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Accounting Policies of KMC Speciality Hospitals (India) Ltd. Company

Mar 31, 2023

Significant accounting policies

A. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions
of the instruments.

(i) Initial recognition

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial
assets or financial liabilities at fair value through profit or loss are recognized immediately in the Statement of profit
and loss.

(ii) Subsequent measurement
(1) Financial assets

All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value,
depending on the classification of the financial assets, except for investments forming part of interest in subsidiaries /
associates, which are measured at cost.

Classification of financial assets

The Company classifies its financial assets in the following measurement categories:

a) Those to be measured subsequently at fair value (either through other comprehensive income, or through
Statement of profit and loss), and

b) Those measured at amortized cost.

The classification depends on the entity''s business model for managing the financial assets and the contractual terms
of the cash flows.

Amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of
principal and interest are measured at amortized cost. A gain or loss on these assets that is subsequently measured
at amortized cost is recognized in Statement of profit and loss when the asset is derecognized or impaired. Interest
income from these financial assets is included in finance income using the effective interest rate method.

Fair value through other comprehensive income (FVTOCI)

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets cash
flows represent solely payments of principal and interest, are measured at fair value through other comprehensive
income (FVTOCI). Movements in the carrying amount are taken through OCI. When the financial asset is derecognized,
the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of profit and loss and
recognized in other income / (expense).

Fair value through profit or loss (FVTPL)

Assets that do not meet the criteria for amortized cost or FVTOCI are measured at fair value through profit or loss. A gain
or loss on these assets that is subsequently measured at fair value through profit or loss is recognized in the Statement
of profit and loss.

Impairment of financial assets

Expected credit loss (ECL) is the difference between all contractual cash flows that are due to the Company in accordance
with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls).

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition
of impairment loss on the financial assets that are measured at amortised cost e.g., cash and bank balances, investment
in equity instruments of subsidiary companies, trade receivables and loans etc.

At each reporting date, the Company assesses whether financial assets carried at amortised cost is credit-impaired. A
financial asset is ''credit-impaired'' when one or more events that have detrimental impact on the estimated future cash
flows of the financial assets have occurred.

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

> significant financial difficulty of the borrower or issuer;

> the breach of contract such as a default or being past due as per the ageing brackets;

> it is probable that the borrower will enter bankruptcy or other financial re-organisation; or

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

The Company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables. The
application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes
impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets, the Company determines that whether there has been
a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month
ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in
subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit
risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.

Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
asset. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12
months after the reporting date.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense/income in the
statement of profit and loss. ECL for financial assets measured as at amortized cost and contractual revenue receivables
is presented as an allowance, i.e., as an integral part of the measurement of those assets in the financial statements.
The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce
impairment allowance from the gross carrying amount.

Write off policy

The Company writes off a financial asset when there is information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery. Any recoveries made are recognised in Statement of profit
and loss.

(2) Financial liabilities and equity instruments:

Classification as equity or financial liability

Equity and Debt instruments issued by the Company are classified as either financial liabilities or as equity in accordance
with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL.

Equity instruments:

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

Financial liabilities at amortized cost

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at
the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured
at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as
part of costs of an asset is included in the ''Finance costs'' line item.

Financial liabilities at FVTPL

Liabilities that do not meet the criteria for amortized cost are measured at fair value through profit or loss. A gain or
loss on these assets that is subsequently measured at fair value through profit or loss is recognized in the Statement
of profit and loss.

(iii) Derecognition

(1) Derecognition of financial assets

A financial asset is derecognized only when the Company has transferred the rights to receive cash flows from the
financial asset. Where the Company has transferred an asset, it evaluates whether it has transferred substantially all
risks and rewards of ownership of the financial asset. Where the Company has neither transferred a financial asset nor
retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the
Company has not retained control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognised on its balance sheet but retains either
all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.

(2) Derecognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company''s obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognized and the
consideration paid and payable is recognized in Statement of profit and loss.

The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified
terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair
value. The difference between the carrying amount of the financial liability extinguished and the new financial liability
with modified terms is recognised in Statement of profit and loss.

(iv) Offsetting

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

B. Foreign currency transactions and translations

Transactions in foreign currencies are translated into the respective functional currency of company at the exchange
rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of
the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the
exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign
currency are translated into the functional currency at the exchange rate when the fair value was determined. Non¬
monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction. Exchange differences are recognised in Statement of profit and loss,
except for such exchange differences arising from the translation of specific items which are recognised in OCI, as the
case may be.

C. Property, plant and equipment (PPE)

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less
accumulated depreciation and accumulated impairment losses, if any.

Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non¬
refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing
the item to its working condition for its intended use and estimated costs of dismantling and removing the item and
restoring the site on which it is located.

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

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

Any gain or loss on disposal of an item of property, plant and equipment is recognised in Statement of profit and loss.

(ii) Capital work in progress and Capital advances:

Advances paid toward the acquisition of property, plant and equipment outstanding at each balance sheet date are
disclosed as “Capital Advances” under Other Noncurrent Assets and the cost of property, plant and equipment not
ready to use before such date are disclosed under “Capital work in progress”.

(iii) Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the
expenditure will flow to the Company. Costs in nature of repairs and maintenance are recognized in the Statement of
Profit and Loss as and when incurred.

(iv) Depreciation

Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over
their estimated useful lives using the straight-line method, and is generally recognised in the statement of profit and
loss. Assets acquired under finance leases are depreciated over the shorter of the lease term and their useful lives
unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Freehold land is
not depreciated.

Leasehold improvements are being depreciated over the term of the lease, or estimated useful life of the assets,
whichever is lower on a straight line basis. Freehold land is not depreciated.

Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.
Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as
given above best represent the period over which management expects to use these assets.

Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready
for use (disposed of).

Assets individually costing Rs 5,000 and less are fully depreciated in the year of purchase based on the technical
evaluation, the management believes that it represents the relevant useful life of these assets.

D. Intangible assets

(i) Measurement

Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost less
accumulated amortisation and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure is recognised in Statement of profit and loss as incurred.

(iii) Amortisation

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their
estimated useful lives using the straight-line method, and is included in depreciation and amortisation in Statement of
Profit and Loss.

E. Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale
in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.
Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition, investment
property is measured at cost less accumulated depreciation and accumulated impairment losses, if any.

Any gain or loss on disposal of an investment property is recognised in Statement of profit and loss.

The fair values of investment property is disclosed in the notes. The fair value of investment property has been
determined in accordance with the requirements of Ind AS 113 - Fair value measurement.

F. Inventories

Inventory comprises of pharmacy stock and consumables. Pharmacy stock is valued at the lower of cost and net
realisable value including necessary provision for obsolescence. Consumables are valued at cost. Cost comprises
purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition. The
cost of consumables is charged to the Statement of profit and loss in the year of purchase. Net realisable value is the
estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
The comparison of cost and net realisable value is made on an item-by-item basis.

The Company follows the first-in-first out method of determining the cost of inventories.

Due allowance is estimated and made by the Management for slow moving / non-moving items of inventory, wherever
necessary, based on the past experience and such allowances are adjusted against the carrying inventory value.

G. Impairment of PPE and intangible assets

The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable
amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating
units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent
of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to
sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).

The Company''s corporate assets do not generate independent cash inflows. To determine impairment of a corporate
asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in the statement of profit and loss. Impairment loss recognised in respect of a CGU
is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying
amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.

