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DIRECTOR'S REPORT

KMC Speciality Hospitals (India) Ltd.

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Market Cap. (₹) 195.21 Cr. P/BV 5.00 Book Value (₹) 2.40
52 Week High/Low (₹) 19/9 FV/ML 1/1 P/E(X) 22.68
Bookclosure 28/09/2018 EPS (₹) 0.53 Div Yield (%) 0.00
Year End :2018-03 

To,

The Members

The Directors have pleasure in presenting their THIRTY FIFTH Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2018.

1. Financial highlights for the year ended March 31, 2018

Particulars

2017-18

2016-17

(Rs In Lakhs)

(Rs In Lakhs)

Operating Income

7066.65

5482.88

Other Income

32.16

11.50

Total Income

7098.81

5494.38

Operating Expenses

5653.64

4252.48

EBIDTA

1445.17

1241.90

Finance Cost

78.70

124.06

Depreciation

386.38

319.11

Profit/(Loss) before Tax

980.09

798.73

Tax expense

226.43

171.59

Provision for Deferred Tax

88 48

91.73

ProW(Loss) after Tax (PAT)

665.18

535.41

2. Dividend

Board has not recommended dividend for the financial year 2017-18 keeping in view the long term objectives of the Company.

3. Reserves

The Company has not transferred any amount to General reserve during the year.

4. Business and Operations Review

Total Operating income increased by 28.89% to Rs. 7066.65 lakhs during the financial year 2017-18 from 5482.88 lakhs in the previous year.

Your Company has earned Profit after tax of Rs 665.18 lakhs tor the financial year 2017-18 significantly higher than Rs. 535.41 lakhs achieved during the previous year.

Improvement in Bed occupancy with better revenue mix coupled with operational efficiency and cost control measures contributed to better profitability.

5. Statement in respect of adequacy of internal financial controls with reference to the Financial Statements

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. To maintain independence of the Internal Audit function, the Internal Auditor reports to the Chairman of the Audit Committee.

The Internal Audit Team along with the Process Team monitors and evaluates Ihe efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of internal audit, corrective actions In the respective areas are undertaken and controls strengthened. Significant audit observations and corrective actions thereon are reported to the Audit Committee of the Board.

6. Disclosure of particulars of loans/advances/investments outstanding during the financial Year

The Company has not given any loans and advances to other body corporate and associates as specified under Section 186 of the Companies Act, 2013. The details of the investments made by the Company and guarantees provided by the Company are given in the notes to the financial statements.

7. Deposits

The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

8. Statutory Auditors

Section 139 of the Companies Act, 2013 provided for the appointment of Statutory Auditors for a period of five years and hence M/s B S R & Co LLP, Chartered Accountants, (ICAI Firm Registration No 101248W/W-100022) were appointed as the Statutory Auditors of the Company in the Annual General Meeting of the Company held on 27t1’ September 2014 for a period till the conclusion of the Thirty Sixth Annual General Meeting.

9. The details of significant and material orders passed by the regulators or courts or tribunals Impacting the going concern status and company’s operations in future

There are no significant and material orders passed by the regulators or courts or tribunals that may have an impact for the company as a going concern and /or company’s operations.

10. Closure of Register of Members and Share Transfer Books

The Register of Members and Share Transfer Books of the company will be closed with effect from 22nd September, 2018 to 28”‘ September, 2018 (both days inclusive).

11. The Board observed that there are no qualifications or reservations or adverse remarks by the Statutory Auditors as well as by the Secretarial Auditor in their reports.

12. Share Capital

The Company has not issued any equity shares with differential rights, sweat equity shares, employee stock options or employee stock purchase scheme. No shares have been transferred to Suspense account in terms of Clause 39 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As at the end of the financial year the Company’s Authorized Equity Share Capital stands at Rs 2500 lakhs and Paid up Equity Share Capital stands at Rs. 1630 85 Lakhs consisting of 1630.85 lakhs fully paid up Equity Shares of Re. 1 each

13. Corporate Governance

Your Company has been complying with the provisions of Corporate Governance as stipulated in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

A separate report on Corporate Governance along with Practicing Company Secretary’s certificate on compliance of the Corporate Governance norms as stipulated in Schedule V read with Clause 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Management Discussion & Analysis report are provided elsewhere in this Annual Report.

