A provision is recognized when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the entity. Contingent Assets are not recognized till the realization of the income is virtually certain. However the same are disclosed in the financial statements where an inflow of economic benefit is probable. Contingent liability and contingent asset are reviewed at each balance sheet date.
l) Revenue Recognition
Revenue comprises of revenue from providing healthcare services such as health checkup and laboratory services. Pathology service is the only principal activity and reportable segment from which the Company generates its revenue. Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring the goods or services to a customer i.e. on transfer of control of the service to the customer. Revenue from rendering of services is net of indirect taxes, reversals and discounts;
Revenue is recognized once the testing samples are processed for requisitioned test, to the extent that it is probable that the economic benefits will flow to the Company and revenue can be reliably measured.
Revenue is measured based on the consideration specified in a contract with a customer. Revenue is recognized at a point in time when the Company satisfies performance obligations by transferring the promised services to its customers.
Generally, each test represents a separate performance obligation for which revenue is recognized when the test report is generated i.e. when the performance obligation is satisfied. For allocating the transaction price, the Company has measured the revenue in respect of each performance obligation of a contract at its relative standalone selling price.
The price that is regularly charged for a test when registered separately is the best evidence of its standalone selling price
Contract liabilities - A contract liability is the obligation to transfer services to a customer for which the Company has received consideration from the customer. If a customer pays consideration before the Company transfers
services to the customer, a contract liability is recognized when the payment is made. Contract liabilities are recognized as revenue when the Company performs under the contract.
For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate which exactly discounts the estimated future cash receipts over the expected life of the financial instrument to the gross carrying amount of the financial asset. When calculating the EIR the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayments, extensions, call and similar options); expected credit losses are considered if the credit risk on that financial instrument has increased significantly since initial recognition
Dividends are recognized in statement of profit and loss on the date on which the Company’s right to receive payment is established.
n) Employee Benefits
(i) Short-term Employee benefits
Liabilities for wages and salaries,compensated absences, bonus and ex gratia including non-monetary benefits that are expected to be settled wholly within twelve months after the end of the year in which the employees render the related service are classified as short term employee benefits and are recognized as an expense in the Statement of Profit and Loss as the related service is provided.
A liability is recognized for the amount expected to be paid 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 obligation can be estimated reliably.
(ii) Share-based payments
The cost of equity settled transactions is determined by the fair value at the grant date which is based on the Black Scholes model. The grant date fair value of options granted to employees is recognized as an
employee expense, with a corresponding increase in equity under "Employee Stock Options Reserve", over the period that the employees become unconditionally entitled to the options.
The expense so determined is recognized over the requisite vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. As at each reporting date, the Company revises its estimates of the number of options that are expected to vest, if required.
When the terms of an equity-settled award are modified, in addition to the expense pertaining to the original award, an incremental expense is recognized for any modification that results in additional fair value, or is otherwise beneficial to the employee as measured at the date of modification.
(iii) Post-Employment Benefits
Defined Contribution Plans:
A defined contribution plan is a postemployment benefit plan under which a Company pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes contribution to provident fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 and Employee State Insurance. Contribution paid or payable in respect of defined contribution plan is recognized as an expense in the year in which services are rendered by the employee.
Defined Benefit Plans:
The Company's gratuity benefit scheme is a defined benefit plan. The liability is recognized in the balance sheet in respect of gratuity is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets (being funded portion), together with adjustments for unrecognized actuarial gain losses and past service costs. The defined benefit obligation is calculated at balance sheet date by an independent actuary using the projected unit credit method. Re-measurement of the net defined benefit liability, which comprise actuarial gains and
losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI).
o) Leases
Ind-As 116:
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
As a lessee
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Contracts may contain both lease and nonlease components. The Company allocates the consideration in the contract to the lease and nonlease components based on their relative standalone prices. However, for leases of real estate for which the Company is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
- Fixed payments (including in-substance fixed payments), less incentives receivables
- Variable lease payments that are based on an index or a rate, initially measured using the index or rate at the commencement date
- amount expected to be payable by the Company under residual value guarantees
- the exercise price of a purchase option if the Company is reasonably certain to exercise that option, and
- Payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.
The lease liability is measured at amortised cost using effective interest method. It is remeasured when there is change in assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
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.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Company:
• where possible, uses recent third-party financing received as a starting point, adjusted to reflect changes in financing conditions since third party financing was received
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held, which does not have recent third party financing, and makes adjustments specific to the lease, e.g. term, country, currency and security.