In respect of other assets for which impairment loss has been recognised in prior periods, the Group reviews at each
reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is
made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.

H. Employee benefits(i) Short-term employee benefits

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

(ii) Defined contribution plans

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

(iii) Defined benefit plans

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

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit
method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the
present value of economic benefits available in the form of any future refunds from the plan or reductions in future
contributions to the plan (''the asset ceiling''). In order to calculate the present value of economic benefits, consideration
is given to any minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan
assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The
Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by
applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to
the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset)
during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to
defined benefit plans are recognised in Statement of profit and loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to

past service (''past service cost'' or ''past service gain'') or the gain or loss on curtailment is recognised immediately in
Statement of profit and loss. The Company recognises gains and losses on the settlement of a defined benefit plan
when the settlement occurs.

(iv) Other long-term employee benefits

The Company''s net obligation in respect of long-term employee benefits other than post-employment benefits is the
amount of future benefit that employees have earned in return for their service in the current and prior periods; that
benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The obligation
is measured on the basis of an annual independent actuarial valuation using the projected unit credit method.
Remeasurements gains or losses are recognised in Statement of profit and loss in the period in which they arise.

(v) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those
benefits and when the Company recognises costs for a restructuring. If benefits are not expected to be settled wholly
within 12 months of the reporting date, then they are discounted.


Mar 31, 2018

1. Significant accounting polices

A. Foreign currency

L Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currency of company at the exchange rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the repotting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Nonmonetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences are recognised in profit or loss, except for such exchange differences arising from the translation of specific items which are recognised in OCI, as the case may be.

B. Financial instruments L Recognition and initial measurement

Trade receivables issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.

A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.

ii. Classification and subsequent measurement

Financial assets

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

- amortised cost;

- Fair value through other comprehensive income (‘FVOCT) - debt investment;

- FVOCI - equity investment; or

- Fair value through profit and loss (‘FVTPL’)

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.

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

a) the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

a) the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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

Financial assets: Subsequent measurement and gains and losses

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

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

Debt investments at FVOCI These assets are subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCL On derecognition, gains and losses accumulated in OC1 are reclassified to profit or loss.

Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to profit or loss.

Financial liabilities

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

UL Derecognition

Financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and docs not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.

Financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms arc substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.

iv. Offsetting

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

C. Property, plant and equipment

L Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.

Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.

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

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

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss. it. Transition to IndAS

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at April 1,2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment.

iii Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

iv. Depreciation

Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over their estimated useful lives using the straight-line method, and is generally recognised in the statement of profit and loss. Assets acquired under finance leases are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Freehold land is not depreciated.

The estimated useful lives of items of property, plant and equipment arc as follows:

Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best represent the period over which management expects to use these assets.

Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready for use (disposed of).

Leasehold improvements are being depreciated over the term of the lease, or estimated useful life of the assets, whichever is lower on a straight line basis. Freehold land is not depreciated.

Assets individually costing Rs 5,000 and less are fully depreciated in the year of purchase based on the technical evaluation, the management believes that it represent the relevant useful life of these assets.

D. Intangible assets

L Measurement

Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.

if. Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.

iiL Transition to Ind AS

On transition to Ind AS, the Company has clcctcd to continue with the carrying value of all of its intangible assets recognised as at April 1, 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets.

iv. Amortisation

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method, and is included in depreciation and amortisation in Statement of Profit and Loss.

The estimated useful lives are as follows:

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

E. Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any.

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its investmentproperty recognised as at April 1, 2016, measured as per the previous GAAP and use that carrying valueas the deemed cost of such investment property.

Any gain or loss on disposal of an investment property is recognised in profit or loss.

The fair values of investment property is disclosed in the notes. The fair value of investment property has been determined in accordance with the requirements of Ind AS 113 - Fair value measurement.

F. Inventories

Inventory comprises of pharmacy stock and consumables. Pharmacy stock is valued at the lower of cost and net realisable value including necessary provision for obsolescence. Consumables are valued at cost. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition. The cost of consumables is charged to the Statement of profit and loss in the year of purchase. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The Company follows the first-in-first out method of determining the cost of inventories.

The comparison of cost and net realisable value is made on an item-by-item basis.

G. Impairment

L Impairment of financial instruments

The Company recognises loss allowances for expected credit losses on financial assets measured atamortised cost

At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is ‘credit impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

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

- significant financial difficulty of the borrower or issuer;

- a breach of contract such as a default or being past due for 90 days or more;

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

- it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

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

The Company measures loss allowances at an amount equal to lifetime expected credit losses. Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.

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

Measurement uf expected credit losses

Expected credit losses are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive).

Presentation of allowance for expected crcdit losses in the balance sheet

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

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

li Impairment of non-financial assets

The Company’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

The rccovcrablc amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).

The Company’s corporate assets do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.

An impairment loss is rccogniscd if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss. Impairment loss rccogniscd in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.

Tn respect of other assets for which impairment loss has been recognised in prior periods, the Group reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

H. Employee benefits

L Short-term employee benefits

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

il Defined contribution plans

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

iiLDefined benefit plans

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

The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan (‘the asset ceiling’). In order to calculate the present value of economic benefits, coasideration is given to any minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised in OCI. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

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

rv. Other long-term employee benefits

The Company’s net obligati cm in respect of long-term employee benefits other than post-employment benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The obligation is measured on the basis of an annual independent actuarial valuation using the projected unit credit method. Remeasurements gains or losses are recognised in profit or loss in the period in which they arise.

v. Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 nxonths of the reporting date, then they are discounted.

I. Provisions (other than for employee benefits)

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected fixture cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discoxxnt is recognised as finance cost. Expected fixture operating losses are not provided for.

J. Revenae L Rendering of services

The Company derives its revenue primarily from rendering medical and healthcare services. Income from medical and healthcare services comprises of income from hospital services and sale of pharmacy products.

Revenue from hospital services to patients is recognised as revenue when the related services are rendered unless significant future uncertainties exist relating to the ultimate collection. Revenue is also recognised in relation to the services rendered to the patients who are undergoing treatment / observation on the balance sheet date to the extent of services rendered. Revenue is rccogniscd net of discounts and concessions given to the patients.

‘Unbilled revenue’ represents value of medical and healthcare services rendered in excess of amounts billed to the patients as at the balance sheet date.

IL Sale of goods

Revenue from sale of pharmacy products within hospital premises is recognised on sale of medicines and similar products to the buyer. Hie amount of revenue recognised is net of sales returns and exclusive of sales tax and trade discounts, wherever applicable.

K. Leases

L Determining whether an arrangement contains a lease

At inception of an arrangement, it is determined whether the arrangement is or contains a lease.

At inception or on reassessment of the arrangement that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease and those for other elements on the basis of their relative fair values. If it is concluded for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the lair value of the underlying asset The liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the incremental borrowing rate.

ii. Lease payments

Payments made under operating leases are generally recognised in profit or loss on a straight-line basis over the term of the lease unless such payments arc structured to increase in line with cxpcctcd general inflation to compensate for the lessor’s expected inflationary cost increases.Lease incentives received are recognised as an integral part of the total lease expense over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

L. Recognition of Interest incomc or expense

Interest income or expense is recognised using the effective interest method.

The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

- the gross carrying amount of the financial asset; or

- the amortised cost of the financial liability.

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

M. Income tax

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

i Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, i f any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

it. Deferred tax

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

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

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

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

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

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

N. Borrowing cost

Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

O. Earnings per share

Basic earnings per share has been computed by dividing profit / loss for the year by the weighted average number of shares outstanding during the year. Diluted earnings per share has been computed using the weighted average number of shares and dilutive potential shares, except where the result would be anti-dilutive.

