1.3 Material accounting policies:

a. Financial Instruments

i. Recognition and initial measurement

Trade receivables and debt securities issued
are initially recognised when they are originated.
All other financial assets and financial liabilities
are initially recognised when the Company
becomes a party to the contractual provisions
of the instrument. A financial asset (unless
it is a trade receivable without a significant
financing component) or financial liability is
initially measured at fair value plus or minus, for
an item not at FVTPL, transaction costs that
are directly attributable to its acquisition or
issue. A trade receivable without a significant
financing component is initially measured at the
transaction price.

ii. Classification and subsequent measurement
Financial assets:

On initial recognition, a financial asset is classified
as measured at:

- amortised cost;

- FVOCI - debt investment;

- FVOCI - equity investment; or
-FVTPL

Financial assets are not reclassified subsequent
to their initial recognition unless the Company
changes its business model for managing financial
assets, in which case all affected financial
assets are reclassified on the first day of the
first reporting period following the change in the
business model.

A financial asset is measured at amortised cost
if it meets both of the following conditions and is
not designated as at FVTPL:

- it is held within a business model whose
objective is to hold assets to collect
contractual cash flows; and

- i ts contractual terms give rise on specified
dates to cash flows that are solely payments
of principal and interest on the principal
amount outstanding.

A debt investment is measured at FVOCI if it
meets both of the following conditions and is not
designated as at FVTPL:

- it is held within a business model whose
objective is achieved by both collecting
contractual cash flows and selling financial
assets; and - its contractual terms give rise
on specified dates to cash flows that are
solely payments of principal and interest on
the principal amount outstanding.

On initial recognition of an equity investment
that is not held for trading, the Company may
irrevocably elect to present subsequent changes
in the investment's fair value in OCI. This election
is made on an investment-by-investment basis.

All financial assets not classified as measured at
amortised cost or FVOCI as described above are
measured at FVTPL. On initial recognition, the
Company may irrevocably designate a financial
asset that otherwise meets the requirements to
be measured at amortised cost or at FVOCI as
at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would
otherwise arise.

Financial assets - Subsequent measurement and
gains and losses

Financial assets at FVTPL -These assets are
subsequently measured at fair value.Net gains
and losses, including any interest or dividend
income, are recognised in profit or loss.

Financial assets at amortised cost -These
assets are subsequently measured at amortised
cost using the effective interest method.
The amortised cost is reduced by impairment
losses. Interest income, foreign exchange gains
and losses and impairment are recognised in
profit or loss. Any gain or loss on derecognition is
recognised in profit or loss.

Equity investments at FVOCI -These assets
are subsequently measured at fair value.
Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI
are not reported separately from other changes in
fair value. Dividends are recognised as income in
profit or loss unless the dividend clearly represents
a recovery of part of the cost of the investment.
Other net gains and losses are recognised in OCI
and are not reclassified to profit or loss.

Financial liabilities - Classification, subsequent
measurement and gains and losses

Financial liabilities are classified as measured at
amortised cost or FVTPL. A financial liability is
classified as at FVTPL if it is classified as held-for-
trading, it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL
are measured at fair value and net gains and losses,
including any interest expense, are recognised
in profit or loss. Other financial liabilities are
subsequently measured at amortised cost using
the effective interest method. Interest expense
and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.

iii. Derecognition
Financial assets:

The Company derecognises a financial asset
when:

- the contractual rights to the cash flows from
the financial asset expire; or

- it transfers the rights to receive the
contractual cash flows in a transaction
in which either:

• substantially all of the risks and rewards
of ownership of the financial asset are
transferred; or

• the Company neither transfers nor
retains substantially all of the risks
and rewards of ownership and it does
not retain control of the financial
asset. The Company derecognises a
financial asset when:

- the contractual rights to the cash flows from
the financial asset expire; or

- it transfers the rights to receive the
contractual cash flows in a transaction
in which either:

• substantially all of the risks and rewards
of ownership of the financial asset
are transferred;or

• the Company neither transfers nor
retains substantially all of the risks and
rewards of ownership and it does not
retain control of the financial asset.

