AFFLUENCE

DIRECTORS’ REPORT

Dear Members,

Your Directors have pleasure in presenting the Annual Report of your Company together with the Audited Standalone and Consolidated Financial Accounts and the Auditors’ Report thereon for the Year ended March 31, 2014. 

As required under the Ministry of Corporate Affairs’ General Circular 08/2014 No. 1/19/2013-CL-V dated April 4, 2014, the Financial Statements and other reports required to be attached to the Annual Report for FY 2013-14 are governed by the relevant provisions, schedules, rules of the Companies Act, 1956.

1. Financial Results:

The highlights of Consolidated Financial Results of your Company and its Subsidiaries and your Company as a Standalone entity are as follows: 

2. Results of Operations:

The performance of your Company is manifested in the operating revenue, where the consolidated revenue for the financial year ended March 31, 2014 is Rs. 4,553 Million, which grew by 30.9% over last year, as the overall operating performance of the company for the year has been positive with key businesses and geographies contributing to all round robust growth. This achievement is a result of extensive efforts put in by the management for growing revenue, improving gross margins and generating efficiencies through increased productivity and leveraging scale.

Despite showing a significant growth in the revenue on a consolidated basis, the Company has reported a Loss Before Tax of Rs. 363 Million Crores in FY 2013-14 as against a Loss Before Tax of Rs. 47 Million in FY 2012-13. The loss for the year covered under the Report is mainly on account of a onetime impact of Rs. 352 Million, which is attributable to certain business strategies, management decisions and policies initiated to improve sustainable profitability of the business in long-term, the details of which are dealt in the Management Discussion and Analysis Report. Setting aside the onetime hit, the loss on consolidated basis would be Rs. 12 Million, which is a significant turnaround from the last year of performance. Your Company during the financial year has completed the demerger of Multispecialty division of HCG Med-Surge Hospitals Private Limited, into the Company and consolidated its financials with that of the Company. 

To ensure long-term competitiveness of the enterprise, the company took several steps in implementing its strategic growth and development initiatives across various facets of the Organization, assuring quality improvement and enhancement of the consumer experience through personalised patient care and nourishing the culture of empathy and patient centricity combined with a focus on patient wellness makes the brand trustworthy and affords the hospitals an intrinsic and sustainable strength that few others in the industry can match.The company has steadily progressed in all these areas and is inculcating a culture which is intolerant to poor quality and absolutely committed to patient care.

To support the overall growth as an enterprise, we have continued to invest in medical equipment and technology to ensure that our doctors, nurses and administrators have the very best resources at their disposal. We have dedicated teams to constantly monitor technological innovations and medical advances to keep abreast of latest developments in cancer care globally. The availability of sophisticated medical equipment ensures that we are among the few healthcare services providers in India, who are able to offer advanced healthcare procedures in the field on oncology.

 Your company also continues to invest in strong operating systems, robust processes, talented people for building a formidable leadership team, across markets with an unwavering focus on medical excellence and patient-centric cancer care. Our line-up of professionally respected doctors and clinical staff include some of the best available medical talent globally, an asset few organizations in the medical delivery space can claim. Our business model builds the strength of our accumulated experience and extensive domain knowledge of the sector. We continue to evolve, as we walk the path of ever improving quality, with an eye on delivering reliable, accessible and affordable cancer care of the global standard. 

While we focus on strengthening our operations, we aspire to adopt best corporate governance practices while sustaining and strengthening our brand as the fastest growing oncology network in South Asia. Our eminent Board of Directors advice and guide us on policies and proposals made by the operating management. The Board, acting through empowered committees, also oversees the operations and management of the Company. The committees also guide the management to continuously upgrade standards, highlight any potential conflicts of interest, and ensure that fair disclosures are made at all times.

As we gear up for the year ahead, and embark on our journey for this financial year, we believe that our innate understanding of patient needs, world-class clinical talent, latest advances in medical and diagnostic technology and overarching emphasis on compassionate care at affordable prices make us the healthcare provider of choice for our patients. 

A detailed discussion on Operational and Financial Performance of the Company for the year, is given in “Operations Reviews” and “Management Discussion and Analysis” Sections of this Annual Report.

