ಕಂಪನಿಯ ಅಕೌಂಟಿಗ್ ಪಾಲಿಸಿ Nephrocare Health Services Ltd.

Mar 31, 2026

2. MATERIAL ACCOUNTING POLICIES AND KEY
ACCOUNTING ESTIMATES AND JUDGEMENTSA. Basis of preparation:

The Standalone financial statements of the Company as at
and for the year ended 31 March 2026 have been prepared
and presented in accordance with Indian Accounting
Standards ("Ind AS") notified under Section 133 of the
Companies Act, 2013 ("the Act") [Companies (Indian
Accounting Standards) Rules, 2015], and presentation
requirements of Division II of Schedule III to the Companies
Act, 2013 as amended from time to time and other relevant
provisions of the Act and accounting principles generally
accepted in India.

These Standalone financial statements for the year ended
31 March 2026 were authorized and approved for issue by
the Company''s Board of Directors on 19 May 2026.

These Standalone financial statements have been
prepared for the Company on the basis of relevant Ind AS
that are effective at the Company''s annual reporting date
31 March 2026.

These Standalone financial statements have been
prepared on going concern basis using the historical cost
convention and on an accrual basis except for the following
material items in the balance sheet:

• Certain financial assets and liabilities which are
measured at fair value;

• Net defined benefit liability which is measured at
present value of defined benefit obligations;

• Lease liabilities which are measured at the
present value of the remaining lease payments,
discounted using the lessee''s incremental
borrowing rate at the date of initial application.
Right-of-use assets have been measured as
an amount equal to the lease liability, adjusted
by an amount of any prepaid or accrued lease
payments relating to that lease recognized in the
balance sheet immediately before the date of
initial application; and

• Share based payments which are measured at
fair value of the options.

The accounting policies are applied consistently to
all the periods presented in the financial statements,
except where a newly issued accounting standard is
initially adopted or a revision to an existing standard
requires a change in the accounting policy hitherto in
use.

B. Summary of material accounting policies

The financial statements have been prepared using the
accounting policies and measurement basis summarized
below:

a. Current versus non-current classification

The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification.

An asset is classified as current when it is:

• Expected to be realized or intended to sold or
consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realized within twelve months
after the reporting period, or

• Cash or cash equivalent unless restricted from
being excha nged or used to settle a lia bility for at
least twelve months after the reporting period

All other assets are classified as non-current.

A liability is classified as current when:

• I t is expected to be settled in normal operating
cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after
the reporting period, or

• There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

b. Functional currency and rounding of amounts

The financial statements are presented in Indian
Rupee (''INR'' or ''? '') which is also the functional and
presentation currency of the Company. All amounts
disclosed in the financial statements and notes have
been rounded-off to the nearest million or decimal
thereof as per the requirement of Schedule III, unless
otherwise stated.

c. Foreign currency

Transactions and balances

Foreign currency transactions are recorded in the
functional currency, by applying to the exchange
rate between the functional currency and the foreign
currency at the date of the transaction.

Foreign currency monetary items are converted
to functional currency using the closing rate.
Non-monetary items denominated in a foreign
currency which are carried at historical cost are
reported using the exchange rate at the date of the
transaction; and non-monetary items which are
carried at fair value, or any other similar valuation
denominated in a foreign currency are reported using
the exchange rates that existed when the values were
determined.

Exchange differences arising on monetary items on
settlement, or restatement as at reporting date, at
rates different from those at which they were initially
recorded, are recognized in the statement of profit
and loss in the year in which they arise.

d. Revenue recognition

The Company derives income by providing dialysis
treatments to patients. Revenue from these services
is recognized when the dialysis treatment of patient is
completed.

Revenue is recognized on satisfaction of performance
obligation upon transfer of control of promised
products or services to customers for an amount that
reflects the consideration the Company expects to
receive in exchange for those products or services.
Revenue is measured based on the transaction

price, which is the fixed consideration adjusted for
components of variable consideration, principal
versus agents'' considerations, any other rights and
obligations as specified in the contracts entered with
customers.

