the revenue and the expenses during the reporting period. Difference between the actual results and
estimates are recognized hi the penod in which the results are Known t materialized.
3. Proparty, Plant and Equipment (PPC): *
PPC are stated at cost, net of accumulated depreciation and accumulated Impairment tosses, If any
The initial cost of PPf comprise its cost of acquisition or construction Inclusive of freight, erection 6
commissioning charges, duties and taxes and other Incidental expenses related thereto.
Ail other expenditure related to existing assets including day-to-day repair and maintenance
expenditure and cost of replacing parts are charged to the statement of profit and loo in the period
during which such expenditure Is Incurred,
The carrying amount of a property, plant and equipment H de recognised when no future economic
benefits are expected from its use or on disposal
Machine spares that can be used only in connection with an Item of fixed asset and their use is
expected for more than one year are capitalized.
Depreciation on property plant and equipment is provided on straight line method based on estimated
useful life of assets as prescribed w Schedule M to the Companies Act. 2C13.
The property, plant and equipment acquired under finance leases, if any. is depreciated over the
asset's useful life or over the shorter of the asset's useful life and the lease term if there Is no
reasonable certainty that the Company will obtain ownership at the end of the lease term.
Cost of leasehold land, other than acquired on perpetual basis, a amortized over the lease period.
Depreciation no the assets purchased during the year h provided on pro-rata basis from the date of
purchase of the assets
I 1
Gains and losses on de- recognition /disposals are determined as the difference between the net
disposal proceeds and the carrying amount of those assets. Gams and Losses tf any, are recognised in
the statement of prefit or loss on de-recognition or disposal as the case may be.
4. Intangible Assets: -
Intangible assets acquired separately are measured or initial recognition at con less accumulated
amortisation and accumulated impairment losses, tf any.
The cost of an intangible asset includes purchase cost (net of rebates and discounts), including any
import duties and noo-refundablc taxes, and any directly attributable costs on making the asset ready
for its intended use.
The amortisation period and method are reviewed at least at each financial year end I# the
expected useful life of the asset is significantly different from previous estimates, the amortisation
period is changed accordingly.
An Intangible asset is derecognised on disposal or when no future economic benefits are expected
from use. Gains and losses arising from de recognition of an intangible asset are 'measured as The
difference between the net disposal proceeds and the carrying amount of the asset are recognised
In the statement of profit and loss when the asset Is de-recognised or on disposal.
5. Inventories: Ý
The inventories of diagnostic consumable and tracing goods are stated at cost or net realisable
value, whichever Is lower, Tire method used In determining the cost of Inventories »s First In First
Out.
6. Impairment oi tangible assets and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any Indication based on Internal / external factors
that those assets have suffered an Impairment loss. If any such Indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (If any).
When it is not posvble to estimate the recoverable amount of an Individual asset, the Company
estimates the recoverable amount of the cash generating unit to which the asset belongs. When a
reasonable and consilient basis of allocation can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they are allocated to the smallest group of cash¬
generating units for which a reasonable and consistent allocation basis can be identified.
mtangibie assets with Indefinite useful lives and intangible assets not yet available for use are
tested for impairment at least annually, and whenever there is an ndication that the asset may be
impaired.
Recoverable amount Is the higher of fair value less costs of disposal and value In use. In asseueig
value in use. the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments ol the time value of money ar«d the risks
specific to the asset for which the estimates of future cash flows have not been adjusted.
if the recoverable amount of an asset (or cash-generating unit) Is estimated to be less than its
carrying amount, the carrying amount of the asset (or cash-gereretirg unit) is reduced to iU
recoverable amount An impairment loss 8 recognised immediately in profit or lass.
The Impairment loss recognized in prior accosting period is reversed if there has been a change in
the estimate of recoverable amount
7. Foreign Exchange Irareactions:-
These financial statements are presented In Indian rupees (INR), which Is the Company's functional
currency.
Transactions in foreign currency are recorded on initial recognition at the spot rate prevailing at the
time of the transaction.
At the end of each reporting perod,
• Monetary Items denominated In foreign currencies are retranslated at the rates prevailing at that
date.
• Hon-monetary items carried at fair value that are denominated in Foreign currencies are
retranslated at the rates prevailing at Che dale when the fair value was determined.