P. Operating segment

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company’s other components, and for which discrete financial information is available. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company’s Managing Director is responsible for allocating resources and assessing performance of the operating segments and accordingly is identified as the Chief Operating Decision Maker (‘CODM’). The Company’s CODM reviews financial information presented, for purposes of making operating decisions and assessing financial performance of the Company. Therefore, the Company has determined that it operates in a single operating and reportable segment (Also refer to note 40).

Q. Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash management.

R. New standards and amendments to existing standards issued but not yet effective

Ind AS 115, Revenue from Contracts with Customers

Ind AS 115, establishes a comprehensive framework for determining whether, how much and when revenue should be recognised, ft replaces existing revenue recognition guidance, including Ind AS 18 Revenue, Ind AS 11 Construction Contracts and Guidance Note on Accounting for Real Estate Transactions. Ind AS 115 is e ftective for annual periods beginning on or after April 1, 2018 and will be applied accordingly. In this regard, the Company is in process of carrying out assessment of potential impact on adoption of Ind AS 115 on accounting policies followed and accordingly impact on its financial statements on initial application of this standard is not reasonably estimable at present.


Mar 31, 2016

1 Company overview

KMC Specialty Hospitals (India) Limited ("the Company") was originally incorporated as Advanced Medical Care Private Limited on December 31, 1982 under the Companies Act, 1956 and was converted into a Public Limited Company on July 15, 1988. The name of the Company was changed to Seahorse Hospitals Limited on March 21, 1995 and to its current name with effect from October 24, 2008. The Company is a super specialty hospital based in Trichy, belonging to the Kauvery Hospitals group. The company is primarily engaged in the business of rendering medical and healthcare services.

2 Significant accounting policies

2.1 Basis of accounting and preparation of financial statements

The financial statements have been prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention using the accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 133 of the Companies Act, 2013 read with the Rule 7 of the Companies (Accounts) Rules, 2014, other pronouncements of Institute of Chartered Accountants of India, the provisions of Companies Act, 2013 and guidelines issued by Securities and Exchange Board of India (SEBI).

2.2 Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.3 Revenue recognition

The Company derives its revenue primarily from rendering medical and healthcare services. Income from medical and healthcare services comprises of income from hospital services and sale of pharmacy products.

Revenue from hospital services to patients is recognised as revenue when the related services are rendered unless significant future uncertainties exist relating to the ultimate collection. Revenue is also recognised in relation to the services rendered to the patients who are undergoing treatment/ observation on the balance sheet date to the extent of services rendered. Revenue is recognised net of discounts and concessions given to the patients.

Revenue from sale of pharmacy products within hospital premises is recognised on sale of medicines and similar products to the buyer. The amount of revenue recognised is net of sales returns and exclusive of sales tax and trade discounts, wherever applicable.

‘Unbilled revenue’ represents value of medical and healthcare services rendered in excess of amounts billed to the patients as at the balance sheet date.

Interest income is recognised using the time-proportion method, based on underlying interest rates.

Dividend income is recognised when the Company''s right to receive dividend is established.

2.4 Fixed assets, depreciation and amortisation

Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation. Cost includes inward freight, duties, taxes and incidental expenses related to acquisition and installation of the asset. Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily take a substantial period of time to be ready for their intended use, are capitalized. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date, are disclosed as Capital advances.

Depreciation on tangible assets is provided on a pro-rata basis on the straight-line method over the estimated useful life of the assets which are lower than the useful lives prescribed under Schedule II to the Companies Act, 2013. The Company believes that the following useful life best represent the useful lives of the assets based on the internal assessment supported by technical evaluation, wherever necessary.

Buildings on leasehold land are being depreciated over the term of the lease, or its estimated useful life, whichever is lower on a straight line basis. Leasehold improvements are depreciated over the period of 10 years or the estimated useful life of the assets, whichever is lower on a straight line basis.

Assets individually costing Rs.5,000 and less are fully depreciated in the year of purchase. Depreciation is charged on a proportionate basis for all fixed assets purchased and sold during the year.

Intangible assets are recorded at the consideration paid for acquisition and are amortised over their estimated useful lives of 3 years on a straight line basis, commencing from the date the asset is available to the Company for its use.

The cost of assets not ready to be put to use before the year end is disclosed under capital work in progress.

2.5 Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount (higher of net realisable value and value in use) of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

2.6 Inventories

Inventory comprises of pharmacy stock and consumables. Pharmacy stock is valued at the lower of cost and net realisable value. Consumables are valued at cost. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition. The Company follows the first-in first-out method for determining the cost of inventories.

2.7 Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at fair value of the assets or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Lease payments are apportioned between finance charges and reduction of the lease liability at the implicit rate of return. Finance charges are charged to the statement of profit and loss.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases.

Operating lease payments are recognised as an expense in the statement of profit and loss on a straight line basis over the period of the lease or as and when the payments are made over the lease term.

2.8 Employee benefits

Provident fund: Eligible employees receive benefits from the provident fund, which is a defined contribution plan. Both the employee and the Company make monthly contributions to the provident fund plan equal to specified percentage of the covered employee’s basic salary. The Company has no further obligations under the plan beyond its monthly contributions. Contributions to provident fund are charged to the statement of profit and loss on accrual basis.

Gratuity: The Company provides gratuity, a defined benefit retirement plan covering eligible employees. Liabilities related to the gratuity plan are determined by actuarial valuation using projected unit credit method carried out by an independent actuary as at the balance sheet date. Actuarial gains or losses are recognised immediately in the statement of profit and loss. The Company’s gratuity scheme is administered by Life Insurance Corporation of India.

Compensated absences: The obligation in respect of long term compensated absences is measured on the basis of independent actuarial valuation using the projected unit credit method. The obligations in respect of short term compensated absences is measured on the actual liability basis.

2.9 Foreign currency transactions

Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognised in the statement of profit and loss.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at year end rates. The resultant exchange differences are recognised in the statement of profit and loss. Non-monetary assets are recorded at the rates prevailing on the date of the transaction.

2.10 Taxation

Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of the timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward of losses under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably and virtually certain respectively to be realised.

Minimum Alternate Tax (''MAT'') under the provisions of the Income-tax Act, 1961 is recognised as current tax in the statement of profit and loss. The credit available under the Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognised as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.

2.11 Earnings per share

Basic earnings per share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share amounts are computed after adjusting the effects of all dilutive potential equity shares. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that decrease profit per share are included.

2.12 Cash Flows

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, financing and investing activities of the Company are segregated.

2.13 Provisions, contingent liabilities and contingent assets

The Company creates a provision when there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.

b. Rights, preferences and restrictions attached to shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time subject to payment of dividend to preference shareholders. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

On winding up of the company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

* Amount disclosed under ''Other current liabilities'' (refer note 11)

Terms of repayment of term loans from banks and the nature of security

a) Term loans availed from Axis Bank:

(I) Term loan-I was availed during October 2010 and is repayable in 60 monthly installments of INR 833,334/- along with interest, commencing from November 30, 2012, being 24 months from the date of sanction.

(ii) Term loan-II was availed during February 2012 and is repayable in 60 monthly installments of INR '' 833,334/- along with interest, commencing from January 31, 2014, being 24 months from the date of sanction.

