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Notes to Accounts of Narayana Hrudayalaya Ltd.

Mar 31, 2023

The values assigned to the key assumptions given in the table above represent managementâs assessment of future trends and based on historical data from both external and internal sources. Discount rate reflects the current market assessment of the risks specific to a Cash Generating Unit (CGU). The discount rate is estimated based on the capital asset pricing method for the CGU. The cash flow projections included specific estimates developed using internal forecasts. The planning horizon reflects the assumptions for short-to-midterm market developments. The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount is based would not cause the aggregate carrying amount to materially exceed the aggregate recoverable amount of the cash generating unit.

4 (v) Notes

(a) includes land in possession and occupation of the Company to the extent of 9 acre 25 guntas out of total 17 acres 44 guntas in Bangalore allotted by Karnataka Industrial Areas Development Board (âKIADBâ) to the Company on lease cum sale basis for which the Company is yet to execute the sale deed as at 31 March 2023.

(b) During the year 2021-22,the Company has purchased a land to the extent of 14 khatha 22 chatak 47 sq ft land including building structure at South 24-Parganas, Thana: Purba Jadabpur, Corporation: Kolkata municipal corporation, Mukundapur, Road Zone : (E.M. Bye pass -- R.N. Tagore Hospital) Premises No: 1491 and 1563, Ward No: 109 from three individuals namely Mr.uttam kundu,Mr.Manoj Kumar Jaiswal and Mr. Suji Kumar Jaiswal for which the Company executed the sale deed on 31 October 2021.

(c) Represents the cost of construction of building on land obtained on lease at Kolkata, Ahmedabad, Jaipur and Jamshedpur.

(d) Leasehold land represents land allotted by various government authorities/ agencies in the states of Gujarat and Rajasthan. There are certain conditions including setting up of hospitals with certain capacity within certain timelines as specified in the terms of the allotment.

(e) During the year 2022-23, the Company has purchased a land measuring 1.0347 Hectares in Survey No. 323/2, 323/6 (Old Sy. No. 323/3), 324, 323/4( Old Sy. No. 323/2), 326/3, 326/4, 326/5, 326/6 and 326/8 at the said district as per the sale deed executed on 8 September 2022.

(f) As at 31 March 2023, property, plant and equipments with a carrying amount of H 6,763.42 million (previous year: H 5,263.94 million) are subject to first charge to secure bank loans.

(g) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) Rights, preferences and restrictions attached to equity and preference shares :

The Company has equity shares having a nominal value of H 10 each. Accordingly, all equity shares rank equally with regard to dividend and share in the Companyâs residual assets. Each holder of equity shares is entitled to one vote per share. The equity shares are entitled to receive dividend as declared from time to time. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.

The Company has authorized preference shares having a nominal value of H 10 each. Preference shares are non-convertible, noncumulative, non-participating and carry preferential right vis-a-vis equity shares of the Company with respect to payment of dividend and repayment in case of winding up or repayment of capital and shall carry voting rights as per the provisions of Section 47(2) of the Companies Act, 2013.

Capital reserve

Capital reserve was created at the time of acquisition of hospital in Barasat.

Securities premium

Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013

Treasury Shares

Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from other equity.

Share options outstanding

The Company has established share based payment for eligible employees of the Company, its subsidiaries or an associate. Also refer note 39 for further details on these plans.

General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriate purposes.

Cash flow hedge reserve

Company has entered into a interest rate swap agreement, This cash flow hedge reserve reflects the fluctuations of the fair value of such swap.

Dividend

The Board of Directors have recommended a dividend of H 2.5 (Rupees Two and a half) per share, for the year ended 31st March, 2023, for approval of shareholders of the Company at the ensuing Annual General Meeting (AGM). The payment of said dividend will be made within the statutorily prescribed time of 30 days from the date of approval by the Shareholders at the ensuing AGM.

II Term loans from Others :

(i) Interest free term loan from Cisco Systems Capital (India) Private Limited has been obtained. Based on the applicable effective interest rate, the present value of loan as at 31 March 2023 amounting to NIL (previous year: H 1.11 million ) has been recognised in the books of accounts.The loan is fully repaid in the current year.

(ii) Term loan from CDC group PLC: H NIL (previous year : H 36.10 million ) carry a interest of 6.5% p.a Repayable in one instalment after 5 years from the utilisation date i.e 26 February 2019. The loan is fully repaid in the current year.

*During the financial year 2013-14, the Company had received capital grant from the Assam Government amounting to H 220.00 million for purchase of fixed assets for operating the hospital in Assam. The Company has recognized this grant as deferred income at fair value which is being amortised over the useful life of the fixed assets in proportion in which the related depreciation is recognized.

**During the financial year 2017-18, 2018-19 & 2022-23, the Company had received capital grant in the form of EPCG licence from Government of India amounting to H 6.10 million,? 89.65 million & H 85.33 million respectively, for import of capital goods subject to fulfilment of export obligation in next 6 years. The Company has recognized this grant as deferred government liability for EPCG licence at fair value. The company will recognize deferred grant income in the statement of profit and loss as per Ind AS.

