SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies
adopted in the preparation of these financial statements.
These policies have been consistently applied to all the years
presented, unless otherwise stated.
2.1 Basis of preparation and measurement(i) Compliance with Ind AS
The financial statements comply in all material aspects
with Indian Accounting Standards ("Ind AS") notified
under Section 133 of the Companies Act, 2013 (the 'Act')
[Companies (Indian Accounting Standards) Rules, 2015]
(as amended from time to time) and other relevant
provisions of the Act.
(ii) Historical Cost Convention
The financial statements have been prepared under
the historical cost convention with the exception of
certain financial assets & liabilities (including derivative
instrument) and defined benefit plan assets that are
required to be carried at fair values by Ind AS's.
(iii) Current versus Non-Current Classification
The Company presents assets and liabilities in the Balance
Sheet based on current/non-current classification.
An asset is classified as current when it is:
a) expected to be realised or intended to be sold or
consumed in the normal operating cycle,
b) held primarily for the purpose of trading,
c) expected to be realised within twelve months after
the reporting period, or
d) cash or cash equivalents unless restricted from
being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
a) it is expected to be settled in the normal operating
cycle,
b) it is held primarily for the purpose of trading,
c) it is due to be settled within twelve months after
the reporting period, or
d) there is no unconditional right to defer settlement
of the liability for at least twelve months after the
reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified
as non-current.
(iv) New and amended standards adopted by the
Company
The Ministry of Corporate Affairs has vide notification
dated March 23, 2022 notified Companies (Indian
Accounting Standards) Amendment Rules, 2022 which
amends certain accounting standards, and are effective
from April 1, 2022. These amendments did not have any
impact on the amounts recognised in prior periods and
are not expected to significantly affect the current or
future periods.
(v) New amendments issued but not effective
The Ministry of Corporate Affairs has vide notification
dated 31 March 2023 notified Companies (Indian
Accounting Standards) Amendment Rules, 2023 (the
'Rules') which amends certain accounting standards, and
are effective 1 April 2023.
The Rules predominantly amend Ind AS 12, Income taxes,
and Ind AS 1, Presentation of financial statements. The
other amendments to Ind AS notified by these rules are
primarily in the nature of clarifications.
These amendments are not expected to have a material
impact on the Company in the current or future reporting
periods and on foreseeable future transactions.
Specifically, no changes would be necessary as a
consequence of amendments made to Ind AS 12 as the
Company's accounting policy already complies with the
now mandatory treatment.
2.2 Use of estimates and critical accounting judgments
In preparation of the financial statements, the Company
makes judgments, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and the associated
assumptions are based on historical experience and other
factors including expectations of future events that may have
a financial impact on the Company and that are believed to
be reasonable under the circumstances. Actual results may
differ from these estimates. The estimates and the underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised and future periods affected.
Significant judgments and estimates relating to the carrying
amounts of assets and liabilities include (i) useful lives of
property, plant and equipment and intangible assets, (ii)
employee benefits (estimation of defined benefit obligation)
and (iii) provisions and contingent liabilities .
Useful lives of property, plant and equipment and
intangible assets
Management reviews its estimate of useful life of property,
plant & equipment and intangible assets at the end of
each reporting period, based on the expected utility of the
assets. Uncertainties in these estimates relate to technical
and economic obsolescence that may change the utility of
property, plant and equipment.
Employee Benefits (Estimation of Defined Benefit
Obligation)
Post-employment benefits represents obligation that will
be settled in the future and require assumptions to project
benefit obligations. Post-employment benefit accounting
is intended to reflect the recognition of future benefit cost
over the employees' approximate service period, based
on the terms of plans and the investment and funding
decisions made. The accounting requires the company to
make assumptions regarding variables such as discount rate
and rate of compensation increase. Changes in these key
assumptions can have a significant impact on the defined
benefit obligations. The company sets these judgements
based on previous experience and third party actuarial advice.
Provision and Contingent liabilities
A provision is recognised when the Company has a present
obligation as result of a past event and it is probable that the
outflow of resources will be required to settle the obligation,
in respect of which a reliable estimate can be made. These are
reviewed at each balance sheet date and adjusted to reflect
the current best estimates. Contingent liabilities are not
recognised in the financial statements. Due to the uncertainty
inherent in such matters, it is often difficult to predict the final
outcomes. In the normal course of business, the Company
consults with legal counsel and certain other experts on
matters related to litigations. The Company accrues a liability
when it is determined that an adverse outcome is probable
and the amount of the loss can be reasonably estimated. In
the event an adverse outcome is possible or an estimate is not
determinable, the matter is disclosed.