Financial liabilities:

The Company derecognises a financial liability
when its contractual obligations are discharged
or cancelled or expire. The Company also
derecognises a financial liability when its terms
are modified and the cash flows of the modified
liability are substantially different, in which case
a new financial liability based on the modified
terms is recognised at fair value. On derecognition
of a financial liability, the difference between
the carrying amount extinguished and the
consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in
profit or loss.

Interest rate benchmark reform

When the basis for determining the contractual
cash flows of a financial asset or financial liability
measured at amortised cost changed as a result
of interest rate benchmark reform, the Company
updated the effective interest rate of the financial
asset or financial liability to reflect the change
that is required by the reform. A change in the
basis for determining the contractual cash flows
is required by interest rate benchmark reform if
the following conditions are met:

• the change is necessary as a direct
consequence of the reform; and

• the new basis for determining the contractual
cash flows is economically equivalent to the
previous basis - i.e., the basis immediately
before the change.

When changes were made to a financial asset
or financial liability in addition to changes to the
basis for determining the contractual cash flows
required by interest rate benchmark reform, the
Company first updated the effective interest
rate of the financial asset or financial liability to
reflect the change that is required by interest rate
benchmark reform. After that, the Group applied
the policies on accounting for modifications to
the additional changes.

Offsetting

Financial assets and financial liabilities are offset
and the net amount presented in the balance
sheet when, and only when, the Company
currently has a legally enforceable right to set off
the amounts and it intends either to settle them
on a net basis or to realise the asset and settle the
liability simultaneously.

b. Property, plant and equipment

i. Recognition and measurement:

Items of property, plant and equipment are
measured at cost (which includes capitalised
borrowing costs, if any) less accumulated
depreciation and accumulated impairment
losses, if any. The cost on item of property, plant
and equipment comprises its purchase price,
taxes, duties, freight and any other directly
attributable costs of bringing the assets to their
working condition for their intended use and
estimated cost of dismantling and removing the
item and restoring the site on which it is located.

The cost of a self-constructed item of property,
plant and equipment comprises the cost of
materials, direct labour and any other costs
directly attributable to bringing the item to its
intended working condition and estimated costs
of dismantling, removing and restoring the site on
which it is located, wherever applicable.

When significant parts of an item of property,
plant and equipment have different useful lives,
they are accounted for as separate items (major
components) of property, plant and equipment.

Gains and losses on disposal of an item of
property, plant and equipment are determined
by comparing the proceeds from disposal
with the carrying amount of property, plant
and equipment, and are recognised net in the
standalone statement of profit and loss.

ii. Transition to IND-AS

The cost of property, plant and equipment as at
1 April 2016, the Company date of transition
to Ind AS, was determined with reference
to its carrying value recognised as per the
previous GAAP (deemed cost), as at the date of
transition to Ind AS.

iii. Subsequent costs:

The cost of replacing a part of an item of property,
plant and equipment is recognised in the carrying
amount of the item if it is probable that the future
economic benefits embodied within the part
will flow to the Company, and its cost can be
measured reliably.

iv. Depreciation:

Depreciation on Property, plant and equipment
(other than for that class of assets specifically
mentioned below) is calculated on a straight-line

Capital work-in-progress includes cost of
property, plant and equipment under installation/
under development as at the balance sheet date.

Advances paid towards acquisition of tangible
and intangible assets outstanding at each balance
sheet date are shown under other non-current
assets as capital advances.

c. Intangible assets and amortisation:

Computer software acquired by the Company, the
value of which is not expected to diminish in the
foreseeable future, is capitalised and recorded in
the Balance sheet as computer software at cost
of acquisition less accumulated amortisation and
accumulated impairment losses.