*** During the financial year 2021-22, the Company has received capital grants from various corporates amounting to H 38.48 million for purchase of medical equipmentâs as agreed. The Company has recognized this grant as deferred income at fair value which is being amortised over the useful life of the Property, plant and equipment in proportion in which the related depreciation is recognized.

Guarantees:

The Company has issued corporate guarantee to its subsidiaries amounting to H 7,305.13 million (previous year H 7,657.36. million) (refer note 45) and total loan outstanding as on 31 March 2023 is H 2,157.17 million ( previous year : H 1,693.15 million). Within the overall limits of the Corporate guarantee, the Company has also committed towards making additional capital contribution in certain subsidiaries, as applicable under the relevant loan agreements.

Note:

A. For financial year 2012-13, the Company has received a notice proposing levy of customs duty on import of âSurgical Microscopesâ along with accessories classifying it under CTH 9018 9000 of Customs Tariff Act 1975.Against the demand of H 1.74 million, the Company has deposited H 1.33 million with the department and filed an appeal before the Commissioner of Customs ( Appeals).

B. Income Tax

a) For assessment year 2012-13 the Company had received an assessment order under section 143 (3) of the Income Tax Act, 1961 on 31st March 2015. The company may have an additional liability of H 12.59 million on account of differential tax provision. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)). CIT(A) had issued an order in favour of the Company. The department then filed an appeal with the Income Tax Appellate Tribunal (ITAT) against the order of CIT(A). ITAT had issued an order in favour of the Company and referred to Assessing office. The assessing officer issued revised assessment order u/s.143(3)r.w.s 254 on 27/09/2022 for disallowing of unpaid leave encashment of H 8.19 million. The company may have an additional liability of H 2.57 million as per the assessment order received however while issuing the assessment order the assessing officer has not given benefit of MAT credit of H 1.58 million. The company is planning to file rectification against the assessment order.

b) For assessment year 2013-14 the Company had received an assessment order under section 143 (3) of the Income Tax Act, 1961 on 25 March 2016. The company may have an additional liability of H 6.69 million on account of differential tax provision. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)).

c) For assessment year 2016-17 the company had received a notice 142(1) of the Income tax act, 1961 on 28 Mar 2018 asking company to submit certain documents on 6 April 2018. Company has replied on 6 April 2018, 24 July 2018, 29 August 2018, 7 December 2018. The department has issued a assessment order u/s 143(3) on 29 December 2018 demanding a sum of H 1.06 million. Against this demand, the Company had paid H 0.3 million under protest on 11 February 2019 and filed an appeal with the Commissioner of Income Tax (Appeals) (CIT(A)).

d) For assessment year 2017-18 the Company has received an assessment order under section 143 (3) of the Income Tax Act, 1961 on 27 December 2019. The company may have an additional liability of H 20.93 million on account of differential tax provision. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)), which is pending as at 31 March 2023.

e) For assessment year 2018-19 the Company has received an assessment order under section 143 (3) of the Income Tax Act, 1961 on 24 May 2021. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)), which is pending as at 31 March 2023.

f) For assessment year 2019-20, the Company has recognised additional contingent liability to the extent of H 4.71 million duly taking into consideration the requirements under Appendix C to Ind AS 12, including the Managementâs assessment of the probability of acceptance of the Companyâs tax positions by the taxation / appellate authorities.During this financial year the company received revised assessment order for the AY 2012-13 and AY 2014-15 in which the Assessing Officer has allowed expenditures which was disallowed in previous assessment orders. Hence the contingent liability of INR 4.71 million is not required to recognise

g) For assessment year 2020-21 the Company has received an assessment order under section 143 (3) of the Income Tax Act,1961 on 23/09/2022. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)), which is pending as at 31 March 2023.

C. For the period July 2017 to March 2018 the company has received assessment order form the GST authority of West Bengal state under section 73(5) under GST Act, 2017. As per the order the company may have additional liability H18.75 million on account of differential tax provisions. The company is planning to file appeal against the assessment order.

D. Based on the advise of its legal counsel, the Company believes that other disputes, lawsuits and claims, including commercial matters, which arise from time to time in the ordinary course of business and are outstanding as at 31 March 2023 will not have any material adverse effect on its financial statements for the year ended 31 March 2023.

32 Segment information

Operating segments

Ind AS 108 "Operating Segment" ("Ind AS 108") establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas, and major customers. Based on the "management approach" as defined in Ind AS 108, Operating segments are to be reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).The CODM evaluates the Company''s performance and allocates resources on overall basis. The Companyâs sole operating segment is therefore âMedical and Healthcare Servicesâ. Accordingly, there are no additional disclosures to be provided under Ind AS 108, other than those already provided in the financial statements.

Entity wide disclosures -Information about geographical areas

Geographical information analyses the company''s revenue and non current assets by the Company''s country of domicile (i.e. India) and other countries. In presenting the geographical information, segment revenue has been based on the geographical location of the customers and segment assets which have been based on the geographical location of the assets.

34 Employee benefits

Defined contribution plan

The Company makes contributions towards provident fund and employee state insurance to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits.

