Notes to Accounts of Dr. Lal Pathlabs Ltd.
Mar 31, 2023
The Company had, in the earlier years purchased the business of "Dr.Bhanudas Yashwant Shinagare" engaged in the business of providing pathological diagnostics services in Pune, on a going concern basis for a purchase consideration of H 15.00 million (including goodwill of H 10.80 million).
Impairment of goodwill
For the purpose of impairment testing, goodwill has been allocated to the cash generating unit - ''Labs CGU''. The recoverable amount of cash-generating units is determined based on a value in use calculation which uses cash flow projections based on financial forecasts covering a five-year period, and a discount rate of 12.50% per annum (as at 31 March, 2022: 14.50% per annum).
Cash flow projections during the forecast period are based on the same expected gross margins and inflation throughout the forecast period. The cash flows beyond that five-year period have been extrapolated using a steady growth rate of 5% per annum (as at March 31,2022: 10% per annum;), which is the projected long-term average growth rate for Labs CGU. The directors believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit. Based on impairment testing as above, the management believes that the recoverable amounts of goodwill are higher than their respective carrying amounts and hence no amounts are required to be recorded for impairment in the carrying amounts of goodwill.
(vi) There are no bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date including the current year.
(vii) Share options granted under the Company''s employee share options plans
(a) The shareholders of the Company approved ''Dr. Lal PathLabs Private Limited Employee Stock Option Plan 2010'' (âESOP 2010") at the Annual General Meeting held on 20 August, 2010 to grant a maximum of3,808,960 options (after considering bonus shares issued during the previous year and subdivision of shares of H 100 each into 10 shares of H 10 each) to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of H 10 each. As per resolution passed on 21 August, 2015, the Company approved to cease further grants under the ESOP 2010. Refer to note 45 for details of options granted, vested and issued under the ESOP 2010.
(b) The shareholders of the Company approved Dr. Lal PathLabs Employees Restricted Stock Unit Plan 2016'' (''RSU 2016) at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 1,244,155 Restricted Stock Units ("RSUs") to key employees and directors of the Company and it''s subsidiaries. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of H 10 each. Refer to note 45 for details of RSUs granted, vested and issued under RSU 2016.
(c) The shareholders of the Company approved Dr Lal PathLabs Employee Stock Option Plan 2022'' (ESOP 2022) at the Annual General Meeting held on 30 June, 2022 to grant a maximum of 1,250,278 options to employees of the Company and it''s subsidiaries. Each option granted and vested under the ESOP 2022 shall entitle the holder to acquire 1 equity share of H 10 each. Refer to note 45 for details of options granted, vested and issued under ESOP 2022.
(a) On approval of the Scheme of Amalgamation between the Company (Transferee Company) and its erstwhile wholly owned subsidiary, namely Delta Ria and Pathology Private Limited (Transferor Company) by the Hon''ble New Delhi Bench and Hon''ble Ahmedabad Bench of the National Company Law Tribunal on 23 October 2018 and 11 December 2018 respectively, the difference between the carrying value of investments in the books of account of the Transferee Company and the amount of the net assets of the Transferor Company had been adjusted in Capital reserve amounting to H 33.00 million as stipulated in the scheme.
(b) On approval of the Scheme of Amalgamation between the Company (Transferee Company) and its erstwhile wholly owned subsidiary, namely APL Institute of Clinical Laboratory & Research Private Limited (Transferor Company) by the Hon''ble New Delhi Bench and Hon''ble Ahmedabad Bench of the National Company Law Tribunal on 13 May 2022 and 17 March 2023 respectively, the difference between the carrying value of investments in the books of account of the Transferee Company and the share capital of the Transferor Company had been adjusted in Capital reserve amounting to H 72.25 million as stipulated in the scheme. Refer to note 42A.
(i) The Company generates its entire revenue from contracts with customers for the services at a point in time. The Company is engaged mainly in the business of running laboratories for carrying out pathological investigations of various branches of bio-chemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
(ii) Transaction price allocated to the remaining performance obligations
The Company has applied practical expedient in Ind AS 115 and has accordingly not disclosed information about remaining performance obligations which are part of the contracts that have original expected duration of one year or less and where the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity''s performance completed to date.
The Company is subject to Indian Income Tax Act, 1961. The Company is assessed for tax on taxable profits determined for each fiscal year beginning on 1 April and ending on 31 March.
"Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India ("Indian GAAP") adjusted in accordance with the provisions of the (Indian) Income tax Act, 1961. Such adjustments generally relate to depreciation of property, plant and equipment, disallowances of certain provisions and accruals, deduction for tax holidays and similar exemptions, the use of tax losses carried forward and retirement benefit costs. Statutory income tax is charged at 22% (2021-22: 22%) plus a surcharge and education cess. The combined Indian statutory tax rate for the fiscal year 2021-22 and for the fiscal year 2022-23 was 25.168%.
Income tax returns submitted by companies are regularly subjected to a comprehensive review and challenge by the tax authorities.
The Company has received notices for reassessment under section 148 of the Income Tax Act 1961 dated 31 March 2023, for the assessment years 2016-17 and 2019-20 respectively on the grounds that income chargeable to tax amounting to Rs. 52.65 million and Rs. 2.83 million pertaining to assessment years 2016-17 and 2019-20 respectively have escaped assessment. Accordingly the Company was required to furnish returns in the prescribed form, within 30 days of the notices.
Subsequent to the year end, the Company has furnished the returns that were orginally filed to the Deputy Commissioner of the Income Tax. The management believes that the grounds of the notices are not tenable and hence no provision is considered necessary.
The Company is engaged solely in the business of running laboratories for carrying out pathological investigations of various branches of bio-chemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company''s performance, allocates resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore there is no reportable segment for the Company, in accordance with the requirements of Indian Accounting Standard 108- ''Operating Segments'', notified under the Companies (Indian Accounting Standard) Rules, 2015.
During the year ended 31 March 2022, the Company has made a further investment of H 45.00 million in its wholly owned
subsidiary Company, PathLabs Unifiers Private Limited, through subscription of additional 1,730,769 equity shares of H 10 each
at a premium of H 26 per share.
a) During the year ended 31 March, 2022, the Company has made a further investment of H 1.01 million (KES 1.5 million) in its wholly owned subsidiary, Dr. Lal PathLabs Kenya Private Limited, through subscription of additional equity shares of 1,500 shares of KES 1,000.
b) The Board of Directors of the Company in their meeting held on 28 March, 2022, had approved the closure of Dr. Lal PathLabs Kenya Private Limited, Kenya a subsidairy. Considering this decision, the Company has fully provided for the investment in Dr. Lal PathLabs Kenya Private Limited, Kenya as on 31 March, 2022.
c) The Board of Directors of the subsidiaries, Paliwal Medicare Private Limited (PMPL) and Paliwal Diagnostics Private Limited (PDPL) in their meetings held on 25 October, 2021 and 25 October, 2021 respectively have approved the ""Scheme of Amalgamation"" of PMPL with PDPL w.e.f. 1 April, 2021, the appointed date. As per the said scheme, the undertaking of PMPL shall stand transferred to and vested in PDPL on a going concern basis without any further act, deed of matter. The scheme of amalgamation is subject to approval by the shareholders of the respective companies, National Company Law Tribunal and other statutory approvals
The Company had completed the acquisition of Suburban Diagnostics (India) Private Limited (""SDIPL"") on November 12, 2021 as per the terms and conditions of the Share Purchade Agreement for a cash consideration of Rs. 9,250.00 million plus certain performance linked payments capped at Rs. 2,250.00 million and subject to certain adjustments. The Company had estimated the consideration for the purchade of shares of SDIPL on a fully dilutive basis, including for employee stock option''s granted by SDIPL (""ESOP''s"") at Rs. 9,667.10 million. Pursuant to completion of the aforesaid acquisition Suburban Diagnostics (India) Private Limited had become a wholly-owned subsidiary and the Company had invested Rs. 9,488.69 million in SDIPL as at 31 March, 2022. SDIPL is primarily engaged in providing diagnostics and healthcare services.
Further, during the year ended 31 March 2023, out of the balance consideration, the Company has paid H 102.22 million and made further investment in its wholly owned subsidiary through acquisition of 42,875 equity shares of H 10 each at a premium.
Notes
a. Total unspent amount for an ongoing project is H3.00 million which has been transferred to ''separate CSR unspent account'' on 28 April 2023, within a period of 30 days from the end of the financial year in compliance with the provisions of section 135(6) of the Act.
b. The company has spent an excess amount of H 1.46 million with respect to other than ongoing projects as approved by the Board of Directors in excess of the minimum requirement as per section 135 (5) of the Company Act, 2013. The Company does not intend to carry forward this excess amount spent of H 1.46 million with respect to other than ongoing projects to the next year.
c. The shortfall with respect to ongoing project of Indian Institute of Management, Ahmedabad (IIMA) relates to certain procedural delays as communicated by IIMA.
The Board of Directors in their meeting, held on 3 February, 2020, approved the ""Scheme of Amalgamation"" of APL Institute of Clinical Laboratory & Research Private Limited (Transferor Company), a wholly owned subsidiary, with the Company (Transferee Company) w.e.f. 1 April, 2020 (the appointed date). As per the said scheme the undertaking of this company shall stand transferred to and vested in the Company on a going concern basis without any further act, deed of matter.
The Scheme envisages transfer of all properties, rights, assets, interests and claims of the Transferor Company to the Transferee Company. Pursuant to the scheme coming into effect, all the equity shares held by the Transferee Company in Transferor Company stand automatically cancelled.
The Hon''ble New Delhi Bench and Hon''ble Ahmedabad Bench of the National Company Law Tribunal (""Hon''ble Tribunal"" or ""NCLT"") sanctioned the Scheme of Amalgamation on May 13, 2022 and March 17, 2023 respectively. The Transferor Company was engaged in business of running laboratories for carrying out pathology investigation of patients in various disciplines of medical sciences.
The amalgamation has been accounted for under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The difference between the carrying value of investments in the books of the Transferee Company and the amount of the share capital of Transferor Company has been adjusted in Capital Reserve as per the scheme. The financial statements for the year ended 31 March 2021 had accordingly been restated to give impact of amalgamation with effect from 1 April 2019 (appointed date 1 April 2020) in accordance with the pooling of interests'' method stated in Appendix C of Ind AS 103 ''Business Combinations''. Accordingly, the financial statements for the year ended 31 March, 2022 have also been restated to take the impact of the amalgamation
Note 43: Employee benefit plans43.1 Defined contribution plans
The Company operates defined contribution retirement benefit plans for all its qualifying employees. Where employees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.
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 contribution is paid to Provident Fund authorities which is expensed during the year.
The total expense recognised in profit or loss of H 101.68 million (for the year ended 31 March, 2022: H 100.59 million) represents contributions payable to provident fund by the Company at rates specified in the rules of the plans. As at 31 March, 2023, contributions of H 17.13 million (as at 31 March, 2022: H 17.08 million) due in respect of the reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the respective reporting periods.
Gratuity: The Company operates a funded gratuity benefit plan. Gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary for each completed year of service, subject to a maximum of H 2.00 million. Vesting occurs upon completion of 4.5 years of service.
The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date."
(a) Capital management
The Company''s objectives when managing capital is to safeguard the ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Company adjusts the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
The Company has investments in fixed deposits with banks and in mutual fund schemes wherein underlying portfolio is spread across securities issued by different issuers having different credit ratings. The credit risk of investments in debt mutual fund schemes is managed through investment policies and guidelines requiring adherence to stringent credit control norms based on external credit ratings.
(b) Financial risk management objective and policies
This section gives an overview of the significance of financial instruments for the Company and provides additional information on the balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2.
Fair value of financial assets and financial liabilities that are not measured at fair value
Management considers that the carrying amounts of financial assets and financial liabilities recognised in the Standalone Financial Statements, except note no. 6, are at approximate of their fair values.
(d) Risk management framework
The Company''s business is subject to several risks and uncertainties including financial risks. The Company''s documented risk management polices act as an effective tool in mitigating the various financial risks to which the business is exposed to in the course of their daily operations. The risk management policies cover areas such as liquidity risk, interest rate risk, counterparty and concentration of credit risk and capital management. Risks are identified through a formal risk management programme with active involvement of senior management personnel and business managers. The Company''s risk management process is in line with the corporate policy. Each significant risk has a designated owner'' within the Company at an appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.
The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Company''s Audit Committee. The overall internal control environment and risk management programme including financial risk management is reviewed by the Audit Committee on behalf of the board.
Treasury management
The Company''s treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
Treasury management focuses on capital protection, liquidity maintenance and yield maximisation.
The Company''s Board of Directors approves financial risk policies comprising liquidity, foreign currency, interest rate and counterparty credit risk. The Company does not engage in the speculative treasury activity but seeks to manage risk and optimise interest through proven financial instruments.
Liquidity risk
The Company requires funds for short-term operational needs and has been rated by CRISIL Limited (CRISIL) for its banking facilities.
Interest rate risk
Fixed rate financial assets are largely interest bearing fixed deposits held by the Company. The returns from these financial assets are linked to bank rate notified by Reserve Bank of India as adjusted on periodic basis. The Company does not charge interest on overdue trade receivables. Trade payables are non interest bearing and are normally settled up to 30 days terms. Mutual fund investments have debt securities as underlying assets and are exposed to floating interest rates. The exposure of the Company''s borrowing to interest rate changes at the end of the reporting period depends on the expected movement of market interest rate.
The exposure of the Company''s financial assets as at 31 March, 2023 to interest rate risk is as follows:
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and after obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company is exposed to credit risk for receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, investments and loans.
Credit risk management considers available reasonable and supportable forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
For short-term investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. Defined limits are in place for exposure to individual counterparties in case of mutual funds schemes.
None of the Company''s cash equivalents are past due or impaired. Regarding trade and other receivables, the Company has accounted for impairment based on expected credit losses method as at 31 March, 2023 and 31 March, 2022 based on expected probability of default.
Price risks
The sensitivity of profit or loss in respect of investments in mutual funds at the end of the reporting period for /-5% change in net asset value is presented below:
"Profit before tax for the year ended 31 March, 2023 would increase/decrease by H 70.69 million (for the year ended 31 March, 2022 would increase/ decrease by H Nil) as a result of the changes in net asset value of investment in mutual funds.
Note 45 Share based paymentsNote 45.1 Employee Share Option Plan-2010
45.1.1 Details of employee share based plan of the Company
The shareholders of the Company approved Dr. Lal PathLabs Private Limited Employee Stock Option Plan 2010'' ("ESOP 2010") at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 3,808,960 options to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of H 10 each. The Company had granted 3,730,340 options till the year ended 31 March, 2015, all of which have all been vested as at 31 March 2019. As per resolution passed on 21 August, 2015, the Company approved to cease any further grants under the ESOP 2010.
Note 45.2 Restricted Share Option Plan
45.2.1 Details of employee share based plan of the Company
The shareholders of the Company approved ''Dr. Lal PathLabs Employees Restricted Stock Unit Plan 2016'' (''RSU 2016'') at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 12,44,155 Restricted Stock Units (""RSUs"") to key employees and directors of the Company and it''s subisdiaries. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of H 10 each. Under RSU 2016, for the performance year 2016-17, options of H 10 each granted to eligible employees is 225,000 out of which 6,225 options were forfeited on non satisfaction of vesting conditions. For the performance year 2017-18, options of H 10 each granted to eligible employees is 225,716 and 9,602 options were forfeited on non satisfaction of vesting conditions. Further, for the performance year 2018-19, options of H 10 each granted to eligible employees is 219,132 and 28,498 options were forfeited on non satisfaction of vesting conditions. Further, for the performance year 2019-20, options of H 10 each granted to eligible employees is 213,841 and 27,631 options were forfeited on non satisfaction of vesting conditions.Further, for the performance year 2020-21, options of H 10 each granted to eligible employees is 1,12,200 and 12,468 options were forfeited on non satisfaction of vesting conditions. Further, for the performance year 2021-22, options of H 10 each granted to eligible employees is 131,594 and 11,793 options were forfeited on non satisfaction of vesting conditions
Further, for the performance year 2022-23, options of H 10 each granted to eligible employees is 21,200 and 27,533 options were forfeited on non satisfaction of vesting conditions. The Company has accounted for the expense of options proportionately for the period under employee cost on the basis of weighted average fair value.
