SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance
In accordance with the notifications issued by the Ministry of Corporate A ffairs, the aforesaid
financial statements comply with the Accounting Standards specified under section 133 of the
Companies Act, 2013 & read with Rule 7 of the Companies (Accounts) Rules, 2014 and the
Companies (Accounting Standards) Amendment Rules, 2016.
2.2 Basis of preparation and presentation
These financial statements have been prepared on the accrual and going concern basis, and the
historical cost convention except for certain financial instruments that are measured at fair values
at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for
goods and services.
Fair value measurement
Fair value is 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 under current
market conditions.
2.3 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is
reduced for trade allowances for deduction, rebates and other similar allowances. Revenue is
recognized tothe extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured. The following specific recognition criteria must also be
met before revenue is recognized:
2.3.1. Laboratory income
Medical testing charges consists of fees received for various tests conducted in the field of
pathology and radiology and are recognized on accrual basis when the samples are registered for
the purpose of conducting the tests, net of discounts, ifany.
Interest income from a financial asset is recognised when it is probable that the
economic benefits will flow to the Company and the amount of income can be
measured reliably. Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount on initial recognition.
2.4 Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the
relevant lease. Where the rentals are structured solely to increase in line with expected general
inflation to compensate for the Company’s expected inflationary cost increases, such increases are
recognised in the period in which such benefits accrue.
2.4.1. The Company as lessee
Rental expense from operating leases is generally recognised on a straight-line basis over
the term of the relevant lease. Contingent rentals, if any, arising under operating leases are
recognised as an expense in the period in which they are incurred.
2.3 Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary
economic environment in which the entity operates ('the functional currency'). The financial
statements are presented in Indian rupee (INR), which is the Company's functional and
presentation currency.
2.4 Employee benefits
Employee benefits include provident fund, gratuity, ESIC, Group Health Insurance, Accidental
Insurance for runners and compensated absences.
2.4.1 Defined contribution plan
Employee benefit under defined contribution plan comprising of provident fund is
recognised based on the amount of obligation of the Company to contribute to the plan. The
provident fund contribution is paid to provident fund authorities. The amounts are expensed
during the year.
2.4.2 Defined benefit plan
The Company's gratuity plan is a defined benefit plan. The present value of the
obligation under such defined benefit plan is determined based on actuarial
valuation using the projected unit credit method, which recognizes each period of
service as giving rise to additional unit of employee benefit entitlement and
measures each unit separately to build up the final obligation. The obligation is
measured at the present value of the estimated future cash flows. The discount rate
used for determining the present value of the obligation under defined benefit
plans, is based on the prevailing market yields on government securities as at the
balance sheet date.
Re-measurement, comprising actuarial gains and losses, the e ffect of the changes to
the asset ceiling (if applicable) and the return on plan assets (excluding net interest),
is reflected immediately in the balance sheet with a charge or credit recognised in
other comprehensive income in the period in which they occur. Re-measurement
recognised in other comprehensive income is reflected immediately in retained
earnings and is not reclassified to profit or loss. Past service cost is recognised in
Statement of profit and loss in the period of a plan amendment. Net interest is
calculated by applying the discount rate at the beginning of the period to the net
defined benefit liability or asset. The company was incorporated in August 2017 and
had recruited the employees with effect from September 01, 2017. The company has
not provided for any provision for gratuity in their books of accounts for the financial
year ended March 31, 2024.
Defined benefit costs are categorized as follows:
• Service cost (including current service cost, past service cost, as well as gains
and losses on curtailments and
• Net interest expense or income; and
• Re-measurement
The Company presents the first two components of defined benefit costs in profit or
loss in the line item ‘Employee benefits expense'. Curtailment gains and losses are
accounted for as past service costs.
The Company intends to take the various policies with insurer managed funds to
meet its obligation towards gratuity. Liability with respect to the gratuity plan is
determined based on an actuarial valuation done by an independent actuary.
The gratuity benefit obligation recognised in the standalone Balance Sheet represents
the actual deficit or surplus in the Company's defined benefit plans. Any surplus
resulting from this calculation is limited to the present value of any economic
benefits available in the form of refunds from the plans or reductions in future
contributions to the plans.
A liability for a termination benefit is recognised at the earlier of when the entity can
no longer withdraw the offer of the termination benefit and when the entity
recognizes any related restructuring costs.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in
exchange for the services rendered by employees are recognised during the year
when the employees render the service. These benefits include performance
incentive and compensated absences which are expected to occur within twelve
months from the end of the period in which the employee renders the related service.
