K. Provision, contingent liabilities and contingent assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Expected future operating losses are not provided for.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
The Company records a provision for decommissioning costs. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of the particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized in the statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate.
Contingencies
Provision in respect of loss/contingencies relating to claims, litigations, assessments, fines and penalties are recognised when it is probable that a liability has been incurred and the amount can be estimated reliably.
Contingent liabilities and contingent assets
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the standalone financial statements.
Contingent asset is not recognised in standalone financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognized.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
L. Earnings per share Basic Earnings per share
Basic Earnings Per Share ('EPS') is calculated by dividing the profit attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.
Diluted Earnings per share
Diluted earnings per share is computed by dividing the profit (considered in determination of basic earnings per share) after considering the effect associated with dilutive potential equity shares by the weighted average number of equity shares considered for deriving basic earnings per share adjusted for the weighted average number of equity shares that would have been issued upon conversion of all dilutive potential equity shares.
M. Exceptional items
The Company discloses certiain financial information both including and excluding exceptional items. The presentation of information excluding exceptional items allows a better understanding of the underlying operating performance of the Company and provides consistency with the Company internal management reporting. Exceptional items are identified by virtue of either their size or nature so as to facilitate comparision with prior periods and to assess underlying trends in the financial performance of the Company.
N. Cash flow statement
Cash flows are reported using the indirect method, whereby profit for the year is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activites. The Company considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.
O. Cash and cash equivalents
Cash and cash equivalents in the balance sheet and cash flow statement consists of cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities less than three months which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.
P. Investments in subsidiaries
Investments in subsidiaries carried at cost less any provision for impairment. Investments are reviewed for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable.
Q. Dividend
The Company recognises a liability for any dividend declared but not distributed at the end of the reporting period, when the distribution is authorised and the distribution is no longer at the discretion of the Company on or before the end of the reporting period.
R. Events after reporting date
Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.
S. Material accounting policy information
The Company adopted "Disclosure of Accounting Policies (Amendments to Ind AS 1) from April 01, 2023. Although the amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy information disclosed in the financial statements.
The amendments require the disclosure of 'material' rather than 'significant' accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting policy information that users need to understand other information in the financial statements.
T. Recent pronouncements
Ministry of Corporate Affairs ("MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
24. DISCLOSURE REQUIRED UNDER CLAUSE 22 OF MICRO, SMALL AND MEDIUM ENTERPRISE DEVELOPMENT ('MSMED') ACT, 2006
The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2024 has been made in the financial statements based on information received and available with the Company. Further in view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.
25. DISCLOSURE AS PER SECTION 186 OF THE COMPANIES ACT, 2013
The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:
(i) Details of investments made are given in Note 6(a);
(ii) Details of the loans given by the Company is given in Note 6(c).
26.OPERATING SEGMENTS
A. Basis for segmentation
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components, and for which discrete financial information is available. All operating segment's results are reviewed regularly by the Company's Chairman and Managing Director to make decisions about resources to be allocated to the segments and assess their performance.
The Chief Operating Decision Maker ("CODM”) who are the Company's Chairman and Managing Director evaluate the Company's performance and allocates resources based on
an analysis of various performance indicators at operational unit level and since there is single operating segment, no segment disclosures of the Company is presented. The Company's operations fall within a single business segment "Diagnostic services”.
B. Geographical information
The Company operates within India and therefore there are no assets or liabilities outside India.
C. Major customers
No single customer contributed more than 10% of the Company's revenues during the year ended March 31,2024 and March 31, 2023.
27. PURCHASE COMMITMENTS TOWARDS REAGENT KITS
The Company has entered into agreements with certain suppliers for purchase of reagents which include the right to use equipment during the life of the agreement in addition to purchase of minimum committed quantities of reagents every year. These agreements are in substance, cost of reagents and services arrangements provided by the supplier on an annual basis and the minimum purchase commitments therein do not result in more than insignificant penalty on termination of the agreement. The cost of reagents which includes the cost of rental of the equipment is recorded as cost of material consumed.