3. Consolidated Financial Statements

The Company as on the March 31, 2014 has 9 subsidiaries, (including two Limited Liability Partnerships). 

In terms of Section 212 of the Companies Act, 1956, your Company is required to attach the directors’ report, balance sheets, profit and loss account of its subsidiary companies to its Annual Report.  

In accordance with the general circular No. 5/12/2007 –CL-III dated 8th February 2011 issued by the Ministry of Corporate Affairs, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Annual Report of the Company. A statement of summarised financials of all the subsidiary companies of your Company, pursuant to Section 212(8) of the Companies Act, 1956 forms part of this report. Any further information in respect of the Annual Report and the financial statements of the subsidiary companies of your Company will be made available to the members on request. In accordance with the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, consolidated Financial Statements presented by your Company include the financial information of all its subsidiaries.

As required under the said general circular, the Board of directors of your company at its meeting held on August 27, 2014, gave its specific consent for not attaching the balance sheets of its subsidiaries, as they would be made available to its members a the company’s registered office. In terms of the said notification of the MCA, a summary of the financial information of each of the subsidiaries of your Company is provided elsewhere in this Annual Report. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary.

4. Dividend

Keeping in view the aggressive growth strategy of the Company and in view of the inadequacy of distributable profits, the Board of Directors of your Company does not recommended any dividend for the financial year under review. Also, during the said year, no amount has been transferred to reserves.

5. Business & Outlook

We believe this has been a transformational year and we feel extremely gratified with the pace of growth and change. During the year, we have forayed into infertility, believing that we will be able to recreate in this specialty, what we have created in cancer care.

While our emphasis remains on growth in the domestic market, we clearly have ambitions of taking the HCG value proposition international. We will continue to explore opportunities abroad, as we pursue our ambition to become one of the best Oncology Institution in the world, while we sustain the position of being South Asia’s largest cancer care network. We are convinced that the benefits realized from such platforms are many, including access to a wider talent pool, cost savings on account of economies of scale and environment of cross-pollination in terms of learning and experience.

A culture of patient-centricity, inculcated at HCG encourages all in the team to stay focused on patient safety, clinical excellence and service excellence. Our hospitals follow well-defined quality and patient safety protocols and adhere to accepted clinical standards in patient handling and care. We are happy to inform you that our facilities in Bangalore and Ahmedabad have received NABH Accreditation, making us one of the few hospitals that are members of an elite group of quality healthcare providers. We are also proud to state that our Triesta Reference Laboratory has received accreditation from NABL and CAP. We aim to get all our hospitals NABH Accredited / NABH prepared and in the process, standardize our services across the group and strengthen our bottom line. Our unique concept of “Integrative Oncology” has been accredited by ESMO (European Society for Medical Oncology) making us one the first health care systems to receive this prestigious recognition. In addition, our clinicians and research scientists have been conferred with many citations and awards for their research, contribution and expertise in clinical domain.

We have been able to aggressively transform our largely hospital centric business, extending our presence to the entire healthcare delivery value chain, with a significant play in Diagnostics, Primary Healthcare, Day Care Specialty and Hospitals. With each strategic and bold decision your company has made, it has brought in unique capabilities, assimilated vast experience and today, it has positioned itself as the “Fastest growing Oncology brand in South Asia”.

The company also has international aspirations in terms of served patients, and with leading accreditations, is rightly placed to offer unbeatable Medical value travel propositions. We already cater to international patients, and with the economic pressures being faced by western economies, are ready to play a larger role in providing quality healthcare services at attractive cost. We are evenly poised to aggressively expand our network, establish brand leadership, and emulate a business model which generates adequate returns for the shareholders.

Today, your company is proud to state that it gives hope to over 1,00,000 patients visiting our Centres every year, for cancer care. While it is humbling to think of the impact we make each day on the thousands of people that seek our care, knowledge of the vastly inadequate infrastructure in the oncology space in our country only adds to the burden of the responsibility we bear, as a leading cancer care provider in the country. We clearly have an integral role to play in India’s development; and a duty to deliver quality care, with a compassionate approach, in a caring environment, to those that need it.