• Non monetary Hems that are measured in terms of historical cost m a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary items or on translating monetary Items
at rates different from those at which they were uunstated on Initial recognition during the period
or in previous financial statements arc recognised in profit or loss in the period In which they aiise.
Exchange differences on monetary items are recognised in profit or loss in the period in which they
arise except for;
I. Exchange differences on foreign axrency borrowings relating to assets under construction
for future productive use, which are included m the cost of those assets when they are regarded as
adjustment to interest costs on those foreign currency borrowngs
It The exchange differences arising on reporting of tong term foreign currency monetary
items at rates different from those at which they were initially recorded in so far as they relate to
the acouisition of depreciable capital assets are shown by addition to/deduction from the cost of
the assets as per exemption provided inder IND AS 21 read along with Ind AS 101 appendix O'
clause D11AA.
8. Borrowing Cost: *
Borrowing costs specilicatly relating to the acquisition or construction of a qualifying asset that
necessarily takes a substantial period of time to get ready for Its Intended use are capitalized as
part of the cost of the asset All other borrowing costs are charged to profit h toss account in the
penod in which It is Incurred except loan processing fees which is recognized as per Effective
Intrrest Rate method. Borrowing costs consist of interest and other costs that Company rscurs In
connection with the borrowing of funds. Borrowing cost also includes exchange differences to the
extent regarded as an adjustment to the borrowing costs.
9. Employe* Benefit*: -
Contribution to Provident fund- Retirement benefits in the form of Provident fund f Pension
Schemes are defined contribution schemes and the contributions are charged to the Profit & Loss
Account In the year when the contributions to the respective funds become due. The Company has
no obligation other than contribution payable to these funds.
Gratuity liability is a defined benefit obligation and Is provided foi on the basis of an actuarial
valuation made at the end of each financial year. ADS Diagnostic Ltd. hai constituted a gratuity
fund trust with UC of India for the benefit of employees. The difference between the actuarial
valuation of gratuity for employees at the year-end and the balance of funds with trust is provided
for as liability In the books.
Remeasurement, comprising actuarial gains and tosses, the effect of the changes to the asset ceiling
(If applicable i and the return on plan assets (excluding net interest >, Is reflected Immediately in me
balance sheet with a charge or credit recognised In other tcmpreliensive income in the period in
which they occur. Remeasurement recognised in other comprehensive Income Is reflected
Immediately in retained earnings and 1i not reclassified to profit or loss. Past service cost Is
recognised in profit or loss In the period of a plan amendment.
10. Tax Expenses:-
Income Tax expense comprises of current tax and deferred tax charge or credit. Provision for
current tax h made with reference to taxable Income computed for the financial year for which the
financial statements are prepared by applying me tax rates as applicable.
Currant Tax:-Cixrent Income tax relating to items recognized outside the profit and loss is
recognized outside the profit and loss (either In other comprehensive income or In equity)
Deferred Tax:- Deterred tax is provided using the balance sheet approach on temporary differences
at the reporting date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purpose at reporting date. Deferred income tax assets and liabilities arc
measured using tax rales and tax laws that have been enacted or substantively enacted by the
balance sheet dote and are expected to apply to taxable Income In the years in which these
temporary differences are expected to be recovered or settled. The effect of changes in tax fates
on deferred income tax assets and liabilities Is recognized as income or expense In the period that
includes the enactment or the substantive enactment date. A deferred income tax asset Is
recognized to the extent that It Is probable that future taxable profit will be available against which
the deductible temporary differences and tax losses can be utilized.
The carrying amount of deferred tax assets b reviewed as at each balance sheet date and reduced
to the extent that It h no longer probable that sufficient taxable profit will not be available against
which deferred tax asset to be utilized. Unrecognised deferred tax assets are re-assessed at each
reporting date and are recognised to the extent that ft has become probable that future taxable
profits will allow the deferred tax asset to be recovered,
Deferred tax assets arc recognized for the unused tax credit to the extent that it Is probable that
taxable profits will be available against which the losses will be utilized. Significant management
judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the tlcety timing and the level of future taxable profits.
11. Leases:
Leases are classified as tlnance leases whenever the terms of the lease transfer substantially all Use
risks and rewards of ownership to the lessee. All other leases arc classified as operating leases
As a Lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of
an asset ate classhed as operating teases. Assets subject to operating leases are included in PPE.