Computer software is amortised on straight line basis
over a period of five years.

Amortisation method and useful lives are reviewed
at the end of each financial year and adjusted
if appropriate.

The Company capitalizes costs related to specific
upgrades and enhancements of software when it is
probable the expenditures will result in additional
features, functionality and significant customer
experience. The Company also capitalizes all
direct and incremental costs incurred during the
development phase, until such time when the software
is substantially complete and ready for use.

Intangible asset is de-recognised upon disposal or when
no future economic benefits are expected from its use
or disposal. Any gain or loss arising on de-recognition
of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the
asset) is recognized in the standalone statement of
profit and loss, when the asset is derecognised.

d. Impairment of assets
Impairment of financial assets

The Company recognises loss allowances for ECLs on:

• financial assets measured at amortised cost;

• debt investments measured at FVOCI; and

• contract assets.

The Company also recognises loss allowances for
ECLs on finance lease receivables, which are disclosed
as financial assets.

The Company measures loss allowances at an amount
equal to lifetime ECLs, except for the following, which
are measured at 12-month ECLs:

• debt securities that are determined to have low
credit risk at the reporting date; and

• other debt securities and bank balances for which
credit risk (i.e., the risk of default occurring over
the expected life of the financial instrument) has
not increased significantly since initial recognition.

Loss allowances for trade and finance lease receivables,
loans and contract assets are always measured at an
amount equal to lifetime ECLs.

Lifetime expected credit losses are the expected credit
losses that result from all possible default events over
the expected life of a financial instrument.

12-month expected credit losses are the portion of
expected credit losses that result from default events
that are possible within 12 months after the reporting
date (or a shorter period if the expected life of the
instrument is less than 12 months).

I n all cases, the maximum period considered when
estimating expected credit losses is the maximum
contractual period over which the Company is exposed
to credit risk.

When determining whether the credit risk of a
financial asset has increased significantly since initial
recognition and when estimating ECLs, the Company
considers reasonable and supportable information
that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative
information and analysis, based on the Company
historical experience and informed credit assessment,
that includes forward-looking information.

Measurement of expected credit losses

ECLs are a probability-weighted estimate of credit
losses. Credit losses are measured as the present value
of all cash shortfalls (i.e. the difference between the
cash flows due to the entity in accordance with the
contract and the cash flows that the Company expects
to receive). ECLs are discounted at the effective
interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Company assesses whether
financial assets carried at amortised cost and debt
securities at FVOCI are credit impaired. A financial

asset is ‘credit-impaired' when one or more events
that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired
includes the following observable data:

• significant financial difficulty of the debtor;

• the restructuring of a loan or advance by the
Company on terms that the Company would not
consider otherwise.

• it is probable that the debtor will enter bankruptcy
or other financial reorganisation; or

• the disappearance of an active market for a
security because of financial difficulties.

Presentation of allowance for expected credit losses
in the balance sheet

Loss allowances for financial assets measured at
amortised cost are deducted from the gross carrying
amount of the assets.

Write-off

The gross carrying amount of a financial asset is written
off when the Company has no reasonable expectations
of recovering a financial asset in its entirety or a portion
thereof. For corporate customers, the Company
individually makes an assessment with respect to the
timing and amount of write-off based on whether there
is a reasonable expectation of recovery. The Company
expects no significant recovery from the amount
written off. However, financial assets that are written
off could still be subject to enforcement activities in
order to comply with the Company procedures for
recovery of amounts due.

e. Investments

Equity investments which are in scope of Ind AS
109 are measured at fair value. For all other equity
instruments in scope of Ind AS 109, the Company
may make an irrevocable election to present in other
comprehensive income subsequent changes in the
fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable.

If the Company decides to classify an equity
instrument as at FVOCI, then all fair value changes on
the instrument, excluding dividends, are recognised in
the OCI. There is no recycling of the amounts from OCI
to the Statement of Profit and Loss, even on sale of

investment. However, the Company may transfer the
cumulative gain or loss to retained earnings.

