Accounting Policies of Chennai Meenakshi Multispeciality Hospital Ltd. Company

Mar 31, 2024

2. MATERIAL ACCOUNITNG POLICIES

(a). Revenue Recognition

The Company earns revenue primarily by providing healthcare services and sale of
pharmaceutical products.

Revenue is recognised upon transfer of control of promised products or services to
customers in an amount that reflects the consideration which the Company expects
to receive in exchange for those products or services. When there is uncertainty on
ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.

a. Healthcare Service: Revenue primarily comprises fees charged for inpatient and
outpatient hospital services. Services include charges for accommodation, theatre, medical
professional services, equipment, radiology, laboratory and pharmaceutical goods used.The
performance obligations for this stream of revenue include accommodation, surgery,
medical/clinical professional services, supply of equipment, and supply of pharmaceutical
and related products. The patient is obligated to pay for healthcare services at
amounts estimated to be receivable based upon the Company''s standard rates or at rates
determined under reimbursement arrangements. The reimbursement arrangements are
generally withthird party administrators.

Revenue is recognised at the transaction price when each performance obligation is
satisfied at a point in time when inpatient/ outpatients has actually received the
service except for few specific services where the performance obligation is satisfied over a
period of time. Revenue from health care patients, third party payers and other
customers are billed at our standard rates net of contractual or discretionary
allowances, discounts or rebates to reflect the estimated amounts to be receivable
from these payers.

b. Pharmacy Sales: Pharmacy Sales where the performance obligation is satisfied at a
point in time, revenue is recognised when the control of goods is transferred to the
customer.

Interest income from a financial asset is recognised when it is probable that the
economic benefits will flow to the Company and the amount of income can be
measured reliably. Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset''s net carrying amount on initial recognition. Revenue is
measured based on the transaction price, which is the fixed consideration adjusted for
discounts, estimated disallowances, amounts payable to customer in the nature of
commissions, principal versus agent considerations, loyalty credits and any other rights
and obligations as specified in the contract with the customer. Revenue al so excludes
taxes collected from customers and deposited back to the respective statutory
authorities.

(b). Property, Plant and Equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. These tangible assets are held for use in
production,supply of goods or services or for administrative purposes.

Cost comprises purchase cost (net of tax credits, wherever applicable) freight, duties
and other expenses directly incidental to acquisition, bringing the asset to the location
and installation including site restoration up to the time when the asset is ready for intended
use. Such costs also include borrowing cost if the recognition criteria are met.

Freehold land is not depreciated. Expenditure incurred after the property, plant and
equipment have been put into operation are normally charged to the statements of
profit and loss in the period in which the costs are incurred. Major inspection, repairs and
overhaul expenditure is capitalized if the recognition criteria are met. Gains and losses on
disposal of an item of property, plant and equipment are determined by comparing the
proceeds from
disposal with the carrying amount of property, plant and equipment, and are recognized
netwithin other income in statement of profit and loss.

Depreciation: Depreciation on Property, Plant and Equipment is provided for on straight-
line-basis, over the useful life of the asset as provided by the Schedule II of the
Companies Act, 2013 or the rates derived based on the economic useful life of the asset
as technically ascertained by the management at the end of each financial year.

(c) . Capital Work - in- Progress

Amounts paid towards the acquisition of property, plant and equipment outstanding as
of each reporting date are recognized as capital advance and the cost of property, plant
and equipment not ready for intended use before such date are disclosed under capital
work- in-progress.

Commencement of Depreciation related to property, plant and equipment classified as
Capital work in progress (CWIP) involves determining when the assets are available for their
intended use. The criteria the company uses to determine whether CWIP are available
for their intended use involves subjective judgments and assumptions about the
conditions necessary for the assets to be capable of operating in the intended manner.

(d) . Leased Assets

Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other leases are
classified as operating leases.

The lease liability is initially measured at the present value of the lease payments that are
not paid at the commencement date, discounted by using the rate implicit in the lease.
If this rate cannot be readily determined, the Company uses its incremental borrowing
rate.

