1A Background and nature of operations
Aspira Pathlab & Diagnostics Limited (the ‘Company’) having CIN- L85100MH1973PLC289209 , (previously known as Utkal Soap Products Ltd.) is a public limited company incorporated and domiciled in India and has its registered office at Flat NO.2 , R.D. Shah Bldg, Shraddhanand Road Opp. Ghatkopar Railway Station, Ghatkopar (West) Mumbai- 400086, Maharashtra, India. The Company is engaged in the business of running, owning, managing and administering Diagnostics Centers. The principal activities of the company consist of pathology investigation services, radiology investigation services and other related healthcare services at Diagnostic Centres in Mumbai.
The equity shares of the Company were listed on the The Calcutta Stock Exchange Ltd and Metropolitan stock Exchange of India Ltd. The equity shares of the company were listed on The Bombay Stock Exchange Ltd during the year.
1B Statement of compliance:
The financial statements have been prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under the companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016. The financial statements of the Company have been prepared on historical cost convention under accrual basis of accounting. The financial statements upto the year ended March 31, 2017 were prepared in accordance with the requirements of previous GAAP prescribed under Section 133 of the Companies Act, 2013, read together with rule 7 of the Companies (Accounts) Rules, 2014.These financial statements are the first financial statements of the company under Ind AS. The date of transition to Ind AS is 1st April,2016. Refer Note- 35 for the details of significant first-time adoption exemptions availed by the Company and an explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, performance and cash flows.
2.1 The Company has only one class of Equity Shares having a par value of Rs.10/- per share. Each shareholder is entitled to one vote per share. All shareholders carry equal rights as to dividend. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in the proportion of the no. of equity shares held by the shareholder. However, no preferential amount exist at present.
Notes
Term loan taken from HDFC bank is secured by hypothecation of Lab Equipment and Instruments. The loan has interest of HDFC bank’s base rate plus 285 BPS. Term loan is repayable in 72 monthly installments from the date of first disbursment of Lab Equipment loan with Moratorium of 6 months.
Infrastructure loan taken from HDFC bank has interest of HDFC bank’s base rate plus 270 BPS. Infrastructure loan is repayable in 48 monthly installments from the date of first disbursment.
Weighted average number of ordinary shares outstanding during the period is the number of ordinary shares outstanding at the beginning of the period, adjusted by the number of ordinary shares issued during the period multiplied by a time-weighing factor. The time-weighing factor is the number of days that the shares are outstanding as a proportion of the total number of days in the period.
3. Income tax
The Company is subject to Indian Income Tax Act, 1961. The Company is assessed for tax on taxable profits determined for each fiscal year beginning on 1 April and ending on 31 March. For each fiscal year, the respective entities’ profit or loss is subject to the higher of the regular income tax payable or the Minimum Alternative Tax (“MAT”).
Statutory income taxes are assessed based on book profits prepared under generally accepted accounting principles in India (“Indian GAAP”) adjusted in accordance with the provisions of the (Indian) Income tax Act, 1961. Such adjustments generally relate to depreciation of property, plant and equipment, disallowances of certain provisions and accruals, deduction for tax holidays and similar exemptions, the use of tax losses carried forward and retirement benefit costs. Statutory income tax is charged at 25% plus a surcharge and education cess. The combined Indian statutory tax rate for the fiscal year 2016-17 was 25.75% and for the fiscal year 2017-18 was 25.75 %.
Income tax returns submitted by companies are regularly subjected to a comprehensive review and challenge by the tax authorities.
Based on the status of the case, the management believes that the Company has strong chances of success in above mentioned case and hence no provision there against is considered necessary at this point in time as the likelihood of liability devolving on the Company is less than probable.
4. Segment information
Primary segments: Business Segment
The Company is solely engaged in the business of running laboratories for carrying out Pathological investigations in various branches of Bio-chemistry, Hematology, Histopathology, Microbiology, Immuno-chemistry, Immunology, Virology, Cytology, other pathological and radiological investigations. The Board of Directors of the Company, which has been identified as being the chief operating decision maker (CODM), evaluates the Company’s performance, allocate resources based on the analysis of the various performance indicator of the Company as a single unit. Therefore there is no reportable segment for the Company, in accordance with the requirements of Indian Accounting Standard 108- ‘Operating Segments’, notified under the Companies (Indian Accounting Standard) Rules, 2015.”
Secondary Segments: Geographical Segments
The analysis of geographical segment is based on geographical location of its customers. The following table shows the distribution of the Company’s consolidated revenue and trade receivables by geographical market:
No single customers contributed more than 10% or more to the Company’s revenue during the years ended 31 March, 2018, 31 March, 2017 and 31 March, 2016.
