Accounting Policies of Suraksha Diagnostic Ltd. Company

Mar 31, 2025

2. Material accounting policies
2.1 Basis of preparation

(a) Statement of Compliance with Indian Accounting
Standards (Ind AS)

These Standalone Financial Statements have been
prepared in accordance with the Indian Accounting
Standard ("Ind AS") as notified by Ministry of Corporate
Affair ("MCA") under section 133 of the Companies Act,
2013 (''Act'') read with Companies (Indian Accounting
Standard) Rule, 2015, as amended and other relevant
provision of the Act.

The Guidance Note on Division II - Schedule III to
the Companies Act, 2013 issued by the Institute of
Chartered Accountants of India ("ICAI") has been
followed in so far.

(b) Basis of measurement

These standalone financial statements have been
prepared on accrual basis and under historical cost
convention, except for the following:

- Certain financial assets and liabilities measured
at fair value (refer accounting policy on
financial instruments)

- Employees Defined benefit plans are recognised
at the net total of the fair value of plan assets,
and the present value of the defined benefit
obligation as per actuarial valuation.

(c) Current versus non-current classification

The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. An asset is treated as current when it is:

• Expected to be realised or intended to be sold or
consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months
after the reporting period, or

• Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability for
at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal
operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after
the reporting period, or

• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period

The terms of the liability that could, at the option of
the counterparty, result in its settlement by the issue
of equity instruments do not affect its classification.

The Company classifies all other liabilities
as non-current.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash
and cash equivalents. The Company has identified
twelve months as its operating cycle.

(d) Presentation currency and rounding off

These standalone financial statements are presented
in Indian Rupees (H) and all values are rounded to
nearest lakhs, unless otherwise indicated.

(e) Going Concern

The Company has prepared the standalone financial
statements on the basis that it will continue to operate
as a going concern.

(f) Use of estimates

The preparation of standalone financial statements
in conformity with Ind AS requires the Management
to make estimate and assumptions that affect the
reported amount of assets and liabilities as at the
Balance Sheet date, reported amount of revenue and
expenses for the year and disclosures of contingent
liabilities as at the Balance Sheet date.

The estimates and assumptions used in the accompanying
financial statements are based upon the Management''s
evaluation of the relevant facts and circumstances as at the
date of the standalone financial statements. Actual results
could differ from these estimates. Estimates and underlying
assumptions are reviewed on a periodic basis. Revisions
to accounting estimates, if any, are recognised in the year
in which the estimates are revised and in any future years
affected. Refer note 3 for details on estimates andjudgments.

2.2 Summary of material accounting policies

(a) Property, plant, and equipment

Property, plant and equipment, are stated at historical
cost of acquisition or construction less accumulated
depreciation and impairment losses, if any. The cost of
property, plant and equipment comprises its purchase
price net of any discounts and rebates, any import
duties and other taxes (other than those subsequently
recovered from the tax authorities), any directly
attributable expenditure on making the asset ready for
its intended use.

Subsequent costs are included in the asset''s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as a separate asset is
derecognised when replaced. All other repairs and
maintenance of revenue nature are charged to
Statement of Profit and Loss during the reporting year
in which they are incurred.

Property, plant and equipment are tested for
impairment whenever events or changes in
circumstances indicate that an asset may be impaired.
If an impairment loss is determined, the remaining
useful life of the asset is also subject to adjustment.
If the reasons for previously recognised impairment
losses no longer exists, such impairment losses are
reversed and recognised in income. Such reversal
shall not cause the carrying amount to exceed the
amount that would have resulted had no impairment
taken place during the preceding periods.

Property, plant and equipment not ready for the
intended use on the date of Balance Sheet are
disclosed as “Capital work-in-progress". Such items
are classified to the appropriate category of Property,
plant and equipment when completed and ready for
intended use. Advances given towards acquisition/
construction of Property, plant and equipment
outstanding at each Balance Sheet date are disclosed
as Capital Advances under “Other non-current assets".