The amount recognised as an expense towards contribution to Provident Fund and Employee State Insurance for the year aggregated to H 291.32 million (previous year: H 264.08 million)

Defined benefit plan

The Company operates post-employment defined benefit plan that provide gratuity. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half monthâs salary for each year of completed service at the time of retirement/exit. The gratuity fund is administered by a trust formed for this purpose and is managed by Kotak Life Insurance. The Companyâs obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation carried out by an independent actuary using the projected unit credit method. The Company recognizes actuarial gains and losses immediately in the statement of profit and loss. The Company accrues gratuity as per the provisions of the Payment of Gratuity Act, 1972 as applicable as at the balance sheet date.

36 Leases

The Company has adopted Ind AS 116 âLeasesâ, effective annual reporting period beginning April 1, 2019. Ind AS 116 replaces Ind AS 17

- Leases and related interpretation and guidance. The Company has applied the standard to its leases, using the modified retrospective

approach, with the cumulative effect of initially applying the Standard, recognized on the date of initial application (April 1,2019). Comparative information has not been restated.

Accordingly, the Company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate and the right of use asset at its carrying amount as if the standard had been applied since the commencement date of the lease, but discounted at the Companyâs incremental borrowing rate at the date of initial application.

In adopting Ind AS 116, the Company has applied the below practical expedients:

The Company has applied a single discount rate to a portfolio of leases with reasonably similar characteristics

The Company has treated the leases with remaining lease term of less than 12 months as if they were "short term leases

The Company has not applied the requirements of Ind AS 116 for leases of low value assets

The Company has used hindsight, in determining the lease term if the contract contains options to extend or terminate the lease

Basic earnings per share

The calculation of basic earnings per share for the year ended 31 March 2023 was based on profit/(loss) attributable to equity shareholders of H 2656.39 million (previous year: 1335.98 million) and weighted average number of equity shares outstanding 203,069,835 (previous year: 202,955,918).

Diluted earnings per share

The calculation of diluted earnings per share for the year ended 31 March 2023 was based on profit/(loss) attributable to equity shareholders of H 2656.39 million (previous year: (H 1335.98 million) and weighted average number of equity shares outstanding after adjustment for effects of all the dilutive potential equity shares.

During the year ended 31 March 2016, the Company introduced the NH ESOP 2015 ("NH ESOPâ) for the benefit of the employees of the Company, its subsidiaries and associates, as approved by the Board of Directors in its meeting held on 12 September 2015. NH ESOP 2015 provides for the creation and issue of 2,040,000 share options that would eventually convert into equity shares of H 10 each in the hands of the employees of the Company, its subsidiaries and associate. The options are to be granted to the eligible employees as per the eligibility criteria as determined by the Nomination and Remuneration Committee at its sole discretion. In case of plan one, The share options vest in a graded manner over a period of four years and are exercisable in one or more tranches within a period of four years from the date of first vesting, failing which the options shall lapse. In case of plan two, The share options vest in a graded manner over a period of two and half years and are exercisable in one or more tranches within a period of Three years from the date of first vesting, failing which the options shall lapse.

Pursuant to NH ESOP the Company granted 988,787 share options till 31 march 2023 . The Stock compensation cost is computed under the Fair value method. For the year ended 31 March 2023, the Company has recorded stock compensation expenses of H NIL (previous year: H 2.56 million) and liability as on 31 March 2023 is H 6.29 million ( previous year: H 30.19 million).

40 Service Concessionaire Arrangement

The Company had entered into an agreement with National Rural Health Mission, Assam (NRHM) on 16 August 2012 ("effective date") to set up a super specialty hospital in Guwahati and to operate and manage such hospital for a period of 30 years. As per the agreement, NRHM will provide H 220.00 million in three instalments over a period of 1 year during execution of the project besides the existing hospital building on as is where is basis. The Company has received H 220.00 million as it met all the conditions relating to the grants. As per the terms of the agreement, the Company has entered into lease agreement with NRHM for existing building and land for a lease period of 30 years.

Also, as per the agreement not less than 50% of the hospitals beds shall be charged at 1.85% below the National Accreditation Board for Hospitals and Healthcare Providers (NABH) accredited hospital rates applicable. All the surgical, observational and other procedures for which super speciality rates are available in Central Government Health Scheme (CGHS) schedule, such rates quoted in CGHS schedule shall apply and for which it is not available, NABH accredited hospital rates shall apply.

The Company has established a super-speciality hospital providing all the necessary services and for that it has to bear all the expenses in setting up the facilities mentioned in the agreement and thereafter run the hospitals on a day to day basis.

The term of the agreement is to commence on the effective date and will continue until the expiration of 30 years on 15th August 2042. Thereafter, this agreement shall be renewed for such additional periods and on such terms and conditions as may be mutually agreed to by the parties to the agreement. The agreement can be terminated by the both the parties by mutual written agreement or if the other party breach or fail to perform any of its covenants or agreement or if any representation or warranty of the other party under this agreement shall have become untrue.

41 Capital management

The Companyâs policy is to maintain a stable capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors capital on the basis of return on capital employed as well as the debt to total equity ratio. For the purpose of debt to total equity ratio, debt considered is long-term and short-term borrowings. Total equity comprise of issued share capital and all other equity reserves.