2.3 Revenue Recognitioni) Sale of goods
Sales are recognised when control of the goods has
transferred, being when the products are delivered to the
customers. Delivery occurs when the products have been
shipped or delivered to the specific location as the case may
be, the risks of obsolescence and loss have been transferred
and either the customer has accepted the products in
accordance with the sales contract or the acceptance
provisions have lapsed or the Company has objective
evidence that all criteria for acceptance have been satisfied.
Sale of goods include related ancillary services, if any.
Revenue from these sales are recognised based on the
price specified in the contract, which is generally fixed,
net of the estimated volume discount. No element of
financing is deemed present as the sales are generally
made with a credit term of 30-90 days or against receipt
of advance which is consistent with market practice. The
Company does not have any contracts where the period
between the transfer of the promised goods or services
to the customer and payment by the customer exceeds
one year. As a consequence, the Company is not required
to adjust any of the transaction prices for the time value
of money. Revenue includes consideration received or
receivable but excludes Goods and Service Taxes, and
are net of discounts and rebates.
A receivable is recognised when the goods are delivered
as this is the point in time that the consideration is
unconditional because only the passage of time is
required before the payment is due.
ii) Sale of Services
Conversion income (included in other operating
income) and income from hospital services (included
in other income) are recognised on rendering of the
related services.
iii) Interest Income
Interest income is accrued on a time proportion basis
taking into account the amount 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 assets to the
gross carrying amount of a financial assets.
2.4 Taxes on Income
The Income tax expense or credit for the period represent the
sum of the tax payable on current period's taxable income
based on the applicable income tax rate and changes in
deferred tax assets and liabilities attributable to temporary
differences, unused tax credits and tax losses.
i) Current Income Tax
The current income tax payable is based on taxable
profit for the period. Taxable profit differs from 'Profit
before tax' as reported in the Statement of Profit and
Loss because of items of income or expenses that are
taxable or deductible in other periods and items that are
never taxable or deductible.
The current income tax charge is calculated using
tax rates (and tax laws) that have been enacted or
substantially enacted at the end of the reporting period.
Management periodically evaluates positions taken in
tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
ii) Deferred Income Tax
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax base used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary difference.
Deferred tax assets are generally recognised for all
deductible temporary differences and unused tax losses
to the extent that it is probable that taxable profits will
be available against which those deductible temporary
differences and losses can be utilised. Deferred tax
assets and liabilities are not recognised if the temporary
differences arise from the initial recognition of assets and
liabilities in a transaction that at the time of transactions
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 or all part of the assets
to be recovered. Deferred tax liabilities and assets are
determined using the tax rates (and tax laws) that have
been enacted or substantively enacted by the end of
the reporting period and are expected to apply when
the related deferred income tax assets is realised or the
deferred income tax liability is settled.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances
relate to the same taxation authority. Current tax assets
and liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on
a net basis, or to realise the asset and settle the liability
simultaneously.
iii) Current and Deferred Tax for the period
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised
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.
2.5 Property, Plant and Equipment
Freehold land is carried at cost. The company recognises
expenditure incurred on construction of assets as an item of
property , plant & equipment only at the time when the assets
is ready for its intended use. All items of property, plant and
equipment are stated at cost less accumulated depreciation /
accumulated impairment loss if any. Pre-operative expenses
including trial run expenses (net of revenue) are capitalised.
The cost of an asset includes the purchase cost of assets,
including import duties and non-refundable taxes, and any
directly attributable costs of bringing an asset to the location
and condition of its intended use. Interest on borrowings used
to finance the construction of qualifying assets are capitalised
as part of the cost of the asset until such time that the asset
is ready for its intended use. Subsequent expenditure on
items of property, plant and equipment after its purchase
/ completion is 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 derecognised when replaced.
On the date of transition to Ind AS i.e. April 1, 2015, the
Company has opted to measure all of its property, plant and
equipment at their previous Generally Accepted Accounting
Principles net carrying value and use that net carrying value
as its deemed cost.
