3. Material accounting policies
3.1 Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured
at cost, which includes capitalised borrowing costs, less
accumulated depreciation and accumulated impairment
losses, if any.
Cost of an item of property, plant and equipment
comprises its purchase price, including import duties and
non-refundable purchase taxes, after deducting trade
discounts and rebates, any directly attributable cost of
bringing the item to its working condition for its intended
use and estimated costs of dismantling and removing the
item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and
equipment comprises the cost of materials and direct
labour, any other costs directly attributable to bringing
the item to working condition for its intended use, and
estimated costs of dismantling and removing the item and
restoring the site on which it is located.
If significant parts of an item of property, plant and
equipment have different useful lives, then they are
accounted for as separate items (major components) of
property, plant and equipment.
The cost of an item of property, plant and equipment may
include costs incurred relating to leases of assets they are
used to construct, add to, replace part of or service an item
of property, plant and equipment, such as depreciation of
right-of-use assets.
Any gain or loss on disposal of an item of property, plant
and equipment is recognised in the standalone statement
of profit and loss.
Advances paid towards the acquisition of property, plant
and equipment, outstanding at each balance sheet date
are shown under other non-current assets. The cost of
property, plant and equipment not ready for its intended
use at each balance sheet date are disclosed as capital
work-in-progress.
ii. Subsequent expenditure and derecognition
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
The gain or loss arising on the disposal or retirement of
an asset is determined as the difference between the
net disposal proceeds and the carrying amount of the
asset and is recognised in the standalone statement of
profit and loss.
iii. Depreciation
Depreciation on property, plant and equipment are
provided on the straight-line method over the useful
lives of the assets estimated by the Management.
Depreciation for assets purchased / sold during a period
is proportionately charged. Leasehold improvements are
amortized over the lease term or useful lives of assets,
whichever is lower. The estimated useful lives of items
of property, plant and equipment for the current and
comparative years are as follows:
asset is available to the Company for its use and is included
in depreciation and amortisation expenses in the standalone
statement of profit and loss. The estimated useful life and
amortisation method are reviewed at the end of each reporting
period, with the effect of any changes in estimate being
accounted for on a prospective basis.
The estimated useful lives for the current and comparative
years are as follows:
* For the above-mentioned classes of assets, the Company believes
that the useful lives as given above best represent the useful lives of
these assets based on internal assessment and supported by technical
advice, where necessary, which is different from the useful lives as
prescribed under Part C of Schedule II of the Companies Act, 2013.
Depreciation method, useful lives and residual values
are reviewed at each financial year-end and adjusted
if appropriate.
iv. 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.
3.2 Intangible assets
Intangible assets - acquired separately
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Intangible assets are
amortised over their respective individual estimated useful
lives on a straight-line basis, commencing from the date the
The estimated useful life of an identifiable intangible asset
is based on a number of factors including the effects of
obsolescence, demand, competition and other economic factors
(such as the stability of the industry and known technological
advances) and the level of maintenance expenditures required
to obtain the expected future cash flows from the asset.
An intangible asset is derecognised on disposal, or when no
future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible
asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, are recognised
in the standalone statement of profit and loss when the asset
is derecognised.
Internally-generated intangible assets - research and
development expenditure
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally-generated intangible asset arising from
development (or from the development phase of an internal
project) is recognised if, and only if, all of the following conditions
have been demonstrated:
- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
- the intention to complete the intangible asset and
use or sell it;
- the ability to use or sell the intangible asset;
- how the intangible asset will generate probable future
economic benefits;
- the availability of adequate technical, financial and other
resources to complete the development and to use or sell
the intangible asset; and
- the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure incurred from
the date when the intangible asset first meets the recognition
criteria listed above. Where no internally-generated intangible
asset can be recognised, development expenditure is recognised
in the standalone statement of profit and loss in the period in
which it is incurred.
Subsequent to initial recognition, internally-generated intangible
assets are reported at cost less accumulated amortisation and
accumulated impairment losses, on the same basis as intangible
assets that are acquired separately.
Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific asset
to which it relates. All other expenditure is recognised in the
standalone statement of profit and loss as incurred.
An intangible asset is derecognised on disposal, or when no
future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible
asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, are recognised
in the standalone statement of profit and loss when the asset
is derecognised.
3.3 Inventories
Inventories are measured at the lower of cost and net realisable
value. The cost of inventories comprises purchase price, and
other cost incurred in bringing the inventories to their present
location and condition. The Company uses the weighted
average method to determine the cost of inventory consisting
of medicines and medical consumables.
Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs necessary to make
the sale. The comparison of cost and net realisable values is
made on an item-by-item basis.
3.4 Impairment
i. Impairment of financial assets
The Company recognises loss allowances for expected
credit losses ('ECL') on financial assets measured at
amortised cost.
At each reporting date, the Company assesses whether
financial assets carried at amortised cost are credit
impaired. A financial asset is 'credit impaired' when
one or more events that have a detrimental impact
on the estimated future cash flows of the financial
asset have occurred.
The Company always measures the loss allowance for
trade receivables at an amount equal to lifetime ECL. The
expected credit losses on trade receivables are estimated
using a provision matrix by reference to past default
experience of the debtors and an analysis of the debtors'
current financial position, adjusted for factors that are
specific to the debtors, general economic conditions of the
industry in which the debtors operate, and an assessment
of both the current as well as the forecast direction of
conditions at the reporting date.