42 Acquisition of Orthopaedic and Trauma Hospital (âSparsh Hosur Roadâ Unit) from Shiva and Shiva Orthopaedic Hospital Private Limited

The Company has signed a Business Transfer Agreement (BTA) on September 5, 2022 with Shiva and Shiva Orthopaedic Hospital Private Limited to acquire its Orthopaedic and Trauma Hospital ("Sparsh Hosur Road" Unit), effective from October 1, 2022 mainly engaged in providing Orthopaedic and Trauma healthcare services as a going concern on slump sale basis for an aggregate cash consideration of H 2,000 million.

This acquisition will enable the Company to foray into the Orthopaedic and Trauma specialty at the Narayana Health City Campus, housing two flagship hospitals, namely the cardiac sciences - focussed Narayana Institute of Cardiac Sciences (NICS) and the multispecialty unit i.e., Mazumdar Shaw Medical Centre (MSMC). The acquisition also reinforces the Companyâs focus on multispecialty care, especially orthopaedics and associated trauma and neurosciences segments and further augment its core Bangalore regions to derive synergies from our existing operations.

a) Business Combination

The above transaction qualifies for the Business Combination as per Ind AS 103 - âBusiness Combinationâ and has been accounted by applying the acquisition method wherein identifiable assets acquired and liabilities assumed are fair valued against the fair value of the consideration transferred and resultant intangibles including goodwill recognised.

Measurement of fair values

The carrying value of all financial assets approximates the fair value.

B. Financial risk management

The Companyâs activities expose it to a variety of financial risks: credit risk, market risk and liquidity risk.

(i) Risk management framework

The Companyâs risk management is carried out by a central treasury department under policies approved by the Board of Directors. The Board supervises overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk and use of financial instruments.

(ii) Credit risk

Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions and other financial instruments.

Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom credit has been granted after obtaining necessary approvals for credit. The collection from the trade receivables are monitored on a continuous basis by the receivables team.

The Company establishes an allowance for credit loss that represents its estimate of expected losses in respect of trade and other receivables based on the past and the recent collection trend. The maximum exposure to credit risk as at reporting date is primarily from trade receivables amounting to H 2,145.46 million (previous year: H 2,032.80 million). The movement in allowance for credit loss in respect of trade and other receivables during the year was as follows:

No single customer accounted for more than 10% of the revenue as of 31 March 2023 and 31 March 2022. There is no significant concentration of credit risk.

Credit risk on cash and cash equivalents is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.

(iii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation. In addition, the Company maintains line of credit as stated in Note 16.

The Company has entered into derivative financial instruments with a counter-party (bank) with investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are mainly interest rate swaps. The most frequently applied valuation techniques include swap models using present value calculations. The models incorporate various inputs including the credit quality of counterparties, interest rate curves and forward rate curves of the underlying. As at March 31,2023, the changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.

Exposure to Interest Rate

Companyâs Interest rate rise arises from borrowings. The following table demonstrates the sensitivity on the companyâs profit before tax to a reasonably possible change in interest rates on that position of loans and borrowings affected, with other variables held constant.

Explanation for variances exceeding 25%:

7 Net capital turnover ratio, Net profit ratio and Return on capital employed ratio have increased due to improvement in Revenue,Net profit and EBIT numbers respectively when compared to previous year

45 During the year ended 31 March 2023, the Company had provided guarantee amounting to USD 79 Million for the loan obtained by Health City Cayman Islands (HCCI) from First Caribbean International Bank (FCIB) and signed Loan Agreement and Capital Contribution Agreement. In the event of HCCI defaulting for the third time in the repayment of loan/interest or any dues to FCIB, FCIB would have a right to release the Corporate Guarantee of USD 79 Million given by the Company from the Escrow Agent (refer note 31(c) & 33(c)). In such event, the liability of the Company towards the Corporate Guarantee would be for the entire value of USD 79 Million. As of the date of this balance sheet, HCCI has paid all its dues and has not defaulted in the repayment of any dues and the outstanding loan amount as of 31st March 2023 is USD 23.08 million (previous year USD 17.32 Million).

46 a) The Company incorporated a wholly owned subsidiary, Athma Healthtech Private Limited on June 2, 2022 to engage in software

development, sale and support services for healthcare service providers.

b) The Company incorporated a wholly owned subsidiary, NH Integrated Care Private Limited on January 10, 2023 to carry on the business of healthcare services in the field of health and wellness management. The Company has transferred certain clinics on slump sale basis for a consideration of H 99.12 million effective from close of business hours as on March 31, 2023.

c) Health City Cayman Islands Ltd. (HCCI), wholly owned subsidiary of the Company, incorporated a wholly owned subsidiary, Cayman Integrated Healthcare Limited (CIHL) on September 28, 2022 to carry on integrated healthcare services business.

d) Health City Cayman Islands Ltd. (HCCI), wholly owned subsidiary of the Company, entered into a share purchase agreement on October 13, 2022, pursuant to which HCCI acquired 50,000 ordinary shares of ENT in Cayman Ltd. (EICL), representing the entire share capital of EICL on March 3, 2023 for a consideration of INR 432.81million (USD 5.26 Million). EICL is a Cayman Islands resident company providing complete diagnosis and treatment of ear, nose, and throat conditions."