The cost of short-term compensated absences is accounted as under:
a) In case of accumulated compensated absences, when employees render the services
that increase their entitlement of future compensated absences; and
b) In case of non-accumulating compensated absences, when the absences occur.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve months from the
end of the period in which the employee renders the related service are recognised as a
liability at the present value of the obligation as at the Balance Sheet date.
Income tax expense represents the sum of the tax currently payable and deferred tax.
2.7.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs
from ‘profit before tax' as reported in the Statement of profit and loss because of items
of income or expense that are taxable or deductible in other years and items that are
never taxable or deductible. The Company's current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit. Deferred tax liabilities are generally recognised
for all taxable temporary differences. Deferred tax assets are generally recognised for
all deductible temporary differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can be utilized.
Such deferred tax assets and liabilities are not recognised if the temporary di fference
arises from the initial recognition (other than in a business combination) of assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting
period and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the period in which the liability is settled or the asset realized, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period.
Deferred tax assets include Minimum Alternate Tax (‘MAT') paid in accordance with
the tax laws in India, which is likely to give future economic benefits in the form of
availability of set off against future income tax liability. Accordingly, MAT is recognised
as deferred tax asset in the Balance Sheet when the asset can be measured reliably and
it is probable that the future economic benefit associated with asset will be realized.
The measurement of deferred tax liabilities and assets reflects the tax consequences
that would follow from the manner in which the Company expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax arerecognised in profit or loss, except when they relate to items
that are recognized in other comprehensive income or directly in equity, in which case,
the current and deferred tax are also recognised in other comprehensive income or
directly in equity respectively.
2.8 Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition or construction less
accumulated depreciation less accumulated impairment, if any.
The cost of Property, plant and equipment (PPE) comprises its purchase price net of any trade
discounts and rebates, any import duties and other taxes (other than those subsequently
recoverable from the tax authorities), any directly attributable expenditure on making the
asset ready for its intended use, other incidental expenses, present value of decommissioning
costs (where there is a legal or constructive obligation to decommission) and interest on
borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is
ready for its intended use.
Subsequent costs are included in the asset's carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a separate asset is derecognized when
replaced. The other repairs and maintenance of revenue nature are charged to profit or loss
during the reporting period in which they are incurred.
Property, plant and equipment are tested for impairment whenever events or changes in
circumstances indicate that an asset may be impaired. If an impairment loss is determined, the
remaining useful life of the asset is also subject to adjustment. If the reasons for previously
recognised impairment losses no longer exists, such impairment losses are reversed and
recognised in income. Such reversal shall not cause the carrying amount to exceed the amount
that would have resulted had no impairment taken place during the preceding periods.
Depreciation methods, estimated useful lives and residual value
Depreciation on all assets is provided using the Written Down Value (WDV) Method at the
rates computed based on the useful lives of the assets estimated by the management on a pro¬
rata basis from the month in which each asset is put to use to allocate their cost, net of their
residual values, over their estimated useful lives.
The assets' residual values, estimated useful lives and depreciation method are reviewed at the
end of each reporting period, with the effect of any changes in estimate accounted for on a
prospective basis.
All assets, the individual written down value of which at the beginning of the year is Rs. 5,000
or less, are depreciated at the rate of 100%. Assets purchased during the year costing Rs. 5,000 or
less are depreciated at the rate of 100%.
Gains and losses on disposal are determined by comparing proceeds with carrying amount and
are credited / debited to profit or loss.
2.9 Intangible assets
2.9.1. Intangible assets acquired separately
Trademarks and software are carried at cost which is incurred and stated in the relevant license
agreement with the technical know-how provider less accumulated amortization and
accumulated impairment losses. Amortization is recognised on a straight line basis over their
estimated useful lives. The estimated useful lives and amortization method are reviewed at
end of each reporting period, with the effect of any changes in estimate being accounted for on
a prospective basis.
Trademarks and software are amortized on a straight line basis over its estimated useful life
i.e. 5 years. An intangible asset is derecognized when no future economic benefits are expected
from use.
2.10 Inventories
Inventories comprise of reagents, chemicals, surgical and laboratory supplies and stores
and others and are valued at lower of cost and net realizable value. Cost is determined on
moving weighted average basis.
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