(iii) Term loan-III was availed during the financial year 2013-14 and is repayable in 60 monthly installments of INR 500,000/- along with interest, commencing from April 30, 2014, being 10 months from the date of sanction.

b) Term loan from City Union Bank was availed on January 2, 2013 and is repayable in 84 equated monthly installments (EMIs) of INR 923,244/- commencing from August 01, 2013, being 6 months after the date of availment.

The above loans are secured by way of the following:

(I) Hypothecation of all movable assets, both present and future, comprising of medical equipments, machineries, furnitures, etc.

(ii) Equitable mortgage on the commercial lands situated at Old TS no. 132, New TS No. 2-part and New tS no. 3/2 part, Old Ward No. 1, New Ward No. K, Old block no. 25, New block no. 17, K.Abishekapuram Village, Cantonment, Trichy and commercial building in the leasehold land situated at No.6, Royal Road, Cantonment, Trichy.

(iii) Corporate guarantee from Sri Kavery Medical Care (Trichy) Limited, the Holding Company.

(iv) Personal guarantees of (a) Dr. S Chandrakumar, the Managing Director and Dr. S Manivannan, Director for the Term Loans availed from Axis Bank and (b) Dr. S Chandrakumar, the Managing Director and Dr D Senguttuvan, Executive Director for the Term Loans availed from City Union Bank.

C) Other loans represents vehicle loan availed during October 2012 and is repayable in 36 EMIs of INR 10,463/-. The loan is secured by hypothecation of fixed assets acquired there under. The loan was fully repaid during the current year.


Mar 31, 2015

2.1 Basis of accounting and preparation of financial statements

The financial statements have been prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention using the accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 133 of the Companies Act, other pronouncements of Institute of Chartered Accountants of India, the provisions of Companies Act, 2013 and guidelines issued by Securities and Exchange Board of India (SEBI).

2.2 Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.3 Revenue recognition

The Company derives its revenue primarily from rendering medical and healthcare services. Income from medical and healthcare services comprises of income from hospital services and sale of pharmacy products. Revenue from hospital services to patients is recognised as revenue when the related services are rendered unless significant future uncertainties exist relating to the ultimate collection. Revenue is also recognised in relation to the services rendered to the patients who are undergoing treatment/ observation on the balance sheet date to the extent of services rendered. Revenue is recognised net of discounts and concessions given to the patients.

Revenue from sale of pharmacy products within hospital premises is recognised on sale of medicines and similar products to the buyer. The amount of revenue recognised is net of sales returns and exclusive of sales tax and trade discounts, wherever applicable.

'Unbilled revenue' represents value of medical and healthcare services rendered in excess of amounts billed to the patients as at the balance sheet date.

Interest income is recognised using the time-proportion method, based on underlying interest rates.

Dividend income is recognised when the Company's right to receive dividend is established.

2.4 Fixed assets, depreciation and amortisation

Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation. Cost includes inward freight, duties, taxes and incidental expenses related to acquisition and installation of the asset. Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily take a substantial period of time to be ready for their intended use, are capitalized. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date, are disclosed as Capital advances.

Depreciation on tangible assets is provided on a pro-rata basis on the straight-line method over the estimated useful life of the assets which are lower than the useful lives prescribed under Schedule II to the Companies Act, 2013. The Company believes that the following useful life best represent the useful lives of the assets based on the internal assessment supported by technical evaluation, wherever necessary.

The useful lives of the assets are:

Description Useful life (in Years)

Surgical and other equipments 10

Electrical installations 5

Computers 3

Books 10

Furniture and fixtures 5

Vehicles 4

Buildings on leasehold land are being depreciated over the term of the lease, or its estimated useful life, whichever is lower on a straight line basis. Leasehold improvements are depreciated over the period of 10 years or the estimated useful life of the assets, whichever is lower on a straight line basis.

Assets individually costing Rs 5,000 and less are fully depreciated in the year of purchase. Depreciation is charged on a proportionate basis for all fixed assets purchased and sold during the year.

Intangible assets are recorded at the consideration paid for acquisition and are amortised over their estimated useful lives of 3 years on a straight line basis, commencing from the date the asset is available to the Company for its use.

The cost of assets not ready to be put to use before the year end is disclosed under capital work in progress.

2.5 Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount (higher of net realisable value and value in use) of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

2.6 Inventories

Inventory comprises of pharmacy stock and consumables. Pharmacy stock is valued at the lower of cost and net realisable value. Consumables are valued at cost. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition. The Company follows the first-in first-out method for determining the cost of inventories.

2.7 Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at fair value of the assets or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Lease payments are apportioned between finance charges and reduction of the lease liability at the implicit rate of return. Finance charges are charged to the statement of profit and loss.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases.

Operating lease payments are recognised as an expense in the statement of profit and loss on a straight line basis over the period of the lease or as and when the payments are made over the lease term.

2.8 Employee benefits

Provident fund: Eligible employees receive benefits from the provident fund, which is a defined contribution plan. Both the employee and the Company make monthly contributions to the provident fund plan equal to specified percentage of the covered employee's basic salary. The Company has no further obligations under the plan beyond its monthly contributions. Contributions to provident fund are charged to the statement of profit and loss on accrual basis.

Gratuity: The Company provides gratuity, a defined benefit retirement plan covering eligible employees. Liabilities related to the gratuity plan are determined by actuarial valuation using projected unit credit method carried out by an independent actuary as at the balance sheet date. Actuarial gains or losses are recognised immediately in the statement of profit and loss. The Company's gratuity scheme is administered by Life Insurance Corporation of India.

Compensated absences: The obligation in respect of long term compensated absences is measured on the basis of independent actuarial valuation using the projected unit credit method. The obligations in respect of short term compensated absences is measured on the actual liability basis.

2.9 Foreign currency transactions

Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognised in the statement of profit and loss.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at yearend rates. The resultant exchange differences are recognised in the statement of profit and loss. Non-monetary assets are recorded at the rates prevailing on the date of the transaction.

2.10 Taxation

Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of the timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward of losses under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably and virtually certain respectively to be realised.

2.11 Earnings per share

Basic earnings per share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share amounts are computed after adjusting the effects of all dilutive potential equity shares. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that decrease profit per share are included.

2.12 Cash Flows

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, financing and investing activities of the Company are segregated.

2.13 Provisions, contingent liabilities and contingent assets

The Company creates a provision when there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2014

1.1 Basis of accounting and preparation of financial statements

The financial statements have been prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention using the accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 211(3C) of the Companies Act, other pronouncements of Institute of Chartered Accountants of India, the provisions of Companies Act, 1956 and guidelines issued by Securities and Exchange Board of India (SEBI).

2.2 Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.3 Revenue recognition

The Company derives its revenue primarily from rendering medical and healthcare services. Income from medical and healthcare services comprises of income from hospital services and sale of pharmacy products. Revenue from hospital services to patients is recognised as revenue when the related services are rendered unless significant future uncertainties exist relating to the ultimate collection. Revenue is also recognised in relation to the services rendered to the patients who are undergoing treatment/ observation on the balance sheet date to the extent of services rendered. Revenue is recognised net of discounts and concessions given to the patients.

Revenue from sale of pharmacy products within hospital premises is recognised on sale of medicines and similar products to the buyer. The amount of revenue recognised is net of sales returns and exclusive of sales tax and trade discounts, wherever applicable.

''Unbilled revenue'' represents value of medical and healthcare services rendered in excess of amounts billed to the patients as at the balance sheet date.

Interest income is recognised using the time-proportion method, based on underlying interest rates.

Dividend income is recognised when the Company''s right to receive dividend is established.