Variable lease payments that depend on sales are recognized in profit or loss in the period in which the condition that triggers those payments occurs. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any incentives received. Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.
Payments associated with short-term leases of equipment and all leases of low-value assets are recognized on a straight-line basis as an expense
in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
The lease liability is presented as a separate line in the statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever
• the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
• the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
• a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The right-of-use assets are presented as a separate line in the statement of financial position.
p) Income-tax
Income tax expense /income comprises current tax expense/ income and deferred tax expense/ income. It is recognized in statement of profit and loss except to the extent that it relates to items recognized directly in equity or in Other Comprehensive Income, in which case, the tax is also recognized directly in equity or other comprehensive income, respectively.
Current Tax
Current tax comprises the expected tax payable or recoverable on the taxable profit or loss for the year and any adjustment to the tax payable or recoverable in respect of previous years. It is
measured at the amount expected to be paid to (or recovered from) the taxation authorities, using the applicable tax rates and tax laws.
• Current tax assets and liabilities are offset only if, the Company has a legally enforceable right to set off the recognized amounts; and
• intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred Tax
Deferred tax is recognized in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purpose and the amount considered for tax purpose.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized, such reductions are reversed when it becomes probable that sufficient taxable profits will be available. Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be recovered.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if:
i) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Uncertain tax provision
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. The provision is estimated based on one of two methods, the expected value method (the sum of the probability weighted amounts in a range of possible outcomes) or the single most likely amount method, depending on which is expected to better predict the resolution of the uncertainty.
q) Foreign currency transactions
Functional and Presentation currency The Company’s financial statements are prepared in Indian National Rupees (Rs.) which is also the Company's functional currency.
Transactions and balances Foreign currency transactions are recorded on initial recognition in the functional currency using the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date the fair value is determined.
Exchange differences arising on the settlement or translation of monetary items are recognized in statement of profit or loss in the year in which they arise.
r) Dividend
The Company recognises a liability for any dividend declared when the distribution is authorized by the shareholders in AGM and the distribution is no longer at the discretion of the Company.
The Company recognises a liability for any dividend declared but not distributed at the end of the reporting period, when the distribution is authorized by the shareholders in AGM and the distribution is no longer at the discretion of the Company on or before the end of the reporting period.
s) Earnings per share:
Basic Earnings per share is calculated by dividing the profit or loss for the year attributable to the
equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the profit or loss for the period attributable to the equity shareholders and the weighted average number of equity shares outstanding during the period is adjusted to take into account:
• The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
• Weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
t) Segment Reporting
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is the Managing Director and CEO of the Company.
Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on a reasonable basis have been included under '"’unallocated revenue / expenses / assets / liabilities"’’. Based on the nature of the business and line of products/ services, there is only one reportable segment - Pathology service.
u) Recent Indian Accounting Standards (Ind AS)
No standards have been issues impacting financial statements of the Company which are effective from April 01,2024.
v) Rounding off amounts
All amounts disclosed in financial statements and notes have been rounded off to the nearest Lakhs as per the requirement of Schedule III. The transactions and balances with values below the rounding off norms adopted by the Company have been reflected as "0.00" in the relevant note to these financial statements.
The amount received in excess of face value of the equity shares is recognized in Securities Premium. It can be used to issue bonus shares, to purchase of its own shares, to provide for premium on redemption of shares or debentures, write-off equity related expenses like underwriting costs, etc.
As per Companies Act, 2013, capital redemption reserve is created when company purchases its own shares out of free reserves or securities premium. A sum equal to the nominal value of the shares so purchased is transferred to capital redemption reserve. The reserve is to be utilised in accordance with the provisions of section 69 of the Companies Act, 2013.
General Reserve
General Reserve is free reserve which is created by transferring funds from retained earnings to meet future obligations or purposes.
Share Application Money Pending Allotment represents application money received on account of Employees Stock Option Scheme.
Employee stock options reserve
The Company has established equity settled share based payment plan for certain categories of employees. Refer Note 46(c). Retained Earnings
Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained Earnings is a free reserve available to the Company.
Re-measurement gain/ (loss) on defined benefit plans (net of taxes)
The Company has elected to recognise changes in the value of certain liabilities toward employee compensation in Other Comprehensive Income. These changes are accumulated within re-measurement gain/ (loss) on defined benefit plan reserve within equity.
