DIRECTORS" REPORT Dear Members, Your Directors are pleased to present their Twenty Ninth Annual Report along with the audited annual accounts for the financial year ended 31 '"March, 2015. RESULTS OF OPERATIONS The Income increased to Rs. 40834.80 lacs from Rs. 33875.75 lacs in the previous year at a growth rate of 21%. The EBITDA amounted to Rs. 10100.38 lacs as against Rs. 7755.70 lacs in the previous year. The Hospital earned a net profit of Rs. 3869.90 lacs for the year as against Rs. 2371.90 lacs in the previous year registering year-on-year (YOY) growth of 63%. The consolidated Income increased to Rs. 40821.78 lacs compared to Rs. 33857.29 lacs in the previous year, registering a growth of 21 %. Consolidated net profit after tax increased to Rs. 3853.36 lacs representing a growth of 62%. CONSOLIDATED FINANCIAL STATEMENTS The Directors also present the audited consolidated financial statements incorporating the duly audited financial statements of the subsidiary and as prepared in compliance with the Companies Act, 2013, applicable Accounting Standards and the Listing Agreement as prescribed by SEBI. DIVIDEND After considering the Company's profitability, Cash flow and overall financial performance, your Directors are pleased to recommend a dividend of 15% (X 1.50 per share) for the financial year ended 31.03.2015. The total out flow on account of dividend, if approved by the Members, will be about X197.54 lacs including Rs.33.41 lacs payable towards dividend tax, surcharge and cess on the same. TRANSFER TO RESERVES The Company proposes to transfer Rs. 200 lacs to the General reserve out of the amount available for appropriation and an amount of Rs. 3416.58 lacs is proposed to be retained in the Statement of profit and loss. BOARD MEETINGS The Board of Directors met four times during this financial year. The disclosure on Board meetings and attendance of Directors are provided in the Corporate Governance Report. AUDIT COMMITTEE The composition of Audit Committee, number of meetings held and the attendance of Directors there to have been provided under an identical head in the Corporate Governance Report. CORPORATE SOCIAL RESPONSIBILITIES The Board on 23.05.2014 constituted the CSR Committee and formulated CSR policy of the company and adopted it in accordance with Section 135 read with Schedule VII and other applicable provisions of the Companies Act, 2013. The purpose of the Committee is to formulate and manage the CSR policy of the company. The Committee will be overseeing the CSR activities, programmes and execution of initiatives as per guidelines. The company has initiated CSR activities in line with, CSR policy and have already earmaked to spend an amount of Rs. 57 lacs towards CSR expenditure. The statement in this respect is appended as" Annexure -1" in the report with regard to the CSR activities. INFORMATION ON STATUS OF COMPANY'S AFFAIRS Information on operational and financial performance etc., is provided in the Management Discussion and Analysis Report, which is annexed to the Directors' Report and has been prepared inter-alia in compliance with the terms of clause 49 of listing agreement with Indian Stock Exchanges. INFECTION CONTROL AND ENVIRONMENT Infection Control is the discipline concerned with preventing nosocomial or health care associated infection. One of our key clinical priorities is to protect our patients, visitors and staff from the risk of health care associated infections. Various infection control procedures like effective management of Bio-Medical waste, good hand hygiene, environmental cleaning, antibiotic control and excellent intravenous line care have helped us to effectively tackle the incidence of infections in our hospital LIVER TRANSPLANT Your hospital has successfully launched its Liver Institute during July, 2014 which offers comprehensive, multi-disciplinary disease management, specializing in Liver disease, Liver transplants. It also envisages treating ailments relating to bile ducts and pancreas in the future. So far we have successfully completed 35 liver transplants. CREDIT RATING CARE has once again upgraded your Company's Long term bank facilities to "CARE A-" (single A minus) from "CARE BBB+" and short term bank facilities to "CARE A2" (A Two) from "CARE A3+". AWARDS Your Hospital was awarded "Nursing Excellence Award" by the Association of Healthcare Providers of India and also was recognised by ICICI Lombard Health Insurance & CNBC TV18 as "The Best Multi-Speciality Hospital" in non-metro city forthe second time. HOSPITAL ACCREDITATION Your Hospital has been certified by National Accreditation Board for Hospitals and Health care Providers (NABH) for the delivery of high standards for safety and quality care to the patients. DIRECTORS RESPONSIBILITY STATEMENT In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that: (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) The Directors had selected such accounting policies and applied them consistently and made judgements 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 and loss of the Company for that period; (c) 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) The Directors had prepared the annual accounts on a going concern basis; (e) The Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and (f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively BOARD EVALUATION Pursuant to the provisions of Companies Act, 2013 and Clause 49 of the listing agreement, a structured questionnaire was administrated after taking into consideration of various aspects to the Board functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance to ascertain the efficacy and functioning of Board and its members. The performance evaluation of Independent Directors was completed. The performance evaluation of the Chairman of the Board and Non-independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the outcome of the evaluation process. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS Pursuant to requirement of Clause 49 of the Listing Agreement, Company has a familiarization programme for the Independent Directors with regard to their role, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company etc. The Board Members are provided with all the necessary documents / reports and internal policies to enable them to familiarize with the Company's procedures and practices. DIRECTORS Dr.P.R.Perumalswami, Director retires at the ensuing AGM and is not opting for re-appointment. Your Directors place on record the valuable guidance, support and advice extended by Dr.P.R.Perumalswami during his tenure as Director. As per the provisions of Section 152(6)(e) of the Companies Act, 2013 at the Annual General Meeting at which a Director retires, the Company may fill up the vacancy by appointing the retiring Director or some other person thereto. The Company has received a notice in writing from a member along with a deposit of requisite amount under Section 160 of the Companies Act, 2013 proposing the candidature of Dr.Arun N Palaniswami for the office of Director of the Company. The Board at its meeting held on 29.05.2015 recommended the appointment of Dr. Arun N Palaniswami as Whole Time Director with effect from 25.09.2015 subject to the approval of members. Hence, necessary resolution is placed for approval. APPOINTMENT OF JOINT MANAGING DIRECTOR The term of office of Dr.Thavamani Devi Palaniswami, Joint Managing Director of the Company expires on 28th July 2015. The terms and conditions of her re-appointment for a further period of 5 years and payment of remuneration are subject to the approval of the members of the company at the ensuing Annual General Meeting by means of a special resolution. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company met with the criteria of their Independence laid down in Section 149(6). COMPLIANCE OF CODE OF CONDUCT The complaince of code of conduct by Directors have been affirmed by the Managing Director and is disclosed under point no.20 of Corporate Governance Report. KEY MANAGERIAL PERSONNEL The Key Managerial Personnel of the Company as stipulated under the Companies Act, 2013 are Dr.Nalla G Palaniswami, Managing Director, Dr.Thavamani Devi Palaniswami, Joint Managing Director, Dr.Mohan S Gounder, Joint Managing Director, CA.P.K.Gopikrishnan, Chief Financial Officer and CS.S.P.Chittibabu, Company Secretary. There was no appointment or cessation of Key Managerial personnel during the financial year 2014-15. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARINGS AND EXPENDITURE The particulars regarding conservation of energy, technology absorption and foreign exchange earnings and expenditure stipulated under section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rule, 2014, are annexed herewith as "Annexure - IV" and forms part of this Report. SUBSIDIARY COMPANY Idhayam Hospitals Erode Limited had become a wholly owned subsidiary of the company with effect from 23.04.2007. The consolidated financial statement of the company including the financial results of the said subsidiary is also included in this report. A statement of salient features of financials of Idhayam Hospitals Erode Limited pursuant to Section 129(3) of the Companies Act, 2013 in Form AOC-1 is annexed and forming part of the report. CHANGE IN THE NATURE OF BUSINESS, IF ANY During the year, there was no change in the nature of business of the Company or any of its subsidiaries. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY There were no material changes and commitments affecting financial position of the Company which have occurred between the end of the financial year of the Company to which the Financial Statements relate and date of the report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 As on March 31, 2015, there were no outstanding loans or guarantees covered under the provisions of Section 186 of the Act. The Company has certain quoted and unquoted investments owned by the Company. The details of changes in Investments covered under the provisions of Section 186 of the Act are given in the Note No.13 to the financial statements. VIGIL MECHANISM The company has set up vigil mechanism for Directors and Employees to report their genuine concerns, the details of which are given in the Corporate Governance Report. The policy on Vigil Mechanism and Whistle Blower Policy have been posted on the website of the Company <http://www.kmchhospitals.com/pdf/whistleblower.policy.pdf>. EXTRACT OF ANNUAL RETURN : As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 is annexed herewith as "Annexure - V" and forming part of report. RISK MANAGEMENT Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Business Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report. The steps taken by company to mitigate the risk are disclosed under an identical head in the Management Discussion and Analysis forming part of Directors' Report. RELATED PARTY TRANSACTIONS AND POLICY ON RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company which may have a potential conflict with the interest of the Company at large and particulars of Contracts or Arrangements with Related parties referred to in Section 188(1) in Form AOC-2 is annexed as "Annexure - III" and forming part of the report. The Board has formulated Policy on Related Party Transactions and the same is uploaded on the Company's website at <http://www.kmchhospitals.com/pdf/Policy> Related PartyTransaction.pdf. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS There are no significant and material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status and the Company's operations in future HUMAN RESOURCES DEVELOPMENT KMCH lays paramount importance to human resources development and provides congenial atmosphere and frame work for helping employees to develop their personal and organizational skills, knowledge and abilities. Your Hospital believes in developing the most superior workforce so that organization and individual employees can accomplish their work goals by providing improved service to the patients. The total strength of the employees of the company as on 31st March 2015 was 3387. INDUSTRIAL RELATIONS The industrial relations scenario continued to be cordial during the year under review. PARTICULARS OF REMUNERATION PAID TO KEY MANAGERIAL PERSONNEL The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the remuneration of Directors, Key Managerial Personnel and employees are enclosed as "Annexure - VI" forming part of the report. The Nomination and Remuneration Policy of the Company has been disclosed on website of the Company and the web link thereon is <http://www.kmchhospitals.com/pdf/Nomination.Remuneration> Evaluation Policy.pdf. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL ACT, 2013. The Company has in place a Prevention of Sexual Harassment policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal complaint committee has been setup to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered underthe policy. During the year 2014-15, no complaints were received by the Company related to sexual harassment. DEPOSITS As per Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits), Rules, 2014, the Company has not accepted any deposits from the public during the year. SECRETARIAL AUDIT Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s KSR & Co. Company Secretaries LLP, Coimbatore, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2014-15. Secretarial Audit Report is annexed herewith as "Annexure - M" forming part of the report. COST AUDIT In terms of Section 148 and other applicable provisions of the Companies Act, 2013, read with Companies (Cost records and Audit) Rules 2014, Mr.V.Sakthivel, Cost Accountant, M/s.RKMS & Associates, Tirupur was appointed as Cost Auditor of the Company by the Board on recommendation of Audit Committee for the financial year 2014-15 and 2015-16. The Remuneration of the cost auditor is subject to ratification by the member at the ensuing Annual General Meeting. STATUTORY AUDITORS M/s Haribhakti & Co. LLP, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting. M/s. Haribhakti & Co. LLP are eligible for re-appointment and have confirmed that their re-appointment, if approved, will be in compliance with Section 141 of the Companies Act, 2013 for a fresh term of 5 years. As per Section 139 of the Companies Act, 2013, a Listed Company shall not appoint / re-appoint an Audit firm as Statutory Auditors for more than 2 terms of Five consecutive years. M/s.Haribhakti & Co. LLP have already served as the Company's Statutory Auditor's for a period of 5 years, from 2010-11. They are eligible for re-appointment as Statutory Auditors of the Company for a further period of five years. Your Board recommends the re-appointment of M/s.Haribhakti & Co. LLP as Statutory Auditor's of the Company, to hold office from the conclusion of this AGM to the conclusion of the sixth consecutive AGM to be held in the year 2020 (Subject to ratification of the appointment by the members at every AGM held after the ensuing AGM). LISTING WITH STOCK EXCHANGE: The Company confirms that it has paid the Annual Listing Fees for the year 2015-16 to BSE where the Company's Shares are listed. During the year the company has submitted an application with Madras Stock Exchange Limited for voluntary delisting of its shares and MSE has delisted the shares of the Company from its list of securities. CORPORATE GOVERNANCE Pursuant to Clause 49 of the listing agreement a report on corporate governance is given in the section titled "Report on Corporate Governance" forming part of Directors' Report. A Certificate from the Practising Company Secretary confirming that the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report. ACKNOWLEDGEMENTS Your Hospital is entering into the 25th year of commercial operations and continues to serve its patients with motherly care by matching the international standards in health care. The Board has decided to celebrate the Silver Jubilee function during the year 2015-16 and would like to place on record it's heartfelt thanks for the continued support received from all stakeholders especially from our shareholders, who have contributed richly to the success of the Hospital. The Board expresses its grateful appreciation for the continued assistance and co-operation received from Government authorities, financial institutions, Banks, Customers, Suppliers and investors. The Board also places on record its appreciation for the dedication and commitment extended by its consultants and employees at all levels and their contribution to the growth and progress of the company. For and on behalf of the Board Dr. NALLA G PALANISWAMI MANAGING DIRECTOR Place : Coimbatore Date : 29.05.2015 |