Equity instruments included within the FVTPL category
are measured at fair value with all changes recognised
in the Statement of Profit and Loss.

f. Investments in subsidiaries

Investment in equity instruments issued by
subsidiary is measured at cost less impairment.
Investments in subsidiary is evaluated for recoverability
whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable.
For the purpose of impairment testing, the recoverable
amount (i.e., the higher of the fair value less cost to sell
and the value-in-use) is determined on an individual
asset basis. If such investment is considered to be
impaired, the impairment to be recognised in the
Statement of Profit and Loss is measured by the amount
by which the carrying value of the investment exceeds
the estimated recoverable amount of the investment.

g. Inventories

Inventories are measured at the lower of cost and net
realisable value.

Cost includes all costs of purchase and other costs
incurred in bringing the inventories to their present
location and condition inclusive of non-refundable
(adjustable) taxes wherever applicable. The Company
follows the first in first out (FIFO) method for
determining the cost of such inventories.

Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs
of completion and the estimated costs necessary
to make the sale. The comparison of cost and net
realisable value is made on an item-by-item basis.

h. Employee benefits

Short-term employee benefits

Short-term employee benefit obligations are measured
on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised
for the amount expected to be paid if the Company
has a present legal or constructive obligation to pay
this amount as a result of past service provided by
the employee, and the amount of obligation can be
estimated reliably.

Share based payment transactions

The grant date fair value of equity settled share based
payment awards granted to employees is recognised

as an employee expense, with a corresponding
increase in equity, over the period that the employees
unconditionally become entitled to the awards.
The amount recognised as expense is based on the
estimate of the number of awards for which the
related service and non-market vesting conditions are
expected to be met, such that the amount ultimately
recognised as an expense is based on the number
of awards that do meet the related service and
non-market vesting conditions at the vesting date.

Post-employment benefit
Defined contribution plans

A defined contribution plan is a post-employment
benefit plan under which an entity pays fixed
contributions into a separate entity and will have no
legal or constructive obligation to pay further amounts.
The Company makes specified monthly contributions
towards Government administered provident fund
scheme. Obligations for contributions to defined
contribution plans are recognised as an employee
benefit expense in statement of profit or loss in the
periods during which the related services are rendered
by employees. Prepaid contributions are recognised as
an asset to the extent that a cash refund or a reduction
in future payment is available.

Defined benefit plans

A defined benefit plan is a post-employment
benefit plan other than a defined contribution plan.
The Company's net obligation in respect of defined
benefit plans is calculated separately for each plan
by estimating the amount of future benefit that
employees have earned in the current and prior
periods, discounting that amount and deducting the
fair value of any plan assets.

The calculation of defined benefit obligation is
performed annually by a qualified actuary using the
projected unit credit method.

Re-measurements of the net defined benefit liability,
which comprise actuarial gains and losses, the return
on plan assets (excluding interest) and the effect of the
asset ceiling (if any, excluding interest), are recognised
in Other comprehensive income (OCI). The Company
determines the net interest expense on the net defined
benefit liability for the period by applying the discount
rate used to measure the defined benefit obligation
at the beginning of the annual period to the then-net
defined benefit liability considering any changes in the
net defined benefit liability during the period as a result
of contributions and benefit payments. Net interest

expense and other expenses related to defined benefit
plans are recognised in statement of profit and loss.

When the benefits of a plan are changed or when a plan
is curtailed, the resulting change in benefit that relates
to past service (‘past service cost' or ‘past service
gain') or the gain or loss on curtailment is recognised
immediately in profit or loss. The Company recognises
gains and losses on the settlement of a defined benefit
plan when the settlement occurs.

The obligations are presented as current liabilities
in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least
twelve months after the reporting period, regardless of
when the actual settlement is expected to occur.