2.4 Fixed assets, depreciation and amortisation

Fixed assets are stated at cost of acquisition or construction, less accumulated depreciation. Cost includes inward freight, duties, taxes and incidental expenses related to acquisition and installation of the asset. Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily take a substantial period of time to be ready for their intended use, are capitalized. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date, are disclosed as Capital advances.

Depreciation is provided on the straight line method from the date of asset being put to use on a pro-rata basis. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If the management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset, or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on management''s estimate of the useful life/remaining useful life.

Pursuant to this policy, depreciation is provided in respect of certain assets at rates which are higher than the corresponding rates prescribed in Schedule XIV to the Companies Act, 1956 as detailed below:

Buildings on leasehold land are being depreciated over the term of the lease, or its estimated useful life, whichever is lower on a straight line basis. Leasehold improvements are depreciated over the period of 10 years or the estimated useful life of the assets, whichever is lower on a straight line basis.

Assets individually costing Rs 5,000 and less are fully depreciated in the year of purchase. Depreciation is charged on a proportionate basis for all fixed assets purchased and sold during the year.

Intangible assets are recorded at the consideration paid for acquisition and are amortised over their estimated useful lives of 3 years on a straight line basis, commencing from the date the asset is available to the Company for its use.

The cost of assets not ready to be put to use before the yearend is disclosed under capital work in progress.

2.5 Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount (higher of net realisable value and value in use) of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

2.6 Inventories

Inventory comprises of pharmacy stock and consumables. Pharmacy stock is valued at the lower of cost and net realisable value. Consumables are valued at cost. Cost comprises purchase price and all incidental expenses incurred in bringing the inventory to its present location and condition. The Company follows the first-in first-out method for determining the cost of inventories.

2.7 Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalised at fair value of the assets or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Lease payments are apportioned between finance charges and reduction of the lease liability at the implicit rate of return. Finance charges are charged to the statement of profit and loss.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases.

Operating lease payments are recognised as an expense in the statement of profit and loss on a straight line basis over the period of the lease or as and when the payments are made over the lease term.

2.8 Employee benefits

Provident fund: Eligible employees receive benefits from the provident fund, which is a defined contribution plan. Both the employee and the Company make monthly contributions to the provident fund plan equal to specified percentage of the covered employee''s basic salary. The Company has no further obligations under the plan beyond its monthly contributions. Contributions to provident fund are charged to the statement of profit and loss on accrual basis.

Gratuity: The Company provides gratuity, a defined benefit retirement plan covering eligible employees. Liabilities related to the gratuity plan are determined by actuarial valuation using projected unit credit method carried out by an independent actuary as at the balance sheet date. Actuarial gains or losses are recognised immediately in the statement of profit and loss. The Company''s gratuity scheme is administered by Life Insurance Corporation of India.

Compensated absences: The obligation in respect of long term compensated absences is measured on the basis of independent actuarial valuation using the projected unit credit method. The obligations in respect of short term compensated absences is measured on the actual liability basis.

2.9 Foreign currency transactions

Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognised in the statement of profit and loss.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at yearend rates. The resultant exchange differences are recognised in the statement of profit and loss. Non-monetary assets are recorded at the rates prevailing on the date of the transaction.

2.10 Taxation

Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of the timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward of losses under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably and virtually certain respectively to be realised.

2.11 Earnings per share

Basic earnings per share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share amounts are computed after adjusting the effects of all dilutive potential equity shares. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that decrease profit per share are included.

2.12 Cash Flows

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, financing and investing activities of the Company are segregated.

2.13 Provisions, contingent liabilities and contingent assets

The Company creates a provision when there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.

b. Rights, preferences and restrictions attached to shares

The company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the company''s residual assets. The equity shares are entitled to receive dividend as declared from time to time subject to payment of dividend to preference shareholders. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

On winding up of the company, the holders of equity shares will be entitled to receive the residual assets of the company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

* Amount disclosed under ''Other current liabilities'' (refer note 11)

Terms of repayment of term loans from banks and the nature of security

a) Term loans availed from Axis Bank:

(I) Term loan-I was availed during October 2010 and is repayable in 60 monthly installments of INR 833,334/- along with interest, commencing from November 30, 2012, being 24 months from the date of sanction.

(ii) Term loan-II was availed during February 2012 and is repayable in 60 monthly installments of INR 833,334/- along with interest, commencing from January 31,2014, being 24 months from the date of sanction.

(iii) Term loan-III was availed during the financial year 2013-14 and is repayable in 60 monthly installments of INR 500,000/- along with interest, commencing from April 30, 2014, being 10 months from the date of sanction.

b) Term loan from City Union Bank was availed on January 2, 2013 and is repayable in 84 equated monthly installments (EMIs) of INR 923,244/- commencing from August 01,2013, being 6 months after the date of availment.

The above loans are secured by way of the following:

(I) Hypothecation of all movable assets, both present and future, comprising of medical equipments, machineries, furnitures, etc.

(ii) Equitable mortgage on the commercial lands situated at Old TS no. 132, New TS No. 2-part and New TS no. 3/2 part, Old Ward No. 1, New Ward No. K, Old block no. 25, New block no. 17,

K.Abishekapuram Village, Cantonment, Trichy and commercial building in the leasehold land situated at No.6, Royal Road, Cantonment, Trichy.

(iii) Corporate guarantee from Sri Kavery Medical Care (Trichy) Limited, the Holding Company

(iv) Personal guarantees of (a) Dr. S Chandrakumar, the Managing Director and Dr. S Manivannan, Director for the Term Loans availed from Axis Bank and (b) Dr. S Chandrakumar, the Managing Director and Dr D Senguttuvan, Executive Director for the Term Loans availed from City Union Bank.

C) Other loans represents vehicle loan availed during October 2012 and is repayable in 36 EMI of INR 10,463/-. The loan is secured by hypothecation of fixed asset acquired thereunder.

Note : Since the Company has carried forward losses and unabsorbed depreciation as per taxation laws, the recognition of deferred tax asset has been scaled down to the extent that the aggregate of the deferred tax asset matches with the aggregate of the deferred tax liability as at the year end.

Terms of repayment of term loans from banks and the nature of security

The cash credit facilities are secured by way of the following:

(I) Hypothecation of current assets of the Company, both present and future;

(ii) Hypothecation of all movable assets, both present and future, comprising of medical equipments, machineries, furnitures, etc.

(iii) Equitable mortgage on the commercial lands situated at Old TS no. 132, New TS No. 2-part and New TS no. 3/2 part, Old Ward No. 1, New Ward No. K, Old block no. 25, New block no. 17, K.Abishekapuram Village, Cantonment, Trichy and commercial building in the leasehold land situated at No.6, Royal Road, Cantonment, Trichy; and

(iv) Corporate guarantee from Sri Kavery Medical Care (Trichy) Limited, the Holding Company and personal guarantees of Dr.S.Chandrakumar, Managing Director, Dr. S Manivannan, Director of the Company.


Mar 31, 2013

1.1 Basis of accounting and preparation of financial statements

The financial statements have been prepared under the historical cost convention under accrual method of accounting except in case of assets for which provision for impairment is made and revaluation is carried out and as a going concern, in accordance with the Generally Accepted Accounting Principles (GAAP) prevalent in India and to comply in all material respects with the Notified accounting standard by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956.