Rental Income from operating lease Is recognised on a stratghi-ltne basis over the term of the
relevant lease. Where the rentals are structured solHy to increase In line with expected general
inflation to compensate (or the company's expected inflationary cost increases, such increases are
recognised In the year In which such benefits accrue.
Costs, including depredation, are recognized as an expense m the statement of profit and toss. Initial
direct costs such as legal costs, brokerage costs, etc are recognized immediately in the statement of
profit and loss.
As a l*u*«
Leases In which significant portions of risks and reward of ownership are rot transferred to the
company as lessee are classified as operating leases. Operating lease payments are recognized at an
expense in the Profit and Loss account on a straight line basis over the lease term. Where the rentals
are structured solely to increase in tine with expected general Inflation to compensate for the lessor s
expected inflationary cost increases, such increases are recognised In the year In which such benefits
accrue. Contingent rentals arising under operating leases are recognised as an expense w the period
in which they arc Incurred. Lease hold land Is considered as operating lease and amortised over the
lease term.
Leases where the lessor effectively transfers substantially ail the risks and benefits of ownership of
the asset are classified as finance leases and are capitalized at the inception of the lease term at the
tower of the fair value of the leased property and present value of minimum lease payments. Lease
payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
recognized as finance costs In the statement of profit and loss. Lease management fees, legal charges
and other initial direct costs of lease are capitalized.
12. Fair Value Measurement:-
The Company measures financial instruments at fair value at each baLnce sheet date.
Fair value ts the price that would be received to sell an asset or paid to transfer a liability In an
orderly transaction between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sett the asset or transfer the
liability takes place either:
- In the principal market (or the asset or liability or
• In the absence of a principal market, in the most advantageous market for the asset or liability
A fair value measurement of a non financial asset takes Into account a market participanti ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable Inputs
and minimizing the use of unobservable Inputs.
Alt assets and liabilities for which fair value ts measured or disclosed in the financial statements are
categorized wthin the fait value hierarchy, dencrlbecl as follows, based on the lowest level Input that
h significant to the (air value measurement as s whole:
Level 1: Quoted lunadjusted) market prices in active markets for Identical assets or liabilities
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value
measurement ts directly or indirectly observable
Level 3. Valuation techniques for which the lowest level Input that » significant to the fair value
measurement is unobservable
For the purpose of fair value disclosures, the Company has determined classes of assets & liabilities
on the basis of the nature characteristics and the risks of the asset or liability and the level of the
fair value hierarchy as explained above,
13. Financial Inurnment
A financial instrument Is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
Financial assets includes Trade receivable, loan to body corporate loan to employees, security
deposits and other eligible current and non-current assets
Financial liabilities Includes Loans, trade payable and eligible current and non-current liabilities
I. Classification :-
The Company classifies financial assets as subsequently measured at amortised cost, fair value
through other comprehensive income or fair value through profit or loss on the basis of both:
• the entity’s business model for managing the financial assets and
• the contractual cash flow characteristics of the financial asset.
A financial asset H measured at amortised cost If both of the following conditions are met:
• the financial asset is held within a business model whose objective Is to hold financial assets
In order to collect contractual cash flows and
• the contractual terms of If* financial asset give rise on specified dates to cash Rows that are
solely payments of principal and interest on the principal amount outstanding.
A financial asset is measured at fair value thtough other comprehensive income if both of the
following conditions are met:
• the financial asset ts held within a business model whose objective Is achieved by both
collecting contractual cash flows and selling financial assets and
• Use contractual terns of the financial asset give rise on specified dates to cash Rows that are
solely payments of principal and interest on the principal amount outstanding
A financial asset >s measured at fan value through profit or loss unless it is measured at amortised
cost cr at fair value through other comprehensive income.
AU financial liabilities are subsequently measured at amortised cost using the effective interest
method or fair value through profit or low.
H. Initial recognition and measurement:-
The company recognizes financial assets and financial liabilities when It becomes a party to the
contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value
at initial recognition, plus or minus, any transaction cost that are directly attrtbcf.aWr to tfie
acquisition or issue of financial assets and financial UaWMtles that are not at fair value through profit
or low.
Hi. Financial assets subsequent measurement:-
Financial assets as subsequent measured at amortised cost, fair value through other comprehensive
income |FVOCi| or fair value through profit or loss <FVTPLi as the case may be.
Financial liabilities as subsequent measured at amortised cost or fair value through profit or loss.