47 Other Statutory Information

(i) There are no balance outstanding on account of any transaction with companies struck off under Section 248 of the Companies Act 2013 or Section 560 of Companies Act 1956

(ii) The Company do not have any Capital-work-in progress or intangible assets under development whose completion is overdue or has exceeded its cost compared to its original plan.

(iii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies) including foreign entities (intermediaries) with the understanding that intermediary shall:

(a) 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

(b) Provide any guarantee, security or the like to or on behalf of the Ultimate beneficiaries

(iv) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding party) with the understanding (whether recorded in writing or otherwise) that

(a) Directly for indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate beneficiaries) or

(b) Provide any guarantee, security or the like to or on behalf of the Ultimate beneficiaries

(v) The company doesnât have any transactions relating to previously unrecorded income that were surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 (43 of 1961) during the year

(vi) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

Mar 31, 2022

4 (iii) Notes

(i) includes land in possession and occupation of the Company to the extent of 9 acre 25 guntas out of total 17 acres 44 guntas in Bangalore allotted by Karnataka Industrial Areas Development Board (''KIADB'') to the Company on lease cum sale basis for which the Company is yet to execute the sale deed as at 31 March 2022.

(ii) pursuant to clause 7.7 of the Investment Agreement and Clause 3.1 (d) of the Shareholdersâ Agreement (together, âagreementsâ) signed in January 2008 between the Company Promoters and Investors, a Promoter of the Company had the right but not the obligation to require the Company to transfer the land and building (âNH landâ) at no consideration to him. On exercise of the right, the promoter was obligated to lease the asset to the Company for an initial term of 15 years with an extension of 10 years in accordance with the terms of the aforesaid agreements at no consideration. The said land and building was being amortized over a period of 25 years based on the Management''s estimate of the lease term for the above arrangement.

As per the letter dated 26 November 2015 by the Promoter, the above right was waived off by him and accordingly he will not be entitled to exercise the right stated in Clause 3.1 (d) of the said Shareholders'' Agreement. The waiver was subject to the completion of the public offering within a period of one year from the date of receipt of the final observation letter from the Securities and Exchange Board of India on the Draft Red Herring Prospectus filed by the Company. The waiver was to be effective from the date of listing of the Company''s shares on the stock exchanges. To this effect, the said Shareholdersâ Agreement was amended and duly executed by all Shareholders of the Company. On the Companyâs shares being listed on the Bombay Stock Exchange and the National Stock Exchange on 6 January 2016, the Promoterâs right to NH Land ceases to exist thereof.

(iii) includes land in possession and occupation of the Company to the extent of 8088 Sq. Meters known as Plot No.257 B of Bommasandra III Phase Industrial Area situated in Sy. No''s 237, 238 and 239 of Bommasandra Village, Attibele Hobli, Bangalore purchased from Kalapaka Transport Company Private Limited for which the Company executed the sale deed as at 9 October 2019.

(iv) During the year 2021-22,the Company has purchased a land to the extent of 14 khatha22 chatak47 sq ft land including building structure at South 24-Parganas, Thana: Purba Jadabpur, Corporation: Kolkata municipal corporation, Mukundapur, Road Zone : (E.M. Bye pass -- R.N. Tagore Hospital) Premises No: 1491 and 1563, Ward No: 109 from three individuals namely Mr.uttam kundu.Mr.Manoj Kumar Jaiswal and Mr. Suji Kumar Jaiswal for which the Company executed the sale deed on 31 October 2021.

(v) Represents the cost of construction of building on land obtained on lease at Kolkata, Ahmedabad, Jaipur and Jamshedpur.

(vi) As at 31 March 2022, property, plant and equipments with a carrying amount of ? 5,263.94 million (previous year: ? 5,996.82 million) are subject to first charge to secure bank loans.

(vii) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

14 Equity share capital (Contd.)

(ii) Rights, preferences and restrictions attached to equity and preference shares :

The Company has equity shares having a nominal value of H 10 each. Accordingly, all equity shares rank equally with regard to dividend and share in the Company''s residual assets. Each holder of equity shares is entitled to one vote per share. The equity shares are entitled to receive dividend as declared from time to time. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by shareholders.

Capital reserve

Capital reserve was created at the time of acquisition of hospital in Barasat.

Securities premium

Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013 Treasury Shares

Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from other equity.

Share options outstanding

The Company has established share based payment for eligible employees of the Company, its subsidiaries or an associate. Also refer note 39 for further details on these plans General reserve

General reserve is used from time to time to transfer profits from retained earnings for appropriate purposes.

Cash flow hedge reserve

Company has entered into a interest rate swap agreement, This cash flow hedge reserve reflects the fluctuations of the fair value of such swap.

Proposed Dividend

The Board of Directors have recommended a dividend of Re .1 (Rupee One) per share, for the year ended 31st March, 2022, for approval of shareholders of the Company at the ensuing Annual General Meeting (AGM).