28. EMPLOYEE BENEFIT PLANS
The Company has following post employment benefit plans:
(a) Defined contribution plans
Contributions were made to provident fund and Employees' State Insurance in India for the employees of the Company as per the regulations. These contributions are made to registered funds administered by the Government of India. The obligation of the Company is limited to the respective amount contributed and it has no further contractual nor any other constructive obligation. The expense recognised during the period in the standalone statement of profit and loss towards defined contribution plans is Rs. 421.24 (March 31, 2023: Rs. 382.76).
(b) Defined benefit plan
The Company provides for Gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in
continuous service for a period of 5 years are eligible for Gratuity. The amount of Gratuity payable on retirement/termination is the employee's last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service or part thereof in excess of six months, restricted to a sum of Rs. 20.
The Gratuity plan is administered through a Gratuity Scheme with Life Insurance Corporation of India ('LIC'). The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.
This defined benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and market (investment) risk.
29. SHARE BASED PAYMENTS VDCL Employee Stock Option Plan 2018 "The Plan" or "ESOP 2018"
The shareholders of the Company approved "VDCPL Employee Stock Option Plan 2018 (ESOP 2018)” at the Extraordinary General Meeting held on May 03, 2018 and subsecquently it was amended at the extraordinary genaral meeting held on March 25, 2021 and August 26, 2021 to grant a maximum of 1,625,000 options to specified categories of employees of the Company. Each option granted and vested under ESOP 2018 shall entitle the holder to acquire one equity share of face value of Rs. 1 each of the Company.
The Plan consists of six schemes with various vesting periods from the grant date subject to satisfaction of vesting conditions. The method of settlement under the Plan is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees.
Vested options can be exercised over a period of ten years from the grant date. The Exercise Price is the fair value of the equity share as on the date of the grant or as decided by the Nomination and remuneration committee. The time and performance based options under Scheme 1, 2, 3, 4, 5 and 6 become vested as below:
The time and performance based options under Scheme 1 become eligible on an annual basis at 30%, 30%, 20% and
20% over a period of four years and vesting starts from second year. The time and performance based options under Scheme 2 become eligible on an annual bais at 25%, 25%, 25% and 25% over a period of four years and vesting starts from third year. The time based options under Scheme 3 become eligible on an annual basis at 25%, 25%, 25% and 25% over a period of four years and vesting starts from third year. The time based options under Scheme 4 become eligible on annual basis at 100% and vest on second year from the grant date. The time based options under Scheme 5 become eligible and vest on an annual basis at 25%, 25%, and 50% over a period of three years. The time based options under Scheme 6 become eligible on an annual basis at 0%, 25%, 50% and 25% over a period of four years and the performace based options under Scheme 6 become eligible on an annual basis at 25%, 25%, 25% and 25% over a period of four years.
The fair value of equity share options is estimated at the date of grant using Black- Scholes model, taking into account the terms and conditions upon which the share options were granted. Based on the historical trends, 50% of stock options are expected to be vested and exercised, accordingly the total compensation cost recognised in the statement of profit and loss is Rs. 93.17 (March 31, 2023: 71.67).
Reasons for variance of more than 25%
(i) There is a decrease in the current ratio primarily due to decrease in the fixed deposits held with the bank and investments made in mutual funds.
(ii) The increase in the Net Capital Turnover ratio is primarily due to decrease in the working capital held by the Company due to decrease in fixed deposits and investments made in mutual funds.
Definitions:
(a) Earnings available for debt service = Profit for the year Non-cash operating expenses such as depreciation and amortisation Interest other adjustments like loss on sale of fixed assets etc.
(b) Debt service = Interest Lease Payments Principal Repayments
(c) Average inventory = (Opening inventory balance Closing inventory balance)/2
(d) Average trade receivables = (Opening trade receivables balance Closing trade receivables balance)/2
(e) Average trade payables = (Opening trade payables balance Closing trade payables balance)/2
(f) Working Capital = Current assets - Current liabilities
(g) Earnings before interest and taxes = Profit before tax Finance costs - Other income
(h) Capital Employed = Total assets- Total liabilities - Intangible assets Deferred tax liabilities
32. CAPITAL MANAGEMENT
The Company's policy is to maintain a stable and strong capital structure with a focus on equity so as to provide returns to shareholders, benefits to other stakeholders, creditors and to sustain future development and growth of the business. In order to maintain the capital structure, the Company monitors the return on capital as well as debt to total equity ratio. The Company aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to all its shareholders. For the purpose of debt to total equity, debt includes its long-term and short-term borrowings. Total equity comprises of issued share capital and all other equity reserves.
i. Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and loans.
The Company has no significant concentration of credit risk with any counterparty.
Trade receivables and loans
Customer credit risk is managed by the respective department subject to Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on individual credit limits as defined by the Company. Outstanding customer receivables are regularly monitored. All the trade receivables are non-interest bearing.
ii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The finance team monitors rolling forecasts of the Company's liquidity position and cash and cash equivalents on the basis of expected cash outflows on trade payables and other financial liabilities and any excess/short liquidity is managed in the form of current borrowings, bank deposits and investment in mutual funds as per the approved frame work.
iii. Market risk
Market risk is the risk that results from changes in market prices - such as foreign exchange rates, interest rates and others -will affect the Company's income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
34. ADDITIONAL REGULATORY INFORMATION PURSUANT TO THE REQUIREMENT IN DIVISION II OF SCHEDULE III TO THE COMPANIES ACT 2013
i. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
ii. The Company does not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
iii. The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
iv. The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond the statutory period.
v. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
vi. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries); or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
vii. The Company has not entered into any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
viii. The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
ix. The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
35. The Company has received a letter dated July 5, 2021, March 14, 2022 and September 16, 2022 under Section 37 of the Foreign Exchange Management Act, 1999 read with Section 133(6) of the Income Tax Act, 1961 from the Directorate of Enforcement, Government of India ("ED”) requesting certain information for the purpose of their investigation. The Company has responded to the ED letter by
letter dated August 5, 2021, March 31, 2022 and September 29, 2022 by providing the information requested for. The letter has only sought certain information, which has been complied with, and it is not a show cause notice or demand letter at this stage, and there is no impact to the financial statements.
36. SUBSEQUENT EVENTS
(a) The wholly owned subsidiaries of the Group namely Doctorslab Medical Services Private Limited and Namrata Diagnostic Centre Private Limited, based on the application filed by the respective companies have been struck off by the Registrar of Companies (ROC) as on April 06, 2024, since there were no operations in these companies. There is no impact on account of this in the financial statements.
(b) Subsequent to March 31, 2024, the Board of Directors of the Company at its meeting held on 08 May 2024 has recommended a final dividend of Re. 1/- per equity share which is subject to approval at the ensuing Annual General Meeting of the Company and hence was not recognised as a liability.
As per our report of even date attached.
For B S R and Co For and on behalf of the Board of Directors of
Chartered Accountants Vijaya Diagnostic Centre Limited
ICAI Firm registration number: 128510W CIN: L85195TG2002PLC039075
Amit Kumar Bajaj Dr. S. Surendranath Reddy S. Suprita Reddy
Partner Executive Chairman Managing Director
Membership Number: 218685 DIN: 00108599 DIN: 00263618
Hansraj Singh Rajput K. Sunil Chandra Narasimha Raju K.A.
Company Secretary Executive Director Chief Financial Officer
Membership No: F11438 DIN: 01409332
Place: Hyderabad Place: Hyderabad
Date: 08 May 2024 Date: 08 May 2024
|