Rental income from operating leases is generally recognised on a straight-line basis over the
term of the relevant lease. Where the rentals are structured solely to increase in line
with expected general inflation to compensate for the Company''s expected inflationary
cost increases, such increases are recognised in the year in which such benefits accrue.

Initial direct costs incurred in negotiating and arranging an operating lease are added to
the carrying amount of the leased asset and recognised on a straight-line basis over the
lease term.

(e) . Borrowing Cost

Borrowings and Borrowing costs

Borrowings are recognised initially at fair value, net of transaction costs incurred.
Borrowings are subsequently stated at amortised cost. Any difference between the proceeds
(net of transaction costs) and the redemption value is recognised in the statement of
profit and loss over the period of the borrowings using the effective interest rate
method. Borrowings are classified as current liabilities unless the Company has an
unconditional right to defer settlement of the liability for at least 12 months after the
reporting date.

Borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to
get ready for their intended use, are added to the cost of those assets, until such time
as the assets are substantially ready for their intended use.

Interest income earned on the temporary investment of specific borrowings pending
their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalisation.

All other borrowing costs are recognised in statement of profit and loss in the period in
which they are incurred.

(f) . Inventories

Inventories of medical consumables, drugs and General stores are valued at cost or lower
of net realizable value. Net Realizable Value represents the estimated selling price in the
ordinary course of business less estimated costs necessary to make the sale. The cost of
inventories shall be assigned by using the first-in, first-out (FIFO) formula.

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Mar 31, 2015

A) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, in accordance with the provisions of the Companies Act 2013 and the Companies {Accounting Standard) Rules 2006 (Indian GAAP) as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

B) Use of Estimates

The preparations of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that effect the reported amounts of assets and liabilities of the financial statements and the reported amounts of revenues and expenses during the reporting period . Differences between actual results and estimates where ever recognized in the financial statements for period in which such results are known and being material.

C) Revenue Recognition

Income from Hospital collections including the Pharmacy sales are accounted for on accrual basis on raising the invoices and is exclusive of tax. The charges recoverable in respect of services rendered by the company to in-patients till the year end, and not due for billing has been treated as IP collections Accrued (pending bill) under "other Current assets".

D) Inventories

inventories are valued at cost or net realizable value whichever is lower under FIFO method. Inventories include Medicines, Lab Chemicals, Consumables stores and spares.

E) Fixed Assets

a) Owned Assets

Fixed assets are stated at cost less Accumulated depreciation. Costs incurred till the asset is ready for use are Capitalized/Allocated to various items of Fixed assets. The cost of improvement to Leased Assets are capitalized.

b) Leased Assets

Fixed assets acquired under Hire-Purchase agreements are capitalized to the extent of Principal value, while finance charges are charged to revenue on accrual basis.

c) Impairment of Assets

The carrying amount of assets are reviewed at each Balance sheet date to ascertain if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of such assets exceeds its recoverable value as contained in AS 28 (Impairment of Assets) issued by the Companies (Accounting Standard Rules), 2006. An impairment loss is charged to Profit & Loss Account in the year in which asset is identified as impaired. The impairment loss recognized during a prior period is reversed if there has been a change in the estimate of the recoverable amount.

d) Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue, during the period in which they are incurred.

F) Depreciation

Depreciation on fixed assets is provided for on straight-line basis, at the higher of the rates as specified in Schedule 11 to the Act or the rates derived based on the economic useful life of the asset as technically ascertained by the management. Cost of improvement to leased assets are amortized over the period of lease.

H) Employee Benefits

i) Defined Contribution Plan:

Provident Fund / Employee State Insurance Scheme

Contributions to Provident Fund and Employee State Insurance Schemes are made on monthly basis, at the rate prescribed by the Employees Provident Fund and Miscellaneous Provisions Act, 1971 and are charged to Profit and Loss Account in the year of contribution.

ii) Defined Benefit Plan: Gratuity

The accrued liability towards Gratuity due to the employees on their retirement is ascertained on Actuarial basis using projected unit credit method and balance in excess of fair value of plan assets as at the year end is duly provided for.

iii) Compensated absences Accrued Leave Accrued value of compensated absences is provided for based on actuarial valuations as at the year end and duly provided for.

