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.
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
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
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
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
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
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§.
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
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.
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
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