Depreciation method, estimated useful lives
and residual value

Depreciation is provided for property, plant and
equipment on a straight-line basis so as to expense the
cost less residual value over their estimated useful lives as
prescribed in Schedule II of the Companies Act, 2013. The
estimated useful lives and residual values are reviewed
at the end of each reporting period, with the effect of any
change in estimate accounted for on a prospective basis.

Assets purchased during the year costing H 5,000 or
less are depreciated at the rate of 100%. Depreciation
on sale/disposal of property plant and equipment is
provided up to the date preceding the date of sale/
disposal as the case may be. Gains and losses on
disposals are determined by comparing the sale
proceeds with carrying amount and accordingly
recorded in the Statement of Profit and Loss during
the reporting year in which they are sold/disposed.

The estimated useful lives are as mentioned below

“Leasehold improvements are amortised over the
period of the lease.

(b) Intangible assets

Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation
and accumulated impairment losses. The useful lives of all
the intangible assets of the Company are assessed as finite.

Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with
a finite useful life are reviewed at least at the end of
each reporting period. The amortisation expense on
intangible assets with finite lives is recognised in the
statement of profit and loss unless such expenditure
forms part of carrying value of another asset.

An intangible asset is derecognised upon disposal (i.e.,
at the date the recipient obtains control) or when no
future economic benefits are expected from its use or
disposal. Any gain or loss arising upon derecognition
of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the
asset) is included in the statement of profit and loss
when the asset is derecognised.

(c) Leases

Identifying leases

The Company assesses at contract inception whether
a contract is or contains a lease. That is, if the contract
conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
Lease contracts entered by the Company majorly
pertains for premises and equipments taken on lease
to conduct its business in the ordinary course.

Company as a lessee

The Company had adopted Ind AS 116 “Leases" using
the modified retrospective approach by applying the
standard to all leases existing at the date of initial
application. The Company also elected to use the
recognition exemption for lease contracts that, at the
commencement date, have a lease term of twelve
months or less and do not contain a purchase option
(“short-term leases") and lease contracts for which the
underlying asset is of low value (“low value assets").
The Company recognises lease liabilities to make
lease payments and right-of-use assets representing
the right to use the underlying assets.

Right-of-use assets

The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made
at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated
on a straight-line basis over the shorter of the lease term
and the estimated useful lives of the assets.

The right-of-use assets are also subject to impairment.
Refer to the accounting policies in section 2.2(d)
“Impairment of non-financial assets".

Lease Liabilities

At the commencement date of the lease, the Company
recognises lease liabilities measured at the present
value of lease payments to be made over the lease term.

The lease payments include fixed payments (including
in substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on
an index or a rate, and amounts expected to be paid
under residual value guarantees. The lease payments
also include the exercise price of a purchase option
reasonably certain to be exercised by the Company
and payments of penalties for terminating the lease,
if the lease term reflects the Company exercising the
option to terminate. Variable lease payments that
do not depend on an index or a rate are recognised
as expenses (unless they are incurred to produce
inventories) in the period in which the event or
condition that triggers the payment occurs.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term,
a change in the lease payments (e.g., changes to
future payments resulting from a change in an index
or rate used to determine such lease payments) or a
change in the assessment of an option to purchase
the underlying asset.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of
12 months or less from the commencement date and
do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to
leases of office equipment that are considered to be
low value. Lease payments on short-term leases and
leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.

(d) Impairment of non financial assets

The Company assesses, at each reporting date,
whether there is an indication that an asset may be
impaired. If any indication exists, or when annual
impairment testing for an asset is required, the
Company estimates the asset''s recoverable amount.
An asset''s recoverable amount is the higher of an
asset''s or cash-generating unit''s (CGU) fair value less
costs of disposal and its value in use. The recoverable
amount is determined for an individual asset, unless
the asset does not generate cash inflows that are
largely independent of those from other assets or
group of assets. When the carrying amount of an

asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to its
recoverable amount.

In assessing value in use, the estimated future cash
flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset. In determining fair value less
costs of disposal, recent market transactions are taken
into account. If no such transactions can be identified,
an appropriate valuation model is used. These
calculations are corroborated by valuation multiples,
quoted share prices for publicly traded companies or
other available fair value indicators.