1.2 Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

1.3 Inventories

i) The inventories of all medicines, Medicare items traded and dealt with by the company are valued lower of cost and Net Realizable Value by applying the FIFO method.

ii) The stock of stores, dental instruments, surgical instruments, dental and other Consumables are valued at cost. Cost of these inventories comprises of all costs of purchase and other cost incurred in bringing the assets to their present location.

1.4 Cash and cash equivalents (for purposes of Cash Flow Statement) Cash comprises cash on hand and demand deposits with banks and interest accrued thereon. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.5 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.6 a) Prior Period Items and Extraordinary Items Prior period item and extraordinary item are separately classified, identified and dealt with as required under Accounting Standard 5 on "Net Profit or Loss for the period, prior period items and changes in accounting policies".

1.7 Depreciation and amortization Depreciation is provided using the Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956, which is management''s estimate of the useful lives of the assets. Depreciation on new assets acquired during the year is provided at the rates applicable from the date of acquisition to the year end. Depreciation on assets sold or discarded is provided till the date of disposal. The rates of depreciation are as follows:- Particulars Buildings 1.63% Medical, Surgical and Other Medical Equipment 7.07% Vehicles 9.05% Computers 16.21% Furniture and Fixtures 6.33% Office and Other Equipment 4.75% Lifts 4.75% Electrical Installations 4.75%

1.8 Revenue recognition

i) Income from hospital services is recognized on accrual basis. At the year end wherever services are not billed , the same is estimated and recognized as unbilled income. The hospital collections of the company are net of rebates, concessions etc.

ii) Pharmacy sales are stated net of returns, discounts and inclusive of sales tax/vat.

iii) Ambulance income is accounted on the basis of the contract entered between the parties on an accrual basis.

iv) Health Club Premium

1.9 Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.10 Tangible fixed assets

Tangible Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any cost attributed for bringing the asset to its working condition for its intended use. Capital Work in Progress comprises of outstanding advances paid to acquire fixed assets and amount expended on development/ acquisition of fixed assets that are not yet ready for their intended use as on the balance sheet date.

1.11 Intangible assets

Intangible Assets are stated at cost of acquisition less accumulated amortization. Application Software is amortized over the period of three years i.e. at the rate of 33.33% p.a. on SLM basis on cost.

1.13 Government grants, subsidies and export incentives

Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognized as income over the life of a depreciable asset by way of a reduced depreciation charge.

Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.

Government grants in the nature of promoters'' contribution like investment subsidy, where no repayment is ordinarily expected in respect thereof, are treated as capital reserve. Government grants in the form of nonmonetary assets, given at a concessional rate, are recorded on the basis of their acquisition cost. In case the nonmonetary asset is given free of cost, the grant is recorded at a nominal value.

Other government grants and subsidies are recognized as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis.

1.14 Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalized and depreciated (where applicable) in accordance with the policy stated for Tangible Fixed Assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Assets.

1.15 Employee benefits

i. Defined Contribution Plan Provident Fund:

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon is paid at retirement The company and employee make monthly contributions to provident fund equal to a specified percentage of the covered employee''s salary. The contributions are made to a government administered provident fund. The monthly contributions are charged off to revenue.

ii.Defined benefit plan Gratuity:

The Company makes contribution to a scheme administered and offered by the Life Insurance Corporation of India (LIC) to discharge gratuity liabilities to the employees. The premium /contribution paid to the Life Insurance Corporation of India towards gratuity scheme are charged off to revenue.

Short term benefits

Short term employee benefits are benefits which are payable within twelve months after the end of the period in which the employees render service and these are measured at cost.

1.16 Borrowing costs Any Interest paid on the amount borrowed for the purpose of capital expenditure are generally charged to revenue, if the relevant capital asset is brought to use within 12 months. Whenever the time taken is more than 12 months such interest attributable to the fixed asset is capitalized and added to the cost of the fixed asset.

1.17 Segment reporting

The company is engaged only in one business segment, that is hospital service and hence no reporting is done under Accounting Standard - 17 (Segment Reporting) on segment revenue, expenses etc.

1.18 Leases

In respect of lease transactions entered in to the Lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.

1.19 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue; rights issue to existing shareholders; share split; and reverse share split, if any

1.20 Taxes on income

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will not be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

1.21 Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technological feasibility has been established, in which case such expenditure is capitalized. The amount capitalized comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets

1.22 Joint venture operations

The accounts of the Company reflect its share of the Assets, Liabilities, Income and Expenditure of the Joint Venture Operations which are accounted on the basis of the audited accounts of the Joint Ventures on line-by-line basis with similar items in the Company''s accounts to the extent of the participating interest of the Company as per the Joint Venture Agreements.

1.23 Impairment of assets

i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

ii)After testing for impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

1.24 Provisions and contingencies

A provision is recognized when enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.


Mar 31, 2012

1.1 Basis of accounting and preparation of financial statements

The financial statements have been prepared under the historical cost convention under accrual method of accounting except in case of assets for which provision for impairment is made and revaluation is carried out and as a going concern, in accordance with the Generally Accepted Accounting Principles (GAAP) prevalent in India and to comply in all material respects with the Notified accounting standard by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956.

1.2 Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

1.3 Inventories

i) The inventories of all medicines, Medicare items traded and dealt with by the company are valued lower of cost and Net Realisable Value by applying the FIFO method.

ii) The stock of stores, dental instruments, surgical instruments, dental and other Consumables are valued at cost. Cost of these inventories comprises of all costs of purchase and other cost incurred in bringing the assets to their present location.

1.4 Cash and cash equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits.with banks and interest accrued thereon. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amount of cash and which are subject to insignificant risk of changes in value.

1.5 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.6 Prior Period Items and Extraordinary Items -

Prior period item and extraordinary item are separately classified, identified and dealt with as required under Accounting Standard 5 on "Net Profit or Loss for the period, prior period items and changes irt accounting policies".

1.7 Depreciation and amortisation

Depreciation is provided using the Straight Line Method at the rates prescribed under Schedule XIV of the Companies Act, 1956, which is management's estimate of the useful lives of the assets. Depreciation on new assets acquired during the year is provided at the rates applicable from the date of acquisition to the year end. Depreciation on assets sold or discarded is provided till the date of disposal. The rates of depreciation are as follows:-

1.8 Revenue recognition

i)lncome from hospital services is recognized on accrual basis. At the year end wherever services are not billed .the same is estimated and recognized as unbilled income. The hospital collections of the company are net of rebates, concessions etc.

ii) Pharmacy sales are stated net of returns, discounts and exclusive of salesr tax./vat.

iii)Ambulance income is accounted on the basis of the contract entered between the parties on an accrual basis.

1.9 Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.10 Tangible fixed assets

Tangible Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any cost attributed for bringing the asset to its working condition for its* intended use. Capital Work in Progress comprises of advances paid to acquire fixed assets and amount expended on development/ acquisition of fixed assets that are not yet ready for their intended use as on the balance sheet date.

1.11 Intangible assets

Intangible Assets are stated at cost of acquisition less accumulated amortization. Application Software is ammortised over the period of three years i.e. at the rate of 33.33% p.a. on SLM basis on cost.

1.12 Foreign currency transactions and translations Initial recognition

Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement of foreign currency monetary items at the Balance Sheet date

Foreign currency monetary items (other than derivative contracts) of the Company and its net investment in non-integral foreign operations outstanding at the Balance Sheet date are restated at the year-end rates.In the case of integral operations, assets and liabilities (other than non-monetary items), are translated at the exchange rate prevailing on the Balance Sheet date. Non-monetary items are carried at historical cost. Revenue and expenses are translated at the average exchange rates prevailing during the year. Exchange differences arising out of these translations are charged to the Statement of Profit and Loss.