The Company’s future growth strategy is to sustain leadership in Oncology space; and continue to build focused Centers of Excellence with best technology, facilities and clinical practices. We also intend to establish our strong presence in key strategic markets; and to leverage the brand strength to become the dominant healthcare provider, by providing additional services in dominant clusters.

While we would be exploring opportunities for expansion through both Greenfield projects and acquisition of hospitals; it is imperative that we consolidate our operations, regroup our energies before moving forth with even greater speed. Therefore, we see the coming year as a year of consolidation, of knitting together the businesses and providing a backbone of shared support services. This will help to stabilise processes and usher in greater efficiencies with a net upsurge in value created.

In continuation with our strategic intent to align the Company with globally recognized best practices and trends, and to manage and mitigate the challenges of growth, we are exploring an innovative, cost effective, asset light business model that will allow us to strengthen our balance sheet and focus on what we do best. A lot has been achieved but much still needs to be accomplished. We remain resolute in our commitment to nurture excellence and have planned on building the brand, global scale, innovations and delivery platforms to capture key cost synergies and drive efficiencies. The Company continues to evaluate its portfolio of overseas businesses to ensure the right strategic fit and adequate realization of synergistic benefits.

6. New Centres, Upcoming Facilities & New Initiatives:

6.1 HCG Cancer Centre, Trichy: HCG in association with Kauvery Medical Centre has started HCG Cancer Centre in Trichy, in February 2014, having state-of-the-art Linear Accelerator for radiation therapy. The Centre is fully equipped to provide treatment in preventive oncology, surgical oncology and medical oncology.

6.2 HCG PET CT Centre, Mangalore and Nashik: HCG in February 2014 has set up the first PET CT center in Nasik, in collaboration with Manavata Cancer Centre, the JV Partner with whom HCG has established its first comprehensive cancer hospital in Nasik. This would help the oncology and non-oncology patients in Nasik to undergo PET-CT scan without having to travel to other Metros for medical diagnosis.

The Company has recently started another PET CT Centre in association with Mangalore Institute of Oncology, a dedicated cancer hospital in Mangalore, in August 2014. Though, Mangalore is considered as a healthcare destination for South Canara District, the patients requiring PET CT presently travel to Bangalore.

PET-CT has revolutionised medical diagnosis in many fields, by adding precision of anatomic localisation to functional imaging, which was previously lacking from pure PET imaging. For example, in oncology, surgical planning, radiation therapy and cancer staging have been changing rapidly under the influence of PET-CT availability, to the extent that many diagnostic imaging procedures and centres have been gradually abandoning conventional PET devices and

substituting them with PET-CTs. Although the combined/hybrid device is considerably more expensive, it has the advantage of providing both functions as stand-alone examinations, being, in fact, two devices in one.

6.3 Strand Triesta Center for Cancer Genomics: HCG as a joint initiative with Strand Life Sciences has decided to set up a one-stop window for conducting genomic testing in cancer diagnosis and treatment based on Next Generation Sequencing (“NGS”) technologies, which will ensure standards in cancer treatment and risk predictions by using genomics-based diagnostics. HCG can now incorporate genomic testing which will be the future of cancer care and this will help oncologists in clinical decisions and help our patients receive targeted individualised therapies that will improve diagnosis and prognosis of cancer. The genomics-based diagnostics offered by Strand Life Sciences will support physicians and patients to identify targeted therapies and treatment choices in the early stages of cancer. The genomic tests can also detect hereditary risk in the family members of cancer patients.

6.4 HCG’s initiatives in Africa: We believe that the overseas foray in Africa provides impetus for HCG’s growth, tapping an under-penetrated market. Rapidly growing disease burden and high mortality rates for cancer in East Africa, a dire shortage of advanced diagnostic and cancer care facilities in the region, growing inflow of patients from East African countries to HCG centers in Bangalore and Ahmadabad, seeking advanced treatment at affordable cost and keen interest from leading medical practitioners and Healthcare firms to establish cancer care centers with HCG collaboration are some of the factors that prompted the Company to consider the continent as a part of its international expansion plans. We believe that our proven expertise in establishing and managing a pan India network of cancer diagnosis and treatment centers based on a hub and spoke model oncology centers in India would help us to reaching out Africa where the demand supply gap of quality care is quite aberrant. We have formed companies in Kampala –Uganda, Nairobi – Kenya and Tanzania set up and establish our phase I operations, which would include comprehensive diagnostic centres, day care centres, having MRI, CT, Mammography and other supportive facilities.