Compensated absences

Accumulated leave, which is expected to be utilised
within the next 12 months, is treated as short-term
employee benefit and the accumulated leave
expected to be carried forward beyond twelve months,
as long-term employee benefit for measurement
purposes. The Company records an obligation for
such compensated absences in the period in which
the employee renders the services that increase this
entitlement. The obligation is measured on the basis
of independent actuarial valuation using the projected
unit credit method.

i. Revenue recognition

The Company's revenue from medical and healthcare
services comprises of income from hospital services
and sale of pharmacy items.

I ncome from hospital services is recognised as when
the related services are rendered. The performance
obligations for this stream of revenue include
accommodation, surgery, medical/clinical professional
services, food and beverages, investigation and supply
of pharmaceutical and related products.

Revenue is measured based on the transaction
price, which is the fixed consideration adjusted
for components of variable consideration which
constitutes discounts, estimated disallowances
and any other rights and obligations as specified in
the contract with the customer. In determining the
transaction price for the hospital services, the Company
considers the effects of variable consideration,
the existence of significant financing components,
non-cash consideration, and consideration payable

to the customer (if any). Revenue is recognised at the
point in time for the inpatient / outpatient hospital
services when the related services are rendered at the
transaction price.

‘ Unbilled revenue' represents value to the extent of
medical and healthcare services rendered to the
patients who are undergoing treatment/ observation
on the balance sheet date and is not billed as at the
balance sheet date.

Revenue from sale of pharmacy is recognised when it
transfers control over a good or service to the customer,
generally on delivery of product to the customer.

Medical service fee is recognised when the related
services are rendered unless significant future
uncertainties exist.

Interest income or expense is recognised using the
effective interest method. The ‘effective interest rate'
is the rate that exactly discounts estimated future cash
payments or receipts through the expected life of the
financial instrument to:

- the gross carrying amount of the financial asset; or

- the amortised cost of the financial liability.

In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount
of the asset (when the asset is not credit-impaired)
or to the amortised cost of the liability. However, for
financial assets that have become credit-impaired
subsequent to initial recognition, interest income is
calculated by applying the effective interest rate to the
amortised cost of the financial asset. If the asset is no
longer credit-impaired, then the calculation of interest
income reverts to the gross basis.

Dividend income is recognised in profit or loss on the
date on which the Company's right to receive payment
is established.

Contract balances:

A contract liability is recognised if a payment is
received or a payment is due (whichever is earlier) from
a customer before the Company transfers the related
goods or services. Contract liabilities are recognised
as revenue when the Company performs under the
contract (i.e., transfers control of the related goods or
services to the customer).

j. Leases

At inception of a contract, the Company assesses
whether a contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the right
to control the use of an identified asset for a period of
time in exchange for consideration.

As a lessee

At commencement or on modification of a contract
that contains a lease component, the Company
allocates the consideration in the contract to each
lease component on the basis of their relative
stand-alone prices. However, for the leases of property
the Company has elected not to separate non-lease
components and account for the lease and non-lease
components as a single lease component.

The Company recognises a right-of-use asset and
a lease liability at the lease commencement date.
The right-of-use asset is initially measured at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before
the commencement date, plus any initial direct costs
incurred and remove the underlying asset or to restore
the underlying asset or the site on which it is located,
less any lease incentives received.

The right-of-use asset is subsequently depreciated
using the straight-line method from the commencement
date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term, unless
the lease transfers ownership of the underlying asset to
the Company by the end of the lease term or the cost
of the right-of-use asset reflects that the Company will
exercise a purchase option. In that case the right-of-
use asset will be depreciated over the useful life of the
underlying asset, which is determined on the same
basis as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.

The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, the Company's incremental borrowing
rate. Generally, the Company uses its incremental
borrowing rate as the discount rate.

Lease payments included in the measurement of the
lease liability comprise the following:

- fixed payments, including in-substance
fixed payments;

- variable lease payments that depend on an index
or a rate, initially measured using the index or rate
as at the commencement date;

- amounts expected to be payable under a residual
value guarantee; and

- the exercise price under a purchase option that
the Company is reasonably certain to exercise,
lease payments in an optional renewal period if
the Company is reasonably certain to exercise
an extension option, and penalties for early
termination of a lease unless the Company is
reasonably certain not to terminate early.

The lease liability is measured at amortised cost using
the effective interest method. It is remeasured when
there is a change in future lease payments arising
from a change in an index or rate, if there is a change
in the Company's estimate of the amount expected
to be payable under a residual value guarantee, or if
the Company changes its assessment of whether it will
exercise a purchase, extension or termination option or
if there is a revised in-substance fixed lease payments.

When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset or is recorded in profit
or loss if the carrying amount of the right-of-use asset
has been reduced to zero.

The Company presents right-of-use assets that do not
meet the definition of investment property in ‘Property,
plant and equipment' and lease liabilities separately in
the balance sheet within ‘Financial Liabilities'.

Short-term leases and leases of low-value assets:

The Company has elected not to recognise right-of-
use assets and lease liabilities for short-term leases
of machinery and buildings that have a lease term
of 12 months or less and leases of low-value assets.
The Company recognizes the lease payments
associated with these leases as an expense in profit or
loss on a straight-line basis over the lease term.

k. Income-tax

Income tax comprises current and deferred tax.
It is recognised in profit or loss except to the extent
that it relates to a business combination or to
an item recognised directly in equity or in other
comprehensive income.

Current tax:

Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in
respect of previous years. The amount of current tax
reflects the best estimate of the tax amount expected
to be paid or received after considering the uncertainty,
if any, related to income taxes. It is measured using
tax rates (and tax laws) enacted or substantively
enacted by the reporting date. Current tax assets and
current tax liabilities are offset only if there is a legally
enforceable right to set off the recognised amounts,
and it is intended to realise the asset and settle the
liability on a net basis or simultaneously.

Deferred tax:

Deferred tax is recognised in respect of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
corresponding amounts used for taxation purposes.

Deferred tax assets are recognised to the extent that it
is probable that future taxable profits will be available
against which they can be used. The existence of
unused tax losses is strong evidence that future
taxable profit may not be available. Therefore, in case
of a history of recent losses, the Company recognises
a deferred tax asset only to the extent that it has
sufficient taxable temporary differences or there is
convincing other evidence that sufficient taxable profit
will be available against which such deferred tax asset
can be realised.

Deferred tax assets recognised or unrecognised, are
reviewed at each reporting date and are recognised/
reduced to the extent that it is probable/ no longer
probable respectively that the related tax benefit
will be realised.

Deferred tax is measured at the tax rates that are
expected to apply to the period when the asset is
realised or the liability is settled, based on the laws
that have been enacted or substantively enacted by
the reporting date.

The measurement of deferred tax reflects the tax
consequences that would follow from the manner in
which the Company expects, at the reporting date,
to recover or settle the carrying amount of its assets
and liabilities.

Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by

the same tax authority on the same taxable entity,
or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their
tax assets and liabilities will be realised simultaneously.

l. Earnings per share

Basic Earnings Per Share ('EPS') is computed by dividing
the net profit attributable to the equity shareholders
by the weighted average number of equity shares
outstanding during the year. Diluted earnings per share
is computed by dividing the net profit by the weighted
average number of equity shares considered for deriving
basic earnings per share and also the weighted average
number of equity shares that could have been issued
upon conversion of all dilutive potential equity shares.
Dilutive potential equity shares are deemed converted
as of the beginning of the year, unless issued at a later
date. In computing diluted earnings per share, only
potential equity shares that are dilutive and that either
reduces earnings per share or increases loss per share
are included. The number of shares and potentially
dilutive equity shares are adjusted retrospectively for
all periods presented for the share splits.