14. Transfer to Investor Education and Protection Fund

As required under the provisions of Section 205A and 205C and other applicable provisions of the Companies Act, 1956 (Section 124 of the Companies AcL 2013), dividends that remain unpaid/unclaimed for a period of seven years, are to be transferred to the account administered by the Central Government viz., Investor Education and Protection Fund (“EPF”).There are no amounts which remain unpaid/unclaimed for a period of seven years and hence no amount has been transferred to “IEPF”.

15. Extract of Annual Return

The Extract of Annual Return as on the Financial Year ended 31*’March 2018, as prescribed under Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is attached to this report as Annexure 1.

16. Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The particulars required to be given as per Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are under

I. Conservation of energy-

Though the nature of the business of the company is such that the consumption of energy is not significant when compared to the overall cost of operations, the company takes all efforts to conserve energy and carries out periodical energy audits.

ii. Technology absorption-

In spite of the fund constraints, the company is currently in the process of updating the technology in various fields of equipments. Within the limitations, everything possible was done to acquire, improve and update the technology.

ill. Foreign Exchange earnings and outgo.

17. Corporate Social Responsibility

Corporate Social Responsibility (CSR) Is an initiative brought in by the Ministry of Corporate Affairs whereby every company having net worth of rupees 500 Crores or more, or turnover of rupees 1000 Crores or more or a net profit of rupees 5 Crores or more during any financial year are mandated to serve the society by contributing at least 2% of the average net profits of the Company during the three immediately preceding financial years in various CSR activities as defined in Schedule VII of the Companies Act, 2013.

The net profit for the financial year 2017-18 has crossed the ceiling limit of Rs. 5 Crores and hence CSR rules are applicable to the Company. The Company has duly constituted a Corporate Social Responsibility Committee as required under Section 135 (1) of the Companies Act, 2013 and the relevant rules made thereunder and the Board has approved a policy on Corporate Social Responsibility which is available in the website of the Company httD://www.kauvervhosoital.com/investors#.

The annual report on your Company’s CSR activities is appended as Annexure 4 to the Board’s report.

18. Particulars of Employees

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided elsewhere in the Annual Report.

19. Directors and Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are Dr. S Chandrakumar, Managing Director, Dr D Senguttuvan, Executive Director, Mr S. Badrinarayan, Chief Financial Officer and Mr. Sathyan G, Company Secretary.

The Directors who are liable to retire by rotation and also whether they offer themselves for reappointment is included in the Notice of Annual General Meeting.

The Statement of Declarations from Independent Directors that they meet the criteria of independence as provided in subsection (6) of Section 149 of the Companies Act, 2013 has been obtained from the Independent Directors and the Board has taken on record the same.

20. Declaration given by Independent Directors

All the Independent Directors of the Company have given their declaration under Section 149 (7) of the Companies Act, 2013, confirming that they are in compliance with the criteria as laid down in the said Section for being an Independent Director of the Company. Further, there has been no change in the circumstances which may affect their status as independent director during the year

21. Policy on Directors’ Appointment and Remuneration including criteria for determining qualifications, positive attributes, independence of a director

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for the selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report

22. Particulars of contracts or arrangements with related parties

During the financial year 2017-18 the contracts and arrangements entered by the Company with related parties were on an “arm’s length” basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managenal Personnel or other designated persons, which may have a potential conflict with the interests of the Company at large.

The policy on dealing with Related Party Transactions as approved by the Board is uploaded on the Company’s website.

The details of contracts or arrangements with related parties entered during the year are given in a separate annexure to the report in Annexure 2.