Iv F fleet tv# interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and
allocating Interest Income over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash receipts through the expected life of the debt instrument, or,
where appropriate, a shorter period, to the net carrying amount on Widal recognition.
Income te recognised on an effective interest bans tor debt instruments other than those financial a
classified as at FVTPl. interest Income ts recognised in profit or loss and Is included In the 'Other
Income* line Item
v. Trad* Receivables:
Trade receivables are the contractual right to receive cash or other financial assets and recognized
Initially at fair value. Subsequently measured at amortised cost (Initial fair value less expected ciedH
loss). Expected credit loss Is the difference between all contractual cash flows that are due to the
company and all that the company expects to receive (i.e. all cash shortfall), discounted at the
effective Interest rate.
vt. Cash and cash Equivalents: -
Cash and cash equivalent In the balance sheet comprise cash at banks and on hand and short-term
deposits with an original maturity of three months or less, which are subject to an insignificant risk of
changes in value.
vti, impairment of Financial Assets:-
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial
assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no
ssgnrfonc financing component Is measured at an amount equal to lifetime ECL. For aU other
financial assets, expected credit losses are measured at an amount equal to the l2month ECL, unless
there has been a significant Increase m credit risk from initial recognition in which case those are
measured at lifetime ECL The amount of expected credit losses lor reversal) that ts required to
adjust the loss allowance at the reporting date to the amount that Is required to be recognised is
recognized as an impairment gain or loss in profit or loss.
viti. Financial liabilities:-
Financial liabilities are recognized initially at fair vaUte less any directly attributable transaction
costs. These are subsequently earned at amortized cost using the effective interest method or fair
value through profit or loss. For trade and other payables maturing within one year from the balance
sheet date, the carrying amounts approximate fair value due to the short matunty of these
Instruments
lx. Trade payables :
Trade payables represent liabilities for gooes and services provided to the Company prior to the end
of financial year and which are unpaid Trade payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period or not paid/payable within operating
cycle. They are recognised initially at their fair value and subsequently measured at amortised cost
using the effective Interest method.
x. borrowings;
Borrowings are initially recognised at fair value, net of transaction costs Incurred, borrowings are
subsequently measured at amortised cost. Any difference between the proceeds |net of transaction
costs) and the redemption amount is recognised w profit or loss over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan facilities are recognised
as transaction costs of the loan.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting period. Where there Is a breach
of a material provision of a long term loan arrangement on or before the end of the reporting period
with the effect that the liability becomes payable on demand on the reporting date, the company
does not classify the liability as current, if the lender agreed, after the reporting period and before
the approval of the financial statements foe issue, not to demard payment as a consequence of the
breach.
xl. Equity Instruments:
An equity Instrument b any contract that evidences a residual Interest ki the assets of company after
deducting all of its liabilities. Equity instruments are recognised at the proceeds received, net of
direct Issue costs.
xR. Derecognition of financial Instrument:
The company derecognizes a financial asset when the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition
under Ind AS 109. A financial liability (or a part of a financial liability) Is derecognized from the
companyv balance sheet when lie obligation specified in the contract is discharged or cancelled or
expires.
xiii. Offsetting of financial instruments: -
Financial assets and financial liabilities are offset and the net amount K reported in the balance sheet
« there Is a currently enforceable legal right to offset the recognised amounts and there 8 an
Intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously
irlv. Financial guarantee
Financial guarantee contracts issued by the entities arc those contracts that require a payment to be
made to reimburse the holder for a loss It incurs because the specified debtor falls to make a
payment when due 1n accordance wltti the terms of a debt instrument Financial guarantee contracts
arc recognised initially as a liability at fair value, adjusted for transaction costs that are directly
attributable u the issuance of the guarantee. Subsequently, the liability is measured at the higher of
the amount of loss allowance determined asper Impairment requirements of INO AS 109 and the
amount recognised less cumulative amortization.
xv. Derivative Financial Instruments:
Derivatives are initially recognised at fair value at the date trie derivative contracts are entered ana
are subsequently remeasured to their fair value at the end of each reporting period. The resulting
gan or loss 8 recognised tn profit or loss immediately unless the derivative Is designated and
ef fee live as a hedging instrument, In which event the timing of the recognition ki profit or loss
depends on the nature of hedging relationship and the natirc of the hedged item.
|