In all cases, the maximum period considered when
estimating expected credit losses is the maximum
contractual period over which the Company is exposed
to credit risk.
Measurement of expected credit losses
Expected credit losses are a probability weighted estimate
of credit losses. Credit losses are measured as the present
value of all cash shortfalls (i.e., the difference between
the cash flows due to the Company in accordance with
the contract and the cash flows that the Company
expects to receive).
Presentation of allowance for expected credit losses in the
standalone balance sheet:
Loss allowances for financial assets measured at
amortised cost are deducted from the gross carrying
amount of the assets.
Write-off
The gross carrying amount of a financial asset is written
off (either partially or in full) to the extent that there is no
realistic prospect of recovery. This is generally the case
when the Company determines that the debtor does not
have assets or sources of income that could generate
sufficient cash flows to repay the amounts subject
to the write off.
ii. Impairment of non- financial assets
The Company's non-financial assets, other than
inventories and deferred tax assets, are reviewed at
each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then
the asset's recoverable amount is estimated to determine
the extent of impairment loss, if any.
For impairment testing, assets that do not generate
independent cash inflows are grouped together into
cash-generating units (CGUs). Each CGU represents the
smallest group of assets that generates cash inflows
that are largely independent of the cash inflows of other
assets or CGUs.
The recoverable amount of a CGU (or an individual asset)
is the higher of its value in use and its fair value less costs
to sell. Value in use is based on the estimated future cash
flows, 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 CGU
(or the asset).
Intangible assets, intangible assets under development
and property, plant and equipment are evaluated
for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may
not be recoverable. For the purpose of impairment testing,
the recoverable amount i.e., the higher of the fair value
less cost to sell and the value-in-use is determined on an
individual asset basis unless the asset does not generate
cash flows that are largely independent of those from
other assets. In such cases, the recoverable amount is
determined for the CGU to which the asset belongs.
If such assets are considered to be impaired, the
impairment to be recognized in the standalone statement
of profit and loss is measured by the amount by which
the carrying value of the assets exceeds the estimated
recoverable amount of the asset.
An impairment loss is reversed in the standalone
statement of profit and loss if there has been a change
in the estimates used to determine the recoverable
amount. The carrying amount of the asset is increased to
its revised recoverable amount, provided that this amount
does not exceed the carrying amount that would have
been determined (net of any accumulated amortization or
depreciation) had no impairment loss been recognized for
the asset in prior years.
iii. Impairment of goodwill
Determining whether goodwill is impaired requires an
estimation of the value in use of the cash-generating units
to which goodwill has been allocated. The value in use is
determined using a discounted cash flow approach based
upon the cash flow expected to be generated by the CGU.
In case that the value in use of the CGU is less than its
carrying amount, the difference is at first recorded as an
impairment of the carrying amount of the goodwill.
3.5 Employee benefits
Short-term employee benefits
Employee benefits payable wholly within twelve months
of receiving employee services are classified as short-term
employee benefits. These benefits include salaries and wages,
bonus and ex-gratia. Short-term employee benefit obligations
are measured on an undiscounted basis and are expensed as
the related service is provided. A liability is recognised for the
amount expected to be paid e.g., under short-term cash bonus,
if the Company has a present legal or constructive obligation
to pay this amount as a result of past service provided by the
employee and the amount of obligation can be estimated reliably.
Post-employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under which an entity pays fixed contributions and will have
no legal or constructive obligation to pay further amounts.
The Company makes specified monthly contributions towards
Government administered provident fund scheme. Obligations
for contributions to defined contribution plans are recognised
as an employee benefit expense in the standalone statement of
profit and loss in the periods during which the related services
are rendered by employees.
Defined Benefit plans
Under a defined benefit plan, it is the Company's obligation to
provide agreed benefits to the employees.
The calculation of defined benefit obligation is performed
annually by a qualified actuary using the projected
unit credit method.
Re-measurements of the net defined benefit liability, which
comprise actuarial gains and losses are recognised in other
comprehensive income (OCI) in the period in which they occur.
Remeasurements of the net defined benefit liability (asset)
recognised in other comprehensive income shall not be reclassified
to statement of profit and loss in a subsequent period. However,
the Company transfers those amounts recognised in other
comprehensive income within equity. The Company determines
the net interest expense on the net defined benefit liability for the
period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the
then-net defined benefit liability, taking into account any changes
in the net defined benefit liability during the period as a result of
contributions and benefit payments. Net interest expense and
other expenses related to defined benefit plans are recognised in
the standalone statement of profit and loss.
Share- based payment transactions
The grant date fair value of equity settled share-based payment
awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the
period that the employees unconditionally become entitled to
the awards. The amount recognised as expense is based on the
estimate of the number of awards for which the related service
and non-market vesting conditions are expected to be met,
such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service
and non-market vesting conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the
grant date fair value of the share-based payment is measured
to reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
Treasury shares
The Company has created an DM Healthcare Employee Welfare
Trust for providing share based payment to its employees.
The Company treats this trust as its extension and shares
held by this trust are treated as treasury shares. Own equity
instruments that are acquired (treasury shares) are recognized
at cost and deducted from equity. When the treasury shares are
issued to the employees by this trust, the amount received is
recognized as an increase in other equity and the resultant is
transferred to securities premium.
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