45.3.4 Share options exercised during the year
No share options were exercised during the year.
45.3.5 Share options outstanding at the end of the year
The share options in respect of this scheme (ESOP 2022) approved during the current year, that were outstanding at the end of the year had a weighted average exercise price of H 1,930.05 and a weighted average remaining contractual life of years 6.83 years.
46 Effective 1 April, 2019, the Company adopted Ind AS 116 "Leases" to its leases using the modified retrospective approach with the option to measure the right-of-use asset at an amount equal to the lease liability (i.e. as per para C8(c) (ii) of Ind AS 116), adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet immediately before the date of initial application.
The Company has applied this standard to land leases and building leases etc. to evaluate whether these contracts contain lease or not. Based on evaluation of the terms and conditions of the arrangements, the Company has evaluated such arrangements to be leases. Under this standard, all lease contracts, with limited exceptions, are recognised in the financial statements by way of right-of-use assets and corresponding lease liabilities.
When measuring lease liabilities, the weighted average discount rate used to calculate the lease liability in the opening balance under Ind AS 116 on 1 April, 2019 was 11.25%.
On transition, the adoption of the new standard had resulted in reclassification of Rs. 81.41 million from property, plant and equipment to right-of-use assets, reclassification of H. 76.35 million from prepaid rent- Other non-current assets to right-of-use assets, reclassification of H 0.82 million from prepaid rent- Other current assets to right-of-use assets, reclassification of H 12.17 million from Payment obligation-leasehold land- Other financial liabilities - non current to lease liabilities and reclassification of H 1.53 million from Payment obligation-leasehold land- Other financial liabilities - current to lease liabilities. There had been no impact on the retained earnings on initial application of the standard.
The Company recognises a lease liability measured at the present value of the remaining lease payments. The right-of-use assets are recognised at cost, which comprises the amount of the measurement of the lease liability adjusted for any lease payments made at or before the inception date of the lease
48. Additional disclosures with respect to amendments to Schedule III (Contd..)
d. The Company had not been declared a wilful defaulter by any bank or financial institution or other lender (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
e. The Company did not have any transactions with struck off companies under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
f. The Company did not have any charges or satisfaction which were yet to be registered with ROC beyond the statutory period.
g. The Company has not traded or invested in Crypto currency or Virtual Currency during year ended 31 March, 2023.
h. The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) any funds to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
i. The Company has not received any funds from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
j. The Company did not have any transaction which had not been recorded in the books of account that had been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
k. The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
52 The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
53 There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
54 The Standalone Financial Statements were approved by the Board of Directors and authorised for issue on 11 May, 2023.
Mar 31, 2022
Note:
1. The Company had not revalued its right-of use assets during the year ending 31 March, 2022 and 31 March, 2021
2. Refer to note 49 in respect of immovable properties that have been taken on lease and the lease agreements are not duly executed in favour of the Company.
The Company had, in the earlier years purchased the business of "Dr.Bhanudas Yashwant Shinagareâ engaged in the business of providing pathological diagnostics services in pune, on a going concern basis for a purchase consideration of '' 15.00 million (including goodwill of '' 10.80 million).
Impairment of goodwill
For the purpose of impairment testing, goodwill has been allocated to the cash generating unit - ''Labs CGU''. The recoverable amount of cash-generating units is determined based on a value in use calculation which uses cash flow projections based on financial forecasts covering a five-year period, and a discount rate of 14.50% per annum (as at 31 March, 2021: 14.50% per annum).
Cash flow projections during the forecast period are based on the same expected gross margins and inflation throughout the forecast period. the cash flows beyond that five-year period have been extrapolated using a steady growth rate of 10% per annum (as at March 31, 2021: 10% per annum;), which is the projected long-term average growth rate for labs CGu. the directors believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit. Based on impairment testing as above, the management believes that the recoverable amounts of goodwill are higher than their respective carrying amounts and hence no amounts are required to be recorded for impairment in the carrying amounts of goodwill.
The average credit period from service is 0-60 days. No interest is charged on the trade receivables for the amount overdue above the credit period. there are no customers who represent more than 5% of the total balance of trade receivables.
the Comany has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. the provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. the expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. the provision matrix at the end of the reporting period is as follows.
(iv) Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of '' 10 per share, (Previous year '' 10 per share). Each holder of equity shares is entitled to one vote per equity share. the Company declares and pays dividends in Indian Rupees. the final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
(vi) there are no bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date including the current year.
(vii) Share options granted under the Company''s employee share options plans
(a) the shareholders of the Company approved âDr. Lal pathLabs private Limited employee Stock option plan 2010â ("ESOp 2010â) at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 3,808,960 options (after considering bonus shares issued during the previous year and subdivision of shares of '' 100 each into 10 shares of '' 10 each) to specified categories of employees of the Company. Each option granted and vested under the ESOp 2010 shall entitle the holder to acquire 1 equity share of '' 10 each. As per resolution passed on 21 August, 2015, the Company approved to cease further grants under the ESOp 2010. Refer to note 45 for details of options granted, vested and issued under the ESOp 2010.
(b) the shareholders of the Company approved âDr. Lal pathLabs Employees Restricted Stock Unit plan 2016â (âRSU 2016â) at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 1,244,155 Restricted Stock Units (âRSUsâ) to key employees and directors of the Company and itâs subsidiaries. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of '' 10 each. Refer to note 45 for details of RSUs granted, vested and issued under RSU 2016.
(viii) Subsquent to the year end, the Company has issued 7,000 Equity shares of Face Value of '' 10/- each on execucise of Employees stock options.
*Represents difference between the employee share based compensation cost booked and the average cost of equity shares issued under the share options scheme to the eligible employees of the Company and itâs subisdiaries.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserve will not be reclassified subsequently to profit or loss.
The above relates to share options granted by the Company under its employee share option plans. Upon exercise of the share options by the employees of the Company and itâs subisdiaries, the proportionate cost of shares exercised is transferred to General Reserves after adjusting the cost of related treasury shares. Further information about share based payments to employees is set out in Note 45.
The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on requirements of Companies Act, 2013. Refer Note 19(iv) for details of equity dividend declared.
the Company in the previous years had bought back its equity shares and as per requirement of erstwhile section 77 of Companies Act, 1956, nominal value of the shares so purchased was transferred to the capital redemption reserve account.
During the year ended 31 March, 2012, the Company had constituted Dr. Lal pathLabs Employee Welfare trust ("EWT trustâ) to acquire, hold and allocate/transfer equity shares of the Company to eligible employees from time to time on the terms and conditions specified under respective plans. the financial statements of the EWT trust have been included in the financial statements of the Company, in accordance with the requirements of Ind AS.
equity shares of the Company purchased from employees and primary market from time to time in the earlier years and held by EWT as at 31 March, 2022 aggregated to 582,964 equity shares (31 March, 2021: 721,036 equity shares) of face value '' 10 each.
On approval of the Scheme of Amalgamation between the Company (Transferee Company) and its wholly owned subsidiary, by the name of Delta Ria and pathology private Limited (transferor Company) by the Honâble New Delhi Bench and Honâble Ahmedabad Bench of the National Company law tribunal on 23 October 2018 and 11 December 2018 respectively, the difference between the carrying value of investments in the books of account of the Transferee Company and the amount of the net assets of Transferor Company had been adjusted in Capital reserve as stipulated in the scheme.
Particulars of term loans:
i) Security
Term loan from HDFC Bank Limited is secured by way exclusive charge on the movable assets of plant and machinery and current assets of the company both present and future.
ii) Terms of repayment and interest rate
Term loan from HDFC Bank Limited (including current maturities) is repayable in 36 quarterly installments of '' 208.33 Million starting from May 2022 and ending on March 2025, with put call option (applicable after 6 months) and carries interest which is linked to 3 month T-Bill and presently the effective rate is 4% p.a with quarterly reset.
iii) The Company has used the borrowings from banks for the specific purpose for which it was taken.
iv) The Company has borrowings from banks on the basis of security of current assets and is yet to submit the annual financial statements with the bank for which the Company has 90 days after the end of the financial year. No other returns were required to be filed with the bank.
i) The Company has used the borrowings from banks for the specific purpose for which it was taken at the balance sheet date.
ii) Bank overdraft is secured against deposits with respective banks of the Company.
Trade payables are non- interest bearing and are normally settled within a period of 30 days.
Based on the information available with the Company, the balance due to micro and small enterprises as defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is '' 73.45 million ('' 70.60 million on 31 March, 2021) and no interest has been paid or is payable during the year under the terms of the MSMED Act, 2006.
Revenue disaggregation as per geography has been included in segment information (Refer to note 38).
(i) The Company generates its entire revenue from contracts with customers for the services at a point in time. the Company is engaged mainly in the business of running laboratories for carrying out pathological investigations of various branches of bio-chemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
(ii) transaction price allocated to the remaining performance obligations
the Company has applied practical expedient in Ind AS 115 and has accordingly not disclosed information about remaining performance obligations which are part of the contracts that have original expected duration of one year or less and where the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entityâs performance completed to date.
The Company is subject to Indian Income Tax Act, 1961. The Company is assessed for tax on taxable profits determined for each fiscal year beginning on 1 April and ending on 31 March.
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India ("Indian GAApâ) adjusted in accordance with the provisions of the (Indian) Income tax Act, 1961. Such adjustments generally relate to depreciation of property, plant and equipment, disallowances of certain provisions and accruals, deduction for tax holidays and similar exemptions, the use of tax losses carried forward and retirement benefit costs. Statutory income tax is charged at 22% (2020-21: 22%) plus a surcharge and education cess. The combined Indian statutory tax rate for the fiscal year 2020-21 and for the fiscal year 2021-22 was 25.168%.
Income tax returns submitted by companies are regularly subjected to a comprehensive review and challenge by the tax authorities.
|
37: Contingent liabilities |
(in '' million, unless otherwise stated) |
||
|
Particulars |
As at 31 March, 2022 |
As at 31 March, 2021 |
|
|
i) Claims against the Company not acknowledged as debts* |
130.58 |
116.08 |
|
|
ii) other claims against the Company not acknowledged as debts |
- |
- |
|
* Based on the discussions with the solicitor/ expert opinions taken/status of the case, the management believes that the Company has strong chances of success in above mentioned cases and hence no provision is considered necessary at this point in time as the likelihood of liability devolving on the Company is less than probable.
The Company is engaged solely in the business of running laboratories for carrying out pathological investigations of various branches of bio-chemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
the Board of Directors of the Company, which has been identified as being the chief operating decision maker (CoDM), evaluates the Company''s performance, allocates resources based on the analysis of the various performance indicators of the Company as a single unit. therefore there is no reportable segment for the Company, in accordance with the requirements of Indian Accounting Standard 108- ''operating Segments'', notified under the Companies (Indian Accounting Standard) Rules, 2015.
39. During the year ended 31 March 2022, the Company has made a further investment of '' 45.00 million in its wholly owned subsidiary Company, pathLabs unifiers private Limited, through subscription of additional 1,730,769 equity shares of '' 10 each at a premium of '' 26 per share.
40. a) During the year ended 31 March, 2022, the Company has made a further investment of '' 1.01 million
(KES 1.5 million) in its wholly owned subsidiary, Dr. lal pathlabs Kenya private limited, through subscription of additional equity shares of 1,500 shares of KES 1,000.
During the previous year ended 31 March 2021, the Company had made a further investment of '' 40.00 million (KES 59 million) in its wholly owned subsidiary, Dr. Lal pathLabs Kenya private Limited, through subscription of additional equity shares of 58,598 shares of KES 1,000.
b) The Board of Directors of the Company in their meeting held on 28 March, 2022, had approved the closure of Dr. lal pathLabs Kenya private limited, Kenya a subsidairy. Considering this decision, the Company has fully provided for the investment in Dr. lal pathLabs Kenya private limited, Kenya as on 31 March, 2022.
c) the Board of Directors of the subsidiaries, paliwal Medicare private limited (pmpL) and paliwal Diagnostics private limited (pdpL) in their meetings held on 25 october, 2021 and 25 october, 2021 respectively have approved the â"Scheme of Amalgamationââ of pmpL with pdpL w.e.f. 1 April, 2021, the appointed date. As per the said scheme, the undertaking of pmpL shall stand transferred to and vested in pdpL on a going concern basis without any further act, deed of matter. The scheme of amalgamation is subject to approval by the shareholders of the respective companies, National Company Law Tribunal and other statutory approvals
d) The Board of Directors ot the company in their meeting held on 3 February, 2020 had approved the âScheme of Amalgamationâ of ApL Institute of Clinical Laboratory & Research private Limited (ApL), a wholly owned subsidairy, with the Company w.e.f. 1 April, 2020 (the appointed date). As per the said scheme the undertaking of this company shall stand transferred to and vested in the Company on a going concern basis without any further act, deed of matter. The scheme of amalgamation is subject to approval by the National Company Law Tribunal and other statutory approvals.
41. The Company has completed the acquisition of Suburban Diagnostics (India) private Limited ("SDIpL") on November 12, 2021 as per the terms and conditions of the Share purchase Agreement for a cash consideration of '' 9,250 million plus certain performance linked payments capped at '' 2,250 million and subject to certain adjustments. The Company has estimated the consideration for the purchase of shares of SDIpL on a fully dilutive basis, including for employee stock option''s granted by SDIpL ("ESOp''s") at '' 9,667.10 million. pursuant to completion of the aforesaid acquisition Suburban Diagnostics (India) private Limited has become a wholly-owned subsidiary and the Company had invested '' 9,488.69 million in SDIpL as at 31 March, 2022. SDIpL is primarily engaged in providing diagnostics and healthcare services.
43.1 Defined contribution plans
The Company operates defined contribution retirement benefit plans for all its qualifying employees. Where employees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.
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 contribution is paid to provident Fund authorities which is expensed during the year.
the total expense recognised in profit or loss of '' 100.09 million (for the year ended 31 March, 2021: '' 92.04 million) represents contributions payable to provident fund by the Company at rates specified in the rules of the plans. As at 31 March, 2022, contributions of '' 16.99 million (as at 31 March, 2021: '' 16.05 million) due in respect of the reporting period had not been paid over to the plans. the amounts were paid subsequent to the end of the respective reporting periods.
43.2 Defined benefit plans
Gratuity: the Company operates a funded gratuity benefit plan. Gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. the aforesaid liability is calculated on the basis of 15 days salary for each completed year of service, subject to a maximum of '' 2.00 million. Vesting occurs upon completion of 4.5 years of service.
the present value of the defined benefit obligation and the related current service cost are measured using the projected unit Credit method with actuarial valuations being carried out at each balance sheet date.
1. The discount rate is based on the prevailing market yield of India Government securities as at the balance sheet date for the estimated term of obligations.
2. the estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
3. the expected return is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.
44 Financial instruments (a) Capital management
The Company''s objectives when managing capital is to safeguard the ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Company adjusts the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
the Company has investments in fixed deposits with banks and in mutual fund schemes wherein underlying portfolio is spread across securities issued by different issuers having different credit ratings. the credit risk of investments in debt mutual fund schemes is managed through investment policies and guidelines requiring adherence to stringent credit control norms based on external credit ratings.
the Company had no outstanding debt as at the end of the previous year other than lease liabilities, the amount of which was lower than cash and cash equivalents. Accordingly, the Company has not calculated the gearing ratio as at 31 March, 2022.
(b) Financial risk management objective and policies
this section gives an overview of the significance of financial instruments for the Company and provides additional information on the balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2.
* Short-term marketable securities not traded in active markets are determined by reference to quotes from the financial institutions; for example: Net asset value (NAV) for investments in mutual funds declared by mutual fund house.
Fair value of financial assets and financial liabilities that are not measured at fair value
Management considers that the carrying amounts of financial assets and financial liabilities recognised in the Standalone Financial Statements, except note no. 6, are at approximate of their fair values.
(d) Risk management framework
The Companyâs business is subject to several risks and uncertainties including financial risks. The Companyâs documented risk management polices act as an effective tool in mitigating the various financial risks to which the business is exposed to in the course of their daily operations. The risk management policies cover areas such as liquidity risk, interest rate risk, counterparty and concentration of credit risk and capital management. Risks are identified through a formal risk management programme with active involvement of senior management personnel and business managers. The Companyâs risk management process is in line with the corporate policy. Each significant risk has a designated âownerâ within the Company at an appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.
