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Arogya Seva Ltd, a for-profit company, has the following revenue for the year: Rs 60 lakh from low-cost diagnostic services in aspirational districts for underserved people, Rs 25 lakh from premium health check-ups for urban clients, and Rs 15 lakh from consulting. It wishes to demonstrate primacy of social intent by the revenue test, which requires that at least 67 per cent of revenue come from eligible activities serving target beneficiaries. What is the correct conclusion?

It fails the revenue test because only Rs 60 lakh of Rs 100 lakh, or 60 per cent, comes from eligible services to target beneficiaries, below the 67 per cent threshold. It may still try to establish primacy of social intent through other tests such as customers served or expenditure.

  1. AIt fails the revenue test, since qualifying revenue is 60 per cent, below 67 per cent, although another test such as customers or expenditure could still be usedCorrect
  2. BIt passes, because 60 per cent is more than half
  3. CIt passes, because 85 per cent of revenue is from healthcare
  4. DIt fails entirely and cannot use any other test

Explanation

Total revenue is 60+25+15 = Rs 100 lakh. Qualifying revenue is Rs 60 lakh, which is 60 per cent, below 67 per cent. The 85 per cent healthcare figure wrongly includes premium services not serving target beneficiaries. The framework allows other criteria (customer base, expenditure), so the entity is not barred from them.

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