2.6 Capital Work in Progress
Expenditure incurred on construction of assets which are not
ready for their intended use are carried at cost less impairment
(if any), under Capital work-in-progress. The cost includes the
purchase cost of materials, including import duties and non¬
refundable taxes, interest on borrowings used to finance the
construction of the asset and any directly attributable costs of
bringing an assets ready for their intended use.
2.7 Intangible Assets
Intangible assets acquired separately are stated at cost less
accumulated amortisation / accumulated impairment loss, if
any. Computer Software for internal use, which is primarily
acquired from third-party vendors is capitalised. Subsequent
costs associated with maintaining such softwares are
recognised as expense as and when incurred. Cost of software
includes license fees and cost of implementation/system
integration services, where applicable.
On the date of transition to Ind AS i.e. April 1, 2015, the Company
has opted to measure all of its intangible assets at their previous
Generally Accepted Accounting Principles net carrying value and
use that net carrying value as its deemed cost.
2.8 Depreciation and Amortisation Method, Estimated
Useful Lives and Residual Values
(i) Freehold land is not depreciated.
(ii) Depreciation is provided on a straight line basis over the
useful lives of assets, which is as stated in Schedule II
to the Act or based on technical estimates made by the
Company. The details of estimated life for each category
of asset are as under:
(a) Buildings - 30 to 60 years
(b) Roads - 5 to 10 years
(c) Plant and equipment - 3 to 20 years
(d) Vehicles - 8 to 10 years
(e) Furniture, Fixtures and Office Equipments
- 5 to 10 years
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on the disposal or retirement of
an item of property, plant and equipment is determined
as the difference between the sales proceeds and the
carrying amount of the assets and is recognised in the
Statement of profit and loss.
The useful lives, residual values and the method of
depreciation of property, plant and equipment are
reviewed, and adjusted if appropriate, at the end of each
reporting year.
*For these class of assets, based on internal assessment
and independent technical evaluation carried out by
external valuers, the Company believes that the useful
lives as given above best represent the year over which
Company expects to use these assets. Hence, the useful
lives for these assets are different from the useful lives as
prescribed under Part C of Schedule II to the Act.
(iii) The cost of Intangible asset are amortised on straight
line basis over the estimated useful life of 5 years.
Amortisation method and useful lives are reviewed
periodically including at each year end.
2.9 Impairment of Non-Financial Assets
At the end of each reporting year, the company reviews the
carrying amounts of Property, plant and equipment and
Intangible assets to determine whether there is any indication
that the carrying value of those assets may not be recoverable
through its continuous use. 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).
Where the asset does not generate cash flows that are
independent from other assets, the Company estimates the
recoverable amount of the cash generating unit to which
the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing 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
of the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been
adjusted. An impairment loss is recognised in the statement
of profit and loss as and when the carrying amount of an asset
exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash generating unit) is increased to
the revised estimate of its recoverable amount, so that the
increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment
loss been recognised for the asset (or cash generating unit) in
prior years. A reversal of an impairment loss is recognised in
the statement of profit and loss immediately.
2.10 Borrowing Costs
General and specific borrowing costs that are attributable to
the acquisition, construction or production of a qualifying asset
are capitalised as part of cost of such assets till such time as the
asset is ready for its intended use or sale. A qualifying asset is an
asset that necessarily takes a substantial period of time to get
ready for its intended use or sale. Investment income earned
on the temporary investment of specific borrowing pending
their expenditure on qualifying assets is deducted from the
borrowing cost eligible for capitalisation. All other borrowing
costs are recognised as an expense in the Statement of Profit
and Loss in the period in which they are incurred.
2.11 Inventories
Inventories are stated at the lower of cost and net
realisable value.
Cost of inventories is ascertained on weighted average basis.
Cost comprises direct materials and, where applicable, direct
labour costs and those overheads that have been incurred
in bringing the inventories to their present location and
condition. Net realisable value is the price at which the
inventories can be realised in the normal course of business
after allowing for the cost of conversion from their existing
state to a finished condition and for the cost of marketing,
selling and distribution.
Provision are made to cover slow moving and obsolete items
based on historical experience of utilisation on a product
category basis.
Scrap is carried at estimated realisable value or cost
whichever is lower.
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