I) Earnings Per Share

The number of shares used in computing basic earnings per share is the Weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises of Weighted average shares considered for deriving basic earnings per share and also the Weighted average number of shares, if any, which would have been issued on the conversion of all dilutive potential equity share.

J) Taxation

Provision for current tax is made in accordance with the Provisions of the Income tax Act, 1961. Timing differences between accounting income and taxable income capable of being reversed in subsequent years are recognized as Deferred Tax.

K) Provisions & Contingent Liabilities

Provisions are recognized when the company has a present obligation as a result of a past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent Liabilities are not recognized but are disclosed at their estimate value in the notes to the Accounts. Contingent Assets are neither recognized nor disclosed in the accounts.

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Mar 31, 2014

A) Basis of Preparation of Financial Statements

The financial statements are prepared under the historical cost convention, in accordance with the provisions of the Companies Act 1956 and the Companies (Accounting Standard) Rules 2006 (Indian GAAP) as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

B) Use of Estimates

The preparations of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that effect the reported amounts of assets and liabilities of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates where ever recognized in the financial statements for period in which such results are known and being material.

C) Revenue Recognition

Income from Hospital collections including the Pharmacy sales are accounted for on accrual basis on raising the invoices and is exclusive of tax. The charges recoverable in respect of services rendered by the company to in-patients till the year end, and not due for billing has been treated as IP collections Accrued (pending bill) under "other Current assets".

D) Inventories

Inventories are valued at cost or net realizable value whichever is lower under FIFO method. Inventories include Medicines, Lab Chemicals, Consumables stores and spares.

E) Fixed Assets

a) Owned Assets

Fixed assets are stated at cost less Accumulated depreciation. Costs incurred till the asset is ready for use are Capitalized/Allocated to various items of Fixed assets. The cost of improvement to Leased Assets are capitalized.

b) Leased Assets

Fixed assets acquired under Hire-Purchase agreements are capitalized to the extent of Principal value, while finance charges are charged to revenue on accrual basis.

c) Impairment of Assets

The carrying amount of assets are reviewed at each Balance sheet date to ascertain if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of such assets exceeds its recoverable value as contained in AS 28 (Impairment of Assets) issued by the Companies (Accounting Standard Rules), 2006. An impairment loss is charged to Profit 6t Loss Account in the year in which asset is identified as impaired. The impairment loss recognized during a prior period is reversed if there has been a change in the estimate of the recoverable amount.

d) Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue, during the period in which they are incurred.

e) Depreciation

Depreciation on Fixed asset is provided on straight line method in accordance with the Schedule XIV of the Companies Act, 1956. Cost of improvement to leased assets are amortized over the period of lease.

F) Foreign Currency Transactions

Foreign Currency Transactions are recorded at the Exchange rates prevailing on the date of transaction. Monetary items appearing in the Balance sheet as at the year-end are converted at the exchange rate prevalent as on that date and the difference, if any, is charged/credited to Profit Et Loss A/c, as the case may be.

G) Employee Benefits

i) Defined Contribution Plan:

Provident Fund / Employee State Insurance Scheme

Contributions to Provident Fund and Employee State Insurance Schemes are made on monthly basis, at the rate prescribed by the Employees Provident Fund and Miscellaneous Provisions Act, 1971 and are charged to Profit and Loss Account in the year of contribution.

ii) Defined Benefit Plan:

Gratuity

The accrued liability towards Gratuity due to the employees on their retirement is ascertained on Actuarial basis using projected unit credit method and balance in excess of fair value of plan assets as at the year end is duly provided for.

iii) Compensated Absences Accrued Leave

Accrued value of compensated absences is provided for based on actuarial valuations as at the year end and duly provided for.

H) Earnings Per Share

The number of shares used in computing basic earnings per share is the Weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises of Weighted average shares considered for deriving basic earnings per share and also the Weighted average number of shares, if any, which would have been issued on the conversion of all dilutive potential equity share.