II Term loans from Others :

(i) Interest free term loan from Cisco Systems Capital (India) Private Limited has been obtained. Based on the applicable effective interest rate, the present value of loan as at 31 March 2022 amounting to H 1.11 million (previous year: H 5.34 million ) has been recognised in the books of accounts.The loan is unsecured

(ii) Term loan from CDC group PLC: H 36.10 million (previous year : H 36.10 million ) carry a interest of 6.5% p.a Repayable in one instalment after 5 years from the utilisation date i.e 26 February 2019. The loan is unsecured

III Overdraft and Cash Credit facilities

Over Draft from HSBC : Nil (previous year: H 121.84 Million) repayable On Demand. It is secured by subservient charge on specific

movable fixed assets

**During the financial year 2017-18 & 2018-19 the Company had received capital grant in the form of EPCG licence from Government of India amounting to H 6.10 & H 89.65 million respectively, for import of capital goods subject to fulfilment of export obligation in next 6 years. The Company has recognized this grant as deferred government liability for EPCG licence at fair value. The Company will recognize deferred grant income in the statement of profit and loss as per Ind AS.

*** During the financial year 2021-22, the Company has received capital grants from various corporates amounting to H 38.48 million for purchase of medical equipment''s as agreed. The Company has recognized this grant as deferred income at fair value which is being amortised over the useful life of the Property,plant and equipment in proportion in which the related depreciation is recognized.

(ii) Corporate social responsibility

Consequent to the requirements of Section 135 of the Companies Act 2013, the Company has made contributions as stated below. The same is in line with activities specified in Schedule VII of the Companies Act, 2013

The Company''s CSR activities primarily focuses on programs that aims to make a positive difference in the lives of the people by engaging in activities that eliminates or alleviates pain and suffering to the under privileged sections of the society by Promoting healthcare facilities for the upliftment of people at large and creating a positive impact by addressing issues of accessibility and affordability.Promoting educational facilities to help and assist in unfolding the creative potentials and talents of the children and amateurs.

29 Contingent liabilities		(H in million)
Particulars	As at 31 March 2022	As at 31 March 2021
Claims against the Company not acknowledged as debts in respect of:-
a) Customs Duty (refer note A below)	1.74	1.74
b) Entry tax (refer note B below)	-	10.00
c) Income tax (refer note C below)	64.31	64.31

Guarantees:

The Company has issued corporate guarantee to its subsidiaries amounting to C 7,657.36 million (previous year C 3,910.10

million) (refer note 44) and total loan outstanding as on 31 March 2022 is C 1,693.15 million ( previous year : C 2,296.73 million).

Within the overall limits of the Corporate guarantee, the Company has also committed towards making additional capital contribution in

certain subsidiaries, as applicable under the relevant loan agreements.

Note:

A. For financial year 2012-13, the Company has received a notice proposing levy of customs duty on import of ''Surgical Microscopes'' along with accessories classifying it under CTH 9018 9000 of Customs Tariff Act 1975.Against the demand of H 1.74 million , the Company has deposited H 1.33 million with the department and filed an appeal before the Commissioner of Customs ( Appeals).

B. For financial year 2010-11, 2011-12, 2012-13, 2013-14 the Company has received a notice proposing levy of entry tax from Commercial Tax Officer under Entry of Goods into Local Area Act 1999 on account of goods brought in local areas from outside the state of Rajasthan without payment of Entry tax as per the provisions.Based on the Company''s submission, the department has issued an order with a demand of H 10 million along with interest. Against this demand, the Company has deposited H 1.55 million with the department and filed an appeal before the Office of Appellate Authority -II, Commercial Tax.During the year the Company has opted Amnesty scheme to settle the entire demand by depositing H 0.9 million.

C. Income Tax

a) For assessment year 2012-13 the Company had received an assessment order under section 143 (3) of the Income Tax Act, 1961 on 31st March 2015. The Company may have an additional liability of H 12.59 million on account of differential tax provision. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)). CIT(A) had issued an order in favour of the Company. The department then filed an appeal with the Income Tax Appellate Tribunal (ITAT) against the order of CIT(A).

b) For assessment year 2013-14 the Company had received an assessment order under section 143 (3) of the Income Tax Act, 1961 on 25 March 2016. The Company may have an additional liability of H 6.69 million on account of differential tax provision. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)).

c) For assessment year 2016-17 the Company had received a notice 142(1) of the Income tax act, 1961 on 28 Mar 2018 asking Company to submit certain documents on 6 April 2018. Company has replied on 6 April 2018, 24 July 2018, 29 August 2018, 7 December 2018. The department has issued a assessment order u/s 143(3) on 29 December 2018 demanding a sum of H 1.06 million. Against this demand, the Company had paid H 0.3 million under protest on 11 February 2019 and filed an appeal with the Commissioner of Income Tax (Appeals) (CIT(A)).

d) For assessment year 2017-18 the Company has received an assessment order under section 143 (3) of the Income Tax Act, 1961 on 27 December 2019. The Company may have an additional liability of H 20.93 million on account of differential tax provision. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)), which is pending as at 31 March 2022.

e) For assessment year 2018-19 the Company has received an assessment order under section 143 (3) of the Income Tax Act, 1961 on 24 May 2021. The Company may have an additional liability of H 19.39 million on account of differential tax provision. The Company has filed an appeal against order issued by the department with the Commissioner of Income tax (Appeals) (CIT (A)), which is pending as at 31 March 2022.

