‘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)
Leases (continued)

Company as lessees

‘The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right
‘of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

‘The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in
the ease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the
discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

— fixed payments, including in-substance fixed payments;

— variable lease payments that depend on an index or arate, initially measured using the index or rate as at the commencement date;

amounts expected to be payable under a residual value guarantee; and

— the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably
certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.

‘The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in
an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its
assessment of whether it will exercise a purchase, extension or termination option,

 

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to zero.

‘The Company presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and equipment’ and lease liabilities in ‘loans and
borrowings’ in the statement of financial position Short-term leases and leases of low-value assets:

‘The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery and buildings that have a lease term of 12 months or less
and leases of low-value assets.

Company as a lessor
‘When the Company acts as a lessor, it determines at lease inception whether each lease isa finance lease or an operating lease,

To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the
underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators
such as whether the lease is for the major part of the economic life of the asset

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with
reference to the right-of-use asset arising from the head lease, not with reference to the underlying, asset. If a head lease is a short-term lease to which the Company applies
the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 to allocate the consideration in the contract.

‘The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other income’.

‘The accounting policies applicable to the Company as a lessor in the comparative period were not different from Ind AS 116.

 

Inventories
Inventories comprise of trading goods and stores and consumables and are valued at lower of cost and net realisable value. Cost includes cost of purchase and other costs
incurred in bringing the inventories to their present location and condition, In case of manufactured inventories and work-in-progress, cost includes an appropriate share of
fixed production overheads based on normal operating capacity.

Cost is determined on first in first out basis. Net realisable value is the estimated selling price in the ordinary course of business reduced by the estimated costs to affect the
sale, Stores and spares which do not meet the definition of property, plant and equipment are accounted as inventories until expected to be capitalised,

‘The net realisable value of work-in-progress are determined with reference to the selling prices of related finished goods.

‘The factors that the Group considers in determining the valuation of inventory includes shelf life and ageing of Inventory. The Group considers these factors and adjust
valuation to reflect actual value of inventory.

Raw materials and consumables held for use in the production of finished goods are not written down below cost except in cases where material prices have declined and it
is estimated that the cost ofthe finished goods will exceed their net realisable value.

Impairment of Non-Financial Assets

‘The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an
asset is required, the Group estimates the asset's recoverable amount, An asset's recoverable amount is the higher of an asset's net selling price and its value in use. The
recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of
assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be
identified, an appropriate valuation model is used.

Impairment losses, including impairment on inventories, are recognised in the consolidated statement of profit and loss

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