**The fair value in respect of the unquoted equity investments cannot be reliably estimated. The Company has currently measured them at their cost, i.e. Rs. 175.28 Lakhs (March 31,2023 Rs. 175.28 Lakhs)
The Fair value of cash and cash equivalents, other bank balances, trade receivables, trade payables approximated their carrying value largely due to short term maturities of these instruments.
Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual creditworthiness of the counterparty. Based on this evaluation, allowances are taken to account for expected losses of these receivables. Accordingly, fair value of such instruments is not materially different from their carrying amounts.
The call options are fair valued at each reporting date through statement of profit and loss.
Ind AS 107, 'Financial Instrument - Disclosure’ requires classification of the valuation method of financial instruments measured at fair value in the Balance Sheet, using a three level fair-value-hierarchy (which reflects the significance of inputs used in the measurements). The hierarchy gives the highest priority to un-adjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and lowest priority to un-observable inputs (Level 3 measurements). The three levels of the fair-value-hierarchy under Ind AS 107 are described below:
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level. This is the case for unlisted equity securities included in level 3.
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 trade and other receivables and cash and cash equivalents. The maximum exposure to credit risk in case of all the financial instruments covered below is restricted to their respective carrying amount.
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
The Company does not have any significant concentration of credit risk. Further, company has no customer (March 31,2023- NIL) which accounts for 10% or more of the total trade receivables at each reporting date.
Trade receivables are generally on terms of 30 to 90 days.
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix.
The movement in the provision for bad and doubtful debts for the year ended March 31,2024
The Company held cash and cash equivalents and other bank deposits as at March 31, 2024 Rs. 3,046.25 Lakhs (March 31,2023 Rs. 4,271.73 Lakhs). The cash and cash equivalents and other bank balances are held with banks with good credit ratings.
c. Investments
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counterparties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.
Loans and advances mainly consist security deposit and advances to related parties.
The security deposit pertains to rent deposit given to lessors. The Company does not expect any losses from nonperformance by these counter-parties.
The loans and advances given majorly pertains to subsidiaries. The parties have been generally regular in making payments and hence the Company does not expect significant impairment losses on its current profile of outstanding advances. The
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices -will affect the Company’s income or the value of its holdings of financial instruments. The Company is exposed to market risk primarily related to foreign exchange rate risk and interest rate risk. The objective of market risk management is to avoid excessive exposure in foreign currency revenues and costs.
a. Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company has foreign currency trade payables and receivables and is therefore exposed to foreign exchange risk.
Exposure to currency risk (Exposure in different currencies converted to functional currency i.e. Rs.)
The currency profile of financial assets and financial liabilities as at March 31,2024 and as at March 31,2023 are as below:
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.
The interest rate profile of the Company’s interest-bearing financial instruments is as follows.
The objective of the Company’s capital management is to ensure that it maintains an efficient capital structure and healthy capital ratios to support its business and maximize shareholder value.
The Company has equity capital and other reserves attributable to the equity shareholders, as the only source of capital and the Company has insignificant interest bearing borrowings/ debts as on the reporting date. Hence, the Company is not subject to any externally imposed capital requirements.
The Company’s capital management is driven by Company’s policy to maintain a sound capital base to support the continued development of its business. The Board of Directors seeks to maintain a prudent balance between different components of the Company’s capital. The Management monitors the capital structure and the net financial debt at individual currency level. Net financial debt is defined as current and non-current financial liabilities less cash and cash equivalents and short-term investments.
The Company contributes towards statutory provident fund as per the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and towards employee state insurance as per the Employees' State Insurance Act, 1948. The amount of contribution to provident fund and Employee State Insurance Scheme recognized as expenses during the year is Rs. 1,484.99 Lakhs (March 31,2023 Rs. 1,391.78 Lakhs).
(c) Employee Stock Option Schemes
Description of share-based payment arrangements:
As at March 31,2024 and March 31,2023 Company had following share-based payment arrangements:
This plan may be called the Metropolis-Restrictive Stock Unit Plan, 2020 (MHL-RSU Plan, 2020) as approved by the Board of Directors of the Company at its meeting held on February 06, 2020 as per the recommendation of Nomination and Remuneration Committee and approved by members of the Company through postal ballot process on April 06, 2020. This plan shall be deemed to have come into force on April 06, 2020 (Being the date of passing of special resolutions for approving the MHL-RSU Plan 2020 by the Shareholder of the Company through postal ballot process) or on such date as may be decided by the Nomination and Remuneration Committee ("Committee") of the Company.