Treatment of exchange differences

Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company and its integral foreign operations are recognised as income or expense in the Statement of Profit and Loss. The exchange differences on restatement / settlement of loans to non- integral foreign operations that are considered as net investment in such operations are accumulated in a "Foreign currency translation reserve" until disposal / recovery of the net investment.The exchange differences arising on restatement / settlement of long-term foreign currency monetary items are capitalised as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets or amortised on settlement / over the maturity period of such items if such items do not relate to acquisition of depreciable fixed assets. The unamortised balance is carried in the Balance Sheet as "Foreign Currency monetary item translation difference account" net of the tax effect thereon.

1.13 Government grants, subsidies and export incentives

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Export benefits are accounted for the year of exports based on eligibility and when there is no uncertainty in receiving the same.

Government grants in the nature of promoters' contribution like investment subsidy, where no repayment is ordinarily expected in respect thereof, are treated as capital reserve. Government grants in the form of non- monetary assets, given at a concessional rate, are recorded on the basis of their acquisition cost. In case the non-monetary asset is given free of cost, the grant is recorded at a nominal value.Other government grants and subsidies are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis§.

1.14 Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalised and depreciated (where applicable) in accordance with the policy stated for Tangible Fixed Assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Assets.

1.15 Employee benefits

i Defined Contribution Plan Provident Fund:

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon is paid at retirement. The company and employee make monthly contributions to provident fund equal to a specified percentage of the covered employee's salary. The contributions are made to a government administered provident fund. The monthly contributions are charged off to revenue.

ii.Defined benefit plan Gratuity

The Company makes contribution to a scheme administered and offered by the Life Insurance Corporation of India (LIC) to discharge gratuity liabilities to the employees. The premium /contribution paid to the Life Insurance Corporation of India towards gratuity scheme are charged off to revenue. .

Short term benefits

Short term employee benefits are benefits which are payable within twelve months after the end of the period in which the employees render service and these are measured at cost.

1.16 Borrowing costs

Any Interest paid on the amount borrowed for the purpose of capital expenditure are generally charged to revenue, if the relevant capital asset is brought to use within 12 months. Whenever the time taken is more than 12 months such interest attributable to the fixed asset is capitalized and added to the cost of the fixed asset

1.17 Segment reporting

The company is engaged only in one business segment, -that is hospital service and hence no reporting is done under Accounting Standard - 17 (Segment Reporting) on segment revenue, expenses etc.

1.18 Leases

In respect of lease transactions entered in to the Lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.

1.19 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue; rights issue to existing shareholders; share split; and reverse share split, if any.

1.20 Taxes on income

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tgx is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes- down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will not be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

1.21 Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product's technological feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.

1.22 Joint venture operations

The accounts of the Company reflect its share of the Assets, Liabilities, Income and Expenditure of the Joint Venture Operations which are accounted on the basis of the audited accounts of the Joint Ventures on line- by-line basis with similar items in the Company's accounts to the extent of the participating interest of the Company as per the Joint Venture Agreements.

1.23 Impairment of assets .

i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment joss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

ii) After testing for impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

1.24 Provisions and contingencies .

A provision is recognized when enterprise has a present obligation as a result of past event and it is probable that an outflow of resources win be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.


Mar 31, 2011

A) Basis of preparation

The financial statements have been prepared under the historical cost convention under accrual method of accounting except in case of assets for which provision for impairment is made and revaluation is carried out and as a going concern, in accordance with the Generally Accepted Accounting Principles (GAAP) prevalent in India and to comply in all material respects with the Notified accounting standard by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed assets

Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any cost attributed for bringing the asset to its working condition for its intended use. Capital Work in Progress comprises of outstanding advances paid to acquire fixed assets and amount expended on development/ acquisition of fixed assets that are not yet ready for their intended use as on the balance sheet date.

e) Intangibles

Intangible Assets are stated at cost of acquisition less accumulated amortization. Application Software is ammortised over the license period of the software.

f) Impairment

i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

ii) After testing for impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

g) Inventories

i) The inventories of all medicines, Medicare items traded and dealt with by the company are valued lower of cost and Net Realisable Value by applying the FIFO method.

ii) The stock of stores, dental instruments, surgical instruments, dental and other Consumables are valued at cost. Cost of these inventories comprises of all costs of purchase and other cost incurred in bringing the assets to their present location.

h) Revenue Recognition

i) Income from hospital services is recognized on accrual basis. At the yearend wherever services are not billed ,the same is estimated and recognized as unbilled income. The hospital collections of the company are net of rebates, concessions etc.

ii) Pharmacy sales are stated net of returns, discounts and inclusive of sales tax./vat.

iii) Ambulance income is accounted on the basis of the contract entered between the parties on an accrual basis.

i) Leases

In respect of lease transactions entered into, the Lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.

j) Prior Period Items and Extraordinary Items

Prior period item and extraordinary item are separately classified, identified and dealt with as required under Accounting Standard 5 on "Net Profit or Loss for the period, prior period items and changes in accounting policies".

k) Employee benefits

i. Defined Contribution Plan

Provident Fund:

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon is paid at retirement The company and employee make monthly contributions to provident fund equal to a specified percentage of the covered employee's salary. The contributions are made to a government administered provident fund. The monthly contributions are charged off to revenue.

ii. Defined benefit plan

Gratuity:

The Company makes contribution to a scheme administered and offered by the Life Insurance Corporation of India (LIC) to discharge gratuity liabilities to the employees. The premium /contribution paid to the Life Insurance Corporation of India towards gratuity scheme is charged off to revenue.

Short term benefits

Short term employee benefits are benefits which are payable within twelve months after the end of the period in which the employees render service and these are measured at cost.

l) Income Tax

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes- down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will not be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

m) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue; rights issue to existing shareholders; share split; and reverse share split, if any.

n) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

o) Borrowing cost (As-16)

Any Interest paid on the amount borrowed for the purpose of capital expenditure are generally charged to revenue,if the relevant capital asset is brought to use within 12 months. Whenever the time taken is more than 12 months such interest attributable to the fixed asset is capitalized and added to the cost of the fixed

S2 Notes forming Part of Accounts

a) Significant Events during the year

i) During the year the company has issued 15,05,40,000 shares of Re.1 each as right entitlement to the existing shareholders at the ratio of 12 shares for every share held. The issue was fully subscribed and on account of this right issue, the paid up capital stood at Rs16,30,85,000 as on 31st March 2011.

ii) The company is funded by borrowings from holding company. A sum of Rs 15.54 crores was outstanding as on 1 st April 2010 and a sum of Rs 11.75 crores was repaid during the year.out of the proceeds of right issue .The amount payable to the other company as on 31 st March 2011 amounts to Rs 5.67 crores. On account of improvement in cash flow position, consequent to the right issue and as demanded by the other company, interest of Rs 164917/- was paid from 8th March 2011onwards.In addition to this, the waiver of interest on the earlier outstandings was limited to the period up to 17th November 2009.

b) Contingent Liability:

i) The company has received a show cause notice from The Department of Customs demanding a sum of Rs.85,24,905.00(Previous Year Rs.85,24,905), towards customs duty for the medical equipment imported during the years 1989-93 and the said amount is not provided as the company is taking appropriate legal steps regarding this issue.

ii) The company has received a show cause notice from The Municipal Corporation, Trichy contending the construction of the 4th, 5th & 6th floors of the hospital building have no approval. The financial effect of the same could not be ascertained. The company has filed application before the appropriate authorities for the regularization of the construction.