In determining the transaction price, the Company
considers the effects of variable consideration, the
existence of significant financing components, non¬
cash consideration, and consideration payable to
the customer (if any). Revenue is recognized at the
point in time for the dialysis services when the related
services are rendered at the transaction price.

Other Operating Income, including revenue from the
sale of pharmacy products and scrap, is recognized at
the point in time when the performance obligation is
satisfied at a point in ti me.

The Company does not expect to have any contracts
where the period between the transfer of the
promised goods or services to the customer and
payment by the customer contractually exceeds one
year as on the date of sale of such goods or service.
As a consequence, it does not require to adjust any of
the transaction prices for the time value of money.

e. Borrowing costs

Borrowing costs directly attributable to the
acquisition, construction or production of a qualifying
asset are capitalized during the period of time that is
necessary to complete and prepare the asset for its
intended use or sale. A qualifying asset is one that
necessarily takes substantial period of time to get
ready for its intended use. All other borrowing costs
are charged to the Statement of Profit and Loss as
incurred.

f. Property, plant and equipment (PPE)

Recognition and initial measurement

As on the date of transition to I nd-AS, the Compa ny had
availed one time transition exemption regarding the
carrying cost of property, plant and equipment (PPE),
pursuant thereto the carrying cost as at 01 April 2019
reported under the previous GAAP were considered as
deemed cost for reporting under Ind-AS

Property, plant and equipment are stated at their
cost of acquisition. The cost comprises purchase
price, borrowing cost if capitalization criteria are met
and directly attributable cost of bringing the asset to
its working condition for the intended use. Any trade
discount and rebates are deducted in arriving at the
purchase price.

Subsequent costs are included in the asset''s
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow
to the Company and the cost of the item can be
measured reliably. All other repair and maintenance
costs are recognized in statement of profit or loss as
incurred.

Subsequent measurement (depreciation and
useful lives)

Depreciation on property, plant and equipment is
provided on the straight-line method, computed on
the basis of useful lives as estimated by management
basis its technical evaluation. Following is the useful
life estimated by management:

The residual values, useful lives and method of
depreciation are reviewed at each financial year end
and adjusted prospectively, if appropriate.

Depreciation

Depreciation on the addition/disposals is charged on
pro-rata basis from/until the date of such addition/
disposal.

De-recognition

An item of property, plant and equipment and any
significant part initially recognized is derecognized
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss
arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds
and the carrying amount of the asset) is included in
the statement of profit and loss, when the asset is
derecognized.

Capital work-in-progress

Cost of assets not ready for intended use, as on
the balance sheet date, is shown as capital work-in¬
progress. Advances given towards acquisition of fixed
assets outstanding at each balance sheet date are
disclosed as other non-current assets.

g. Intangible assets

Recognition and initial measurement

Intangible assets are stated at their cost of acquisition.
The cost comprises purchase price, borrowing cost if
ca pitalization criteria a re met a nd directly attri butable
cost of bringing the asset to its working condition for
the intended use.

Subsequent measurement (amortization)

The cost of capitalized software is amortized over
a period of up to 6 years, on a straight-line basis.
Amortization on the addition/disposals is charged on
pro-rata basis from/until the date of such addition/
disposal.

h. Leases

The Company assess at the contract inception
whether a contract is, or contains, a lease. That is, if
the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.

At inception or on reassessment of a contract that
contains a lease component, the Company allocates
the consideration in the contract to each lease
component on the basis of their relative stand-alone
prices. However, for the leases where the stand¬
alone prices of lease and non-lease components is
not determinable, the Company has elected not to
separate non-lease components and account for the
lease and non-lease components as a single lease
component.

The Company pays "Hospital fees" to the hospital
for services like leasing out the rental premises,
nephrologist services and other common facilities.
These include both lease and non-lease components
where the standalone prices of non-lease
components are not determinable, hence, the entire
expense is considered as a single lease component.

