‘MedPlus Health Services Limited (formerly known as MedPlus Health Services Private Limited)
Annexure: V

‘Summary of Significant Accounting Policies

(All amounts are in Rs. i millions except as otherwise stated)

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Summary of significant accounting policies (continued)

Financial Instruments (continued)
Derecognition

AA financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (Je. removed from the Groups
balance sheet) when:

«the rights to receive Cash flows from the asset have expired, oF
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third
parly under a ‘pass-through’ arrangement; and cither (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it valuates if and to what extent it has retained
the risks and rewards of ownership. When it has neither transferred nor retained substantially all ofthe risks and rewards of the asset, nor transferred control of the asset, the
Group continues to recognise the transferred asset to the extent of the Group's continuing involvement. In that case, the Group 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 Group has retained,

 

 

Continuing involvement that takes the form of a guarantee over the tran stand the maximum,

amount of consideration that the Group could be required to repay.

ferred asset is measured at the lower of the original carrying amount of the as

 

Impairment of financial assets
In accordance with Ind AS 109, the Group applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and
credit risk exposure:

4) Financial assets that are debt instruments, and are measured at amortised cost e.g, loans, debt securities, deposits, trade receivables and bank balance

b) Financial assets that are debt instruments and are measured as at FVTOCL
In case of trade receivables , the Group follows a simplified approach wherein an amount equal to lifetime ECL is measured and recognised as loss allowance. The

application of simplified approach does not require the Group to track changes in credit risk. Rather, it recognises 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 and risk exposure, the Group 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 a subsequent period, credit quality of the instrament improves such that there is no longer a
significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.

Lifetime ECL ate the expected credit losses 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 the reporting date.

ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the entity expects to receive (i.e,
all cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

~ All contractual terms of the financial instrument (including prepayment, extension, call and similar options) 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

= Cash flows from the sale of collateral Held or other credit enhancements that are integral to the contractual terms,

Asa practical expedient, the Group uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its
historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates, At every reporting date, the historical
‘observed default rates are updated and changes in the forward-looking estimates are analysed,

ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the Statement of Profit and Loss under the head ‘Other
expenses’. The balance sheet presentation for various financial instruments are Financial assets measured as at amortised cost, contractual revenue receivables and lease
receivables:

ECL is presented as an allowance, ie., 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 Group does not reduce impairment allowance from the gross carrying amount.

Financial liabilities
Financial liability, Equity and Compound Financial Instruments

‘The debt and equity instruments that are issued are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
Initial recognition and measurement

Financial liabilities:
Financial liabilities are classified, at intial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate,

All financial liabilities are recognised initially at fair value and, inthe case of loans and borrowings and payables, net of directly attributable transaction costs.

‘The Group financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts

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