23. Risk Management

The Company approaches Risk Management by identification, assessment, monitoring and mitigation of various risks that the company may face in its business. The Company’s enterprise Risk Management approaches, identifies and categorizes the major risks relating to Operations and Finance. The Company’s objective is to achieve a balance between acceptable levels of risk and reward In effectively managing its Operational, Financial, Business and other risks.

24. Secretarial Audit Report

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Alagar & Associates, Practicing Company Secretary as the Secretarial Auditors of the Company in the Board Meeting held on 10th February 2018. The Secretarial Audit Report issued by the Company’s Secretarial Auditor M/s. Aiagar & Associates is annexed and forms part of this Report in Annexure 3. The report does not contain any qualification

25. Number of meetings of Board

The details of the number of meetings of the Board of Directors are included as a part of Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

26. Composition of Audit Committee

The Audit Committee of the Company has been constituted in accordance with the provisions of Section 177 of the Companies Act, 2013 read with Clause 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of the Audit Committee are included as a part of Corporate Governance Report

27. Details of establishment of vigil mechanism

The Company has formulated and adopted a vigil mechanism for employees to report genuine concerns to the Chairman of the Audit Committee. The policy provides opportunities for employees to access in good faith, the Audit Committee, If they observe unethical and improper practices. The Whistle Blower policy of the Company is available in the website of the Company. The link for the same is http ://www. kauvervhospita I .com/in vestors#.

28. Prevention of Insider Trading

The Company has adopted a code for prevention of insider trading with a view to regulate trading and securities by the Directors and designated employees of the Company. The code requires pre-clearance for dealing in the Company’s securities and prohibits the purchase or sale of Company’s Securities while in possession of unpublished price sensitive information and during the period when the trading window is closed.

29. Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and the Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company has completed a formal evaluation of their performance and that of its Committees and individual directors.

30. Separate Meeting of Independent Directors

The Independent Directors of the Company had met during the financial year to review the performance of the NonIndependent Directors, Chairman (after taking into account the views of Executive and Non-Executive Directors of the Company) and Board as a whole and also the access, quality, quantity and timeliness of the flow of information between the Company’s management and the Board.

During the Financial Year under review the independent Directors met on H*1 November, 2017 and all the Independent Directors attended the Meeting without the presence of the non-independent directors and the members of the management

31. Listing fees:

The Company confirms that it has paid the annual listing fees for the year 2018-19 to Bombay Stock Exchange where the company’s shares are listed.

32. Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013:

The Company has in place a Policy on prevention of Sexual Harassment in accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees are covered under this policy.

The company has not received any complaints under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 during the financial year 2017-18.

33. Directors’ Responsibility Statement as required under Section 134 (5) of the Companies Act, 2013

In terms of provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

(ii) the directors had selected such accounting policies and applied them consistently and made judgments 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.

(iii) 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.

(iv) the directors had prepared the annual accounts on a going concern basis.

(v) the directors, had laid down internal financial controls and such internal financial controls are adequate and were operating effectively.

(vi) 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.

34. Material changes and commitments affecting financial position between the end of the financial year and the date of the report

There is no change in the nature of business of the Company during the year. There are no material changes and commitments in the business operations of the Company since the close of the financial year on 31st March, 2018 to the date of this report.

35. Familiarization Programme for Independent Directors:

The Board members are provided with necessary documents, reports and internal policies to enable them to familiarize with the Company’s procedures and practices. The details of such familiarization programmes for the Independent Directors are posted on the website of the Company.

36. Acknowledgments

We thank the various Government Agencies and Banks for their continued support and co-operation to the Company. We place on record our appreciation of the contribution made by our employees, consultants and officers of the Company during the year under report.

For and on behalf of the Board of Directors

Race: Chennai (Dr S Chandrakumar) (Dr D Senguttuvan)

Date: 13th August, 2018 DIN: 01867847 DIN:01867900

MANAGING DIRECTOR EXECUTIVE DIRECTOR

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