The Company bases its impairment calculation on
detailed budgets and forecast calculations, which are
prepared separately for each of the Company''s CGUs to
which the individual assets are allocated. These budgets
and forecast calculations generally cover a period of
five years. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after
the fifth year. To estimate cash flow projections beyond
periods covered by the most recent budgets/forecasts,
the Company extrapolates cash flow projections in
the budget using a steady or declining growth rate for
subsequent years, unless an increasing rate can be
justified. In any case, this growth rate does not exceed
the long-term average growth rate for the products,
industries, or country or countries in which the Company
operates, or for the market in which the asset is used.

Impairment losses of continuing operations, including
impairment on inventories, are recognised in the
statement of profit and loss.

(e) Investments in subsidiaries

A subsidiary is an entity that is controlled by another
entity. The Company''s investments in its subsidiaries
are accounted at cost less impairment if any.
Investments are reviewed for impairment if events or
changes in circumstances indicate that the carrying
amount may not be recoverable.

(f) Inventories

Inventories comprises of reagents, chemicals, surgical
and laboratory supplies and stores are initially
recognised at cost, and subsequently at the lower
of cost and net realizable value. Cost comprises all
costs of purchase, costs of conversion and other costs
incurred in bringing the inventories to their present
location and condition. Cost is determined on first in
first out method (FIFO) basis.

(g) Cash and cash equivalents

Cash and cash equivalents includes cash in hand,
deposits held at call with banks, other short term highly
liquid investments with original maturities of three
months or less, and - for the purpose of the statement
of cash flows - bank overdrafts. Bank overdrafts are
shown within borrowings in current liabilities on the
Standalone Balance Sheet.

(h) Share Capital

Financial instruments issued by the Company are
classified as equity only to the extent that they do not
meet the definition of a financial liability or financial
asset. The Company''s ordinary shares are classified as
equity instruments.

(i) Financial assets

(i) Initial recognition and measurement

At initial recognition, financial asset is measured
at its fair value plus the transaction cost directly
attributable to the acquisition of the financial asset
in the case of a financial asset measured not at
fair value through profit or loss. Transaction costs
of financial assets carried at fair value through
profit or loss are expensed in profit or loss.

(ii) Subsequent measurement

For purposes of subsequent measurement,
financial assets are classified in
following categories:

(a) at amortized cost; or

(b) at fair value through other
comprehensive income; or

(c) at fair value through profit or loss.

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

The Company does not hold any Financial
assets classified at fair value through other
comprehensive income; or at fair value through
profit or loss. Accordingly, the Company holds
only financial assets measured at amortised cost ,
therefore accounting policy of financial assets
classified at amortised cost stated below:

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. Interest income from
these financial assets is included in finance income
using the effective interest rate method (EIR).

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortization is included
in finance income in the Statement of Profit and Loss.

(iii) Impairment of financial assets

In accordance with Ind AS 109 “Financial
Instruments", the Company applies Expected
Credit Loss (ECL) model for measurement and
recognition of impairment loss on the following
financial assets and credit risk exposure:

a) Trade receivables:

The Company follows ‘simplified approach''
for recognition of impairment loss
allowance on trade receivables resulting
from transactions within the scope of
Ind AS 115 “Revenue from Contracts with
Customers". The application of simplified
approach does not require the Company
to track changes in credit risk. Rather, it
recognises impairment loss allowance
based on lifetime ECL at each reporting
date, right from its initial recognition.

b) Other financial assets:

For recognition of impairment loss on
financial assets and risk exposure, 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 years, 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 is the expected credit loss
resulting from all possible default events over
the expected life of a financial instrument.
The 12 month ECL is a portion of the lifetime
ECL which results from default events that
are possible within 12 months after year end.

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

at the original effective interest rate (EIR).
When estimating the cash flows, an entity
is required to consider all contractual
terms of the financial instrument (including
prepayment, extension etc.) over the
expected life of the financial instrument.
However, in rare cases when the expected
life of the financial instrument cannot
be estimated reliably, then the entity is
required to use the remaining contractual
term of the financial instrument.

ECL impairment loss allowance (or reversal)
recognised during the year is recognised as
income/expense in the Statement of Profit
and Loss. For financial assets measured
at amortised cost, ECL is presented as
an allowance, i.e. as an integral part of
the measurement of those assets in the
Balance Sheet. 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.