The Company has instituted "Metropolis Employee Stock Option Plan 2015 "(MESOP 2015) for eligible employees. In terms of the said plan, options to the employees shall vest at the rate of 30% of Grant on 36 months from Grant Date, 35% of Grant on 48 months from Grant Date and 35% of Grant on 60 months from Grant Date. The vested options can be exercised on earlier of Listing of Company Shares on an Indian Stock Exchange or 60 month from the date of the grant. Further option can only be exercised during the exercise window specified by the Company. Each Option carries with it the right to purchase one equity share of the Company at the exercise price determined by Nomination and Remuneration Committee.
On September 19, 2017, consent was given by the Nomination and Remuneration Committee, where in vesting schedule was modified to grant options under Metropolis Employee Stock Options Scheme, 2015 (MESOS 2015). As per modified terms, option to
- Existing employees (person who is in continuous employment with the Company since 1 January, 2016 or prior thereto) shall vest at the rate of 50% of Grant on 1 January 2018, 25% of Grant on 1 January 2019 and 25% of Grant on 1 January 2020.
- New employees (person who is in continuous employment with the Company after 01 January, 2016.) shall vest at the rate of 50% of Grant on completion of 2 years from date of joining, 25% of Grant on completion of 3 years from date of joining and 25% of Grant on completion of 4 years from date of joining.
The Company follows period of January to December period for accrual of leaves. As per policy accumulation of Previliged and casual leave is not allowed. Previliged leaves are encashed at the end of December, however, casual leaves get lapsed at the end of December.
Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on a reasonable basis have been included under “unallocated revenue / expenses / assets / liabilities".
Based on the nature of the business and line of products/ services, there is only one reportable segment - Pathology service.
During the earlier years, the Company has entered into a business purchase agreement to acquire Sanjeevani Pathology Laboratory located at Rajkot for an initial purchase consideration of Rs 4,104.00 Lakhs, an amount of Rs 2,300.00 Lakhs is to be paid by the Company to Dr. Kiritkumar Patel, owner of Sanjeevani Pathology Laboratory in 7 tranches starting from February 2017 to March 2021.
In case of investment in Dr. Patel Metropolis Healthcare Private Limited during year ended March 31,2019, out of total consideration of Rs 868.92 Lakhs, an amount of Rs. 100 Lakhs is to be paid by Company in 2 tranches (Rs. 80 Lakhs to be paid on September 14, 2021 and remaining Rs. 20 Lakhs to be paid on September 14, 2023).
The deferred consideration of Rs. 100 Lakhs has been measured at fair value (Rs. 80.40 Lakhs) on initial recognition and the difference of Rs. 19.60 Lakhs will be recognized as finance cost on EIR basis over the payment tenure; During year ended March 31,2024 Rs. 0.33 Lakhs (March 31,2023 Rs 1.25 Lakhs) charged to statement of profit and loss (refer note 33).
During the 2019-20, Desai Metropolis health Services Private Limited a subsidiary of the Company has entered into a business purchase agreement to acquire Four Laboratories (Yash Lab, Nagar lab, Doctor Lab and Iyyer Lab) located at Surat for an initial purchase consideration of Rs 1,800.00 Lakhs. The amount of Rs 1,800.00 Lakhs is to be paid by the Desai Metropolis health Services Private Limited to the owners of these laboratories in 6 tranches starting from September 2019 to September 2024.
The deferred consideration of Rs. 1,800 Lakhs has been measured at fair value (Rs. 1,668.1 1 Lakhs) on initial recognition and the difference of Rs. 131.89 Lakhs will be recognized as finance cost on EIR basis over the payment tenure; During year ended March 31,2024 Rs 5.28 Lakhs (March 31,2023 Rs 8.67 Lakhs) charged to statement of profit and loss (refer note 33).
As at March 31,2024, the Company has an investment of Rs. 129.85 Lakhs (March 31,2023 Rs. 129.85 Lakhs) and receivable of Rs. 445.05 Lakhs (March 31,2023 Rs. 445.05 Lakhs) from Star Metropolis Health Services Middle East LLC ('Star Metropolis’). Since the information has not been forthcoming for many years, Management has decided to discontinued to recognize the said entity as an associate from the previous year and has filed an application to Reserve Bank of India (RBI) through Authorised Dealer Bank seeking permission to write off the above investment and receivable. However during the year, The Board of Directors of the Company has accorded their approval for entering into a Settlement agreement with the equity shareholder(s) of Star Metropolis Health Services Middle East LLC - Dubai, associate of the Company (' the Associate’) inter-alia to enable liquidation of the Associate as per the applicable laws.