Company as a lessee
Right-of-use assets:

The Company recognizes right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use

assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount
of lease liabilities recognized, initial direct costs
incurred, and lease payments made at or before
the commencement date less any lease incentives
received. Unless the Company is reasonably certain
to obtain ownership of the leased asset at the end of
the lease term, the recognized right-of-use assets are
depreciated on a straight-line basis over the shorter of
its estimated useful life and the lease term. Right-of-
use assets are subject to impairment.

Lease liabilities:

At the commencement of the lease, the Company
recognizes lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments
(including in-substance fixed payments) less any
lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees.
The lease payments also include the exercise price of
a purchase option reasonably certain to be exercised
by the Company and payments of penalties for
terminating a lease, if the lease term reflects the
Company exercising the option to terminate. The
variable lease payments that do not depend on an
index or a rate are recognized as expense in the
period on which the event or condition that triggers
the payment occurs.

In calculating the present value of lease payments, the
Company uses the incremental borrowing rate at the
lease commencement date if the interest rate implicit
in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term, a
change in the in-substance fixed lease payments or a
change in the assessment to purchase the underlying
asset.

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 ca rryi ng a mou nt of the right-of-use
asset has been reduced to zero.

Short term leases and leases of low-value assets:

The Compa ny a pplies the short-term lease recognition
exemption to its short-term leases of premises/
equipment''s (i.e., those leases that have a lease term
of 12 months or less from the commencement date
and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption
to leases of premises/equipment''s.

i. Impairment of non-financial assets

At each reporting date, the Company assesses
whether there is any indication that an asset may
be impaired, based on internal or external factors. If
any such indication exists, the Company estimates
the recoverable amount of the asset or the cash
generating unit. If such recoverable amount of the
asset or cash generating unit to which the asset
belongs is less than its carrying amount, the carrying
amount is reduced to its recoverable amount. The
reduction is treated as an impairment loss and is
recognized in the statement of profit and loss. If,
at the reporting date there is an indication that a
previously assessed impairment loss no longer exists,
the recoverable amount is reassessed, and the asset
is reflected at the recoverable amount. Impairment
losses previously recognized are accordingly reversed
in the statement of profit and loss.

j. Financial instruments

Financial assets

Initial recognition and measurement

Trade receivables issued are initially recognized
when they are originated. All other financial assets
and financial liabilities are initially recognized when
the Company becomes a party to the contractual
provisions of the instrument. A financial asset (unless
it is a trade receivable without a significant financing
component) or financial liability is initially measured
at fair value plus or minus, for an item not at FVTPL,
transaction costs that are directly attributable to
its acquisition or issue. A trade receivable without a
significant financing component is initially measured
at the transaction price.

The financial asset is classified as measured at:

• amortized cost;

• fair value through other comprehensive income
(FVOCI) - equity instrument; or

• fair value through profit and loss (FVTPL)

Subsequent measurement

Debt instruments at amortized cost - A ''debt
instrument'' is measured at the amortized cost if both
the following conditions are met:

• The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

• Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the
principal amount outstanding.

After initial measurement, such financial assets are
subsequently measured at amortized cost using the
effective interest rate (EIR) method.

Equity investments - All equity investments in
scope of Ind-AS 109 are measured at fair value. Equity
instruments which are held for trading are generally
classified at fair value through profit and loss (FVTPL).
For all other equity instruments, the Company
decides to classify the same either as at fair value
through other comprehensive income (FVOCI) or fair
value through profit and loss (FVTPL). The Company
makes such election on an instrument-by-instrument
basis. The classification is made on initial recognition
and is irrevocable.

De-recognition of financial assets

A financial asset is primarily de-recognized when the
contractual rights to receive cash flows from the asset
have expired or the Company has transferred its rights
to receive the contractual cash flows from the asset.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognized initially at fair
value and transaction cost that is attributable to the
acquisition of the financial liabilities is also adjusted.
These liabilities are classified as amortized cost.