6.5 Upcoming facilities and New Initatives: The Company is in the process of setting up some of its facilities in Delhi, Borivali, Baroda, Vijayawada, Vishakapatanam, Kochi, Gulbarga, Nagpur, Kolkata, Mumbai and Jaipur. In order to eestablish our presence in key strategic markets; and to leverage the brand strength to become the dominant healthcare provider and to enhanced the revenue momentum, we feel it is imperative to do multi specialty selectively, in both green and brown field; which we believe, we have the vision and the expertise to execute these projects effectively.

7. Recent Achievements

7.1 First hospital to win Golden Peacock Award for Innovation Management: HCG has been recognized for excellence in cancer care with Golden Peacock Innovation Management Award 2013 and is the first hospital to win the Golden Peacock Award for Innovation Management. Golden Peacock Awards is regarded as a benchmark of corporate excellence worldwide and receives over 1000 entries per year for various awards from over 25 countries worldwide.

7.2 First cancer center in India to be accredited by NABH, NABL and CAP : We are happy to inform you all that HCG- Bangalore, is the first cancer center in India, to achieve accreditation from National Accreditation Board for Hospitals & Healthcare Providers, (NABH) Government of India, College of American Pathologists (CAP), State of Illinois, and National Accreditation Board for Testing and Calibration Laboratories (NABL), Government of India. The combined accreditation for quality from three distinguished accreditation bodies was possible because of HCG’s focus on robust process for patient quality, efficient practice of diagnosis and improvements in medical outcome.

7.3 Introduction of TrueBeam & PreScision Artiste Technology for the first time in Asia: We are the first hospital in Asia to introduce the Varian TrueBeam Technology and Siemens PreScision Artiste in cancer treatment, the latest technology in cancer treatment at our centres at Ahmedabad, Bangalore and Chennai.

7.4 Awarded 'Best Health Care Group of The Year' by BMA and Best Place to Work in Indian Health Care: HCG has been awarded the best Health Care Group of the year by BMA and the best place to work in Indian HealthCare, by People Strong & HOSMAC. We believe that the talent and passion of our people is critical to our success and we foster it by providing an exhilarating working environment that inspires lateral thinking, fosters team spirit and encourages open communication. Our HR vision is to be an employer of choice where every employee is a brand ambassador of our superior medical service delivery, and an organization, where every individual shares the pride and commitment in taking us to achieve our mission.

8. Subsidiaries

. During the year under review and till the date of Report, the following companies are the subsidiaries of HCG:

v Malnad Hospital and Institute of Oncology Private Limited.

v HealthCare Global Senthil Multi Specialty Hospitals Private Limited.

v HealthCare Global Vijay Oncology Private Limited.

v HCG Medi-Surge Hospitals Private Limited.

v MIMS HCG Oncology Private Limited.

v HCG TVH Medical Imaging Private Limited.

v Healthcare Diwan Chand Imaging LLP

v BACC Health Care Private Limited

v HCG Pinnacle Oncology Private Limited

v HCG Apex Oncology LLP

The Company has made further investments in almost all the existing subsidiaries and proposes to increase its controlling stake in the subsidiaries. These investments are made in the subsidiaries to fund their expansion programmes

9. Changes in capital structure

9.1 Authorised Capital: The Authorised Capital of the Company is Rs. 120,00,00,000/-(Rupees One Hundred Twenty Crores Only) divided into 12,00,00,000 (Twelve Crores) Equity Shares of Rs.10/- (Rupees Ten only).

9.2 Paid up capital: The issued, subscribed and paid up share capital as on March 31, 2014 was Rs. 68,24,51,120, constituting of 6,82,45,112 Equity Shares of Rs. 10 each. Whereas, the paid up capital of the Company as on March 31, 2013 was Rs. 66,88,99,630, comprising of 6,55,34,814 Equity Shares of Rs. 10 each, fully paid up, and 27,10,298 Equity shares of Rs. 5 paid up, per share. The partly paid shares were converted to fully paid up on May 22, 2013.