5. Operating Lease Arrangements The Company as a lessee
Ouce premises are obtained on operating lease. The lease terms range from 3-5 years and are generally cancellable at the option of the either party. However, there is lock in period in case of few leases. Future minimum lease payments are as follows:
The Company has assessed the conditions as specified in the Ind AS -17 ‘Leases’, for determining whether the said arrangement is under operating lease or finance lease. Based on the evaluation determination of Finance Lease or Operating Lease has been done.
6. Employee Benefit Plans
6.1 Defined Contribution Plans
Employee benefit under defined contribution plan comprising of provident fund is recognised based on the amount of obligation of the Company to contribute to the plan. The contribution is paid to Provident Fund authorities which is expensed during the year.
The total expenses recognised in statement of profit and loss Rs.13,93,136/- (for the year ended 31 March, 2017: Rs.2,86,249/- ) represents contributions payable to provident fund by the Company at rates speciued in the rules of the plans. As at 31 March, 2018, contributions of Rs.1,14,879/- (as at 31 March, 2017: Rs.2,86,249/-) due in respect of 20172018 (2016-2017) reporting period had not been paid over to the plans. The amounts were paid subsequent to the end of the respective reporting periods.
6.2 Defined benefit plans
The Group has a defined benefit gratuity plan which is unfunded. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service or part thereof in excess of six months. The present value of the defined benefit obligation and the related current service cost are measured using the Projected Unit Credit method with actuarial valuations being carried out at each balance sheet date.
6.3 The Company is exposed to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.
Salary risk: The present value of the defined beneut plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.
7. Related Party Disclosures
I. Names of related parties and related party relationship
a. Entities in which key managerial personnel can exercise signiucant influence
- Yashraj Biotechnology Limited
b. Key managerial personnel
-Dr.Pankaj Shah-Managing Director
- Mr.Arvind K Bhanushali- Executive Director -Paresh Bhanji Bhanushali- Executive Director -Chander Prakash Puri- Executive Director & CEO -Balkrishna Subhash Talawadekar- CFO -Mamta Nilesh Mav- Company Secretary
c. Relatives of key management personnel
- Dr.Snehal Shah (wife of Dr.Pankaj Shah)
- Smt. Shashibala J. Shah (mother of Dr.Pankaj Shah)
- Mrs.Deepali Bhanushali (wife of Mr.Arvind Bhanushali)
-Mr. Yash Bhanushali (Son of Mr.Arvind Bhanushali)
- Dr. Vipla Puri (Wife of Mr. Chandra Prakash Puri- Executive Director & CEO)
8. Financial Instruments
(a) Capital Management
The Company’s objectives when managing capital is to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and beneuts for other stakeholders. The Company has investments in uxed deposits with banks, where there is no risk.
The Company has following outstanding debt as at the end of reporting periods. Gearing ratio as at 31 March, 2018, 31 March, 2017 and 1 April, 2016 is as under.
(b) Financial risk management objective and policies
This section gives an overview of the significance of financial instruments for the Company and provides additional information on the balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1.
(c) Financial assets and liabilities:
The accounting classification of each category of financial instruments, and their carrying amounts, are set out below:
(d) Risk management framework
The Company’s business is subject to several risks and uncertainties including financial risks. The Company’s documented risk management polices act as an efective tool in mitigating the various financial risks to which the business is exposed to in the course of their daily operations. The risk management policies cover areas such as liquidity risk, interest rate risk, counterparty and concentration of credit risk and capital management. Risks are identiued through a formal risk management programme with active involvement of senior management personnel and business managers.
The company’s risk management process is in line with the Corporate policy. Each significant risk has a designated ‘owner’ within the company at an appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.
The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Company’s Audit Committee. The overall internal control environment and risk management programme including financial risk management is reviewed by the Audit Committee on behalf of the board.
The risk management framework aims to:
- improve financial risk awareness and risk transparency
- identify, control and monitor key risks
- identify risk accumulations
- provide management with reliable information on the Company’s risk situation
- improve financial returns Financial risk
The Company’s Board approves financial risk policies comprising liquidity, foreign currency, interest rate and counterparty credit risk. The Company does not engage in speculative treasury activity but seeks to manage risk and optimise interest through proven financial instruments.
(i) Liquidity risk: The Company requires funds for short-term operational needs. The Company remains committed to maintaining a healthy liquidity, gearing ratio and strengthening the balance sheet. The maturity profile of the Company’s financial liabilities and realisability of financial assets based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual cash obligation of the company.
The following table below details the Company’s expected maturity for its non-derivative financial assets. The information included in the table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis.