Subsequent measurement

These liabilities include borrowings, trade payables,
deposits etc. Subsequent to initial recognition, these
liabilities are measured at amortized cost using the
effective interest method.

De-recognition of financial liabilities

A financial liability is de-recognized when the
contractual obligation under the liability is discharged
or cancelled or expires. When an existing financial

liability is replaced by another from the same lender
on substantially different terms, or the terms of an
existing liability are substantially modified, such
an exchange or modification is treated as the de¬
recognition of the original liability and the recognition
of a new liability. The difference in the respective
carrying amounts is recognized in the statement of
profit or loss.

Other income - Interest income

Interest income is recognized on time proportion
basis taking i nto accou nt the a mou nt outstanding and
rate applicable. For all debt instruments measured at
amortized cost, interest income is recorded using the
effective interest rate (EIR) method.

The ''effective interest rate'' is the rate that exactly
discounts estimated future cash payments or
receipts through the expected life of the financial
instrument to:

• the gross carrying amount of the fi nancia l asset;
or

• the amortized cost of the financial liability.

Offsetting of financial instruments

Financial assets and financial liabilities are off-set,
and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset
the recognized amounts and there is an intention to
settle on a net basis, to realize the assets and settle
the liabilities simultaneously.

k. Impairment of financial assets

In accordance with Ind-AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss for financial
assets.

ECL is the difference between all contractual cash
flows that are due to the Company in accordance with
the contract and all the cash flows that the Company
expects to receive. When estimating the cash flows,
the Company is required to consider-

• All contractual terms of the financial assets
(including prepayment and extension) over the
expected life of the assets.

• Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms.

The Company considers a financial asset to be in
default when:

• the debtor is unlikely to pay its credit obligations
to the Company in full, without recourse by the
Company to actions such as realizing security (if
any is held); or

• the financial asset is past due.

Trade receivables

The Company applies approach permitted by Ind AS
109 Financial Instruments, which requires expected
lifetime losses to be recognized from initial recognition
of receivables.

Other financial assets

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
whether there has been a significant increase in the
credit risk since initial recognition and if credit risk has
increased significantly, impairment loss is provided.

The gross ca rryi ng amount of a fi nancial asset is written
off (either partially or in full) to the extent that there is
no realistic prospect of recovery. This is generally the
case when the Company determines that the debtor
does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that
are written off could still be subject to enforcement
activities in order to comply with the Company''s
procedures for recovery of amounts due.

l. Investment in subsidiaries and joint venture

Investments in subsidiaries and joint venture is
recognized at cost as per Ind AS 27. On loss of control
or disposal of an investment in a subsidiary, the
Company derecognizes the carrying amount of the
investment and recognizes the difference between
the consideration received (and the fair value of any
retained interest) and the carrying amount as gain
or loss in the standalone statement of profit and
loss. Impairment in the cost of these investments is
recognized in accordance with principles mentioned
in para 2.B(i) above.

m. Inventories

I nventories comprising of medical consumables and
stores and spares are valued at cost and include
purchase price and other direct expenses incurred
to bring inventories to its present condition and
location. Inventories are measured at the lower of

cost and net realizable value. Cost of inventories is
determined using the weighted average method.
Cost includes purchase price excluding taxes those
are subsequently recoverable by the Company from
the concerned authorities, freight inwards and other
expenditure incurred in bringing such inventories to
their present location.

The carrying cost of medical consumables are
appropriately written down when there is a decline
in replacement cost of such materials which are
expected to be sold below cost.

n. Income taxes

Tax expense recognized in statement of profit or loss
comprises the sum of deferred tax and current tax
except the ones recognized in other comprehensive
income or directly in equity.

Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable
in respect of previous years. The amount of current
tax reflects the best estimate of the tax amount
expected to be paid or received after considering
the uncertainty, if any, related to income taxes. It is
measured using tax rates (and tax laws) enacted or
substantively enacted at the reporting date. Current
income tax relating to items recognized outside
profit or loss is recognized outside profit or loss
(either in other comprehensive income or in equity).
Current tax items are recognized in correlation to the
underlying transaction either in other comprehensive
income or directly in equity.

Current tax assets and current tax liabilities are offset
only if there is a legally enforceable right to set off
the recognized amounts, and it is intended to realize
the asset and settle the liability on a net basis or
simultaneously.

Deferred tax is provided using the liability method
on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
Deferred tax assets are recognized to the extent that
it is probable that the underlying tax loss or deductible
temporary difference will be utilized against future
taxable income. This is assessed based on the
Company''s forecast of future operating results,
adjusted for significant non-taxable income and

expenses and specific limits on the use of any unused
tax loss or credit.

The carrying a mount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that
it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred
tax asset to be utilized. Unrecognized deferred tax
assets are re-assessed at each reporting date and are
recognized to the extent that it has become probable
that future taxable profits will allow the deferred tax
asset to be recovered.

Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based on
tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date. Deferred
tax relating to items recognized outside profit or loss
is recognized outside profit or loss (either in other
comprehensive income or in equity).

Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by
the same tax authority on the same taxable entity,
or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their
tax assets and liabilities will be realized simultaneously.

o. Cash flow statement

Cash flows are reported using the indirect method,
whereby net profit / (loss) before tax is adjusted for
the effects of transactions of a non-cash nature
and 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 from regular revenue generating (operating
activities), investing and financing activities of the
Company are segregated.

p. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand,
demand deposits, other short-term highly liquid
investments (original maturity of three months or
less) that are readily convertible into known amounts
of cash and which are subject to an insignificant risk of
changes in value.

q. Post-employment, long-term and short-term
employee benefits

Short-term employee benefits

Short-term employee benefits comprise of employee
costs such as salaries, bonus etc. is recognized on the

basis of the amount paid or payable for the period
during which services are rendered by the employee.

Defined contribution plan

The Company''s contribution to provident fund and
employee state insurance schemes is charged to
the statement of profit and loss. The Company''s
contributions towards Provident Fund are deposited
with the Regional Provident Fund Commissioner
under a defined contribution plan.

Defined benefit plan

The Company has gratuity as defined benefit plan
where the amount that an employee will receive on
retirement is defined by reference to the employee''s
length of se rvice and final sa la ry The lia bi l ity recognized
in the balance sheet for defined benefit plans is the
present value of the defined benefit obligation (DBO)
at the reporting date net of fair value of plan assets,
if any. Management estimates the DBO annually with
the assistance of independent actuaries, by adopting
the projected unit credit method. Actuarial gains and
losses resulting from re-measurements of the liability
are included in other comprehensive income.

Other long-term employee benefits

The Company also provides benefit of compensated
absences to its employees which are in the nature
of long -term benefit plan. Liability in respect of
compensated absences becoming due and
expected to be availed more than one year after
the balance sheet date is estimated on the basis of
an actuarial valuation performed by an independent
actuary using the projected unit credit method as
on the reporting date. Actuarial gains and losses
arising from experience adjustments and changes in
actuarial assumptions are recorded in the statement
of profit and loss in the year in which such gains or
losses arise.

r. Share based payments

Certain employees of the Company are entitled to
remuneration in the form of equity settled instruments,
for rendering services over a defined vesting
period. Equity instruments granted are measured
by reference to the fair value of the instrument at
the date of grant. The fair value determined at the
grant date is expensed over the vesting period of
the respective tranches of such grants. The stock
compensation expense is determined based on the
Company''s estimate of equity instruments that will

eventually vest using fair value in accordance with Ind
AS 102, Share based payments.

The employee benefits expense is measured using
the fair value of the employee stock options and is
recognized over vesting period with a corresponding
increase in equity. The vesting period is the period
over which all the specified vesting conditions are to
be satisfied.