Apollo Hospitals Enterprise Ltd.
|BSE: 508869||Sector: Health care|
|NSE: APOLLOHOSP||ISIN Code: INE437A01024|
|BSE 15:50 | 20 Feb||1201.30||
|NSE 15:42 | 20 Feb||1199.25||
|Mkt Cap.(Rs cr)||16,712|
|Mkt Cap.(Rs cr)||16712.49|
Apollo Hospitals Enterprise Ltd. (APOLLOHOSP) - Director Report
Company director report
Your Directors are pleased to present the THIRTY SIXTH ANNUAL REPORTand the audited financial statements for the year ended 31st March 2017.
Financial results (Standalone)
Indian accounting Standards
The Ministry of Corporate Affairs vide a notification dated February16 2015 notified the Indian Accounting Standards ("Ind AS") to be applicableto a certain class of companies including listed companies for the accounting periodsbeginning on or after April 1 2016 with comparatives to be provided for the periodending on March 31 2016. Ind AS has replaced the existing Indian GAAP prescribedunder section 133 of the Companies Act 2013. Accordingly the standalone and consolidatedfinancial statements for the financial year ended March 31 2017 forming part of thisAnnual Report have been prepared in accordance with Ind AS with a transition date ofApril 1 2015.
The reconciliations and descriptions of the effect of the transitionfrom previous GAAP to Ind AS have been provided in the notes to accounts to the standaloneand consolidated financial statements.
results of Operations
During the year under review the income from operations of the Companyincreased to `64417 million compared to
`55883 million in the previous year registering a growth of 15%. Theprofit after tax for the year declined by 15% to `2851 million compared to `3339 millionin the previous year.
During the year under review the consolidated gross revenue of theCompany increased to `72549 million compared to ` 62146 million registering animpressive growth of 17%. Net profit after minority interest for the group stood at `1990million.
Consolidated Financial Statements
In accordance with Companies Act 2013 ("the Act") and Ind AS110 - Consolidated Financial Statements read with Ind AS 28 - Investments in Associatesand Ind AS 31 - Interests in Joint Ventures the audited consolidated financial statementsform part of the Annual Report.
In terms of provision to sub section (3) of Section 129 of the Act thesalient features of the financial statements of the Subsidiaries Associates and JointVenture Companies are set out in the prescribed Form AOC-1 which forms a part of theAnnual Report.
In accordance with Section 136 of the Act the audited financialstatements including the consolidated financial statements of the Company and auditedaccounts of the subsidiaries are available at the Company's website: www.apollohospitals.com.The documents will also be available for inspection during business hours at theregistered office of the Company.
Material Changes affecting the Company
There have been no material changes and commitments affecting thefinancial position of the Company between the end of the financial year and the date ofthis Report. There has been no change in the nature of business of the Company.
The Board of Directors has recommended a dividend of `6.00 per equityshare (120% on face value of `5/-per share) on the paid-up equity share capital of thecompany for the financial year ended 31st March 2017 amounting to
`1004 million inclusive of tax of `170 million which if approved atthe forthcoming Annual General Meeting on 20th September 2017 will be paid to thoseshareholders whose names appear in the Register of Members as at the closing hours ofbusiness on 8th September 2017. In respect of shares held in electronic form the dividendwill be paid on the basis of beneficial ownership furnished by the depositories viz. NSDLand CDSL for this purpose.
The Register of Members and Share Transfer Books will remain closedfrom Saturday 9th September 2017 to 20th September 2017 (both days inclusive).
The Board approved and adopted a dividend distribution policy at itsmeeting held on 30th May 2017 which is annexed herewith as Annexure-I to this Report andalso posted in the Company's website: www.apollohospitals.com.
CRISIL has rated the company's debt instruments as AA indicating ahigh degree of safety.
India Ratings and Research (Ind-RA) (a Fitch Group Company) hasassigned the Company's long term debt and Non-Convertible Debentures (NCDs)an IND AA+ Rating with a stable outlook.
Subsidiaries associate Companies and Joint Ventures.
At the beginning of the year your Company had Sixteen directsubsidiaries and five step down subsidiaries six joint ventures and three associatecompanies. As on 31st March 2017 your Company had eighteen direct subsidiaries fourstep down subsidiaries three joint ventures and four associate companies.