The Company management is of the opinion that its international and domestic transactions are at arm’s length as per the independent firms report for the year ended March 31,2023. Management continues to believe that its international transactions post March 31,2023 and the specified domestic transactions are at arm's length and that the transfer pricing legislation will not have any impact on these financial statements, particularly on amount of tax expense and that of provision of taxation.
Metropolis Healthcare Lanka Private Limited (Metropolis Lanka) has bought back 250,000 ordinary shares held by Nawaloka Hospitals PLC ("Nawaloka") in Metropolis Lanka pursuant to memorandum of understanding (MOU) dated March 31, 2017. As per the MOU, the buy-back consideration payable by Metropolis Lanka was adjusted against certain receivables payable by Nawaloka to Metropolis Lanka. As at March 31, 2020, Metropolis Lanka has not filed relevant forms with Registrar of the Company in respect of share transfer. Currently, the shareholding records in the books of Metropolis Lanka assumes that the buy-back has been effectuated as per the MOU and Metropolis Healthcare Limited is reflected as 100% owner of Metropolis Lanka.
The Company did not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
54 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
55 The total amount receivable from the contract of Aam Aadmi Mohalla Clinic was Rs 384 Lakhs, the Company has received Rs 131 Lakhs (including TDS) out of that and the balance Rs 253 Lakhs has been fully provided over the period of the contract period i.e Feb 2023 to March 31,2024.
56 As at March 31, 2024, there are certain proceeds from exporting diagnostic services to its overseas subsidiaries and certain other customers that have not been repatriated back into India within the stipulated timeframe as prescribed by the Reserve Bank of India (RBI) Master Direction on reporting and realization of export proceeds, including due to circumstances beyond the Company’s control. The Company has duly applied to its Authorised Dealer (AD) bank for an extension of time period to repatriate the outstanding export proceeds. The Company is actively engaged with the AD bank to ensure compliance with RBI regulations and to facilitate the repatriation of the export proceeds at the earliest. The Company does not consider any material impact in respect of the above on the financial position or performance of the Company.
On April 18, 2024 the National Company Law Tribunal, Chennai Bench ("NCLT") has approved the dissolution of Dr.Ganesan's Hitech Diagnostic Centre Private Limited ("Hitech", a wholly owned subsidiary of the Company) vide its order. Pursuant to the Scheme becoming effective, Hitech ceased to be the subsidiary of the Company and gets merged with the Company. The entire business of Hitech was distributed to the Company on a going concern basis on and with effect from 4 June 2022.
A Acquisition and Liquidation of Dr.Ganesan's Hitech Diagnostic Centre Private Limited
a) On October 22, 2021, the Company acquired 100% stake in Dr.Ganesan’s Hitech Diagnostic Centre Private Limited ("Hitech") and its wholly owned subsidiary Centralab Healthcare Services Private Limited ("Centralab") for a cash consideration of Rs. 63,142 (Lakhs) as per the terms and conditions of the Share Purchase Agreement including amendments thereof entered between the Company and Hitech. Post completion of the aforesaid acquisition, "Hitech" and "Centralab" has become wholly owned subsidiary and step down subsidiary respectively of the Company.
b) The Board of Directors of the Company, at their meeting held on February 1 1, 2022, accorded in-principle approval for the voluntary liquidation of Dr. Ganesan’s Hitech Diagnostic Centre Private Limited ('Hitech’), a wholly owned subsidiary of the Company, to be carried out under the provisions of Insolvency and Bankruptcy Code, 2016. The Board of Directors of Hitech in their meeting dated April 01,2022 and the members of Hitech in their Extra Ordinary
General meeting held on April 01, 2022 had accorded their approval for consolidation of the business of Hitech through voluntary liquidation process. Pursuant to the ongoing liquidation process, the liquidator of Hitech has transferred the entire business undertaking to the Company on a going concern basis on and with effect from 04 June 2022.