10. Demerger of Multispecialty Division from HCG Medi-surge Hospitals Private Limited into Company: The Board of Directors of the Company on June 06, 2013, has accorded their consent for the Scheme of Arrangement between HCG Medi-surge Hospitals Private Limited, its subsidiary and the Company and their respective shareholders, for the demerger of the Multispecialty Division from HCG Medi-surge Hospitals Private Limited into Company, to be effective from April 01, 2012 (the Appointed Date). Honourable High Court of Karnataka and Honourable High Court of Gujarat have approved the Scheme of Demerger on November 12, 2013 and February 28, 2014, respectively, with an appointed date of 1st April, 2012 and an effective date of 31st March, 2014 (‘the Effective Date’), being the date on which all the requirements under the Companies Act, 1956 have been completed.

In terms of the Scheme of Arrangement (the Scheme), the Multispecialty division of HCG Medi-Surge Hospitals Private Limited (Transferor Company), has been merged with the Company (Transferee Company), upon which the undertaking and the entire business, including all assets and liabilities of the Transferor Companies stand transferred to and vested in the Transferee Company. The amalgamation has been accounted under the pooling of interest method and the assets and liabilities transferred have been recorded at their book values. The Multispecialty division of Transferor Company is engaged in offering specialised services for medical diagnosis and is located in Ahmedabad, Gujarat.

Pursuant to the Scheme, the Company has to allot 0.2668 fully paid-up equity shares of Rs. 10/- each for every one fully paid-up equity shares of Rs. 10/- each held by the minority shareholders in the Transferor Company. Accordingly, 579,948 equity shares of Rs. 10/- each are pending to be allotted as at 31st March, 2014 to the minority shareholders in the Transferor Company.

11. Public deposits

During the year under review, your Company has not invited or accepted any deposits from the Public pursuant to the provisions of Section 58A of the Companies Act, 1956, and therefore, no amount of principal or interest was outstanding in respect of deposits from the Public as of the date of Balance Sheet.

12. Changes in the Board of Directors during the financial year till date.

12.1 Appointments: We have immense pleasure in introducing Mr. Rajesh Singhal who has joined the Board of the Company on September 25, 2013, representing Milestone Private Equity Fund and Milestone Army Trust. Pursuant to the provisions of Section 260 of the Companies Act, 2013 (Section 152 and 161 of the Companies Act 2013), (“the Act”), he holds the office upto the date of the ensuing Annual General Meeting and is eligible for appointment as a Director of the Company.

12.2 Resignations: Mr. Anant Kulkarni, Nominee Director representing Milestone Private Equity Fund and Milestone Army Trust and Dr. V.Prakash, Independent Director, have resigned from the Company on September 03, 2013 and September 25, 2013, respectively. The Board of Directors places on record their appreciation for the valuable services rendered by them during their tenure as Directors of the Company.

12.3 Re-appointments at the ensuing Annual General Meeting: In terms of Section 255, 256 and 257 of the Companies Act, 1956, and in accordance with Articles of Articles of Association of the Company, Mr. Gangadhara Ganapati, Dr. K.S.Gopinath and Dr. Ganesh Nayak, directors of the Company, retire at the forthcoming annual general meeting and offer themselves for re-appointment.

13. ERP Implementation

Your Company is in the process of implementing ERP and networking all locations for the purpose of integrating and providing real time information to facilitate speedy decisions. The implementation of ERP will standardize and improve the operational processes, facilitate control mechanisms through sophisticated checks and balances, minimize duplication and reduce costs.

14. Depository System

As the Members are aware, your Company’s shares are tradable in electronic form and your Company has established connectivity with National Securities Depository Limited (NSDL), Depository. In view of the numerous advantages offered by the Depository system, members are requested to avail the facility of dematerialization of the Company’s shares on the Depository as aforesaid.