The statement containing the summarized financial position of thesubsidiary companies viz. Apollo Home Healthcare (I) Ltd (AHHCL) AB Medical CentresLimited (ABMCL) Samudra Healthcare Enterprises Limited (SHEL) Apollo Hospital (UK)Limited (AHUKL) Apollo Hospitals Singapore Pte Limited (AHSPL) Apollo Health andLifestyle Limited (AHLL) Western Hospitals Corporation Pvt Limited (WHCPL) Total Health(TH) Imperial Hospital and Research Centre Limited (IHRCL) Apollo Home HealthcareLimited (AHHL) Apollo Nellore Hospital Limited (ANHL) Sapien Bio Sciences Pvt Limited(SBPL) Apollo Rajshree Hospitals Pvt Limited (ARHL) Apollo Lavasa Health CorporationLimited (ALHCL) Assam Hospitals Limited (AHL) Apollo Hospitals International Limited(AHIL) Future
Parking Private Ltd (FPPL) Apollo Healthcare Technology SolutionsLimited (AHTSL) Apollo Sugar Clinics Limited (ASCL) Apollo Specialty Hospitals PvtLimited (ASHPL) Alliance Dental Care Limited (ADCL) and Apollo Dialysis Private Limited(ADPL) pursuant to Section 129 and Rules 5 of the Companies (Accounts) Rules 2014 iscontained in Form AOC-1 which forms part of the Annual Report.
apollo Home Healthcare (India) Limited (aHHCL)
AHHCL a wholly owned subsidiary of the Company recorded a revenue of`0.01 million and net profit of `0.01 million.
aB Medical Centres Limited (aBMCL)
ABMCL a wholly owned subsidiary of the Company does not have anycommercial operations as it has leased out its infrastructure viz. land and building tothe company for running a hospital. For the year ended 31st March 2017 ABMCL recorded anincome of `6.76 million and a net profit of `4.80 million.
Samudra Healthcare Enterprises Limited (SHEL)
SHEL a wholly owned subsidiary of the company runs a 120 bed multispeciality hospital at Kakinada. For the year ended 31st March 2017 SHEL recorded anincome of `309.16 million and a net loss of `31.96 million.
apollo Health and Lifestyle Limited (aHLL)
AHLL is a 68.64% subsidiary of the Company engaged in the business ofproviding primary healthcare facilities through a network of owned/franchised clinicsacross India offering specialist consultations diagnostics preventive health checkstelemedicine facilities and a 24-hour pharmacy all under one roof. For the year ended 31stMarch 2017 AHLL recorded an income of `3899.13 million and a net loss of `1418.04million.
western Hospitals Corporation Private Limited (wHCPL)
WHCPL a wholly owned subsidiary of the Company for the year ended31st March 2017 recorded an income of
` 17.31 million and a net profit of `11.18 million.
Total Health (TH)
TH a wholly owned subsidiary of the Company registered under Section 8of the Companies Act 2013 is engaged in carrying on CSR activities in the field ofcommunity/rural development.
apollo Hospital (UK) Limited (aHUKL)
AHUKL is a wholly owned foreign subsidiary of the Company and has notyet commenced its operations.
apollo Hospitals Singapore Pte Limited (aHSPL)
AHSPL is a wholly owned subsidiary of the Company and has not yetcommenced its operations.
Imperial Hospital and research Centre Limited (IHrCL)
IHRCL a 90% subsidiary of the company owns a 240 bed multi-specialtyhospital at Bengaluru. For the year ended 31st March 2017 IHRCL recorded an income of`2111.93 million and a net profit of `82.03 million.
apollo Home Healthcare Limited (aHHL)
AHHL a 80.87% subsidiary of the Company is engaged in the business ofproviding high quality personalized and professional healthcare services at the doorstepsof the patients. AHHL recorded revenues of `190.98 million and a net loss of `104.93million.
60 apollo Nellore Hospital Limited (aNHL)
ANHL a 79.44% subsidiary of the Company has leased out its land atNellore to the Company. ANHL recorded revenues of `7.80 million and a net profit of `5.90million.
Sapien Biosciences Pvt Ltd (SBPL)
SBPL is a 70% subsidiary of the company which is engaged in thebusiness of bio-banking of tissues. For the year ended 31st March 2017 SBPL recordedrevenues of `10.55 million and a net loss of `3.22 million.
apollo rajshree Hospitals Pvt Ltd (arHL)
ARHL a 54.63% subsidiary of the company runs a multi specialityhospital at Indore. For the year ended 31st March 2017 ARHL recorded an income of`355.03 million and a net loss of `60.77 million.
apollo Lavasa Health Corporation Limited (aLHCL)
ALHCL a 51% subsidiary of the company runs a hospital at Lavasa. Forthe year ended 31st March 2017 ALHCL recorded an income of `7.03 million and a net lossof `39.06 million.
assam Hospitals Limited (aHL)
AHL a 59.08% subsidiary of the company runs a multi specialityhospital at Guwahati. For the year ended 31st March 2017 AHL recorded an income of`1109.78 million and a net profit of `51.34 million.
apollo Hospitals International Limited (aHIL)
AHIL a 50% subsidiary of the company runs a multi speciality hospitalat Ahmedabad. For the year ended 31st March 2017 AHIL recorded an income of `1729.39million and a net loss of `12.34 million.