c) Accordingly, the Company gave effect of the liquidation as per the requirements of Appendix C to Ind AS 103 "Business Combination", to as if it had occurred from the beginning of the preceding period, being the date of acquisition (i.e. October 22, 2021) and accordingly preceding period figures (i.e March 31,2022) have been revised.
d) Accounting treatment
i. The Company has recorded all the assets, liabilities and reserves of the Hitech, at their carrying values and in the same form as appearing in the consolidated financial statement of the Company as on the Appointed Date, by applying the principles as set out in Appendix C of IND AS 103 'Business Combinations’ read with ITFG Bulletin 9; Issue 2 ; Situation B and prescribed under Companies (Indian Accounting Standards) Rules, 2015 issued by the Institute of Chartered Accountants of India.
ii. The financial statements of the Company reflect the financial position on the basis of consistent accounting policies.
iii. Any loans, advances or other obligations (including but not limited to any guarantees, letters of credit, letters of comfort or any other instrument or arrangement which may give rise to a contingent liability in whatever form) that were due between the Company and Hitech, if any, ipso facto, stood discharged and came to end and the same was eliminated by giving appropriate elimination effect in the books of account and records of the Transferee Company.
iv. Investments in shares of the Hitech held by the Company were adjusted against Share Capital of the Hitech and the difference, between cost of investment of the Hitech in the books of the Company was adjusted against balance of reserves and surplus of the Company post-liquidation.
v. The identity of the reserves was preserved and appear in the financial statements of the Company in the same form in which they appeared in the financial statements of the Hitech.
The Board of Directors of the Company, at their meeting held on February 11, 2022, accorded in-principle approval for the voluntary liquidation of Dr. Ganesan's Hitech Diagnostic Centre Private Limited ('Hitech'), a wholly owned subsidiary of the Company, to be carried out under the provisions of Insolvency and Bankruptcy Code, 2016. The Board of Directors of Hitech in their meeting dated April 01, 2022 and the members of Hitech in their Extra Ordinary General meeting held on April 01,2022 have accorded their approval for consolidation of the business of Hitech through voluntary liquidation process. Pursuant to the ongoing liquidation process, the liquidator of Hitech has transferred the entire business undertaking to the Company on a going concern basis on and with effect from 04 June 2022. On April 18, 2024 the National Company Law Tribunal, Chennai Bench ("NCLT") has approved the dissolution of Dr.Ganesan's Hitech Diagnostic Centre Private Limited ("Hitech", a wholly owned subsidiary of the Company) vide its order. Pursuant to the Scheme becoming effective, Hitech ceased to be the subsidiary of the Company and gets merged with the Company. The entire business of Hitech was distributed to the Company on a going concern basis on and with effect from June 04, 2022.
(i) Earning before interest and taxes = Profit before exceptional items and tax Finance costs - Other Income
(j) Capital Employed = Tangible Net Worth Total Debt Deferred Tax Liability Note:
1. Due to repayment and prepayment of loans taken for acquision of Hitech business in Earlier years.
2. Mainly due to increase in Favourable payable terms from the creditors for payment due date
3. Variance is due to early repayment of term loan resulting positive working capital
60 No transactions to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:
(a) Crypto Currency or Virtual Currency
(b) Benami Property held under Prohibition of Benami Property Transactions Act, 1988 and rules made thereunder
(c) Registration of charges or satisfaction with Registrar of Companies
(d) Relating to borrowed funds:
i. Wilful defaulter
ii. Utilisation of borrowed funds and securities premium
iii. Borrowings obtained on the basis of security of current assets
iv. Discrepancy in utilisation of borrowings
v. Current maturity of long term borrowings
(e) Number of layers of companies as prescribed under clause section 87(2) of the Companies Act, 2013 As per our report of even date attached
For B S R & Co. LLP For and on behalf of the Board of Directors
Chartered Accountants Metropolis Healthcare Limited
Firm’s Registration No: 101248W/W-100022 L73100MH2000PLC192798
Rajesh Mehra Dr. Sushil Shah Ameera Shah
Partner Chairman & Executive Director Managing Director
Membership No: 103145 DIN: 00179918 DIN: 00208095
Place : Mumbai Place : Mumbai
Surendran Chemmenkotil Rakesh Agarwal
Chief Executive Officer Chief Financial Officer
Date: May 21,2024
Subramanian Ranganathan Kamlesh Kulkarni
Independent Director Company Secretary
DIN:00125493 Place: Mumbai
Place : Mumbai