Interest rate risk
Fixed rate financial assets are largely interest bearing fixed deposits held by the Company. The returns from these financial assets are linked to bank rate notified by Reserve Bank of India as adjusted on periodic basis. The Company does not charge interest on overdue trade receivables. Trade payables are non interest bearing and are normally settled up to 30 days terms.
The exposure of the Company’s financial assets as at 31 March, 2018 to interest rate risk is as follows:
Interest rate sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the assets balance at the end of the reporting period was outstanding for the whole year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.
(iii) Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties , as a means of mitigating the risk of financial loss from defaults. The Company is exposed to credit risk for receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, investments and loans.
Credit risk management considers available reasonable and supportable forward-looking information including indicators like external credit rating (as far as available), macro-economic information (such as regulatory changes, government directives, market interest rate).
Only high rated banks are considered for placement of deposits. Bank balances are held with reputed and creditworthy banking institutions.
For short-term investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. Deuned limits are in place for exposure to individual counterparties in case of mutual funds schemes.
None of the Company’s cash equivalents are past due or impaired. Regarding trade and other receivables, the Company has accounted for impairment based on expected credit losses method as at 31 March, 2018, 31 March, 2017 and 1 April, 2016 based on expected probability of default.
9. First-time Ind AS adoption reconciliations
These are the Company’s first Standalone Financial Statements prepared in accordance with Ind AS.
The accounting policies set out in Note 1 have been applied in preparing the Standalone Financial Statements for the year ended 31 March 2018, the comparative information presented in these Standalone Financial Statements for the year ended 31 March, 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in Standalone Financial Statements prepared in accordance with the applicable accounting standards as prescribed under the provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. An explanation of how the transition from previous GAAP to Ind AS has afiected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
The Company has prepared the opening balance sheet as per Ind AS as of 1 April , 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company. The Company has applied the following transition exemptions in Ind AS 101 :
(a) Deemed cost for property, plant and equipment and intangible assets
In accordance with Ind AS transitional provisions, the Company opted to consider previous GAAP carrying value of property, plant and equipment and other intangible assets as deemed cost on transition date.
(b) Business combination
In accordance with Ind AS transitional provisions, the Company opted not to restate business combinations which occurred prior to the transition date. The amortsiation of Goodwill pertaining to such business combination has been reversed and same has been adjusted with the opening retained earnings.
(c) Leases
In accordance with Ind AS transitional provisions, the Company opted to determine whether an arrangement existing at the date of transition contains a lease on the basis of facts and circumstances existing at the date of transition rather than at the inception of the arrangement.
(d) Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1 April, 2016 (the transition date).
(e) Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been signiucant increases in credit risk since initial recognition, as permitted by Ind AS 101.
10 Reconciliation of Cash flow statement
There were no significant reconciliation items between cash flows prepared under Indian GAAP and those prepared under IndAS.
Notes:
a. As the presentation requirements under previous GAAP differ from Ind AS, the previous GAAP information has been regrouped for ease and facilitation of reconciliation with Ind AS.
b. The financial information of the Company for the year ended 31 March, 2017 and the transition date opening balance sheet as at 1 April, 2016 included in these standalone Ind AS financial statements, are based on the statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 as amended, audited by the predecessor auditor and have been restated to comply with Ind AS.
Notes to the reconciliation
(a) Under the previous GAAP, rental deposits placed without any interest were measured at transaction value. Under Ind AS, they are measured at amortised cost using effective interest method, less impairment, if any. The effect of this change has resulted in an increase in equity as at 1 April, 2016 and 31 March, 2017. It has also increased other income and rental expenses for the year ended 31 March, 2017.
(b) Under the previous GAAP, goodwill on business purchase and amalgamation was amortised on a straight line basis over a period of uve years. Under Ind AS, such goodwill is carried at cost less accumulated impairment, if any. Also, on transition to Ind AS, goodwill is required to be assessed for impairment. Accordingly, on transition date, goodwill amortised under previous GAAP has been reversed in the statement of profit and loss for the year ended 31 March, 2017.
11. The Company don’t have any foreign currency exposure during the year.
12. The Company has not received any intimation from the suppliers regarding status under the Micro, Small and Medium Enterprises Development Act, 2006 (the ‘Act’) and hence disclosure regarding the following has not been provided
a) Amount due and outstanding to suppliers as at the end of the accounting year,
b) Interest paid during the year,
c) Interest payable at the end of the accounting year,
d) Interest accrued and unpaid at the end of the accounting year.
13. Previous year’s figures have been regrouped / rearranged wherever necessary to conform to current year’s classification.
14. The Standalone Financial Statements were approved by the Board of Directors and authorised for issue on 29 May, 2018.
The Company has elected to continue with the carrying value of all of its property, plant and equipment as at the transition date, viz., 1 April, 2017 measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
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