15. Statutory Auditors

The Statutory Auditors viz., M/s. Deloitte Haskins & Sells, Chartered Accountants, Bangalore, retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. Your Directors recommend their reappointment as Statutory Auditors for the financial year 2014-15.

The Company has also received a letter from M/s. Deloitte Haskins & Sells, Chartered Accountants, Bangalore, to the effect that their re-appointment, if made, would be within the

limit prescribed under Section 224(1B) of the Act, and that they are not disqualified for such re-appointment within the meaning of Section 226 of the Act.

16. Auditors' report

The observations made in the Auditors' Report, read together with the relevant notes thereon, are self-explanatory and hence do not call for any comments under section 217 of the Companies Act, 1956

17. Audit Committee and its composition:

The Audit Committee has been constituted in accordance with the requirements of Section 292A of the Companies Act, 1956. The Audit Committee comprises of Mr. Rajesh Singhal, Mr. Sayed Parvez Mustafa and Mr. Gangadhara Ganapati as Members. Mr. Rajesh Singhal is the is the Chairman of the Committee and Ms. Sunu Manuel, Company Secretary is the Secretary of the Committee.

18. Personnel

Your Directors place on record, their appreciation of the good work of all the employees. Information pursuant to Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars relating to Employees) Rules, 1975 is furnished herein below:

Notes:

a. Remuneration comprises of salary, all allowances and Variable Pay based on Performance.

b. None of the employees except the Chairman & CEO holds 2% or more of the paid up equity share capital of the Company.

19. Management Discussion and Analysis Report

Management Discussion and Analysis report forms part of this Annual Report. The discussion in this section covers the industry trends, Company structure, organisation overview, opportunities and outlook of the Company, analysis of financial results for the financial year ended March 31,

2014, and other developments during April 2013 to till the date of the Report in respect of HCG and its subsidiaries as a Group.

20. Information under Sec. 217(1)(e) of the Companies Act, 1956.

20.1 Conservation of energy: The operations of your company do not consume high levels of energy. However, significant measures are being taken to reduce energy consumption by using energy efficient equipments. Your Company constantly evaluates and invests in new technology to make the infrastructure more energy efficient. As the cost of energy consumed by the Company forms a very small portion of the total costs, the financial implications of these measures are not material.

20.2 Research & Development (R&D): R&D of new services, designs, frameworks, processes and methodologies continue to be of importance at the Company. This allows your company to increase quality and customer satisfaction through continuous innovation.

20.3 Technologies absorption, adaptation and innovation: Over the years your Company has brought into the country the best and the world class equipments for the treatment of
cancer. The Company has a dedicated team of technically competent personnel who relentlessly work on technology upgradation and development related fields. Your Company also deploys its resources from time to time and imparts necessary training to keep abreast of the continuously changing technology.

20.4 Foreign Exchange Earnings and Outgo:

A well thought thorough strategy has been put in place to ensure that the target revenue or the next year is achieved. The key components of this strategy include penetrating deeper in key markets, develop new markets and leverage local opportunities in driving the International Business.

The details of Foreign Exchange Earnings and Outgo during the year ended March 31, 2014, is as under:

21. Stock Option Plan

a) At the extraordinary general meeting held on 25 August, 2010, the shareholders approved the issue of 1,800,000 options under the Scheme titled “Employee Stock Option Scheme 2010 (ESOP 2010). The ESOP 2010 allows the issue of options to employees of the Company and its subsidiaries. Each option comprises one underlying equity share. As per the Scheme, the Remuneration committee grants the options to the employees deemed eligible. The exercise price of each option shall be at a price not less than the face value per share. The option holders may exercise those options vested based on passage of time commencing from the expiry of 4 years from the date of grant and those vested based on performance immediately after vesting, within the expiry of 10 years from the date of grant. On 16 June, 2010, the Company granted options under said scheme for eligible personnel. The fair market value of the option has been determined using Black Scholes Option Pricing Model. The Company has amortised the fair value of option after applying an estimated forfeiture rate over the vesting period.

