24. SIGNIFICANT ACCOUNTING POLICIES A. Accounting Convention The accounts are brpared on accrual basis under the historical cost convention and in accordance with the accounting principles generally accepted in India including the accounting standards referred to in Section 133 of the Companies Act,2013 read together with Rule 7 of the Companies ( Accounts ) Rules , 2014 and other relevant provisions of the said Act. B. Use of Estimates The brparation of financial statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amount of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results materialize. C. Revenue Recognition i) Revenue is recognized on accrual basis. Hospital Revenue comprises of income from services rendered to the out-patients and in-patients. Revenue also includes value of services rendered pending billing in respect of in-patients undergoing treatment as at the end of the year. ii) Under the "Served from India Scheme" introduced by Government of India, an exporter of service is entitled to certain export benefits on foreign currency earned. The revenue in respect of export benefits is recognized on the basis of the foreign exchange earned at the rate at which the said entitlement accrues to the extent there is no significant uncertainty as to the amount of consideration that would be derived and as to its ultimate collection. D. Fixed Assets Fixed Assets are stated at historical cost less accumulated debrciation. E. Debrciation i) Debrciation is charged on straight line method based on the useful life brscribed under Schedule II to the Companies Act, 2013. Where the life of asset is different from the useful life specified in the schedule, the debrciation is charged as per useful life of the asset determined by the company. ii) When impairment loss / reversal is recognized, the debrciation charge for the asset is adjusted in future periods to allocate the asset's revised carrying amount, less its residual value (if any) on a systematic basis over its remaining useful life. F. Intangible Assets Intangible Assets are stated at cost less accumulated amortisation. G. Amortisation of Intangible Assets i) Intangible assets are amortised on straight line method over the estimated useful life of the asset. ii) The useful life of the intangible assets for the purpose of amortisation is estimated to be three years. H. Impairment of Assets Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the Company's fixed assets. If any indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is determined on the basis of value in use. In assessing value in use, the estimated future cash flows are discounted to their brsent value based on an appropriate discount factor. Reversal of impairment losses, recognised in prior years, is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. However, the increase in the carrying amount of the asset due to reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of debrciation) had no impairment loss been recognised for the asset in prior years. I. Inventories i) Inventories are valued at lower of cost or net realizable value. ii) The cost in respect of the items constituting the inventories has been computed on FIFO basis. J. Expenditure incurred during the construction period In respect of new / major expansion of units, the indirect expenditure incurred during construction period up to the date of commencement of business, which is attributable to the construction of the project, is capitalised on various category of fixed assets on proportionate basis. K. Employee benefits Short Term Employee Benefits Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the Statement of Profit and Loss of the year in which the related service is rendered. Post Employment Benefits Defined Contribution Plans The Employer's contribution to Provident Fund and Employees Pension Scheme, a defined contribution plan is made in accordance with the Provident Fund Act,1952 read with the Employees Pension Scheme,1995. The Employer's contribution to Employees State Insurance is made on the basis of actual liability accrued and paid to authority Defined Benefit Plans The Employees Gratuity Fund Scheme, managed by HDFC Standard Life Insurance Company Ltd. is a defined benefit plan. The liability for gratuity is provided on actuarial basis. The Present Value of the company's obligation is determined on the basis of actuarial valuation at the year end and the fair value of plan assets is reduced from the gross obligations under the gratuity scheme to recognize the obligation on a net basis. Long Term Employee Benefits The liability for leave encashment and other compensated absences is recognized on the basis of actuarial valuation made at the end of the year. L. Foreign currency transactions Transactions denominated in foreign currency are recorded at the exchange rate brvailing on the date of the transaction. Exchange difference arising on the settlement of monetary items or on reporting the company's monetary items at rates different from those at which they are initially recorded during the year or, reported in brvious financial statements are recognised as income or expense in the year in which they arise. M. Borrowing costs Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of the asset. Other costs are recognized as expense in the year in which they are incurred. N. Taxation (i) Provision for Taxation comprises of Income Tax Liability on the profits for the year chargeable to tax and Deferred Tax resulting from timing differences between Book and Tax Profits. The Deferred Tax Asset/ Liability is provided in accordance with the Accounting Standard - 22 (AS-22), "Accounting for Taxes on Income", issued by the Institute of Chartered Accountants of India. O. Provisions and Contingent Liabilities A Provision is recognised (for Liabilities that can be measured by using a substantial degree of estimation). When : (a) the company has a brsent obligation as a result of a past event, (b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and (c) the amount of obligation can be reliably measured. Contingent liability is disclosed in the case of : (a) a brsent obligation arising from a past event when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or (b) a possible obligation, unless the probability of outflow in settlement is remote . 25. NOTES ON ACCOUNTS A. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 29,425,075 ( Previous Year Rs. 31,017,729/-). B. Contingent Liability i) Claims against the company not acknowledged as debt Rs. 375,460,000 (Previous Year Rs. 357,510,000/-) and interest thereon. This rebrsents suits filed against the company and the consultant doctor. Based on the facts and circumstances, possibility of any of the claims resulting in a major financial loss to the company is remote. Notwithstanding above, the company is adequately insured to mitigate the possibility of any loss. ii) Letters of credit / Bank guarantees outstanding on account of stores / spares and medical equipment amounting to Rs. 47,732,588/- (Previous Year Rs. 7,179,275/-). C. Under the terms of the agreement between the Government of NCT of Delhi and the company, the Hospital project of the company has been put up on the land belonging to Government of NCT of Delhi. The Government of NCT of Delhi is committed to meet the expenditure to the extent of Rs. 154,780,000/- out of IMCL Building fund account (funds earmarked for the period) together with the interest thereon for construction of definite and designated buildings while the balance amount of the cost of the building will be borne by the Company. As at 31st March, 2015, the aforesaid fund, together with interest thereon amounting to Rs. 192,357,946/- have been utilized towards progress payments to contractors, advances to contractors, payments for materials, etc. The ownership of the building between Government of NCT of Delhi and the company will be decided at a future date keeping in view the lease agreement. D. On a Public Interest Litigation (PIL) regarding free treatment in the hospital the Hon'ble Delhi High Court vide its order dated 22nd September, 2009 has held that free treatment provided by the hospital as per the terms of lease deed with Government of National Capital Territory of Delhi shall be inclusive of medicines and consumables. In response to the said order the company filed a Special Leave Petition in the Hon'ble Subrme Court for appropriate directions with a prayer to stay the judgment of the Hon'ble Delhi high court. The Hon'ble Subrme Court of India has admitted the Special Leave Petition and passed an interim order on 30.11.2009. In pursuance of the interim order, the Hospital is charging for medicines & medical consumables from patients referred by the Govt. of Delhi for free treatment in the Hospital. As the matter is sub judice, the financial impact in the matter can be quantified only upon a decision by the Hon'ble Subrme Court of India. E. Employee benefits (i) The summarized position of Post - employment benefits and long term benefits recognised in the Statement of Profit and Loss and the Balance Sheet as required in accordance with Accounting Standard - 15 (Revised) are as under: H. The Basic earning per share (EPS) disclosed in the Statement of Profit and Loss has been calculated by dividing the net profit for the year ended 31st March, 2015 attributable to equity shareholders by the weighted average number of equity shares outstanding during the said financial year. The net profit attributable to equity share holders is Rs. 324,911,605- (Previous Year Rs. 354,358,366/-) and the weighted average number of equity share is 91,673,000 (Previous Year 91,673,000) for this purpose. I. The Company has no suppliers who fall into the category of Micro, Small and Medium Enterprises as defined in "The Micro, Small and Medium Enterprises Development Act, 2006". Hence there is no amount due to Micro, Small and Medium Enterprises for the year ended 31st March, 2015 (Previous Year Rs. Nil). J. Fixed Assets includes expenditure amounting to Rs. 67,587,227/- (Previous Year Rs. 67,587,227/-) on building incurred by the company in connection with setting up 57 bedded hospital at Noida (U.P.). The hospital has been set up on land taken on lease by SABCO Medicare (P) Limited from Noida Authority. The rights of the lease deed has been acquired through an assignment deed in favour of the company from Apollo Hospital Enterprises Limited who are the Sub-lessee. The Sub-let agreement between SABCO and Apollo Hospital Enterprises Limited is due for renewal. Debrciaition on such building has been charged over the period of lease. K. Debrciation for the year has been provided on Straight Line Method on the basis of useful lives specified in Schedule-II of the Companies Act, 2013 as against the amount of debrciation calculated on the basis of rates of debrciation in respect of various assets contained in Schedule XIV to the Companies Act, 1956. In view of this change, carrying amounts of various tangible fixed assets as at 1st April, 2014 after retaining the residual value, an amount of Rs. 76,452,325/- has been recognised in the opening balance of retained earning net of deferred tax of Rs. 25,986,145/- where the useful life of an asset is nil. In other cases, the carrying amounts as at 1st April, 2014 have been debrciated over the revised remaining useful life of asset as per Schedule II or the remaining useful life determined by the company. The debrciation for the year is lower to the extent of Rs. 16,059,059/- on account of this change and accordingly the profit for the year is higher by Rs. 16,059,059/-. L. Stores and Spares consumed includes Rs. NIL (Previous Year Rs. 39,819,250/-) on account of write off in respect of unutilised export benefit due to significant uncertainty as to their ultimate collection as on 31st March, 2015. M. In accordance with the Accounting Standard, AS-28 on Impairment of Assets, the company has assessed whether any indications with regard to impairment of any assets exists as on the Balance Sheet date. Based on such assessment, it has been ascertained that there are no such indications and thereby no formal estimate of the recoverable amount has been made. N. A Sum of Rs. NIL (Previous year Rs. 4,693,544) is included under other expenses rebrsenting Net Prior Period Items. U. The company is engaged in the healthcare business, which in context of Accounting Standard 17 issued by the Institute of Chartered Accountants of India is considered the only business segment. V. All figures have been rounded off to the nearest rupee. As per our separate report of even date attached For S.C. Vasudeva & Co. Chartered Accountants Firm Reg. No. 000235N Abhinav Khosla Partner M. No. 87010 Dr. Prathap C. Reddy Vice Chairman Jaideep Gupta Managing Director P. Shivakumar Chief Financial and Operating Officer Ajay Kumar Singhal Vice President Cum Company Secretary Place : New Delhi Date : 26th May, 2015 |