The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Companyâs Audit Committee. The overall internal control environment and risk management programme including financial risk management is reviewed by the Audit Committee on behalf of the board.
The risk management framework aims to:
- improve financial risk awareness and risk transparency
- identify, control and monitor key risks
- identify risk accumulations
- provide management with reliable information on the Companyâs risk situation
- improve financial returns
Treasury management
The Companyâs treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyses exposures by degree and magnitude of risks. these risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
treasury management focuses on capital protection, liquidity maintenance and yield maximisation. Financial risk
the Companyâs Board of Directors approves financial risk policies comprising liquidity, foreign currency, interest rate and counterparty credit risk. The Company does not engage in the speculative treasury activity but seeks to manage risk and optimise interest through proven financial instruments.
(i) Liquidity risk
The Company requires funds for short-term operational needs and has been rated by CRISIL Limited (CRISIL) for its banking facilities.
The Company remains committed to maintaining a healthy liquidity, gearing ratio and strengthening the balance sheet. The maturity profile of the Companyâs financial liabilities and realisability of financial assets based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual cash obligation of the Company.
Fixed rate financial assets are largely interest bearing fixed deposits held by the Company. The returns from these financial assets are linked to bank rate notified by Reserve Bank of India as adjusted on periodic basis. the Company does not charge interest on overdue trade receivables. trade payables are non interest bearing and are normally settled up to 30 days terms. Mutual fund investments have debt securities as underlying assets and are exposed to floating interest rates. the exposure of the Companyâs borrowing to interest rate changes at the end of the reporting period depends on the expected movement of market interest rate.
The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. For floating rate assets, the analysis is prepared assuming the amount of the assets balance at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.
(iii) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. the Company has adopted a policy of only dealing with creditworthy counterparties and after obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. the Company is exposed to credit risk for receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, investments and loans.
Credit risk management considers available reasonable and supportable forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
For short-term investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. Defined limits are in place for exposure to individual counterparties in case of mutual funds schemes.
None of the Companyâs cash equivalents are past due or impaired. Regarding trade and other receivables, the Company has accounted for impairment based on expected credit losses method as at 31 March, 2022 and 31 March, 2021 based on expected probability of default.
(iv) Price risks
The sensitivity of profit or loss in respect of investments in mutual funds at the end of the reporting period for /-5% change in net asset value is presented below:
Profit before tax for the year ended 31 March, 2022 would increase/decrease by Nil (for the year ended 31 March, 2021 would increase/ decrease by '' 25.11 million) as a result of the changes in net asset value of investment in mutual funds.
45.1 Employee Share Option Plan-2010
45.1.1 Details of employee share based plan of the company
The shareholders of the Company approved âDr. Lal PathLabs Private Limited Employee Stock Option Plan 2010â ("ESOP 2010â) at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 3,808,960 options to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of '' 10 each. The Company had granted 3,730,340 options till the year ended 31 March, 2015, all of which have all been vested as at 31 March 2019. As per resolution passed on 21 August, 2015, the Company approved to cease any further grants under the ESOP 2010.
Note 1: All options vest after 48-60 months from date of grant subject to satisfaction of vesting conditions. The exercise period is five years from the date on which the Company''s shares were listed on a recognised stock exchange in India or a period of 10 years from date of respective vesting, whichever period ends later. options not exercised within exercise period lapses.
45.1.4 Share options exercised during the year
No share options were exercised during the year.
45.1.5 Share options outstanding at the end of the year
the share options outstanding at the end of the year has a weighted average exercise price of '' 311.30 (as at 31 March, 2021: '' 311.30) and a weighted average remaining contractual life of years 5.13 (as at 31 March, 2021: 6.13 years)
45.2 Restricted Share Option Plan
45.2.1 Details of employee share based plan of the company
the shareholders of the Company approved âDr. Lal pathLabs Employees Restricted Stock unit plan 2016â (âRSu 2016â) at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 12,44,155 Restricted Stock Units (ââRSUsââ) to key employees and directors of the Company and itâs subisdiaries. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of '' 10 each. Under RSU 2016, for the performance year 2016-17, options of '' 10 each granted to eligible employees is 225,000 out of which 6,225 options were forfeited on non satisfaction of vesting conditions. For the performance year 2017-18, options of '' 10 each granted to eligible employees is 225,716 and 9,602 options were forfeited on non satisfaction of vesting conditions. Further, for the performance year 2018-19, options of '' 10 each granted to eligible
employees is 219,132 and 28,498 options were forfeited on non satisfaction of vesting conditions. Further, for the performance year 2019-20, options of '' 10 each granted to eligible employees is 213,841 and 27,631 options were forfeited on non satisfaction of vesting conditions.Further, for the performance year 202021, options of '' 10 each granted to eligible employees is 1,12,200 and 12,468 options were forfeited on non satisfaction of vesting conditions.
Further, for the performance year 2021-22, options of '' 10 each granted to eligible employees is 131,594 and 11,793 options were forfeited on non satisfaction of vesting conditions. The Company has accounted for the expense of options proportionately for the period under employee cost on the basis of weighted average fair value.
Note 1: All options vest after 1 year but within 4 years of date of grant subject to satisfaction of vesting conditions. the exercise period is five years from the date of respective vesting or such other shorter period as may be decided by the Nomination and Remuneration Committee from time to time. options not exercised within the exercise period lapse.
45.2.5 Share options outstanding at the end of the year
The share options outstanding at the end of the year has a weighted average exercise price of '' 10 (as at 31 March, 2021: '' 10) and a weighted average remaining contractual life of 5.62 years (as at 31 March, 2021: 5.96 years)
46. Effective April 1, 2019, the Company adopted Ind AS 116 âLeasesâ to its leases using the modified retrospective approach with the option to measure the right-of-use asset at an amount equal to the lease liability (i.e. as per para C8(c) (ii) of Ind AS 116), adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet immediately before the date of initial application.
the Company has applied this standard to land leases and building leases etc. to evaluate whether these contracts contains lease or not. Based on evaluation of the terms and conditions of the arrangements, the Company has evaluated such arrangements to be leases. under this standard, all lease contracts, with limited exceptions, are recognised in the financial statements by way of right-of-use assets and corresponding lease liabilities.
When measuring lease liabilities, the weighted average discount rate used to calculate the lease liability in the opening balance under Ind AS 116 on April 1, 2019 was 11.25%.
on transition, the adoption of the new standard had resulted in reclassification of '' 81.41 million from property, plant and equipment to right-of-use assets, reclassification of ''. 76.35 million from prepaid rent-other non-current assets to right-of-use assets, reclassification of '' 0.82 million from prepaid rent- other current assets to right-of-use assets, reclassification of '' 12.17 million from payment obligation-leasehold land- other financial liabilities - non current to lease liabilities and reclassification of '' 1.53 million from payment obligation-leasehold land- other financial liabilities - current to lease liabilities. there had been no impact on the retained earnings on initial application of the standard.
the Company recognises a lease liability measured at the present value of the remaining lease payments. the right-of-use assets are recognised at cost, which comprises the amount of the measurement of the lease liability adjusted for any lease payments made at or before the inception date of the lease.
The Company has cash outflows for lease of underlying assets amounting to '' 504.33 (31 March, 2021: 395.23 million) out of which rent charges is amounting to '' Nil million (31 March, 2021: 27.38 million) which includes rentals for short term lease and low value lease.
47. In February 2019, the Honâble Supreme Court of India vide its judgment and subsequent dismissal of the review petition in August 2019 had ruled in respect of compensation for the purpose of provident Fund contribution under the Employeeâs provident Fund Act. The Company has assessed possible outcomes of the judgment on determination of provident fund contributions and based on the legal opinion obtained and current evaluation, the Company believes it is not probable that certain components paid by the Company will be subject to payment of Provident Fund due to the Supreme Court order. The Company will continue to monitor and evaluate its position based on future events and developments.
48. The Indian Parliament has approved the Code on Social Security, 2020 (âthe Codeâ) which, inter alia, deals with employee benefits during employment and post-employment. The Code has been published in the Gazette of India. The effective date of the Code is yet to be notified and the rules for quantifying the financial impact are also yet to be issued. In view of this, the impact of the change, if any, will be assessed and recognised post notification of the relevant provisions.
49. Additional disclosures with respect to amendments to Schedule III
The title deeds comprising all the immovable properties of land and buildings which are freehold (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) and the building constructed on leasehold land disclosed as property, plant and equipment in the financial statements, are held in the name of the Company as at the balance sheet date except the following:
b. The Company had not granted any loans or advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, that are repayable on demand or without specifying any terms or period of repayment.
c. the Company was not holding any benami property and no proceedings were initiated or pending against the Company for holding any benami property under the Benami transactions (prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
d. the Company had not been declared a wilful defaulter by any bank or financial institution or other lender (as defined under the Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
e. The Company did not have any transactions with struck off companies under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
f. the Company did not have any charges or satisfaction which were yet to be registered with RoC beyond the statutory period.
g. the Company has not traded or invested in Crypto currency or Virtual Currency during year ended 31 March, 2022.
h. the Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) any funds to or in any other persons or entities, including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the ultimate Beneficiaries.
i. the Company has not received any funds from any persons or entities, including foreign entities (âFunding partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding party (âultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the ultimate Beneficiaries.
j. the Company did not have any transaction which had not been recorded in the books of account that had been surrendered or disclosed as income during the year in the tax assessments under the Income tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income tax Act, 1961).
k. the Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
53. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
54. there were no amounts which were required to be transferred to the Investor Education and protection Fund by the Company.
55. the Standalone Financial Statements were approved by the Board of Directors and authorised for issue on 17 May, 2022.
Mar 31, 2021
Impairment of goodwill
For the purpose of impairment testing, goodwill has been allocated to the cash generating unit - ''Labs CGU''. The recoverable amount of cash-generating units is determined based on a value in use calculation which uses cash flow projections based on financial forecasts covering a five-year period, and a discount rate of 14.50% per annum (as at 31 March, 2020: 11.50% per annum).
Cash flow projections during the forecast period are based on the same expected gross margins and inflation throughout the forecast period. The cash flows beyond that five-year period have been extrapolated using a steady growth rate of 10% per annum (as at March 31, 2020: 10% per annum;), which is the projected long-term average growth rate for Labs CGU. The directors believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit. Based on impairment testing as above, the management believes that the recoverable amounts of goodwill are higher than their respective carrying amounts and hence no amounts are required to be recorded for impairment in the carrying amounts of goodwill.
) Share options granted under the Company''s employee share options plans
(a) The shareholders of the Company approved ''Dr. Lai PathLabs Private Limited Employee Stock Option Plan 2010'' (âESOP 2010â) at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 3,808,960 options (after considering bonus shares issued during the previous year and subdivision of shares of '' 100 each into 10 shares of '' 10 each) to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of '' 10 each. As per resolution passed on 21 August, 2015, the Company approved to cease further grants under the ESOP 2010. Refer to note 45 for details of options granted, vested and issued under the ESOP 2010.
(b) The shareholders of the Company approved ''Dr. Lal PathLabs Employees Restricted Stock Unit Plan 2016'' (''RSU 2016'') at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 1,244,155 Restricted Stock Units ("RSUs") to key employees and directors of the Company. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of '' 10 each. Refer to note 45 for details of RSUs granted, vested and issued under RSU 2016.
(i) The Company generates its entire revenue from contracts with customers for the services at a point in time. The Company is engaged mainly in the business of running laboratories for carrying out pathological investigations of various branches of biochemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
(ii) Transaction price allocated to the remaining performance obligations
The Company has applied practical expedient in Ind AS 115 and has accordingly not disclosed information about remaining performance obligations which are part of the contracts that have original expected duration of one year or less and where the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity''s performance completed to date.
The Company is subject to Indian Income Tax Act, 1961. The Company is assessed for tax on taxable profits determined for each fiscal year beginning on 1 April and ending on 31 March.
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India (âIndian GAAPâ) adjusted in accordance with the provisions of the (Indian) Income tax Act, 1961. Such adjustments generally relate to depreciation of property, plant and equipment, disallowances of certain provisions and accruals, deduction for tax holidays and similar exemptions, the use of tax losses carried forward and retirement benefit costs. Statutory income tax is charged at 22% (2019-20: 22%) plus a surcharge and education cess. The combined Indian statutory tax rate for the fiscal year 2019-20 and for the fiscal year 2020-21 was 25.168%.
Income tax returns submitted by companies are regularly subjected to a comprehensive review and challenge by the tax authorities.
The Company is engaged solely in the business of running laboratories for carrying out pathological investigations of various branches of bio-chemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company''s performance, allocates resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore there is no reportable segment for the Company, in accordance with the requirements of Indian Accounting Standard 108-''Operating Segments'', notified under the Companies (Indian Accounting Standard) Rules, 2015.
During the year ended 31 March 2021, the Company has made a further investment of '' 225.00 million in its wholly owned subsidiary Company, PathLabs Unifiers Private Limited, through subscription of additional 9,576,923 equity shares (1,500,000 equity shares of '' 10 each at a premium of '' Nil per share and 8,076,923 equity shares of '' 10 each at a premium of '' 26 per share).
Subsquent to the year ended 31 March 2021, the Company has made a further investment of '' 45.00 million in its wholly owned subsidiary Company, PathLabs Unifiers Private Limited, through subscription of additional 1,730,769 equity shares of '' 10 each at a premium of '' 26 per share.
During the previous year ended 31 March 2020, the Company had made a further investment of '' 599.00 million and '' 9.00 million in its wholly owned subsidiary Companies, PathLabs Unifiers Private Limited and Dr. Lal Ventures Private Limited, respectively through subscription of additional equity shares.
During the year ended 31 March, 2021, the Company has made a further investment of '' 40.00 million (KES 59 million) in its wholly owned subsidiary, Dr. Lal PathLabs Kenya Private Limited, through subscription of additional equity shares of 58,598 shares of KES 1,000.
During the previous year ended 31 March 2020, the Company had formed a new wholly owned foreign subsidiary, âDr. Lal PathLabs Kenya Private Limitedâ in Kenya. The Company had subscribed to equity share capital amounting to KES 10 million (? 7.10 million) consisting of 9,880 shares of KES 1,000
The Board of Directors of the company in their meeting held on 3 February, 2020 had approved the âScheme of Amalgamationâ of APL Institute of Clinical Laboratory & Research Private Limited (APL), a wholly owned subsidairy, with the Company w.e.f. 1 April, 2020 (the appointed date). As per the said scheme the undertaking of this company shall stand transferred to and vested in the Company on a going concern basis without any further act, deed of matter. The scheme of amalgamation is subject to approval by the national Company Law Tribunal and other statutory approvals.
Employee benefit plans1 Defined contribution plans
The Company operates defined contribution retirement benefit plans for all its qualifying employees. Where employees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.
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 contribution is paid to Provident Fund authorities which is expensed during the year.
The total expense recognised in profit or loss of '' 92.04 million (for the year ended 31 March, 2020: '' 90.75 million) represents contributions payable to provident fund by the Company at rates specified in the rules of the plans. As at 31 March, 2021, contributions of '' 16.05 million (as at 31 March, 2020: '' 15.63 million) due in respect of the reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the respective reporting periods.
Gratuity: The Company operates a funded gratuity benefit plan. Gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary for each completed year of service, subject to a maximum of '' 2.00 million. Vesting occurs upon completion of 4.5 years of service.
The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date.
(a) Capital management
The Company''s objectives when managing capital is to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Company adjusts the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
The Company has investments in fixed deposits with banks and in mutual fund schemes wherein underlying portfolio is spread across securities issued by different issuers having different credit ratings. The credit risk of investments in debt mutual fund schemes is managed through investment policies and guidelines requiring adherence to stringent credit control norms based on external credit ratings.
The Company has no outstanding debt as at the end of reporting periods. Accordingly, the Company has not calculated gearing ratio as at 31 March, 2021 and 31 March, 2020.
(b) Financial risk management objective and policies
This section gives an overview of the significance of financial instruments for the Company and provides additional information on the balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2.
The Company''s business is subject to several risks and uncertainties including financial risks. The Company''s documented risk management polices act as an effective tool in mitigating the various financial risks to which the business is exposed to in the course of their daily operations. The risk management policies cover areas such as liquidity risk, interest rate risk, counterparty and concentration of credit risk and capital management. Risks are identified through a formal risk management programme with active involvement of senior management personnel and business managers. The Company''s risk management process is in line with the corporate policy. Each significant risk has a designated owner'' within the Company at an appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.
The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Company''s Audit Committee. The overall internal control environment and risk management programme including financial risk management is reviewed by the Audit Committee on behalf of the board.
The Company''s treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
Treasury management focuses on capital protection, liquidity maintenance and yield maximisation.
The Company''s Board of Directors approves financial risk policies comprising liquidity, foreign currency, interest rate and counterparty credit risk. The Company does not engage in the speculative treasury activity but seeks to manage risk and optimise interest through proven financial instruments.
The Company requires funds for short-term operational needs and has been rated by CRISIL Limited (CRISIL) for its banking facilities.
(iii) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and after obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company is exposed to credit risk for receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, investments and loans.
Credit risk management considers available reasonable and supportable forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
For short-term investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. Defined limits are in place for exposure to individual counterparties in case of mutual funds schemes.
None of the Company''s cash equivalents are past due or impaired. Regarding trade and other receivables, the Company has accounted for impairment based on expected credit losses method as at 31 March, 2021 and 31 March, 2020 based on expected probability of default.
(iv) Price risks
The sensitivity of profit or loss in respect of investments in mutual funds at the end of the reporting period for /-5% change in net asset value is presented below:
Profit before tax for the year ended 31 March, 2021 would increase/decrease by '' 25.11 million (for the year ended 31 March, 2020 would increase/ decrease by '' 79.45 million) as a result of the changes in net asset value of investment in mutual funds.
45. Share based payments45.1 Employee Share Option Plan-201045.1.1 Details of employee share based plan of the Company
The shareholders of the Company approved ''Dr. Lal PathLabs Private Limited Employee Stock Option Plan 2010'' (âESOP 2010â) at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 3,808,960 options to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of '' 10 each. The Company had granted 3,730,340 options till the year ended 31 March, 2015, all of which have all been vested as at 31 March 2019. As per resolution passed on 21 August, 2015, the Company approved to cease any further grants under the ESOP 2010.
45.2 Restricted Share Option Plan45.2.1 Details of employee share based plan of the Company
The shareholders of the Company approved ''Dr. Lai PathLabs Employees Restricted Stock Unit Plan 2016'' (''RSU 2016'') at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 1,244,155 Restricted Stock Units ("RSUs") to key employees and directors of the Company. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of '' 10 each. Under RSU 2016, for the performance year 2016-17, options of '' 10 each granted to eligible employees is 225,000 out of which 6,225 options were forfeited on non satisfaction of vesting conditions. For the performance year 2017-18, options of '' 10 each granted to eligible employees is 225,716 and 9,602 options were forfeited on non satisfaction of vesting conditions. Further, for the performance year 2018-19, options of '' 10 each granted to eligible employees is 219,132 and 28,498 options were forfeited on non satisfaction of vesting conditions. Further, for the performance year 2019-20, options of '' 10 each granted to eligible employees is 213,841 and 27,631 options were forfeited on non satisfaction of vesting conditions.
Further, for the performance year 2020-21, options of '' 10 each granted to eligible employees is 112,200 and 12,468 options were forfeited on non satisfaction of vesting conditions. The Company has accounted for the expense of options proportionately for the period under employee cost on the basis of weighted average fair value.
46. Effective April 1, 2019, the Company adopted Ind AS 116 âLeasesâ to its leases using the modified retrospective approach with the option to measure the right-of-use asset at an amount equal to the lease liability (i.e. as per para C8(c) (ii) of Ind AS 116), adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet immediately before the date of initial application.
The Company has applied this standard to land leases and building leases etc. to evaluate whether these contracts contains lease or not. Based on evaluation of the terms and conditions of the arrangements, the Company has evaluated such arrangements to be leases. Under this standard, all lease contracts, with limited exceptions, are recognised in the financial statements by way of right-of-use assets and corresponding lease liabilities.
When measuring lease liabilities, the weighted average discount rate used to calculate the lease liability in the opening balance under Ind AS 116 on April 1, 2019 was 11.25%.
On transition, the adoption of the new standard had resulted in reclassification of '' 81.41 million from property, plant and equipment to right-of-use assets, reclassification of ''. 76.35 million from prepaid rent- Other non-current assets to right-of-use assets, reclassification of '' 0.82 million from prepaid rent- Other current assets to right-of-use assets, reclassification of '' 12.17 million from Payment obligation-leasehold land- Other financial liabilities - non current to lease liabilities and reclassification of '' 1.53 million from Payment obligation-leasehold land- Other financial liabilities - current to lease liabilities. There had been no impact on the retained earnings on initial application of the standard.
The Company recognises a lease liability measured at the present value of the remaining lease payments. The right-of-use assets are recognised at cost, which comprises the amount of the measurement of the lease liability adjusted for any lease payments made at or before the inception date of the lease
The Company has cash outflows for lease of underlying assets amounting to '' 395.23 (31 March, 2020: 371.56 million) out of which rent charges is amounting to '' 27.38 million (31 March, 2020: 32.60 million) which includes rentals for short term lease and low value lease.
47. In February 2019, the Hon''ble Supreme Court of India vide its judgment and subsequent dismissal of the review petition in August 2019 had ruled in respect of compensation for the purpose of Provident Fund contribution under the Employee''s Provident Fund Act. The Company has assessed possible outcomes of the judgment on determination of provident fund contributions and based on the legal opinion obtained and current evaluation, the Company believes it is not probable that certain components paid by the Company will be subject to payment of Provident Fund due to the Supreme Court order. The Company will continue to monitor and evaluate its position based on future events and developments.
48. The Indian Parliament has approved the Code on Social Security, 2020 (''the Code'') which, inter alia, deals with employee benefits during employment and post-employment. The Code has been published in the Gazette of India. The effective date of the Code is yet to be notified and the rules for quantifying the financial impact are also yet to be issued. In view of this, the impact of the change, if any, will be assessed and recognised post notification of the relevant provisions.
49. Disclosure pursuant to section 186 of the Companies Act 2013:
|
Sr. No. |
Nature of the transaction (loans given/ Investment made/ guarantee given/ security provided) |
As at 31 March, 2021 |
As at 31 march, 2020 |
|
1 |
Loan and advances |
- |
- |
|
2 |
Other advances |
- |
- |
|
3 |
Guarantees |
- |
- |
|
4 |
Investments in fully paid equity instruments and current investments |
Refer Note 6 and 13 |
Refer note 6 and 13 |
50. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
51. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
52. The Standalone Financial Statements were approved by the Board of Directors and authorised for issue on 21 May, 2021.
Mar 31, 2019
1 GENERAL INFORMATION
(i) Dr. Lal PathLabs Limited (âthe Companyâ) is a public company domiciled in India and incorporated on 14 February, 1995 under the provisions of the Companies Act, 1956. The Company is engaged in the business of running laboratories for carrying out pathological investigations of various branches of bio-chemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, and other pathological and radiological investigations.
The equity shares of the Company are listed on The National Stock Exchange of India and Bombay Stock Exchange.
The registered address and principal place of business of the Company is Block E, Sector-18, Rohini, New Delhi-110085.
(ii) A Scheme of Amalgamation between the Company (âTransferee Companyâ) and its wholly owned subsidiary, by the name of Delta Ria and Pathology Private Limited (âTransferor Companyâ) with an appointed date of 1 April, 2017 was approved by the Honâble New Delhi Bench and Honâble Ahmedabad Bench of the National Company Law Tribunal (Honâble Tribunalâ or âNCLTâ) on October 23, 2018 and December 11, 2018 respectively. Pursuant to the Scheme becoming effective, the amalgamation has been accounted for under the âpooling of interestsâ method in accordance with Ind AS 103 âBusiness Combinationsâ and the assets, liabilities and reserves of the Transferor Company have been accounted for at their book value, in the books of account of the Company.
Consequent to the scheme becoming effective, the Company has restated the amounts for the year ended 31 March, 2018 after giving effect to the Scheme of Amalgamation as described in note 40.
The Company had, in the earlier years purchased the business of âDr.Bhanudas Yashwant Shinagareâ engaged in the business of providing pathological diagnostics services in Pune, on a going concern basis for a purchase consideration of Rs. 15.00 million (including goodwill of Rs. 10.80 million).
Impairment of Goodwill
For the purpose of impairment testing, goodwill has been allocated to the cash generating unit - âLabs CGUâ. The recoverable amount of cash-generating units is determined based on a value in use calculation which uses cash flow projections based on financial forecasts covering a five-year period, and a discount rate of 11.50% per annum (as at 31 March, 2018: 11.50% per annum).
Cash flow projections during the forecast period are based on the same expected gross margins and inflation throughout the forecast period. The cash flows beyond that five-year period have been extrapolated using a steady growth rate of 10% per annum (as at March 31, 2018: 22% per annum;), which is the projected long-term average growth rate for Labs CGU. The directors believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit. Based on impairment testing as above, the management believes that the recoverable amounts of goodwill are higher than their respective carrying amounts and hence no amounts are required to be recorded for impairment in the carrying amounts of goodwill.
The Company has elected to continue with the carrying value of all of its intangible assets as at the transition date, viz., 1 April, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
The Companyâs business does not involve any conversion process for materials. Reagents and chemicals are used to conduct various pathology and radiology tests and are consumed in the process.
The mode of valuation of inventories has been stated in note 2.11.
The average credit period from service is 0-60 days. No interest is charged on the trade receivables for the amount overdue above the credit period. There are no customers who represent more than 5% of the total balance of trade receivables.
The Comany has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows.
* Pursuant to the Scheme of Amalgamation [âthe Schemeâ] u/s 230 to 232 of the Companies Act, 2013 among the Company and its erstwhile wholly owned subsidiary Company [Transferor Company] and the approval of National Company Law Tribunal of Delhi and Ahmedabad, the authorised share capital of the transferor Company has been merged with authorised share capital of the Company during the financial year ended 31 March 2019.
iii) terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of Rs. 10 per share, (Previous year Rs. 10 per share). Each holder of equity shares is entitled to one vote per equity share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
* The number of shares are after considering the impact of sub-division of shares on 27 March, 2015 of Rs. 100 each into 10 shares of Rs. 10 each.
In addition, the Company has issued total 3,030,890 (31 March 2018: 3,022,024) equity shares of Rs. 10 each (after considering issue of bonus shares and sub-division of shares of Rs. 100 each into Rs. 10 each), including 1,918,757 (31 March, 2018: 1,918,757) equity shares issued to Dr Lal PathLabs Employee Welfare Trust, during the period of five years immediately preceding the reporting date on exercise of options granted under the Employee Share Option Plan, 2005 and 2010.
(vi) Share options granted under the companyâs employee share options plans
(a) The shareholders of the Company approved âDr. Lal PathLabs Private Limited Employee Stock Option Plan 2010â (âESOP 2010â) at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 3,808,960 options (after considering bonus shares issued during the previous year and subdivision of shares of Rs. 100 each into 10 shares of Rs. 10 each) to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of Rs. 10 each. As per resolution passed on 21 August, 2015, the Company approved to cease further grants under the ESOP 2010. Refer to note 46 for details of options granted, vested and issued under the ESOP 2010.
(b) The shareholders of the Company approved âDr. Lal PathLabs Employees Restricted Stock Unit Plan 2016â (âRSU 2016â) at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 1,244,155 Restricted Stock Units (âRSUsâ) to key employees and directors of the Company. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of Rs. 10 each. Refer to note 46 for details of RSUs granted, vested and issued under RSU 2016.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserve will not be reclassified subsequently to profit or loss.
The above relates to share options granted by the Company under its employee share option plans. Upon exercise of the share options by the employees, the proportionate cost of shares exercised is transferred to General reserves after adjusting the cost of related treasury shares. Further information about share based payments to employees is set out in Note 46.
âTax on final equity dividend paid during the year is after adjusting corporate dividend tax of Rs. 3.41 million (previous year ended 31 March, 2018 Nil) paid by a subsidiary company on dividend paid to the Company during the year.
âTax on interim equity dividend paid during the year is after adjusting corporate dividend tax of â Nil (previous year ended 31 March, 2018 Rs. 1.63 million) paid by a subsidiary company on dividend paid to the Company during the year.
In respect of the year ended 31 March, 2019, the directors propose that a dividend of Rs. 3.50 per share (previous year ended 31 March, 2018 Rs. 3.00 per share) to be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs. 291.70 million (previous year Rs. 250.00 million).
The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on requirements of Companies Act, 2013. Refer Note 19(iv) for details of equity dividend declared.
During the year ended 31 March, 2012, the Company had constituted EWT Trust to acquire, hold and allocate/transfer equity shares of the Company to eligible employees from time to time on the terms and conditions specified under respective plans. The financial statements of the EWT Trust has been included in the financial statements of the Company, in accordance with the requirements of Ind AS.
Equity shares of the Company purchased from employees and secondary market from time to time in the earlier years and held by EWT as at 31 March, 2019 aggregated to 1,000,822 equity shares (31 March, 2018: 1,054,098 equity shares) of face value Rs. 10 each.
On approval of the Scheme of Amalgamation between the Company (Transferee Company) and its wholly owned subsidiary, by the name of Delta Ria and Pathology Private Limited (Transferor Company) by the Honâble New Delhi Bench and Honâble Ahmedabad Bench of the National Company Law Tribunal on 23 October 2018 and 11 December 2018 respectively, the difference between the carrying value of investments in the books of account of the Transferee Company and the amount of the net assets of Transferor Company has been adjusted in Capital reserve as stipulated in the scheme.
Based on the information available with the Company, the balance due to micro and small enterprises as defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is Rs. 21.94 million (Rs. 0.71 million on 31 March, 2018) and no interest has been paid or is payable during the year under the terms of the MSMED Act, 2006.
(i) The Company generates its entire revenue from contracts with customers for the services at a point in time. The Company is engaged mainly in the business of running laboratories for carrying out pathological investigations of various branches of biochemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Companyâs performance, allocates resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore no infomation has been disclosed in accordance with the requirements of Ind AS 108- âOperating Segment Reportingâ.
(ii) Transaction price allocated to the remaining performance obligations
The Company has applied practical expedient in Ind AS 115 and has accordingly not disclosed information about remaining performance obligations which are part of the contracts that have original expected duration of one year or less and where the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entityâs performance completed to date.
2. Income tax
The Company is subject to Indian Income Tax Act, 1961. The Company is assessed for tax on taxable profits determined for each fiscal year beginning on 1 April and ending on 31 March. For each fiscal year, the respective entitiesâ profit or loss is subject to the higher of the regular income tax payable or the Minimum Alternative Tax (âMATâ).
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India (âIndian GAAPâ) adjusted in accordance with the provisions of the (Indian) Income tax Act, 1961. Such adjustments generally relate to depreciation of property, plant and equipment, disallowances of certain provisions and accruals, deduction for tax holidays and similar exemptions, the use of tax losses carried forward and retirement benefit costs. Statutory income tax is charged at 30% plus a surcharge and education cess. The combined Indian statutory tax rate for the fiscal year 2017-18 was 34.608% and for the fiscal year 2018-19 was 34.944 %.
Income tax returns submitted by companies are regularly subjected to a comprehensive review and challenge by the tax authorities.
* Based on the discussions with the solicitor/ expert opinions taken/status of the case, the management believes that the Company has strong chances of success in above mentioned cases and hence no provision there against is considered necessary at this point in time as the likelihood of liability devolving on the Company is less than probable.
3. Segment Reporting
The Company is engaged solely in the business of running laboratories for carrying out pathological investigations of various branches of bio-chemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Companyâs performance, allocates resources based on the analysis of the various performance indicators of the Company as a single unit. Therefore there is no reportable segment for the Company, in accordance with the requirements of Indian Accounting Standard 108-âOperating Segmentsâ, notified under the Companies (Indian Accounting Standard) Rules, 2015.
Information about geographical areas
a) The Company is domiciled in India. The amount of its revenue from operations from external customers broken down by location of customers is tabulated below:
b) The Companyâs non-current assets (excluding financial assets, non-current tax assets, deferred tax assets and certain other noncurrent assets) broken down by location of customers is tabulated below:
c) Information about major customers
No single customer contributed more than 10% or more to the Companyâs revenue during the years ended 31 March, 2019 and 31 March, 2018.
4. Operating lease arrangements
The Company as a lessee
Office premises and equipment are obtained on operating lease.
The lease terms range from 1-9 years and are generally cancellable at the option of the either party. However, there is lock in period in case of few leases. Future minimum lease payments are as follows
The Company has undertaken various agreements with equipment manufacturer suppliers. As per agreements, the Company will get equipment free of cost and reagents have to be purchased from those specific vendors only. The Company has assessed the conditions as specified in the Ind AS -17 âLeasesâ, for determining whether the said arrangement is under operating lease or finance lease. Based on the evaluation of case, the nature of lease cannot be determined and hence the Company continues to treat the purchase of reagents in consumption cost with no element of rental /interest therein.
The Company as a Lessor
The Company has entered into operating sub-lease arrangements for a premise. These arrangements are cancellable in nature. Lease rental income earned by the Company is disclosed in âOther incomeâ. The Company did not have any non-cancellable operating lease receivables as at 31 March 2019 and 31 March 2018.
5. The Board of Directors in their meeting, held on 12 May, 2017, approved the âScheme of Amalgamationâ of Delta Ria and Pathology Private Limited (Transferor Company), a wholly owned subsidiary, with the Company (Transferee Compay) w.e.f. 1 April, 2017 (the appointed date). As per the said scheme the undertaking of this company shall stand transferred to and vested in the Company on a going concern basis without any further act, deed of matter.
The Scheme envisages transfer of all properties, rights, assets, interests and claims of the Transferor Company to the Transferee Company. Pursuant to the scheme coming into effect, all the equity shares held by the Transferee Company in Transferor Company stand automatically cancelled.
The Honâble New Delhi Bench and Honâble Ahmedabad Bench of the National Company Law Tribunal (âHonâble Tribunalâ or âNCLTâ) sanctioned the Scheme of Amalgamation on October 23, 2018 and December 11, 2018 respectively. The Transferor Company was engaged in business of running laboratories for carrying out pathology investigation of patients in various disciplines of medical sciences.
The amalgamation has been accounted for under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The difference between the carrying value of investments in the books of the Transferee Company and the amount of the net assets of Transferor Company has been adjusted in Capital Reserve as per the scheme. The impact of the amalagamation has been given from the date on which the Transferee Company obtained the control of the Transferor Company i.e. 21 December, 2016 in accordance with the pooling of interests method prescribed under Ind AS 103 Business Combinations.
5. During the year ended 31 March 2018, the Company, as approved in the Board of Directors meeting, held on 7 August, 2017, had acquired 70% equity stake in âDr. Lal Path Labs Bangladesh Pvt. Ltd., Bangladeshâ, engaged in the business of providing pathological diagnostics services in Bangladesh, on a going concern basis through purchase and subscription for a total consideration of Rs. 18.09 million.
During the current year, the Company has made a further investment of Rs. 24.58 million in this subsidiary Company through subscription of additional shares resulting in increase in shareholding by 1.83% to 71.83%.
6. During the current year, two new wholly owned subsidiaries, Dr. Lal Ventures Private Limited and PathLabs Unifiers Private Limited have been incorporated in India. The Company has subscribed to equity share capital amounting to Rs. 1.00 million in each of these subsidiaries.
7. In light of Section 135 of the Companies Act, 2013, the Company has incurred expenses on Corporate Social Responsibility (CSR) aggregating to Rs. 45.02 Million (Previous year Rs. 25.03 Million) for CSR activities.
* The Company has contributed Rs. 45.02 Million (Previous year Rs. 25.00 Million) to âLal PathLabs Foundationâ (formerly known as âDr. Lal PathLabs Welfare Trustâ) which is carrying out Corporate Social Responsibility (CSR) activities on behalf of the Company, as mentioned in Schedule VII of Companies Act, 2013.
8. Employee benefit plans
8.1 Defined contribution plans
The Company operates defined contribution retirement benefit plans for all its qualifying employees. Where employees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.
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 contribution is paid to Provident Fund authorities which is expensed during the year.
The total expense recognised in profit or loss of Rs. 51.26 million (for the year ended 31 March, 2018: Rs. 45.06 million) represents contributions payable to provident fund by the Company at rates specified in the rules of the plans. As at 31 March, 2019, contributions of Rs. 15.47 million (as at 31 March, 2018: Rs. 7.69 million) due in respect of the reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the respective reporting periods.
8.2 Defined benefit plans
Gratuity: The Company operates a funded gratuity benefit plan. Gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary for each completed year of service, subject to a maximum of Rs. 2.00 million. Vesting occurs upon completion of 4.5 years of service.
The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date.
Notes:
1. The discount rate is based on the prevailing market yield of India Government securities as at the balance sheet date for the estimated term of obligations.
2. The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
3. The expected return is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.
Expected contribution in respect of Gratuity for next year will be Rs. 55.00 million (For the year ended 31 March, 2018 Rs. 25.50 million)
8.3 Sensitivity analysis
Below is the sensitivity analysis determined for significant actuarial assumptions for the determination of defined benefit obligations and based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period while holding all other assumptions constant.
9 Financial Instruments
(a) Capital management
The Companyâs objectives when managing capital is to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Company adjusts the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
The Company has investments in fixed deposits with banks, corporates and in mutual fund schemes wherein underlying portfolio is spread across securities issued by different issuers having different credit ratings. The credit risk of investments in debt mutual fund schemes is managed through investment policies and guidelines requiring adherence to stringent credit control norms based on external credit ratings.
The Company has no outstanding debt as at the end of reporting periods. Accordingly, the Company has not calculated gearing ratio as at 31 March, 2019 and 31 March, 2018.
(b) Financial risk management objective and policies
This section gives an overview of the significance of financial instruments for the Company and provides additional information on the balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2.
Fair value of financial assets and financial liabilities that are not measured at fair value
Management considers that the carrying amounts of financial assets and financial liabilities recognised in the Standalone Financial Statements, except note no. 6, approximate their fair values.
(d) Risk management framework
The Companyâs business is subject to several risks and uncertainties including financial risks. The Companyâs documented risk management polices act as an effective tool in mitigating the various financial risks to which the business is exposed to in the course of their daily operations. The risk management policies cover areas such as liquidity risk, interest rate risk, counterparty and concentration of credit risk and capital management. Risks are identified through a formal risk management programme with active involvement of senior management personnel and business managers. The Companyâs risk management process is in line with the corporate policy. Each significant risk has a designated âownerâ within the Company at an appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.
The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Companyâs Audit Committee. The overall internal control environment and risk management programme including financial risk management is reviewed by the Audit Committee on behalf of the board.
The risk management framework aims to:
- improve financial risk awareness and risk transparency
- identify, control and monitor key risks
- identify risk accumulations
- provide management with reliable information on the Companyâs risk situation
- improve financial returns Treasury management
The Companyâs treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.
Treasury management focuses on capital protection, liquidity maintenance and yield maximisation.
Financial risk
The Companyâs Board of Directors approves financial risk policies comprising liquidity, foreign currency, interest rate and counterparty credit risk. The Company does not engage in the speculative treasury activity but seeks to manage risk and optimise interest through proven financial instruments.
(i) Liquidity risk
The Company requires funds for short-term operational needs and has been rated by CRISIL Limited (CRISIL) for its banking facilities.
The Company remains committed to maintaining a healthy liquidity, gearing ratio and strengthening the balance sheet. The maturity profile of the Companyâs financial liabilities and realisability of financial assets based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual cash obligation of the Company.
(ii) Interest rate risk
Fixed rate financial assets are largely interest bearing fixed deposits held by the Company. The returns from these financial assets are linked to bank rate notified by Reserve Bank of India as adjusted on periodic basis. The Company does not charge interest on overdue trade receivables. Trade payables are non interest bearing and are normally settled up to 30 days terms. Mutual fund investments have debt securities as underlying assets and are exposed to floating interest rates.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. For floating rate assets, the analysis is prepared assuming the amount of the assets balance at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents managementâs assessment of the reasonably possible change in interest rates.
(iii) credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and after obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company is exposed to credit risk for receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, investments and loans.
Credit risk management considers available reasonable and supportable forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
For short-term investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. Defined limits are in place for exposure to individual counterparties in case of mutual funds schemes.
None of the Companyâs cash equivalents are past due or impaired. Regarding trade and other receivables, the Company has accounted for impairment based on expected credit losses method as at 31 March, 2019 and 31 March, 2018 based on expected probability of default.
(iv) Price risks
The sensitivity of profit or loss in respect of investments in mutual funds at the end of the reporting period for /-5% change in net asset value is presented below:
Profit before tax for the year ended 31 March, 2018 would increase/decrease by Rs. 4.62 million (for the year ended 31 March, 2018 would increase/ decrease by Rs. 3.04 million) as a result of the changes in net asset value of investment in mutual funds.
10. Share based payments 46.1 Employee Share option Plan-2010
10.1.1 Details of employee share based plan of the company
The shareholders of the Company approved âDr. Lal PathLabs Private Limited Employee Stock Option Plan 2010â (âESOP 2010â) at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 3,808,960 options to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of Rs. 10 each. The Company had granted 3,730,340 options till the year ended 31 March, 2015, all of which have all been vested as at 31 March 2019. As per resolution passed on 21 August, 2015, the Company approved to cease any further grants under the ESOP 2010.
Note 1: All options vest after 48-60 months from date of grant subject to satisfaction of vesting conditions. The exercise period is five years from the date on which the Companyâs shares were listed on a recognised stock exchange in India or a period of 10 years from date of respective vesting, whichever period ends later. Options not exercised within exercise period lapses.
10.1.2 Fair value of share options granted in the year
There were no options granted during the years ended 31 March, 2019 and 31 March, 2018.
10.1.3 Share options outstanding at the end of the year
The share options outstanding at the end of the year has a weighted average exercise price of Rs. 306.79 (as at 31 March, 2018: Rs. 295.52) and a weighted average remaining contractual life of 8.29 years (as at 31 March, 2018: 9.29 years)
11. Share based payments
11.1 Restricted Share Option Plan
11.1.1 Details of employee share based plan of the Company
The shareholders of the Company approved âDr. Lal PathLabs Employees Restricted Stock Unit Plan 2016â (âRSU 2016â) at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 12,44,155 Restricted Stock Units (âRSUsâ) to key employees and directors of the Company. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of Rs. 10 each. Under RSU 2016, for the performance year 2016-17, options of Rs. 10 each granted to eligible employees is 225,000 out of which 6,225 options were forfeited on non satisfaction of vesting conditions. For the performance year 2017-18, options of Rs. 10 each granted to eligible employees is 225,716 and 9,602 options were forfeited on non satisfaction of vesting conditions.
Further, for the performance year 2018-19, options of Rs. 10 each granted to eligible employees is 219,132 and 29,366 options were forfeited on non satisfaction of vesting conditions. The Company has accounted for the expense of options proportionately for the period under employee cost on the basis of weighted average fair value.
11.1.2 Share options outstanding at the end of the year
The share options outstanding at the end of the year has a weighted average exercise price of Rs. 10 (as at 31 March, 2018: Rs. 10) and a weighted average remaining contractual life of 6.45 years (as at 31 March, 2018: 6.68 years)
12. Related Party Disclosures
I. Names of related parties and related party relationship
a. Related parties where control exists Subsidiaries
1 Paliwal Diagnostics Private Limited
2 Paliwal Medicare Private Limited
3 Dr. Lal PathLabs International B.V.
4 APL Institute of Clinical Laboratory & Research Private Limited
5 Dr. Lal PathLabs Nepal Private Limited
6 Dr. Lal PathLabs Bangladesh Pvt. Ltd (w.e.f October 16, 2017)
7 Pathlabs Unifiers Private Limited (incorporated on 12 December, 2018)
8 Dr. Lal Ventures Private Limited (incorporated on 10 December, 2018)
b. Entities in which key managerial personnel can exercise significant influence
1 Central Clinical Laboratory
2 Eskay House HUF - Dr. Arvind Lal
c. Key managerial personnel
1 (Hony) Brig. Dr. Arvind Lal - Chairman and Managing Director
2 Dr. Vandana Lal - Director
3 Dr. Om Prakash Manchanda - CEO and Whole time Director
4 Mr. Dilip Bidani - Chief Financial Officer (upto 9 August, 2018)
5 Mr. Ved Prakash Goel - Chief Financial Officer (w.e.f from 10 August, 2018)
6 Mr. Rajat Kalra - Company Secretary
d. Relatives of key management personnel
1 Dr. Archana Lal
(Daughter of (Hony) Brig. Dr. Arvind Lal and Dr. Vandana Lal)
2 Mr. Anjaneya Lal
(Son of (Hony) Brig. Dr. Arvind Lal and Dr. Vandana Lal)
e. other related parties
1 Lal Pathlabs Foundation (formerly Dr. Lal PathLabs Welfare Trust
(Trust to manage and administer corporate social responsibilities of the Group under the Companies Act, 2013)
2 Dr. Lal Pathlabs Limited Group Gratuity Trust ( formerly Dr. Lal Pathlabs Private Limited Group Gratuity Trust) (Trust to manage and administer gratuity liability of the Company)
13. Subsequent to year end, the Company has received a notice dated 22 April, 2019 from the Office of the Commissioner, CGST Gurugram, contending to show cause why service tax (including cess) for an amount of Rs. 2,295.13 million and interest and penalty for the period October, 2013 to June, 2017 should not be levied on the operations of the Company.
The Company is in the process of submitting its response and based on the solicitor/ expertâs opinion taken, the management believes that the grounds of the show cause notice are not tenable and hence no provision is considered necessary.
14. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
15. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
16. The Standalone Financial Statements were approved by the Board of Directors and authorised for issue on 17 May, 2019.
Mar 31, 2018
* The number of shares are after considering the impact of sub-division of shares on 27 March, 2015 of Rs, 100 each into 10 shares of Rs, 10 each.
In addition, the Company has issued total 30,22,024 (31 March 2017: 27,62,184, 1 April, 2016: 23,72,997) equity shares of Rs, 10 each (after considering issue of bonus shares and sub-division of shares of Rs, 100 each into Rs, 10 each), including 19,18,757 (31 March, 2017: 19,18,757, 1 April, 2016: 19,18,757) equity shares issued to Dr Lal PathLabs Employee Welfare Trust, during the period of five years immediately preceding the reporting date on exercise of options granted under the Employee Share Option Plan, 2005 and 2010.
(vi) Share options granted under the Company''s employee share options plans
(a) The shareholders of the Company approved ''Dr. Lal PathLabs Private Limited Employee Stock Option Plan 2010'' ("ESOP 2010") at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 38,08,960 options (after considering bonus shares issued during the previous year and subdivision of shares of '' 100 each into 10 shares of Rs, 10 each) to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of Rs, 10 each. As per resolution passed on 21 August, 2015, the Company approved to cease further grants under the ESOP 2010. Refer to note 49 for details of options granted, vested and issued under the ESOP 2010.
(b) The Company, vide resolution dated 11 May, 2015 approved ''Dr. Lal PathLabs Private Limited Employee Share Purchase Scheme 2015'' ("ESPS 2015"), a performance based share purchase scheme entitling eligible employees to purchase equity shares of the Company. The number of equity shares entitled to be purchased by an employee under ESPS 2015 is calculated based on the employee''s performance incentive during the year divided by the market value per equity share as on 1 April of every year. The shares shall be purchased by eligible employees from Dr. Lal PathLabs Employee Welfare Trust ("EWT Trust") under the ESPS 2015 and shall have a lock in period of 2 years from the end of the respective performance year. As per resolution passed on 29 July, 2016, the Company approved to cease further grants under the ESPS 2015. Refer to note 49 for details of shares issued to employees under ESPS 2015.
(c) The shareholders of the Company approved ''Dr. Lal PathLabs Employees Restricted Stock Unit Plan 2016'' (''RSU 2016'') at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 1,244,155 Restricted Stock Units ("RSUs") to key employees and directors of the Company. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of '' 10 each. Refer to note 49 for details of RSUs granted, vested and issued under RSU 2016.
*Represents difference between the employee share based compensation cost booked and the average cost of equity shares issued under the share options scheme to the eligible employees.
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in general reserve will not be reclassified subsequently to profit or loss.
The above reserve relates to share options granted by the Company to its employee share option plans. Further information about share based payments to employees is set out in Note 49.
* Tax on interim equity dividend paid during the year is after adjusting corporate dividend tax of '' 1.63 million (previous year ended 31 March, 2017 Rs, 2.71 million) paid by a subsidiary company on dividend paid to the Company during the year.
In respect of the year ended 31 March, 2018, the directors propose that a dividend of Rs, 3.00 per share (previous year ended 31 March, 2017 Rs, 1.70 per share) be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The proposed equity dividend is payable to all holders of fully paid equity shares. The total estimated equity dividend to be paid is Rs, 250.00 million.
The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on requirements of Companies Act, 2013. Refer Note 19 for details of equity dividend declared.
The Company in the previous years had bought back its equity shares and as per requirement of section 77 of Companies Act, 1956, nominal value of the shares so purchased was transferred to the capital redemption reserve.
During the year ended 31 March, 2012, the Company had constituted EWT Trust to acquire, hold and allocate/transfer equity shares of the Company to eligible employees from time to time on the terms and conditions specified under respective plans. The financial statements of the EWT Trust has been included in the financial of the company.
Equity shares of the Company purchased from employees and secondary market from time to time in the earlier years and held by EWT as at 31 March, 2018 aggregated to 10,54,098 equity shares (31 March, 2017: 15,43,668 equity shares and 1 April, 2016: 15,48,903 equity shares) of Rs, 10 each.
Note:
Trade payables are non- interest bearing and are normally settled upto 30 days terms.
Based on the information available with the Company, the balance due to micro and small enterprises as defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is Rs, 0.71 million (Rs, 0.28 million on 31 March, 2017; Rs, 0.66 million on
1 April, 2016) and no interest has been paid or is payable during the year under the terms of the MSMED Act, 2006.
34 Income tax
The Company is subject to Indian Income Tax Act, 1961. The Company is assessed for tax on taxable profits determined for each fiscal year beginning on 1 April and ending on 31 March. For each fiscal year, the respective entities'' profit or loss is subject to the higher of the regular income tax payable or the Minimum Alternative Tax ("MAT").
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India ("Indian GAAP") adjusted in accordance with the provisions of the (Indian) Income tax Act, 1961. Such adjustments generally relate to depreciation of property, plant and equipment, disallowances of certain provisions and accruals, deduction for tax holidays and similar exemptions, the use of tax losses carried forward and retirement benefit costs. Statutory income tax is charged at 30% plus a surcharge and education cess. The combined Indian statutory tax rate for the fiscal year 2016-17 was 34.608% and for the fiscal year 2017-18 was 34.608 %.
Income tax returns submitted by companies are regularly subjected to a comprehensive review and challenge by the tax authorities.
* Based on the discussions with the solicitor/ expert opinions taken/status of the case, the management believes that the Company has strong chances of success in above mentioned cases and hence no provision there against is considered necessary at this point in time as the likelihood of liability devolving on the Company is less than probable.
2.Segment Reporting
The Company is engaged solely in the business of running laboratories for carrying out Pathological investigations of various branches of bio-chemistry, hematology, histopathology, microbiology, electrophoresis, immuno-chemistry, immunology, virology, cytology, other pathological and radiological investigations.
The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company''s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore there is no reportable segment for the Company, in accordance with the requirements of Indian Accounting Standard 108- ''Operating Segments'', notified under the Companies (Indian Accounting Standard) Rules, 2015."
c) Information about major customers
No single customers contributed more than 10% or more to the Company''s revenue during the years ended 31 March, 2018 and 31 March, 2017.
3. Operating lease arrangements
The Company as a lessee
Office premises and equipment are obtained on operating lease. The lease terms range from 1-9 years and are generally cancellable at the option of the either party. However, there is lock in period in case of few leases. Future minimum lease payments are as follows:
The Company has undertaken various agreements with equipment manufacturer suppliers. As per agreements, the Company will get equipment free of cost and reagents have to be purchased from those specific vendors only. The Company has assessed the conditions as specified in the Ind AS -17 ''Leases'', for determining whether the said arrangement is under operating lease or finance lease. Based on the evaluation of case, the nature of lease cannot be determined and hence the Company continues to treat the purchase of reagents in consumption cost with no element of rental /interest therein.
The Company as a Less or
The Company has entered into operating sub-lease arrangements for a premises. These arrangements are cancellable in nature. Lease rental income earned by the Company is disclosed in ''Other income''. The Company did not have any non-cancellable operating lease receivables as at 31 March 2018, 31 March 2017 and 1 April 2016.
4. The Board of Directors in their meeting, held on 12 May, 2017, approved the "Scheme of Amalgamation" of Delta Ria and Pathology Private Limited with the Company w.e.f. 1 April, 2017 (the appointed date). As per the said scheme the undertaking of this company shall stand transferred to and vested in the Company on a going concern basis without any further act, deed of matter. The scheme of amalgamation is subject to approval by the National Company Law Tribunal and other statutory approvals.
5. During the year ended 31 March, 2017, the Company had acquired 10% additional equity stake in its existing two subsidiaries - Paliwal Diagnostic Private Limited (PDPL) and Paliwal Medicave Private Limited (PMPL). Pursuant to the acquisition, the Company holds 80% stake in both the subsidiaries. The Company had made payment of Rs, 137.77 million in previous year as consideration for purchase of additional stake.
6. During the year ended 31 March, 2017, the Company subscribed to the equity share capital of a wholly owned foreign subsidiary, Dr. Lal PathLabs Nepal Private Limited, Nepal, for a consideration of NRS 40.00 million (Rs, 25.05 million) consisting of 4,00,000 Shares of NRS 100.
7. During the year ended 31 March, 2017, the Company has acquired 100% equity stake in "Delta Ria and Pathology Private Limited", engaged in the business of providing pathological diagnostics services in Bhopal, on a going concern basis for a purchase consideration of Rs, 34.09 Million. The Company had made payment of Rs, 23.80 million in previous year against consideration for purchase of Investment. The balance consideration was payable, along with 10% interest per annum which was paid in current year.
8. During the current year, the Company, as approved in the Board of Directors meeting, held on 7 August, 2017, has acquired 70% equity stake in "Dr. Lal PathLabs Bangladesh Pvt. Ltd., Bangladesh", engaged in the business of providing pathological diagnostics services in Bangladesh, on a going concern basis through purchase and subscription for a total consideration of Rs, 18.09 million.
* Company has contributed Rs, 25.00 Million (Previous year Rs, 18.75 Million) to Dr. Lal PathLabs Welfare Trust which is carrying out Corporate Social Responsibility (CSR) activities as mentioned in Schedule VII of Companies Act 2013
9. Employee benefit plans
10. Defined contribution plans
The Company operates defined contribution retirement benefit plans for all its qualifying employees. Where empoyees leave the plans prior to full vesting of the contributions, the contributions payable by the Company are reduced by the amount of forfeited contributions.
Employee benefit under defined contribution plan comprising of provident fund is recognized based on the amount of obligation of the Company to contribute to the plan. The contribution is paid to Provident Fund authorities which is expensed during the year.
The total expense recognized in profit or loss of Rs, 45.06 million (for the year ended 31 March, 2017: Rs, 45.29 million) represents contributions payable to provident fund by the Company at rates specified in the rules of the plans. As at 31 March, 2018, contributions of Rs, 7.69 million (as at 31 March, 2017: Rs, 7.85 million) due in respect of 2017-2018 (2016-2017) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the respective reporting periods.
11 Defined benefit plans
Gratuity: The Company operates a funded gratuity benefit plan. Gratuity liability arises on retirement, withdrawal, resignation, and death of an employee. The aforesaid liability is calculated on the basis of 15 days salary for each completed year of service, subject to a maximum of Rs, 2.00 million. Vesting occurs upon completion of 4.5 years of service.
The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date.
Notes:
1. The discount rate is based on the prevailing market yield of India Government securities as at the balance sheet date for the estimated term of obligations.
2. The estimate of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
3. The expected return is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.
47 Related Party Disclosures
I. Names of related parties and related party relationship
a. Related parties where control exists
i. Subsidiaries
1 Paliwal Diagnostics Private Limited
2 Paliwal Medicare Private Limited
3 Dr. Lal PathLabs International B.V.
4 APL Institute of Clinical Laboratory & Research Private Limited
5 Dr. Lal PathLabs Nepal Private Limited (since August 23, 2016)
6 Delta Ria and Pathology Private Limited (since December 21, 2016)
7 Dr. Lal PathLabs Bangladesh Pvt. Ltd (since October 16, 2017)
b. Entities in which key managerial personnel can exercise significant influence
1 Central Clinical Laboratory
2 Eskay House HUF - Dr. Arvind Lal
c. Key managerial personnel
1 (Hony) Brig. Dr. Arvind Lal - Chairman and Managing Director
2 Dr. Vandana Lal - Director
3 Dr. Om Prakash Manchanda - CEO and Whole time Director
4 Mr. Dilip Bidani - Chief financial officer
5 Mr. Rajat Kalra - Company Secretary
d. Relatives of key management personnel
1 Dr. Archana Lal
(Daughter of (Hony) Brig. Dr. Arvind Lal and Dr. Vandana Lal)
2 Mr. Anjaneya Lal
(Son of (Hony) Brig. Dr. Arvind Lal and Dr. Vandana Lal)
e. Other related parties
1 Dr. Lal PathLabs Welfare Trust
(Trust to manage and administer corporate social responsibilities of the group under the Companies Act, 2013)
2 Dr. Lal Pathlabs Private Limited Group Gratuity Trust
(Trust to manage and administer gratuity liability of the company)
48 Financial Instruments
(a) Capital management
The Company''s objectives when managing capital is to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Company adjusts the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
The Company has investments in fixed deposits with banks, corporate and in mutual fund schemes wherein underlying portfolio is spread across securities issued by different issuers having different credit ratings. The credit risk of investments in debt mutual fund schemes is managed through investment policies and guidelines requiring adherence to stringent credit control norms based on external credit ratings.
The Company has no outstanding debt as at the end of reporting periods. Accordingly, the Company has not calculated gearing ratio as at 31 March, 2018, 31 March, 2017 and 1 April, 2016.
(b) Financial risk management objective and policies
This section gives an overview of the significance of financial instruments for the Company and provides additional information on the balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2.
* Short-term marketable securities not traded in active markets are determined by reference to quotes from the financial institutions; for example: Net asset value (NAV) for investments in mutual funds declared by mutual fund house.
Fair value of financial assets and financial liabilities that are not measured at fair value
Management considers that the carrying amounts of financial assets and financial liabilities recognized in the Standalone Financial Statements, except note no. 6, approximate their fair values.
(d) Risk management framework
The Company''s business is subject to several risks and uncertainties including financial risks. The Company''s documented risk management polices act as an effective tool in mitigating the various financial risks to which the business is exposed to in the course of their daily operations. The risk management policies cover areas such as liquidity risk, interest rate risk, counterparty and concentration of credit risk and capital management. Risks are identified through a formal risk management programme with active involvement of senior management personnel and business managers. The company''s risk management process is in line with the Corporate policy. Each significant risk has a designated ''owner'' within the company at an appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.
The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Company''s Audit Committee. The overall internal control environment and risk management programme including financial risk management is reviewed by the Audit Committee on behalf of the board.
The risk management framework aims to:
- improve financial risk awareness and risk transparency
- identify, control and monitor key risks
- identify risk accumulations
- provide management with reliable information on the Company''s risk situation
- improve financial returns
Treasury management
The Company''s treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyses exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk. Treasury management focuses on capital protection, liquidity maintenance and yield maximization.
Financial risk
The Company''s Board approves financial risk policies comprising liquidity, foreign currency, interest rate and counterparty credit risk. The Company does not engage in speculative treasury activity but seeks to manage risk and optimize interest through proven financial instruments.
(i) Liquidity risk
The Company requires funds for short-term operational needs and has been rated by CRISIL Limited (CRISIL) for its banking facilities in line with Basel II norms.
The Company remains committed to maintaining a healthy liquidity, gearing ratio and strengthening the balance sheet. The maturity profile of the Company''s financial liabilities and reliability of financial assets based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual cash obligation of the company.
The following table details the Company''s expected maturity for its non-derivative financial assets. The information included in the table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
(ii) Interest rate risk
Fixed rate financial assets are largely interest bearing fixed deposits held by the Company. The returns from these financial assets are linked to bank rate notified by Reserve Bank of India as adjusted on periodic basis. The Company does not charge interest on overdue trade receivables. Trade payables are non interest bearing and are normally settled up to 30 days terms. Mutual fund investments have debt securities as underlying assets and are exposed to floating interest rates.
(iii) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and after obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company is exposed to credit risk for receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, investments and loans.
Credit risk management considers available reasonable and supportable forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
For short-term investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. Defined limits are in place for exposure to individual counterparties in case of mutual funds schemes.
None of the Company''s cash equivalents are past due or impaired. Regarding trade and other receivables, the Company has accounted for impairment based on expected credit losses method as at 31 March, 2018, 31 March, 2017 and 1 April, 2016 based on expected probability of default.
(iv) Price risks
The sensitivity of profit or loss in respect of investments in mutual funds at the end of the reporting period for /-5% change in net asset value is presented below:
Profit before tax for the year ended 31 March, 2018 would increase/decrease by '' 3.04 million (for the year ended 31 March, 2017 would increase/ decrease by '' 3.01 million) as a result of the changes in net asset value of investment in mutual funds.
49 Share based payments
49.1 Employee Share Option Plan-2010
49.1.1 Details of employee share based plan of the Company
The shareholders of the Company approved ''Dr. Lal PathLabs Private Limited Employee Stock Option Plan 2010'' ("ESOP 2010") at the Annual General Meeting held on 20 August, 2010 to grant a maximum of 38,08,960 options to specified categories of employees of the Company. Each option granted and vested under the ESOP 2010 shall entitle the holder to acquire 1 equity share of '' 10 each. The Company had granted 35,68,160 options till the year ended 31 March, 2014, all of which have all been vested before the transition date. The Company granted additional 1,62,180 options on 23 January, 2015 under ESOP 2010, of which interest as on the transition date. As per resolution passed on 21 August, 2015, the Company approved to cease any further grants under the ESOP 2010.
Note 1: All options vest after 48-60 months from date of grant subject to satisfaction of vesting conditions. The Exercise Period is five years from the date on which the Company''s shares were listed on a recognized stock exchange in India or a period of 10 years from date of respective vesting, whichever period ends later. Options not exercised within exercise period lapses.
49.1.2 Fair value of share options granted in the year
There were no options granted during the years ended 31 March, 2017 and 31 March, 2018.
49.1.3 Movements in share options during the year
The reconciliation of share options outstanding at the beginning and end of the year:
49.1.5 Share options outstanding at the end of the year
The share options outstanding at the end of the year has a weighted average exercise price of Rs, 295.52 (as at 31 March, 2017: Rs, 178.47) and a weighted average remaining contractual life of 9.29 years (as at 31 March, 2017: 9.32 years).
49.2 Employee Share Purchase Scheme
49.2.1 Details of employee share based plan of the Company
The Company, vide resolution dated 11 May, 2015 approved the Dr. Lal PathLabs Private Limited Employee Share Purchase Scheme 2015 ("ESPS 2015") which is a performance based plan entitling eligible employees to seek transfer of Equity Shares from the Employee Welfare Trust, which is determined upon evaluation of their performance during the year and the fair market value of the Equity Shares as on 1 April of every year. The transfers from the Employee Welfare Trust would be adjusted against a performance based amount which is determined in accordance with ESPS 2015 and transferred by the Company to the Employee Welfare Trust. The shares purchased under the Scheme by the employees shall have a lock in period of 2 years from the end of the respective performance year. ESPS 2015 came into effect on 1 April, 2014 and was terminated on 30 June, 2017.
49.2.2 Fair value of share options granted in the year
There were no options granted during the years ended 31 March, 2017 and 31 March, 2018.