iii) The company has received a show cause notice from Trichy Municipal Corporation demanding a sum of Rs. 9,17,260 being the arrears of rent on poramboke land. Of the said sum, a sum of Rs. 3,79,000 has been provided in the books of accounts.

iv) The company has received a demand notice from Trichy Corporation for an amount of Rs. 1,08,31,767 being arrears of property tax for the period 2005-2010. The company in reply has filed an appeal with the District Munsif Court in the year 2003. A provision of Rs.50,00,000 has been made which is based on the management's estimate likely settlement of the above dues.

v) Claims against the company not acknowledged as debt Rs. 4,35,000 (Previous year Rs.6,76,000)

vi) The company has given corporate guarantee for Rs 6 crores to Axis Bank for the loan given to M/s Sri Kaveri Medical Care ( Trichy) Limited ,which is the holding company. At the time of giving the guarantee, the company has exceeded the limits prescribed u/sec 372A of the companies Act 1956.However as on 31 st March 2011, consequent to the right issue, the net worth of the company has gone up and the guarantee given is well within the limits prescribed u/sec 372A of the companies Act 1956.

c) Capital Commitment

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs.3739553/- (Previous year- 59,14,142/-)

d) Sundry Debtors and Loans and Advances

Sundry Debtors, Creditors are yet to be confirmed. The confirmation of balances have not been obtained. The auditors have relied on the balance as per books of accounts maintained in the absence of confirmation from the debtors/creditors. The balances adopted are as appearing in the books of accounts.

e) Prior Period Item

Prior period item is shown net of income and expense, the same during the year amounts to Rs. 79,632 (Previous Year – Rs. 3,52,965)

f) The company provides hospital services and also sells drugs and Pharmaceutical products. The quantitative particulars as per Para 3(ii) d of Part-II of Schedule-VI of the companies act, 1956 with respect to the total value of turnover, purchases, goods traded, sales etc for the financial year ended 31st March 2011 as required under the Companies Act,1956 are not disclosed. In the opinion of the management, such disclosure is practically difficult.

g) Payment to Managing Director - Dr.S. Chandrakumar - Monthly Remuneration – Rs.2,13,500 pm (including Provident Fund Contribution)

h) Earnings in Foreign Currency – Nil (Previous Year- Nil)

i) Expenditure in Foreign Currency- Nil (Previous Year- Nil)

j) Remittance during the period of foreign currency on account of Import of Raw Materials- Nil (Previous Year- Nil)

k) Micro, Small and Medium Enterprises Development Act, 2006

In accordance with the Notification No.GSR 719 (E) dt 16.11.2007, issued by the Ministry of Corporate Affairs, certain disclosures are required to be made relating to Micro, small and Medium Enterprises as defined under the Micro, Small and Medium Development Act, 2006. The Company has not yet compiled the relevant information from its suppliers under the said act. Since the relevant information is not readily available, no disclosures as required as per statutory provisions as stated above have been made in the accounts.

n) Managerial Remuneration-

The company has paid a sum of Rs 30,00,000/- in the aggregate to Managing director Dr.S.Chandrakumar during the year.

o) Related Party Transactions under AS-18 and disclosure under SEBI (Substantial Acquisition of Shares & Takeovers) regulations, 1997:-

A list of related parties where control exists and other related parties with whom the company had transactions and their relationships:

Sl.No Name of the Related Nature of Relationships

1 Dr.S. Chandrakumar Key Management Personnel Party

2 Dr.S. Manivannan Key Management Personnel

3 Dr. T. Senthil Kumar Key Management Personnel

4 D. Selvaraj Key Management Personnel 5 Sri Kavery Medical Enterprise in which KMP are Care (Trichy) Ltd interested (promoters)



Promoters of the company & Persons Acting in Concert (PAC):

Sri Kavery Medical Care (Trichy) Ltd

p) Disclosure under Accounting Standard – 22

The company recognises deferred tax on timing differences arising in an accounting period and reversing in subsequent accounting periods. Also, Deferred Tax is the case of losses was recognised only on Unabsorbed depreciation loss as the company was of the opinion that there will be sufficient profits in future available for set off such losses. However, deferred tax assets on business loss are not recognised as a matter of prudence.

q) Travelling, Conveyance and Business Promotion expenses include expenditure incurred by the directors of the company for the purpose of the business of the company.

r) Business Segments (Accounting Standard – 17)

The company is engaged only in one business segment, that is hospital service and hence no reporting is done under Accounting Standard – 17 (Segment Reporting) on segment revenue, expenses etc.

s) Earnings per Share (Accounting Standard – 20)

t) Previous year's figures have been regrouped wherever found necessary to conform to the current year's presentation.

u) The figures given in the Profit and Loss account and balance sheet have been rounded off to the nearest rupee.


Mar 31, 2010

A) Basis of preparation

The financial statements have been prepared under the historical cost convention under accrual method of accounting except in case of assets for which provision for impairment is made and revaluation is carried out and as a going concern, in accordance with the Generally Accepted Accounting Principles (GAAP) prevalent in india and to comply in all material respects with the Notified accounting standard by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956.

b) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities ana disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed assets

Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any cost attributed for bringing the asset to its working condition for its intended use. Capital Work in Progress comprises of outstanding advances paid to acquire fixed assets and amount expended on development/ acquisition of fixed assets that are not yet ready for their intended use as on the balance sheet date.

e) Intangibles

Intangible Assets are stated at cost of acquisition less accumulated amortization. Application Software is ammortised over the license period of the software.

f) Impairment

i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

ii) After testing for impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life

g) Inventories

i) The inventories of all medicines, Medicare items traded and dealt with by the company are valued lower of cost and Net Realisable Value by applying the FIFO method.

ii) The stock of stores, dental instruments, surgical instruments, dental and other Consumables are valued at cost. Cost of these inventories comprises of all costs of purchase and other cost incurred in bringing the assets to their present location.

h) Revenue Recognition

i) Income from healthcare services is recognized on completed service contract method. The hospital collections of the company are net of rebates, concessions etc.

ii) Pharmacy sales are stated net of returns, discounts and inclusive of sales tax.

iii) Ambulance income is accounted on the basis of the contract entered between the parties on an accrual basis.

i) Leases

The Company has entered into a Land Lease arrangement for a period of 10 years with a further option to extend the lease. The Lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.

j) Prior Period Items and Extraordinary Items

Prior period item and extraordinary item are separately classified, identified and dealt with as required under Accounting Standard 5 on "Net Profit or Loss for the period, prior period items and changes in accounting policies".

k) Employee benefits

i. Defined Contribution Plan Provident Fund:

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon is paid at retirement The company and employees make monthly contributions to provident fund equal to a specified percentage of the covered employees salary. The contributions are made to a government administered provident fund. The monthly contributions are charged off to revenue,

ii. Defined benefit plan Gratuity:

The Company makes contribution to a scheme administered by the Life Insurance Corporation of India (LIC) to discharge gratuity liabilities to the employees. The Company accounts its liability for future gratuity benefits based on actuarial valuation as at the balance sheet, using Projected Unit Credit Method.

iii. Short term benefits

Short term employee benefits are benefits which are payable within twelve months after the end of the period in which the employees render service and these are measured at cost.

i) Income Tax

Tax expense comprises of current, deferred and fringe benefit tax Current income tax and fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes- down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will not be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

b) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split, if any.

c) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect tne current management estimates.

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