D. Based on the advise of its legal counsel, the Company believes that other disputes, lawsuits and claims, including commercial matters, which arise from time to time in the ordinary course of business and are outstanding as at 31 March 2022 will not have any material adverse effect on its financial statements for the year ended 31 March 2022.

E. The Company has given letter of support to its subsidiary company, namely Narayana Vaishno Devi Specialty Hospitals Private Limited. Under the letter of support, the Company is committed to provide operational and financial assistance as is necessary for the subsidiary companies to enable them to operate as going concern for a period of at least one year from the balance sheet date (31 March 2022).

30 Commitments

Estimated amounts of contracts remaining to be executed on capital account (net of advances) and other commitments and not provided

for, amounts to ? 1015.07 million (previous year: ? 91.50 million).

32 Segment information

Operating segments

Ind AS 108 "Operating Segment" establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas, and major customers. Based on the "management approach" as defined in Ind AS 108, Operating segments are to be reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).The CODM evaluates the Company''s performance and allocates resources on overall basis. The Companyâs sole operating segment is therefore âMedical and Healthcare Servicesâ. Accordingly, there are no additional disclosures to be provided under Ind AS 108, other than those already provided in the financial statements.

Entity wide disclosures -Information about geographical areas

Geographical information analyses the Company''s revenue and non current assets by the Company''s country of domicile (i.e. India) and other countries. In presenting the geographical information, segment revenue has been based on the geographical location of the customers and segment assets which have been based on the geographical location of the assets.

34 Employee benefits

Defined contribution plan

The amount recognised as an expense towards contribution to Provident Fund and Employee State Insurance for the year aggregated to C 264.08 million (previous year: H 215.05 million)

Defined benefit plan

The Company operates post-employment defined benefit plan that provide gratuity. The gratuity plan entitles an employee, who has rendered at least five years of continuous service, to receive one-half month''s salary for each year of completed service at the time of retirement/exit. The gratuity fund is administered by a trust formed for this purpose and is managed by Kotak Life Insurance. The Companyâs obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation carried out by an independent actuary using the projected unit credit method. The Company recognizes actuarial gains and losses immediately in the statement of profit and loss. The Company accrues gratuity as per the provisions of the Payment of Gratuity Act, 1972 as applicable as at the balance sheet date.

36 Leases

The Company has adopted Ind AS 116 ''Leases'', effective annual reporting period beginning April 1, 2019. Ind AS 116 replaces Ind AS 17 - Leases and related interpretation and guidance. The Company has applied the standard to its leases, using the modified retrospective approach, with the cumulative effect of initially applying the Standard, recognized on the date of initial application (April 1, 2019). Comparative information has not been restated.

In adopting Ind AS 116, the Company has applied the below practical expedients:

The Company has applied a single discount rate to a portfolio of leases with reasonably similar characteristics

The Company has treated the leases with remaining lease term of less than 12 months as if they were "short term leases"

The Company has not applied the requirements of Ind AS 116 for leases of low value assets

The Company has used hindsight, in determining the lease term if the contract contains options to extend or terminate the lease

37 Earnings/ (loss) per share (EPS)

Basic earnings per share

The calculation of basic earnings per share for the year ended 31 March 2022 was based on profit/(loss) attributable to equity shareholders of C1335.98 million (previous year: (C 786.73) million) and weighted average number of equity shares outstanding 202,955,918 (previous year: 202,916,718).

39 Share based payments

During the year ended 31 March 2016, the Company introduced the NH ESOP 2015 ("NH ESOPâ) for the benefit of the employees of the Company, its subsidiaries and associates, as approved by the Board of Directors in its meeting held on 12 September 2015. NH ESOP 2015 provides for the creation and issue of 2,040,000 share options that would eventually convert into equity shares of C 10 each in the hands of the employees of the Company, its subsidiaries and associate. The options are to be granted to the eligible employees as per the eligibility criteria as determined by the Nomination and Remuneration Committee at its sole discretion. In case of plan one, the share options vest in a graded manner over a period of four years and are exercisable in one or more tranches within a period of four years from the date of first vesting, failing which the options shall lapse. In case of plan two, the share options vest in a graded manner over a period of two and half years and are exercisable in one or more tranches within a period of Three years from the date of first vesting, failing which the options shall lapse.

Pursuant to NH ESOP, the Company granted 988,787 share options till 31 March 2022 (previous year: 988,787). The Stock compensation cost is computed under the Fair value method. For the year ended 31 March 2022, the Company has recorded stock compensation expenses of C 2.56 million (previous year: H 6.02 million) and liability as on 31 March 2022 is H 30.19 million ( previous year: C 35.85 million).

Plan-1:- The weighted average remaining contractual life for the stock options outstanding as at 31 March 2022 is nil years (previous year: nil years). The exercise price for the stock options outstanding as at 31 March 2022 is C 10 (previous year : C 10).