The grant date fair market value of the options granted through the stock option plan was measured based on Black Scholes method. Expected volatility is estimated by considering historic average share price volatility.

b) The detail of fair market value and the exercise price is as given below:

22. Directors’ Responsibility Statement u/s. 217(2AA) of the Companies Act, 1956

The Companies Amendment Act, 2000 requires that the Directors ensure that the financial statements of the Company are prepared in such manner as to give a true and fair view of the state of affairs of the Company as at the end of 31st March, 2014 and of the loss of the Company for the year to that date. Your Directors confirm:

a) that in preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) that the directors had selected such accounting polices and applied them consistently and made adjustments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) that the directors had prepared the annual accounts on a going concern basis

23. Green Initiative: As a Green Initiative in Corporate Governance, Ministry of Corporate affairs have permitted companies to send electronic copies of Annual Report, notices, etc., to the e-mail IDs of shareholders. We are accordingly arranging to send soft copies of these documents to the e-mail IDs of shareholders available with us or with our depositories.

In case any of the shareholders would like to receive physical copies of these documents, the same shall be forwarded on written request to the Company.

We are also in the process of starting a sustainability initiative with the aim of being carbon neutral and minimize our impact on the environment. Sustainability practices will be implemented and tracked diligently to ensure that we comply with the goals we set for ourselves.

24. Corporate Social Responsibility.

Over the years, HCG has been involved in a number of social initiatives to support the community and bring about a positive change in preventive healthcare, through education and awareness building activities. Its CSR programmes are delivered through HCG Foundation, which is committed to providing health services and subsidised medical care to the socially and economically marginalized sections of society.

Free cancer detection and screening camps, Continuous Medical Education (CMEs) are now a regular feature in HCG’s community outreach program. We believe that organisational growth is impossible without the sharing and pooling of our knowledge and resources. Best practices are disseminated across our facilities through coordinated CMEs, Continuous Nursing Education (CNEs) and Seminars. HCG organizes such continuous education programmes every year.

25. Acknowledgement

We stay committed to partnering for value creation and take this opportunity to thank one and all who have participated in our journey this far. Your Directors desires to place on record, its sincere appreciation to all employees at all levels, who with sustained dedicated effort and hard work, enabled the Company to deliver a good all-round performance. Your Directors also wish to place on record their appreciation and acknowledge with gratitude the support and co-operation extended by the consultants, bankers shareholders and investors at large and look forward to their continued support. We also take this opportunity to express sincere thanks to the medical fraternity and patients for their continued co-operation, patronage and trust reposed in the Company and its health services.

For and on behalf of the Board of Directors

Sd/-

Dr. B.S.Ajai Kumar

Chairman

Date: August 27, 2014

Place: Bangalore.

The operations of your company do not consume high levels of energy. However, significant measures are being taken to reduce energy consumption by using energy efficient equipments. Your Company constantly evaluates and invests in new technology to make the infrastructure more energy efficient. As the cost of energy consumed by the Company forms a very small portion of the total costs, the financial implications of these measures are not material.

Over the years your Company has brought into the country the best and the world class equipments for the treatment of cancer. The Company has a dedicated team of technically competent personnel who relentlessly work on technology upgradation and development related fields. Your Company also deploys its resources from time to time and imparts necessary training to keep abreast of the continuously changing technology.

A well thought thorough strategy has been put in place to ensure that the target revenue or the next year is achieved. The key components of this strategy include penetrating deeper in key markets, develop new markets and leverage local opportunities in driving the International Business. The details of Foreign Exchange Earnings and Outgo during the year ended March 31, 2014, is as under: Particulars For the year ended 31.03.2014 (Rs.) Expenditure in Foreign Exchange Interest 6,125,460 Travel expenses 10,175,143 Repairs and maintenance :Machinery 11,910,689 Professional charges 4,320,548 Business promotion expenses 397,955 Total 32,929, 795 Earnings in foreign exchange Medical service income 235,634,563

The Companies Amendment Act, 2000 requires that the Directors ensure that the financial statements of the Company are prepared in such manner as to give a true and fair view of the state of affairs of the Company as at the end of 31st March, 2014 and of the loss of the Company for the year to that date. Your Directors confirm: a)that in preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b)that the directors had selected such accounting polices and applied them consistently and made adjustments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period; c)that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d)that the directors had prepared the annual accounts on a going concern basis