(iv) Derecognition of financial assets

A financial asset is derecognised only when:

(a) the contractual rights to receive
cash flows from the financial asset is
transferred or expired.

(b) retains the contractual rights to receive
the cash flows of the financial asset, but
assumes a contractual obligation to pay the
received cash flows in full without material
delay to one or more recipients.

Where the financial asset is transferred then in
that case financial asset is derecognised only if
substantially all risks and rewards of ownership
of the financial asset is transferred. Where the
entity has not transferred substantially all risks
and rewards of ownership of the financial asset,
the financial asset is not derecognised.

Where the financial asset is neither transferred,
nor the entity retains substantially all risks and
rewards of ownership of the financial asset,
then in that case financial asset is derecognised
only if the Company has not retained control
of the financial asset. Where the Company
retains control of the financial asset, the asset
is continued to be recognised to the extent of
continuing involvement in the financial asset.
In that case, the Company also recognises an

associated liability. The transferred asset and
the associated liability are measured on a basis
that reflects the rights and obligations that the
Company has retained.

On derecognition of a financial asset, the
difference between the carrying amount and
the consideration received is recognised in the
Statement of Profit and Loss.

(j) Financial liabilities and equity instruments
Classification as debt or equity

An instruments issued by a 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.

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 recognised at the proceeds
received, net of direct issue costs.

Repurchase of the Company''s own equity instruments
is recognised and deducted directly in equity. No gain
or loss is recognised in Statement of Profit and Loss
on the purchase, sale, issue or cancellation of the
Company''s own equity instruments. Dividend paid on
equity instruments are directly reduced from equity.

Financial liabilities

(i) Initial recognition and measurement

Financial liabilities are classified, at initial
recognition, as financial liabilities at fair value
through profit or loss or at amortized cost,
as appropriate.

All financial liabilities being loans, borrowings
and payables are recognised net of directly
attributable transaction costs.

(ii) Subsequent measurement

The measurement of financial liabilities depends
on their classification, as described below:

* Financial liabilities at amortised cost

* Financial liabilities at fair value
through profit or loss

The Company does not owe any financial
liability which is either classified or designated
at fair value though profit or loss. Accordingly,
the Company holds only financial liabilities
designated at amortised cost , therefore

accounting policy of financial liabilities classified
at amortised cost stated below:

Financial liabilities at amortised cost

All the financial liabilities of the Company are
subsequently measured at amortised cost using
the EIR method. Gains and losses are recognised
in the Statement of Profit and Loss when the
liabilities are derecognised as well as through
the EIR amortization process. Amortised cost is
calculated by taking into account any discount or
premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortization
is included as finance costs in the Statement of
Profit and Loss.

(iii) Derecognition

A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expired. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification
is treated as the derecognition of the original
liability and the recognition of a new liability. The
difference in the respective carrying amounts is
recognised in the Statement of Profit and Loss
as finance costs.

(iv) Offsetting financial instruments

Financial assets and liabilities are offset and the
net amount is reported in the Balance Sheet
where there is a legally enforceable right to
offset the recognised amounts and there is an
intention to settle on a net basis or realize the
assets and settle liabilities simultaneously. The
legally enforceable right must not be contingent
on future events and must be enforceable in
the normal course of business and in the event
of default, insolvency or bankruptcy of the
Company or the counterparty.

Financial instruments issued by the Company are
classified as equity only to the extent that they
do not meet the definition of a financial liability or
financial asset. The Company''s ordinary shares
are classified as equity instruments.

(k) Fair value measurement

A number of assets and liabilities included in the

Company''s financial statements require measurement

at, and/or disclosure of, fair value.

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:

* In the principal market for the asset or liability, or

* In the absence of a principal market, in the most
advantageous market for the asset or liability
accessible to the Company.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximizing the use of relevant observable inputs and
minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the standalone financial statements are
categorized within the fair value hierarchy, described
as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:

* Level 1 — Quoted (unadjusted) market prices in
active markets for identical assets or liabilities

* Level 2 — Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable

* Level 3 — Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable