MedPlus Health Services Private Limited
CIN - U85110AP2006PTC051845
Notes to consolidated financial statements for the year ended March 31, 2017
(All amounts in Indian Rupees, except as otherwise stated)
1.	Corporate information
MedPlus Health Services Private Limited (“Parent Company” or “the Company”) is a private company domiciled in India. The Parent Company together with its subsidiaries (collectively termed as “the Group”) are primarily engaged in retail trading of medicines and general items, wholesale cash and carry and pathological testing services.
2.	Basis of brparation of consolidated financial statements
The consolidated financial statements of the company have been brpared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has brpared these consolidated  financial statements to comply in all material respects with the accounting standards specified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014 and Companies (Accounting Standards) Amendment Rules, 2016. The consolidated financial statements have been  brpared on an accrual basis and  under the historical cost convention.
Investments in subsidiaries in consolidated financial statements are accounted in accordance with the Accounting Standard 21, ‘Consolidated Financial Statements’, (‘AS 21’), as notified under section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014 and Companies (Accounting Standards) Amendment Rules, 2016. The consolidated financial statements have been brpared on the following basis:
i.	Subsidiary companies are consolidated on a line-by-line basis by adding together the book values of the like items of assets, liabilities, income and expenses after eliminating all significant intra-group balances and intra-group transactions and also unrealized profits or losses, except where cost cannot be recovered.
ii.	The difference between the cost to the Group of investments in subsidiaries and the proportionate share in the equity of the investee company as at the date of acquisition of stake is recognized in the Consolidated Financial Statements as Goodwill or Capital Reserve, as the case may be.
iii.	Minorities’ interest in net profits of consolidated subsidiaries for the year is identified and adjusted against the income in order to arrive at the net income attributable to the shareholders of the parent company. Their share of net assets is identified and brsented in the Consolidated Balance Sheet separately. Where accumulated losses attributable to the minorities are in excess of their equity in the absence of the contractual obligation on the minorities, the same is accounted for by the Company.
iv.	As far as possible, the Consolidated Financial Statements are brpared using uniform accounting policies for like transactions and other events in similar circumstances and are brsented, to the extent possible, in the same manner as the Company’s stand alone financial statements.
v.	The financial statements of the entities used for the purpose of consolidation are drawn up to same reporting date as that of the Company i.e. year ended March 31, 2017.
vi.	As per Accounting Standard 21, only those notes which are material need to be disclosed. Materiality for this purpose is assessed in relation to the information contained in the Consolidated Financial Statements. Further, additional statutory information disclosed in separate financial statements of the subsidiary and/or a parent having no bearing on the true and fair view of the Consolidated Financial Statements are not disclosed in the Consolidated Financial Statements.
The Consolidated Financial Statements as at and for the year ended on March 31, 2017 include the financial statements of the following entities:
	Name of the subsidiary company				Country of incorporation		Percentage of Ownership as at March 31, 2017		Percentage of Ownership as at March 31, 2016
	Optival Health Solutions Private Limited (‘OHSPL’)			India		99.98		99.98
	Ritemed Pharma Retail Private Limited (‘RPRPL’)			India		100.00		100.00
	Medsupply Distributors Private Limited (‘MPPL’)		India		100.00		100.00
	MHS Pharmaceuticals Private Limited (‘MHS’)			India		99.98		99.98
	Ritecure Pharma Private Limited (‘RPPL’)			India		100.00		100.00
	PanIndia Pharma Distributors Private Limited (‘PPDPL’)		India		100.00		100.00
	Sai Sridhar Pharma Private Limited (‘SSPPL’)			India		100.00		100.00
	Venkata Krishna Enterprises Private Limited (‘VKEPL’)		India		100.00		100.00
	Deccan Medisales Private Limited ('DMPL')			India		100.00		100.00
	Shri Banashankari Pharma Private Limited (‘SBPPL’)			India		100.00		100.00
	Sidson Pharma Distributors Private Limited ('SPDPL')			India		99.99		99.99
2.1.	Summary of significant accounting policies
(a) Use of estimates
The brparation of consolidated financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
(b) Property, Plant and Equipment
Property, plant and equipment, capital work in progress are stated at cost, net of accumulated debrciation and accumulated impairment losses, if any.  The cost comprises purchase price, borrowing costs if capitalization criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use and initial estimate of decommissioning, restoring and similar liabilities. Any trade discounts and rebates are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of the plant and equipment. When significant parts of plant and equipment are required to be replaced at intervals, the Group debrciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
Items of stores and spares that meet the definition of property, plant and equipment are capitalized at cost and debrciated over their useful life. Otherwise, such items are classified as inventories.
Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The Group identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
Property, plant and equipment held for sale is valued at lower of their carrying amount and net realizable value. Any write-down is recognized in the statement of profit and loss.
(c) Debrciation on property, plant and equipment
Debrciation on property, plant and equipment other than leasehold improvements is calculated on a straight-line basis using the following rates arrived at based on the useful lives estimated by the management which coincide with the lives brscribed under the schedule II to the Companies Act, 2013.
Asset class			Useful lives estimated by the management (years)
Furniture and fixtures			10
Vehicles			8 - 10
Data Processing Equipment			3 - 6
Buildings			60
Plant and equipment			5 - 10
Debrciation on leasehold improvements is provided over the lease term or 5 years, whichever is shorter, which is higher than the rates brscribed under the schedule II to the Companies Act, 2013.
The residual values, useful lives and methods of debrciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
(d) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Website development cost is recognized as an intangible asset when the Group can demonstrate all the following:
i.	The technical feasibility of completing the intangible asset so that it will be available for use
ii.	Its intention to complete the asset
iii.	Its ability to use the asset
iv.	How the asset will generate future economic benefits
v.	The availability of adequate resources to complete the development and to use the asset
vi.	The ability to measure reliably the expenditure attributable to the intangible asset during development.
Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized on a straight line basis over a period of five years or estimated useful life whichever is lower. Amortization is recognized in the statement of profit and loss. During the period of development, the asset is tested for impairment annually.
Software is stated at cost of acquisition and is amortized over a period of 5 years.
Goodwill other than arising on consolidation is stated at purchase cost and is amortized over a period of five years. Goodwill on consolidation rebrsents the excess of purchase consideration over the net book value of assets acquired of the subsidiary companies as on the date of investment. Goodwill on consolidation is not amortised but is tested for impairement, where indicator of impairement exists and losses are recognised where applicable.
The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from brvious estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS 5  'Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies'.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
(e) Impairment of 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 brsent value using a br-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 recognized in the statement of profit and loss.
After impairment, debrciation is provided on the revised carrying amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any indication that brviously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A brviously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited to the extent that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of debrciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
(f) Leases
Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
(g) Inventories
Raw materials, packing material, stores and consumables are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, packing material, stores and consumables is determined on first in first out basis. Stores and consumables which do not meet the definition of property, plant and equipment are accounted as inventories. Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a first in first out basis. Traded goods are valued at lower of cost and net realizable value. Cost includes cost of purchase and other costs incurred in bringing the inventories to their brsent location and condition. Cost is determined on a first in first out basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(h) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:
Sale of goods
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods and is net of  Value Added Taxes (VAT), returns and discounts. The Group collects VAT on behalf of the Government and therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.
Income from services
Revenue from pathological laboratory services and running of clinics are recognised as and when services are rendered.
Display income
Display income is accounted on accrual basis in accordance with the provisions of the relevant contacts. The Group collects Service Tax on behalf of the Government and therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.
Interest
Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
(i) Foreign currency translation
Initial recognition:
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Conversion:
Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction. Non-monetary items, which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.
Exchange differences:
Exchange differences arising on settlement of monetary items or on reporting such monetary items of the Group at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognised as income or as expenses in the year in which they arise.
(j) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year when the contributions are due. The Group has no obligation, other than the contribution payable to the provident fund.
The Group operates a defined benefit plan for its employees, viz., gratuity. The costs of providing benefits under the plan are determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gains and losses for the defined benefit plan are recognized in full in the period in which they occur in the statement of profit and loss.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Group measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Group treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Group brsents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
(k) Employee stock compensation cost
Employees (including senior executives) of the Company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments.
In accordance with the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method and recognized, together with a corresponding increase in the “Stock options outstanding account” in reserves. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit recognized in the statement of profit and loss for a period rebrsents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefit expenses.
(l) Income taxes
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflects the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Group has unabsorbed debrciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Group re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Group writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Group recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Group recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement.” The Group reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the Group does not have convincing evidence that it will pay normal tax during the specified period.
(m) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
(n) Provisions
A provision is recognized when an enterprise has a brsent obligation as a result of 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. Provisions are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
(o) Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Group does not recognize a contingent liability but discloses its existence in the financial statements.
(p) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
3.	Uniform accounting policies
As per the requirements of AS-21, in the brparation of consolidated financial statements, the accounting policies of the consolidated entities are required to be aligned with those of the Parent Company to the extent practicable.
Valuation of inventory of SSPPL,VKEPL, DMPL, SPDPL and SBPPL was done on specific identification method as compared to first in first out basis followed by the Parent Company until March 31, 2016. The closing stock of inventory in hand valued as at March 31, 2016 on specific identification method aggregated to Rs.67,387,679 and its proportion to the Group’s inventory is 2.17%. The Group had estimated the impact of such differential accounting policies on the consolidated results for the year and financial position of the Group as at March 31, 2016 and based on such estimates, had determined that the difference is not material. Management was of the opinion that, such alignment of accounting policies is not practicable and that the cumulative impact of such alignment, if made, would not be significant to the consolidated financial statements.
During the current year, the above subsidiaries have reviewed their method of valuation and concluded that first in first out method of valuation would be appropriate and result in fair brsentation. The change in method of valuation from specific identification method to first in first out method did not have any material impact on current year financials.