I) Taxation

Provision for current tax is made in accordance with the Provisions of the Income tax Act, 1961. Timing differences between accounting income and taxable income capable of being reversed in subsequent years are recognized as Deferred Tax.

J) Provisions 8t Contingent Liabilities

Provisions are recognized when the company has a present obligation as a result of a past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent Liabilities are not recognized but are disclosed at their estimate value in the notes to the Accounts. Contingent Assets are neither recognized nor disclosed in the accounts.

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Mar 31, 2012

A) Basis of Preparation of Financial Statements:

The financial statements are prepared under the historical cost convention, in accordance with the provisions of the Companies Act, 1956 and the Companies (Accounting Standards) Rules 2006, as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

B) Use of Estimates:

The preparation of the financial statements in conformity with generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of income and expenditure for the year. Actual results could differ from these estimates. Any revision in accounting estimates are recognized in the period in which the results are known / materialized.

C) Revenue Recognition:

Income from Hospital collections including the Pharmacy sales are accounted for on accrual basis on raising the invoices and is exclusive of Tax. The charges recoverable in respect of services rendered by the Company to in-patients till the year end, and not due for billing has been treated as IP Collections Accrued (pending bill) under'Other Current Assets'.

D) Inventories:

Inventories are valued at cost or net realizable value whichever is lower under FIFO method. Inventories include Medicines, Lab Chemicals, Consumables stores and spares.

E) Cash Flow statement:

Cash flows from operating activities are reported using the indirect method, whereby net 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 regular revenue generating, investing and financing activities of the company are segregated.

F) Fixed Assets:

i) Owned Assets:

Fixed Assets are stated at cost less Accumulated Depreciation. Costs incurred till the asset is ready for use are Capitalized / Allocated to various items of Fixed Assets. The costs of improvement to Leased Assets are capitalized.

ii) Leased Assets:

Fixed Assets acquired under Hire- Purchase agreements are capitalized to the extent of principal value, while finance charges are charged to revenue on accrual basis.

iii) Impairment of Assets:

The carrying amounts of Assets are reviewed at each Balance Sheet date to ascertain if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of such asset exceeds its recoverable value as contained in AS 28 (Impairment of Assets) issued by the Companies (Accounting Standard Rules), 2006. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized during a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

iv) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are charged to revenue, during the period in which they are incurred.

v) Depreciation:

Depreciation on Fixed Asset is provided on straight-line method in accordance with the Schedule XIV of the Companies Act 1956. Costs of Improvement to leased Assets are amortized over the period of the Lease.

G) Foreign Currency Transactions:

Foreign Currency transactions are recorded at the Exchange rates prevailing on the date of transaction. Monetary items appearing in the Balance Sheet as at the year-end are converted at the exchange rate prevalent as on that date and the difference, if any, is charged/credited to Profit and loss A/C, as the case may be.

H) Employee Benefits:

a. Defined Contribution

Contribution to the Provident Fund is made on monthly basis, at the rate prescribed by the Employees' Provident Fund and Miscellaneous Provisions Act, 1971 and is charged to the Revenue. _

b. Defined Benefit

The Accrued liability towards gratuity due to employees on their retirement is ascertained on the basis of actuarial valuation as at the year end and duly provided for.

c. Compensated Absences

Liability towards Long Term Compensated absences is determined on the basis of actuarial valuation as at the year end and duly provided for.

I) Earnings Per Share:

The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share and also the weighted average number of shares, if any, which would have been issued on the conversion of all dilutive potential equity shares.

J) Taxation:

Provision for Current Tax is made in accordance with the Provisions of the Income Tax Act, 1961. Timing differences between accounting income and taxable income capable of being reversed in subsequent years are recognized as Deferred Tax.

K) Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognized when the company has a present obligation as a result of past event and it is probable that an out flow of resources will be required to settle such obligation, in respect of which a reliable estimate can be made. Contingent Liabilities are not recognized but are disclosed at their estimated value in the notes to the Accounts. Contingent Assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2010

A) Basis Of Preparation Of Financial Statements:

The financial statements are prepared under the historical cost convention, in accordance with the provisions of the Companies Act, 1956 and the Companies (Accounting Standards) Rules 2006, as adopted consistently by the Company. All income and expenditure having a material bearing on the financial statements are recognized on accrual basis.

b) Use of Estimates:

The preparation of the financial statements in conformity with generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of income and expenditure for the year. Actual results could differ from these estimates. Any revision in accounting estimates are recognized in the period in which the results are known / materialized.

c) Revenue Recognition:

Income from Hospital collections including the Pharmacy sales are accounted for on accrual basis on raising the invoices and is exclusive of Value Added Tax (for pharmacy sales) and net of discounts. The service rendered by the Company to in-patients till the year end, and not due for billing has been treated as IP Collection Accrued (pending bill) underOther Current Assets.

d) Inventories:

Inventories are valued at cost or net realizable value whichever is lower. Inventories include Medicines, Lab Chemicals, Consumables stores and spares.

e) Cash Flow statement:

Cash flows from operating activities are reported using the indirect method, whereby net 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 regular revenue generating, investing and financing activities of the company are segregated.

f) Prior Period Items and Extraordinary Items:

Prior period items and extraordinary items 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" specified by the Companies (Accounting Standards) Rules, 2006.

g) Fixed Assets:

a) Fixed Assets:

Fixed Assets are stated at cost less Accumulated Depreciation. All costs including financial costs till the asset is ready for use are Capitalized / Allocated to various items of Fixed Assets. The costs of improvement to Leased Assets are capitalized.

Capital work-in-progress comprises of advances paid to acquire fixed assets and amounts expended on development/acquisition of fixed assets that are not yet ready for their intended use at the Balance sheet date. Expenditure during construction period incurred on projects pending implementation is included under capital work-in- progress.

b) Leased Assets:

Fixed Assets acquired under Hire-Purchase agreements are capitalized to the extent of principal value, while finance charges are charged to revenue on accrual basis.

c) Impairment of Assets:

The carrying amounts of Assets are reviewed at each Balance sheet date to ascertain if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of such asset exceeds its recoverable value as contained in AS 28 (Impairment of Assets) issued by the Companies (Accounting Standard Rules), 2006. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized during a prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

d) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are charged to revenue, during the period in which they are incurred.

e) Depreciation:

Depreciation on Fixed Asset is provided on straight-line method in accordance with the Schedule XIV of the Companies Act 1956. Costs of Improvement to leased Assets are amortized over the period of the Lease.

h) Foreign Currency Transactions:

Foreign Currency transactions are recorded at the Exchange rates prevailing on the date of transaction. Monetary items appearing in the Balance Sheet as at the year-end are converted at the exchange rate prevalent as on that date and the difference, if any, is charged/credited to Profit and loss A/C, as the case may be.

i) Employee Benefits:

a. Defined Contribution

Contribution to the Provident Fund is made on monthly basis, at the rate prescribed by the Employees Provident Fund and Miscellaneous Provisions Act, 1971 and is charged to the Revenue.

b. Defined Benefit

The Accrued liability towards gratuity due to employees on their retirement is ascertained on the basis of actuarial valuation as at the year end and duly provided for.

c. Compensated Absences

Liability towards Long Term Compensated absences is determined on the basis of actuarial valuation as at the year end and duty provided for.

j) Earnings Per Share

The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share and also the weighted average number of shares, if any, which would have been issued on the conversion of all dilutive potential equity shares.

k) Taxation:

Provision for Current Tax is made in accordance with the Provisions of the Income Tax Act, 1961. Timing differences between accounting income and taxable income capable of being reversed in subsequent years are recognized as Deferred Tax.

l) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized when the company has a present obligation as a result of past event and it is probable that an out flow of resources will be required to settle such obligation, in respect of which a reliable estimate can be made. Contingent Liabilities are not recognized but are disclosed at their estimated value in the notes to the Accounts. Contingent Assets are neither recognized nor disclosed in the financial statements.