Plan-2:- The weighted average remaining contractual life for the stock options outstanding as at 31 March 2022 is 0.5 years (previous year: 1.5 years ). The exercise price for the stock options outstanding as at 31 March 2022 is C 10 (previous year : C 10).

40 Service Concessionaire Arrangement

The Company had entered into an agreement with National Rural Health Mission, Assam (NRHM) on 16 August 2012 ("effective date") to set up a super specialty hospital in Guwahati and to operate and manage such hospital for a period of 30 years. As per the agreement, NRHM will provide H 220.00 million in three instalments over a period of 1 year during execution of the project besides the existing hospital building on as is where is basis. The Company has received C 220.00 million as it met all the conditions relating to the grants. As per the terms of the agreement, the Company has entered into lease agreement with NRHM for existing building and land for a lease period of 30 years.

40 Service Concessionaire Arrangement. (Contd.)

41 Capital management

The Company''s policy is to maintain a stable capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors capital on the basis of return on capital employed as well as the debt to total equity ratio.

For the purpose of debt to total equity ratio, debt considered is long-term and short-term borrowings. Total equity comprise of issued share capital and all other equity reserves.

Measurement of fair values

The carrying value of all financial assets approximates the fair value.

B. Financial risk management

The Company''s activities expose it to a variety of financial risks: credit risk, market risk and liquidity risk.

(i) Risk management framework

The Company''s risk management is carried out by a central treasury department under policies approved by the Board of Directors. The Board supervises overall risk management, as well as policies covering specific areas, such as foreign exchange risk, credit risk and use of financial instruments.

(ii) Credit risk

The Company establishes an allowance for credit loss that represents its estimate of expected losses in respect of trade and other receivables based on the past and the recent collection trend. The maximum exposure to credit risk as at reporting date is primarily from trade receivables amounting to H 2,032.80 million (previous year: H 1,857.14 million). The movement in allowance for credit loss in respect of trade and other receivables during the year was as follows:

No single customer accounted for more than 10% of the revenue as of 31 March 2022 and 31 March 2021. There is no significant concentration of credit risk.

(iii) Liquidity risk

(a) Foreign currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and the respective functional currencies of the Company. The functional currency of Company is H. The currencies in which these transactions are primarily denominated is US dollars.

The Company has entered into derivative financial instruments with a counter-party (bank) with investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are mainly interest rate swaps. The most frequently applied valuation techniques include swap models using present value calculations. The models incorporate various inputs including the credit quality of counterparties, interest rate curves and forward rate curves of the underlying. As at March 31, 2022, the changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.

44 During the year ended 31 March 2018, the Company had provided guarantee amounting to USD 32.5 Million for the loan obtained by Health City Cayman Islands (HCCI) from First Caribbean International Bank (FCIB) and signed Loan Agreement and Capital Contribution Agreement. In the event of HCCI defaulting for the third time in the repayment of loan/interest or any dues to FCIB, FCIB would have a right to release the Corporate Guarantee of USD 32.5 Million given by the Company from the Escrow Agent (refer note 31(c) & 33(c)). In such event, the liability of the Company towards the Corporate Guarantee would be for the entire value of USD 32.5 Million. As of the date of this balance sheet, HCCI has paid all its dues and has not defaulted in the repayment of any dues and the outstanding loan amount as of 31st March 2022 is USD 17.32 million (previous year USD 22.92 Million).

45 The Company has considered the possible impact of known events arising from COVID-19 pandemic and continues to actively manage its business, including taking various initiatives to optimise costs and meet its financial commitments. The Company as of the reporting date does not expect any long term adverse impact of COVID-19 on its ability to recover the carrying value of its current assets and non-current assets including trade receivables, property, plant and equipment and intangible assets and meeting its financial obligations.

46 The Code on Social Security, 2020 ("the Code") which would impact the contributions by the Company towards Provident Fund and Gratuity has received Presidential assent in September 2020. However, the date from which the Code will come into effect has not been notified. The Ministry of Labour and Employment (Ministry) has released draft rules for the Code on November 13, 2020 and has invited suggestions from stake holders which are under active consideration by the Ministry. The Company will complete its evaluation and will give appropriate impact in its standalone financial statements in the period in which the Code becomes effective and the related rules are published.

47 Pursuant to the approval of the Board of Directors of the Company in their meeting held on February 4, 2022, the Company has initiated voluntary liquidation of the wholly owned subsidiary viz. Narayana Institute for Advance Research Private Limited (NIARPL) under Section 59 of the Insolvency and Bankruptcy Code, 2016 and dissolution of the wholly owned subsidiary viz. Narayana Health Institutions Private Limited (NHIPL) under Section 248 of the Companies Act, 2013. The said wholly owned subsidiaries are neither carrying on any operations nor there is any intention to carry on any operations or business of the Company.

48 The Board of Directors, in their meeting on February 5, 2021, had approved the merger of its wholly owned subsidiary Narayana Cayman Holdings Limited, Cayman Islands with its wholly owned stepdown subsidiary Health City Cayman Islands Limited, Cayman Islands with the effective date being April 1,2021. The said merger has been approved by the Registrar of Companies, Cayman Islands.

49 Other Statutory Information