Note 2: Material Accounting Policies:
(a) Use of Estimates:
The preparation of financial statements in conformity with Indian GAAP requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reported
period. Although these estimates are based on management’s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying
amounts of assets or liabilities in future periods.
(b) Revenue Recognition:
The Company’s revenue is primarily generated from business of running laboratories for carrying out pathological
investigations of various branches of bio-chemistry, and other pathological and radiological investigations for customers
through various arrangements.
Revenue is measured based on the consideration specified in a contract with a customer. Revenue is recognised
at a point in time when the Company satisfies performance obligations by transferring the promised services to its
customers. Generally, each test represents a separate performance obligation for which revenue is recognised when
the test report is generated i.e when the performance obligation is satisfied.
Revenue towards satisfaction of performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The transaction price of services rendered is net of variable
consideration on account of discounts and schemes offered to the customers by the Company
For allocating the transaction price, the Company has measured the revenue in respect of each performance obligation
of a contract at its relative standalone selling price net of discounts. The price that is regularly charged for a test when
registered separately is the best evidence of its standalone selling price.
Interest Income:
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate
applicable.
(c) Property, Plant and Equipment:
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and
any accumulated impairment losses. The cost of Plant, Property & Equipment comprises of its purchase price, non¬
refundable taxes & levies, freight and other incidental expenses related to the acquisition and installation of the
respective assets. Borrowing cost attributable to financing of acquisition or construction of the qualifying Property,
Plant and Equipment is capitalised to respective assets when the time taken to put the assets to use is substantial
When major items of property, plant and equipment have different useful lives, they are accounted for as separate
items of property, plant and equipment. The cost of replacement of any property, plant and equipment is recognised in
the carrying amount of the item if it is probable that the future economic benefit associated with the item will flow to the
Company and its cost can be measured reliably
Capital work-in-progress comprises cost of Property, Plant and Equipment those are not yet installed and ready for
their intended use at the Balance sheet date.
d) The cost and related accumulated depreciated are eliminated from the financial statements upon sale or retirement of
the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss. Assets to be disposed
of are reported at the lower of the carrying value or net realizable value;
e) Depreciation is provided on written down value basis based on life assigned to each asset in accordance with Schedule
ll of the Companies Act, 2013.
(d) Inventories:
Inventories are valued at lower of cost and net realizable value. Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
The cost is determined as under in separate conditions:
i) Raw material and stores and Spares on FIFO basis.
ii) Work in Progress on material cost and appropriate share of overheads in bringing the inventory in present location
and condition.
iii) Finished Goods on material cost and overheads in bringing the inventory in present location and condition.
(e) Accounting for Taxes on Income:
Tax expenses comprises of current and deferred tax. Current income tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Income tax Act, 1961.
Deferred Tax is recognized on timing difference being the difference between taxable income and accounting income
that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets arising
from timing differences are recognized to the extent there is a reasonable certainty that the assets can be realized in
future.
(f) Borrowing Cost:
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective
asset. All other borrowing costs are expensed in the period they occur.
(g) Segment Reporting:
There is no segment reporting.
(h) Earnings per share:
Basic earnings per share is computed by dividing the net profit for the period attributable to equity shareholders by the
weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by
taking into account the aggregate of the weighted average number of equity shares outstanding during the period and
the weighted average number of equity shares which would be issued on conversion of all the dilutive potential equity
shares into equity shares.
(i) Foreign currency transactions:
No foreign currency transactions.
(j) Intangible assets:
Intangible Assets are stated at cost less accumulated amount of amortization.
(k) Amortization:
Intangible assets are amortized over their estimated useful lives from the date they are available for use.
(l) Impairment of Assets:
At each balance sheet date an assessment is made whether any indication exists that an asset has been impaired. If
any such indication exists, an impairment loss i.e., the amount by which the carrying amount of an asset exceeds its
recoverable amount is provided in the books of account.
(m) Cash and cash equivalents:
Cash comprises of cash on hand and demand deposit with banks other than under lien. Cash equivalents are short term,
highly liquid investments that are readily convertible into known amount of cash and which are subject to insignificant
risk of change in value.
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