49.2.3 Movements in share options during the year
The reconciliation of share options outstanding at the beginning and end of the year:
49.2.4 Share options exercised during the year
No share options were exercised during the year.
49.3 Restricted Share Option Plan
49.3.1 Details of employee share based plan of the Company
The shareholders of the Company approved ''Dr. Lal PathLabs Employees Restricted Stock Unit Plan 2016'' (''RSU 2016'') at the Annual General Meeting held on 28 July, 2016 to grant a maximum of 12,44,155 Restricted Stock Units (""RSUs"") to key employees and directors of the Company. Each RSU granted and vested shall entitle the holder to acquire 1 equity share of Rs, 10 each. Under RSU 2016, for the performance year 2016-17, Options of Rs, 10 each granted to eligible employees is 2,25,000 out of which 6,225 Options were forfeited on non satisfaction of vesting conditions. The Company has accounted for the expense of options proportionately for the period under employee cost on the basis of weighted average fair value.
Further, for the performance year 2017-18, Options of Rs, 10 each granted to eligible employees is 2,25,716 and 9,602 Options were forfeited on non satisfaction of vesting conditions. The Company has accounted for the expense of options proportionately for the period under employee cost on the basis of weighted average fair value.
The following share- based payment arrangements were in existence during the currend and prior years:
Note 1: All options vest after 1 year but within 4 years of date of grant subject to satisfaction of vesting conditions. The Exercise Period is five years from the date of respective vesting or such other shorter period as may be decided by the Nomination and Remuneration Committee from time to time. Options not exercised within exercise period lapses.
49.3.2 Fair value of share options granted in the year
The fair value of the options, calculated by an external valuer, was estimated on the date of grant using the Black-Scholes model with the following significant assumptions:
49.3.5 Share options outstanding at the end of the year
The share option outstanding at the end of the year has a weighted average exercise price of Rs, 10 (as at 31 March, 2017: Rs, 10) and a weighted average remaining contractual life of 6.68 years (as at 31 March, 2017: 6.84 years)
50 First-time Ind AS adoption reconciliations
These are the CompanyRs,s first Standalone Financial Statements prepared in accordance with Ind AS.
The accounting policies set out in note 2 have been applied in preparing the Standalone Financial Statements for the year ended 31 March 2018, the comparative information presented in these Standalone Financial Statements for the year ended 31 March, 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the Company''s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in Standalone Financial Statements prepared in accordance with the applicable accounting standards as prescribed under the provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
The Company has prepared the opening balance sheet as per Ind AS as of 1 April , 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company. The Company has applied the following transition exemptions in Ind AS 101 :
(a) Deemed cost for property, plant and equipment and intangible assets
In accordance with Ind AS transitional provisions, the Company opted to consider previous GAAP carrying value of property, plant and equipment and other intangible assets as deemed cost on transition date.
(b) Business combination
In accordance with Ind AS transitional provisions, the Company opted not to restate business combinations which occurred prior to the transition date.
(c) Share based payments
The Company is allowed to apply Ind AS 102 Share-based payment to equity instruments that remain unvested as of transition date. The Company has elected to avail this exemption and apply the requirements of Ind AS 102 to all such grants where the options have not been vested. Accordingly, these options have been measured at fair value as against intrinsic value under previous GAAP.
The excess of employee share based compensation expense measured using fair value over the cost recognized under previous GAAP using intrinsic value has been adjusted in ''Share option outstanding account'', with the corresponding impact taken to the retained earnings as on the transition date.
(d) Leases
In accordance with Ind AS transitional provisions, the Company opted to determine whether an arrangement existing at the date of transition contains a lease on the basis of facts and circumstances existing at the date of transition rather than at the inception of the arrangement.
(e) Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1 April, 2016 (the transition date).
(f) Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
(g) Assessment of embedded derivatives
The Company has assessed whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date when there has been a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract.
Notes:
1. As the presentation requirements under previous GAAP differ from Ind AS, the previous GAAP information has been regrouped for ease and facilitation of reconciliation with Ind AS.
2. The financial information of the Company for the year ended 31 March, 2017 and the transition date opening balance sheet as at 1 April, 2016 included in these standalone Ind AS financial statements, are based on the statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 as amended, audited by the predecessor auditor and have been restated to comply with Ind AS.
Notes to the reconciliation
(a) Under the previous GAAP, dividends on equity shares recommended by the Board of Directors after the end of the reporting period but before the Financial Statements were approved for issue were recognized in the Financial Statements as a liability. Under Ind AS, such dividends are recognized when approved by the members in the Annual General Meeting. The effect of this change is an increase in total equity with a corresponding decrease in provisions as on 31 March, 2017 and as on 1 April, 2016. This does not have any impact on the Statement of Profit and Loss for the year ended 31 March, 2017.
(b) Under the previous GAAP, deposits placed and loans to employees at below market interest rate were measured at transaction value, net of provisions, if any. Under Ind AS, they are measured at amortized cost using effective interest method, less impairment, if any. The effect of this change has resulted in an increase in equity as at 1 April, 2016 and 31 March, 2017. It has also increased other income and rental expenses for the year ended 31 March, 2017.
(c) Under the previous GAAP, deposits received were measured at transaction value, net of provisions, if any. Under Ind AS, they are measured at amortized cost using effective interest method, less impairment, if any. The effect of this change has resulted in an increase in equity as at 1 April, 2016 and 31 March, 2017. It has also resulted in a reduction in fee to collection centreâs and increase in interest cost for the year ended 31 March 2017.
(d) Under the previous GAAP, all rent escalations were equalized on a straight line basis over the operating lease period. Under Ind AS, rent escalations expected to compensate inflationary increases are not required to be equalized. The effect of this change has resulted in reversal of rent equalization reserve to opening retained earnings as at 1 April 2016. Further, changes to rent equalization reserve for the year ended 31 March, 2017 has been adjusted through rental expenses for the year.
(e) Under the previous GAAP, goodwill on business purchase and amalgamation was amortized on a straight line basis over a period of five years. Under Ind AS, such goodwill is carried at cost less accumulated impairment, if any. Also, on transition to Ind AS, goodwill is required to be assessed for impairment. Accordingly, on transition date, impairment losses on account of excess of goodwill over recoverable amount of the cash generating unit to the extent identified has been charged off against opening retained earnings as at 1 April, 2016.
Further, goodwill amortized under previous GAAP has been reversed in the statement of profit and loss for the year ended 31 March, 2017.
(f) The various transitional adjustments have deferred tax implications which have been account for by the Company. Deferred tax adjustments have been recognized in relation to the underlying transaction either in retained earnings or other comprehensive income, on the date of transition.
(g) Under the previous GAAP, advance rentals paid for land lease were disclosed under property, plant and equipment and amortized to profit and loss over the operating lease period. Under Ind AS, all lease arrangements are classified as operating or finance lease based on transfer of risks and rewards and the period of use relative to the economic life. The effect of this change has resulted in reclassification of amounts from property plant and equipment to other financial assets on transition date (1 April, 2016) and as at 31 March, 2017. Further, depreciation expenses for the year ended 31 March, 2017 has been reclassified to rental expenses.
(h) Under previous GAAP, actuarial gains and losses were recognized in profit or loss. Under Ind AS, the actuarial gains and losses forming part of remeasurement of the net defined benefit liability / asset is recognized in other comprehensive income. Consequently, the tax effect of the same has also been recognized in other comprehensive income under Ind AS instead of profit or loss. This change does not affect total equity, but there is a increase in profit before tax for the year ended 31 March, 2017.
(i) Under the previous GAAP, investment in mutual funds were classified as long-term or current investments based on the intended holding period and reliability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value.
Under Ind AS, these investments are required to be classified as at fair value through profit or loss (FVTPL) and measured at fair value. The resulting fair value changes of FVTPL investments are recognized in profit and loss. Accordingly, the fair value changes upto the transition date has been adjusted in opening retained earnings as at the date of transition and fair value changes for the year needed 31 March 2017 has been accounted for in Statement of Profit and Loss.
(j) Under previous GAAP, costs of equity settled share-based payments (ESOPs) was recognized using the intrinsic value method. Under Ind AS, such costs are recognized based on the fair value of ESOPs as on the grant date. The effect of this change has resulted in an increase of employee costs for the year ended 31 March 2017 with no change in equity.
(k) Under Ind AS, the financial statement of the Trust have been included in the financial statements of the Company as in substance the ESOP Trust functions as an extension of the Company. Consequently, the cash flow statement and balance sheet have changed to the extent of balances included in the Financial Statements from the trust.
12 The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
13 There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
14 The Standalone Financial Statements were approved by the Board of Directors and authorized for issue on 14 May, 2018.
Mar 31, 2017
1. Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of Rs. 10 per share, Previous year ( Rs. 10 per share). Each holder of equity shares is entitled to one vote per equity share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31st March 2017, the amount of per share interim dividend recognized as distribution to equity shareholders is Rs. 1.30, (Previous year Rs. Nil) and the amount of per share final dividend recognized as distribution to Equity shareholders is Rs. Nil, (Previous year Rs. 2.45).
2. Terms/ rights attached to convertible, participating preference shares("CCPS")
During the previous year on November 13, 2015, Convertible, participating preference shares were converted into equity shares of Rs. 10 each.
3. Segment Information
Primary segments: Business Segment
The Company is solely engaged in the business of running laboratories for carrying out Pathological investigations of various branches of Bio-chemistry, Hematology, Histopathology, Microbiology, Electrophoresis, Immuno-chemistry, Immunology, Virology, Cytology, other pathological and radiological investigations. The entire operations are governed by the same set of risks and returns and hence have been considered as representing a single business segment. The said treatment is in accordance with the guiding principles enunciated in the Accounting Standard 17 on Segment Reporting as notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013.
Secondary Segments: Geographical Segments
The analysis of geographical segment is based on geographical location of its customers.
The following table shows the distribution of the Company''s consolidated revenue and trade receivables by geographical market:
4. Gratuity and other post employment benefit plans
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months.
The following tables summaries the components of net benefit expense recognized in the statement of profit and loss and amounts recognized in the balance sheet for the gratuity plan.
5. Employee Stock Option Plan
In terms of approval of shareholders accorded at the Annual General Meeting held on August 20, 2010 the Company formulated Dr. Lal PathLabs Pvt. Ltd. Employee Stock Option Plan 2010 ("Plan") for specified categories of employees of the Company. As per the Plan, 3,808,960 Stock Options (after considering bonus shares issued during the previous year and subdivision of shares of Rs. 100 each into 10 shares of Rs. 10 each) can be issued to specified categories of employees of the Company. Each option, upon vesting, shall entitle the holder to acquire 1 equity share of Rs. 10. As per resolution passed by the Company on August 21, 2015 there would not be any further grant under the ESOP Plan 2010. Details of the scheme are as under:
Stock Options granted:
The weighted average fair value of the Company''s shares under the stock option plan granted to the employees as at 31.03.2017 is Rs. 967.55. The same has been taken based on the closing price as reported by www.nseindia.com.
In FY 2011-12, Dr. Lal PathLabs Employee Welfare Trust" ("Trust") was constituted, inter alia, for the purpose of acquiring equity shares of the Company, to hold the shares and to allocate/ transfer these shares to eligible employees of the Company from time to time on the terms and conditions specified under the Plan.
The Company has given interest free loans of Rs. 42,52,48,602 (March 31, 2016: Rs. 43,29,03,732) to the said Trust which in turn has purchased 19,15,331 equity shares (March 31, 2016: 19,15,331 equity shares) of Rs. 10 each from employees of the Company. The Company has not consolidated the financial statements of the Trust in the standalone financial statements of the Company.
29 (b) Employee Share Purchase Scheme
The Company, vide resolution dated May 11, 2015 approved the Dr. Lal PathLabs Private Limited Employee Share Purchase Scheme 2015 ("ESPS 2015") which is a performance based plan entitling eligible employees to seek transfer of Equity Shares from the Employee Welfare Trust ("EWT"), which is determined upon evaluation of their performance during the year and the fair market value of the Equity Shares as on April 1 of every year. The transfers from the EWT would be adjusted against a performance based amount which is determined in accordance with ESPS 2015 and transferred by the Company to the EWT. The shares purchased under the Scheme by the employees shall have a lock in period of 2 years from the end of the respective performance year. ESPS 2015 came into effect on April 1, 2014 and shall continue to remain in force unless terminated.
6. Restricted Stock Option Plan
In terms of approval of shareholders accorded at the Annual General Meeting held on July 28, 2016, the Company has formulated Dr. Lal PathLabs Employees Restricted Stock Unit Plan 2016 ("RSU 2016" or the ""Plan"") for grant of Restricted Stock Units (""Options"") to key employees & directors of the company. As per the Plan, maximum number of Options which can be granted to specified categories of employees of the Company are 12,44,155. Each option, upon vesting, shall entitle the holder to acquire 1 equity share of Rs. 10. RSU 2016 came into effect on July 28, 2016 and shall continue to remain in force unless terminated or all of Options available for issuance under RSU 2016 have been issued & exercised, whichever is earlier.
Under RSU 2016, for the performance year 2016-17, Options of Rs. 10 each granted to eligible employees is 2,25,000 out of which 6,225 Options were forfeited on non satisfaction of vesting conditions. The Company has accounted for the liability of Options proportionately for the period under Employee salaries on the basis of weighted average fair value.
7: Options granted under RSU 2016 would vest not before one year and not later than four years from the date of grant of such Options, which means 25% of options granted will become due for vesting on each anniversary of date of grant.
8.The Exercise Period shall be five years from the date of respective vesting or such other shorter period as may be decided by the Nomination and Remuneration Committee from time to time.
9.Vesting Conditions:
10. Time Based Vesting Condition: 50% of Options due for vesting as on relevant date of vesting shall vest automatically subject to employee continuously remaining employed by the Company during the vesting period and is on the rolls of the Company on the date of vesting in undersigned state.
11. Up to balance 50% of Options due for vesting as on relevant date of vesting shall vest on the basis of Company Performance Factor. The Company ""Performance Factor"" is determined by the weighted average of two business KPIs (Gross Revenue & EBITDA with equal weightage) for the performance period. The performance period shall refer to the financial year prior to the date of vesting.
12. Assets taken on Operating Leases
Office premises and equipment are obtained on operating lease. The lease terms are ranging from 1-20 years and are generally cancellable at the option of the Company. However, there are lock in period in case of few leases.
13. During the current year, the Company has acquired 100% equity stake in "Delta Ria and Pathology Private Limited", engaged in the business of providing pathological diagnostics services in Bhopal, on a going concern basis for a purchase consideration of Rs. 3,40,00,000.
The Company has made payment of Rs. 2,38,00,000 in current year against consideration for purchase of Investment. The Investments have been recorded at full consideration and the balance consideration of Rs. 1,02,00,000 has been shown as ''Creditors against purchase of Investment'' in Note No. 6 under Trade Payables and Other Liabilities'' in current year. The balance consideration is payable, along with 10% interest per annum w.e.f. December 21st Rs.2016, after 12 months from the date of signing of the agreement.
14. During the current year, the Company has acquired 10% additional equity stake in its existing two subsidiaries - Paliwal Diagnostic Private Limited (PDPL) & Paliwal Medicave Private Limited (PMPL). Pursuant to acquisition, the Company holds 80% stake in both the subsidiaries. The Company has made payment of Rs. 13,77,66,800 in current year as consideration for purchase of additional stake.
15. The Company had, during the previous year, formed a wholly owned foreign subsidiary, Dr. Lal PathLabs Nepal Private Limited, Nepal, with an issued capital of NRS 4,00,00,000 consisting of 4,00,000 Shares of NRS 100. During the current year, the Company has subscribed for Equity Share Capital of NRS 4,00,00,000 (equivalent Rs. 2,50,48,532) consisting of 4,00,000 shares of NRS 100. Further, during 2013 14, wholly owned foreign subsidiary Dr. Lal PathLabs International B.V., Amsterdam, with an issued capital of EUR 1,00,000 consisting of 10,000 shares of EUR 10 each was formed, however, no amount has been subscribed till the year end.
16. As per the Scheme of Amalgamation ["the Scheme"] u/s 391/394 of the Companies Act, 1956 among the Company and its erstwhile wholly owned subsidiary Companies [Transferor Companies], the title deeds for immovable properties, licenses, agreements, bank accounts, loan documents etc. of the Transferor Companies are in the process of being transferred in the name of Company.
17. The amortization of goodwill arising pursuant to Scheme of Amalgamation has been treated as deductible expense under Section 32 of the Income Tax Act, 1961 on the basis of judicial pronouncements and legal opinion obtained by the Company.
18. The Board of Directors in their meeting held on May 12, 2017 have approved the "Scheme of Amalgamation" of Delta Ria and Pathology Private Limited with the Company w.e.f. April 1, 2017 (the appointed date). As per the said scheme the undertaking of this company shall stand transferred to and vested in the Company on a going concern basis without any further act, deed of matter.
19. Previous year Comparatives
During the current year as well as during the previous year, the Company has set up new/acquired laboratories at various locations in India and some new patient service centers at various locations. Hence, current year''s figures are not strictly comparable with those of the previous year.
Previous year''s figures have been regrouped / rearranged wherever necessary to conform to current year classification.
Mar 31, 2016
(A) Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of Rs,
10 per share, Previous year (Rs, 10 per share). Equity Shares of Rs,
100 each were subdivided into 10 shares of Rs, 10 each on March 27,
2015. Each holder of equity shares is nettled to one vote per equity
share. The Company declares and pays dividends in Indian Rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31, 2016, the amount of per share interim
dividend recognized as distribution to equity shareholders was Nil ,
(previous year Rs, 1.5336) and the amount of per share final dividend
recognized as distribution to Equity shareholders is Rs, 2.45,
(Previous year Nil).
As per records of the Company, including its register of shareholders/
members and other declarations received from shareholders regarding
beneficial interest, the above shareholding represents both legal and
beneficial ownerships of shares.
(b) Shares reserved for issue under options
For details of shares reserved for issue under the employee stock
Option (ESOP) plan of the Company, please refer note 29
In addition, the Company has issued total 61,81,957 (March 31, 2015:
47,66,800) equity shares of Rs, 10 each (after considering issue of
bonus shares and sub-division of shares of Rs, 100 each into Rs, 10
each), including 19,18,757 (March 31, 2015: 7,81,760) equity shares
issued to Dr Lal PathLabs Private Limited Employee Welfare Trust,
during the period of five years immediately preceding the reporting
date on exercise of options granted under the Employee Stock Option
Plan, 2005 and 2010.
* The number of shares after considering the impact of sub-division of
shares of Rs, 100 each into 10 shares of Rs, 10 each.
(c) Terms/ rights attached to convertible, participating preference
shares("CCPS")
The Company had only one class of CCPS fully participating with equity
having par value of Rs, 10 per share, Previous year (Rs, 10 per share).
Preference Shares of Rs, 100 each were subdivided into 10 shares of Rs,
10 each on March 27, 2015 and converted into equity shares of Rs, 10
each on November 13, 2015.
During the year ended March 31, 2016, the amount of per share interim
dividend recognized as distribution to preference shareholders is Nil,
(Previous year Rs, 1.5336).
*Includes Rs, 41,84,47,743 (Previous year Rs, 19,92,74,659) being
difference between fair value of shares and exercise price of options,
routed through liability towards Employee Stock Options Compensation
Outstanding.
**Including on 66,000 equity shares issued subsequently against share
application money received pending allotment as on March 31, 2016
*66,000 equity shares of face value of Rs, 10 each at a premium of Rs,
100.80 per share against exercise of options. These equity shares shall
rank pari-passu with the existing equity shares of the Company.
Application money was received on 28th March 2016.
1. Segment Information
Primary segments: Business Segment
The Company is solely engaged in the business of running laboratories
for carrying out Pathological investigations of various branches of
Bio-chemistry, Hematology, Histopathology, Microbiology,
Electrophoresis, Immuno-chemistry, Immunology, Virology, Cytology,
other pathological and radiological investigations. The entre operators
are governed by the same set of risks and returns and hence have been
considered as representing a single business segment. The said
treatment is in accordance with the guiding principles enunciated in
the Accounting Standard 17 on Segment Reporting as notified under
Section 133 of the Companies Act, 2013, read together with paragraph 7
of the Companies (Accounts) Rules, 2014 and the relevant provisions of
the Companies Act, 2013.
Secondary Segments: Geographical Segments
The analysis of geographical segment is based on geographical location
of its customers.
2. Gratuity and other post employment Benefit plans
The Company has a defend Benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service
or part thereof in excess of six months. The scheme is funded.
The following tables summarise the components of net Benefit expense
recognized in the statement of Profit and loss and amounts recognized
in the balance sheet for the gratuity plan.
The overall expected rate of return on assets is determined based on
the market prices prevailing on that date, applicable to the period
over which the obligation is to be settled.
3.(a) Employee Stock Option Plan
In terms of approval of shareholders accorded at the Annual General
Meeting held on August 20, 2010 the Company formulated Dr. Lal PathLabs
Pvt. Ltd. Employee Stock Option Plan 2010 ("Plan") for specified
categories of employees of the Company. As per the Plan, 38,08,960
Stock Options (after considering bonus shares issued during the
previous year and subdivision of shares of Rs, 100 each into 10 shares
of Rs, 10 each) can be issued to specified categories of employees of
the Company. Each Option, upon vesting, shall nettle the holder to
acquire 1 equity share of Rs, 10. As per resolution passed by the
Company on August 21, 2015 there would not be any further grant under
the ESOP Plan 2010. Details of the scheme are as under:
Note 1 : Prior to Listing of the Company''s equity shares, the options
granted under the Plan were considered as cash settled as per the
provision of the said Plan. As per the Plan, upon Listing of the
Company''s shares, there is no obligation on the Company to provide
liquidity to employees. Accordingly, the Plan has been considered as
Equity Settled post the Listing of the Company''s shares on December 23,
2015
Note 2: Exercise period shall be a period of five years from the date
on which the Company''s shares are listed on a recognized stock exchange
in India, or a period of ten years from the date of vesting, whichever
period ends later.
Note 3: Before Listing, as the exercise period was dependent on the
Listing of the Company''s share, contractual life of the options was not
determinable.
Stock Options granted:
The weighted average fair value of the Company''s shares under the stock
Option plan granted to the employees as at 31.03.2016 is Rs, 923.30.
The same has been taken based on the closing price as reported by
www.nseindia.com.
In FY 2011-12, Dr. Lal PathLabs Pvt. Ltd. Employee Welfare Trust"
("Trust") was constituted, inter alia, for the purpose of acquiring
equity shares of the Company, to hold the shares and to allocate/
transfer these shares to eligible employees of the Company from time to
time on the terms and conditions specified under the Plan. The Company
has given interest free loans of Rs, 43,29,03,732 (March 31, 2015: Rs,
34,44,20,478) to the said Trust which in turn has purchased 19,15,331
equity shares (March 31, 2015: 16,03,200 equity shares) of Rs, 10 each
from employees of the Company. The Company has not consolidated the
financial statements of the Trust in the standalone financial
statements of the Company.
4. (b) Employee Share Purchase Scheme
The Company, vide resolution dated May 11, 2015 approved the Dr. Lal
PathLabs Private Limited Employee Share Purchase Scheme 2015 ("ESPS
2015") which is a performance based plan nettling eligible employees to
seek transfer of Equity Shares from the Employee Welfare Trust ("EWT"),
which is determined upon evaluation of their performance during the
year and the fair market
value of the Equity Shares as on April 1 of every year. The transfers
from the EWT would be adjusted against a performance based amount which
is determined in accordance with ESPS 2015 and transferred by the
Company to the EWT. The shares purchased under the Scheme by the
employees shall have a lock in period of 2 years from the end of the
respective performance year. ESPS 2015 came into effect on April 1,
2014 and shall continue to remain in force unless terminated.
Under ESPS 2015, for the performance year 2015-16, maximum number of
equity shares of Rs, 10 each to be granted to eligible employees is
97,977 out of which 16,062 were forfeited. The Company has accounted
for the liability proportionately for the period under Employee
salaries. Further, for the performance year 2014-15, 37,412 equity
shares of Rs, 10 each were transferred to eligible employees by the EWT
under the Scheme. The Company accounted for the cost of Rs, 1,36,51,749
in the previous year at the Fair Value of Rs, 311.30 per share on total
number of 37,412 equity shares issued under the scheme in the current
year (net of 6,442 equity shares adjusted towards TDS liability of
certain employees)."
* Based on the discussions with the solicitor/ expert opinions
taken/status of the case, the management believes that the Company has
strong chances of success in above mentioned cases and hence no
provision there against is considered necessary at this point in time
as the likelihood of liability devolving on the Company is less than
probable.
5. Unhedged foreign currency exposure
Particulars of unheeded foreign currency exposure as at the reporting
date
Particulars Amount
Import trade payable (USD) NIL (March 31, 2015: USD 52,040.45 )
NIL (March 31, 2015: Rs, 32,87,215)
Capital Creditors (USD) USD 53,800(March 31, 2015: NIL)
(Rs, 35,68,710 (March 31, 2015: NIL)
Export trade receivable (SAR) SAR1,99,032 (March 31, 2015:
SAR 3,16,495.23)
(Rs, 35,06,256 (March 31,
2015: Rs, 51,49,322))
Export trade receivable(KD) KD 726.29 (March 31, 2015: KD 1001.70)
(Rs, 1,58,727 (March 31, 2015:
Rs, 2,06,861))
Export trade receivable (NGN) NGN Nil (March 31, 2015:
NGN 1,57,259.87)
(Rs, Nil (March 31, 2015: Rs, 58,817))
Export trade receivable (OMR) OMR 2,096.13 (March 31,
2015: OMR 5,837.64)
(Rs, 3,58,692 (March 31,
2015: Rs, 9,34,525))
Export trade receivable (USD) USD 18,932.76
(March 31, 2015: USD 8,085.20)
(Rs, 12,51,435
(March 31, 2015: Rs, 5,02,096))
Export trade receivable(QAR) QAR 29,967.24
(March 31, 2015: QAR 35,190.36)
(Rs, 5,43,543 (March 31,
2015: Rs, 5,97,589))
(*as per audited financial statements)
This Company has incurred loss during the current financial year.
However there was Profit in the previous two financial years. This
being a long term strategic investment and also in view of the
projected Profitable operators of the Company, the management is of the
view that the diminution in the value of the investment is temporary in
nature and hence no provision is required to be made there against.
6. The Company has, during the current year, purchased business of
"Dr.Bhanudas Yashwant Shinagare" engaged in the business of providing
pathological Diagnostics services in Pune, on a going concern basis for
a purchase consideration of Rs, 1,25,00,000 .The Company has made
payment of Rs, 62,50,000 against consideration payable for purchase of
the business. The balance consideration of Rs, 62,50,000 has been shown
as ''Creditors against purchase of business'' in Note No. 6 under Trade
Payables and Other Liabilities. The balance consideration is payable
along with 9% interest per annum w.e.f. May''2015 after 12 months from
the date of signing of the agreement. Further, if the gross turnover of
the purchased business for the one year period commencing from May''2015
exceeds the amount specified in the agreement, the consideration will
increase proportionately subject to a maximum increase of Rs,
25,00,000. The amount of Rs, 97,62,754 paid over and above the value
of net assets acquired of Rs, 27,37,246 has been recognized as
Goodwill.
7. The Company has, during the year, formed a wholly owned foreign
subsidiary, Dr. Lal PathLabs Nepal Private Limited, Nepal, with an
issued capital of NRS 4,00,00,000 consisting of 400,000 Shares of NRS
100. Further, during 2013-14, wholly owned foreign subsidiary Dr. Lal
PathLabs International B.V., Amsterdam, with an issued capital of EUR
1,00,000 consisting of 10,000 shares of EUR 10 each was formed.
However, no amount has been subscribed till the year end.
*Including Rs, 17,81,790 recovered from shareholders who have offered
their shares in the IPO. **Including Rs, 2,43,14,040 recovered from
shareholders who have offered their shares in the IPO.
The loans have been utilized for Meeting their working capital
requirements. For details of investments made by the Company refer
note no 10.
8. Amalgamation
I. Pursuant to the Scheme of Amalgamation ["the Scheme"] under Section
391/394 of the Companies Act 1956 among the Company and its erstwhile
wholly owned subsidiary companies, namely Sanya Chemicals Private
Limited ("Sanya"), Amolak Diagnostics Private Limited ("Amolak"), Medex
Healthcare Private Limited ("Medex"), Medicave Diagnostic Centre
Private Limited ("MDCPL") and Medicave Medical Systems Private Limited
("MMSPL") [Transferor Companies] approved by respective Hon''ble High
Courts, the Transferor Companies stand merged with the Company w.e.f.
April 1, 2013 (the appointed date).
*Company has contributed Rs, 35,00,000 to Dr. Lal PathLabs Welfare
Trust which is carrying out Corporate Social Responsibility (CSR)
actives as mentioned in Schedule VII of Companies Act 2013.
9. During the year, the Company completed its Inital Public Offering
(IPO) comprising an Offer for Sale of 1,16,00,000 Equity Shares of face
value of Rs, 10/- each for cash at a price of Rs, 550 per equity share
including a share premium of Rs, 540 per Equity Share (except for
Retail Individual Bidders for whom the Offer Price was Rs, 535 per
Equity Share pursuant to a discount of Rs, 15 offered on the Offer
Price.)
The equity shares of the Company were listed on The National Stock
Exchange of India and Bombay Stock Exchange on December 23, 2015.
The Company has incurred total Offer expenses aggregating to Rs,
44,05,83,691 including Rs, 1,62,02,161 paid to statutory auditor for
certification etc. The expenses of this Offer include, among others,
underwriting and lead management fees, selling commissions, Syndicate
Banks'' commissions/ fees, printing and distribution expenses, legal
fees, Offer related advertisements and publicity, registrar and
depository fees and Listing fees. Other than Listing fees, which has
been borne by the Company, all costs, fees and expenses with respect to
the Offer has been shared between the Selling Shareholders, in
proportion to their respective proportion of the Offered Shares.
10. Disclosure required under Section 186(4) of the Companies Act 2013
Included in loans and advance are certain inter-corporate deposits the
particulars of which are disclosed below as required by Section 186(4)
of Companies Act 2013
Note: Approval is not required for Dr. Lal PathLabs Private Limited
("the transferee company") as per the order dated April 02, 2014 of the
Hon''ble High Court of Delhi. Accordingly, there is no requirement of
fling the sanction order with the ROC, NCT of Delhi and Haryana as per
Section 391-394 of the Companies Act, 1956. However, the Company has
fled the order with the ROC, NCT of Delhi and Haryana. The Company has
electronically fled E Form INC-28 on July 3, 2015 and resubmitted the
said form along with the order on July 9, 2015 for the purpose of
intimating the ROC, NCT of Delhi and Haryana regarding the scheme and
getting the approval for increase in authorised share capital. The
Company has received a comment from ROC, NCT of Delhi and Haryana that
there is a delay in fling E Form INC-28 and that the Company may ask
for condemnation for delay.
The Company is legally opined that the Scheme of Amalgamation is
effective from May 21, 2015, the date on which the order of the Hon''ble
High Court of Rajasthan (i.e. last order) was fled with the ROC,
Rajasthan.
II. The title deeds for immovable properties, licenses, agreements,
bank accounts, loan documents etc. of the Transferor Companies are in
the process of being transferred in the name of the Company.
III. As per the scheme of Amalgamaton, the authorised share capital of
the Parent Company will automatically increase by merging the
authorised share capital of Transferor Companies with the Parent
Company without any further act of deed on the part of the Parent
Company on the effective date. In order to intimate the ROC, NCT of
Delhi and Haryana regarding the Scheme and to get its authorised share
capital increased as per the scheme, the Company has fled E form INC-28
on July 3 2015 and resubmitted the said form on July, 9 2015.
IV The amortization of goodwill arising pursuant to Scheme of
Amalgamation has been treated as deductible expense under Section 32 of
the Income Tax Act, 1961 on the basis of judicial pronouncements and
legal opinion obtained by the Company.
11. Previous year Comparatives''
During the current year as well as during the previous year, the
Company has set up new/acquired laboratories at various locations in
India and some new patent service centres'' at various locations. Hence,
current year figures are not strictly comparable with those of the
previous year.
Previous year''s figures have been regrouped / rearranged wherever
necessary to conform to current year classification.
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