‘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)
Fair Value Measurement

In determining the fair value of its financial instruments, the Group uses following hierarchy and assumptions that are based on market conditions and risks existing at each
reporting date

All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorised 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 evel 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

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period,

When the fair values of financial assets and financial liabilities recorded in the financial statements cannot be measured based on quoted prices in active markets, their fair
value is measured using valuation techniques ineliuding the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but
where this is not feasible, a degree of judgements is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk
volatility and discount rates. Changes in assumptions about these factors could affect the reported fair value of financial instruments,

Revenue recognition
In March 2018, the Ministry of Corporate Affairs ("MCA") has notified Ind AS 115, Revenue from Contracts with Customers, which is effective for accounting periods
beginning on or after 1 April 2018, This comprehensive new standard supersedes Ind AS 18, Revenue, Ind AS 11, Construction contracts and related interpretations. The new
standard amends revenue recognition requirements and establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and
cash flows arising from contracts with customers.

‘The Group adopted Ind AS 115 effective as of 1 April 2018, The Group applied the modified retrospective method upon adoption of Ind AS 115 on 1 April 2018. This method
requires the recognition of the cumulative effect of initially applying Ind AS 115 to retained earnings and not to restate prior years. Overall, the application of this standard,
did not have a material impact on the Group revenue streams.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the
payment is being made. Revenue is measured at the fair value of the consideration received of receivable, taking into account contractually defined terms of payment and
excluding taxes or duties collected on behalf of the government.

However, Goods and Service Tax (GST) is not received by the Group on its own account. Rather, itis tax collected on value added to the commodity by the seller on behalf of
the government. Accordingly, itis excluded from revenue.
‘The specific recognition criteria described below must also be met before revenue is recognised.

Sale of goods
Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the
‘goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume
rebates.

Sales returns

Provision is created based on historical experience of sales returns. Returns are accepted upto 3 months from the date of sale, Accordingly, the Group accounts for sales
returns accrual by recording refund liability concurrent with the recognition of revenue at the time of a product sale. This liability is based on the Group's estimate of
expected sales returns, Accordingly, the estimate of sales returns is determined primarily by the Group's historical experience of sales returns.

 

At the time of recognising the refund liability, the Group also recognises an asset, (.e,, the right to the returned goods) which is included in Inventory for the products
expected to be returned. The Group initially measures this asset at the former carrying amount of the inventory, less any expected costs to recover the goods, including any
potential decreases in the value of the returned goods. Along with re-measuring the refund liability at the end of each reporting period, the Group updates the measurement
Of the asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the returned products

 

Rendering of Services
Revenue from pathological laboratory services and running of clinies are recognised as and when services are rendered.

‘Customer Loyalty Programme

Group operates a Flexi Rewards scheme (Customer loyalty programme), which allows customers to accumulate points when they purchase products in the Group's retail
stores. These points can be redeemed for purchase of value plus items,

‘The fair value of the consideration received or receivable in respect of the initial sale is allocated between the award credits and the other components of the sale, The
amount allocated to award credits is deferred and is recognised as revenue when the award credits are redeemed and the Group has fulfilled its obligations to supply the
discounted products under the terms of the programme or when it is no longer probable that the award credits will be redeemed.

Display income
Revenue for display of advertisement is accounted on accrual basis in accordance with the provisions of the relevant contacts.

Interest income

Interest income from financial instruments measured either at amortised cost or at fair value through other comprehensive income is recorded using the effective interest
rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where
appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Group estimates
the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not
consider the expected credit losses, Interest income is included in other income in the consolidated statement of profit and loss.

Rental Income
Rental income arising from operating leases on building is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or
loss due to its operating nature

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