Future Parking Private Limited (FPPL)
FPPL a subsidiary of the company has been promoted for thedevelopment of Multi level Car parking at Walace Garden Nungambakkam Chennai. FPPLrecorded and income of `41.95 Million and a net loss of `27.53 million.
apollo Healthcare Technology Solutions Limited (aHTSL)
AHTSL a subsidiary of the Company is in the process of setting up theProton Therapy Centre in Chennai which will be the first of its kind in southernhemisphere offering advanced oncology care. AHTSL is yet to commence operations.
apollo Speciality Hospitals Pvt Limited (aSHPL)
ASHPL a subsidiary Company of Apollo Health and Lifestyle Limited isengaged in the business of running day surgery centres. For the year ended 31st March2017 ASHPL recorded an income of `1812.52 million and a net loss of `1138.63. million.
apollo Sugar Clinics Limited (aSCL)
ASCL a subsidiary company of Apollo Health and Lifestyle Limited isengaged in the business of running diabetes management centres. For the year ended 31stMarch 2017 ASCL recorded an income of `173.77 million and a net loss of `107.55 million.alliance dental Care Limited (adCL)
ADCL a subsidiary of Apollo Health and Lifestyle Limited is engaged inthe business of running dental clinics. For the year ended 31st March 2017 ADCL recordeda revenue of `335.12 million and a net loss of `75.90 million.
apollo dialysis Pvt Ltd (adPL)
ADPL a subsidiary of Apollo Health and Lifestyle Limited is engaged inthe business of running dialysis centres. For the year ended 31st March 2017 ADPLrecorded a revenue of `55.12 million and a net loss of `0.42 million.
The Company is committed to maintain the highest standards of corporategovernance and adhere to the corporate governance requirements set out by SEBI. The reporton corporate governance as required under the Securities Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (hereinafter ListingRegulations) forms an integral part of this report. The requisite certificate from theAuditors of the Company confirming compliance with the conditions of corporate governanceis attached to the report on Corporate Governance.
Management's Discussion and Analysis Report
Management's Discussion and Analysis Report for the year underreview as stipulated under Regulation 34 of the Listing Regulations is presented in aseparate section forming part of the Annual Report.
Business responsibility report
As stipulated under the Listing Regulations the BusinessResponsibility Report describing the initiatives taken by the Company from anenvironmental social and governance perspective is attached as part of the Annual Report.
The Company has adopted a policy on prevention prohibition andredressal of sexual harassment at the workplace in line with the provisions of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and therules framed thereunder. The Company received 2 complaints under the policy all of whichwere disposed off.
Vigil Mechanism/whistle Blower Policy
The Company has established a vigil mechanism for Directors andEmployees to report their genuine concerns the details of which are given in theCorporate Governance Report. The policy on Vigil Mechanism and Whistle Blower Policy hasbeen posted on the website of the Company www.apollohospitals.com.
Particulars of Loans Guarantees and Investments
During the year your company did not accept any deposits from thepublic.
The total outstanding deposits with the Company as on 31st March 2017were `150.21 million (`273.41 million as on 31st March 2016) which include deposits for anaggregate value of `16.12 million (`18.87 million as on 31st March 2016) not claimed bythe depositors. directors and other Key Managerial Personnel (KMPs)
Board Composition and Independent Directors
The Board consists of the Executive Chairman four Executive directorsand seven Independent directors.
Independent directors are appointed for a term of five years and arenot liable to retire by rotation.
All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16 (b) of the SEBI Listing Regulations.
The Company plans to induct new Independent Directors over the nextcouple of years to ensure that the process of transition on the Board with regard toIndependent Directors is a smooth and gradual one .
Shri Habibullah Badsha Shri Rafeeque Ahamed and Shri Rajkumar Menonciting existing Professional Commitments have resigned from the Board with effect from14th August 2017. The Board placed on record its sincere appreciation for the valuableservices rendered by these Individual Directors during their tenure.
Retirement by Rotation
Pursuant to Section 152 of the Companies Act 2013 Smt.Sangita ReddyDirector retires by rotation at the ensuing Annual General Meeting and being eligibleoffers herself for re-appointment.
Based on the recommendation of the Nomination and RemunerationCommittee the Board has recommended to the members that Dr.T. Rajgopal and Shri. BVRMohan Reddy be appointed as Independent Directors for a term of
5 (five) consecutive years with effect from their repective dates ofappointment viz. 30th May 2017 and 14th August 2017 respectively.
The Company has received declarations from Dr.T. Rajgopal and Shri. BVRMohan Reddy confirming that they meet the criteria of independence prescribed under theAct and the Listing Regulations.
Key Managerial Personnel
Pursuant to the provisions of Section 203 of the Companies Act 2013the Key Managerial Personnel of the Company are Smt. Suneeta Reddy Managing DirectorShri. Krishnan Akhileswaran Chief Financial Officer and Shri. S.M. KrishnanCompany Secretary. There has been no change in the Key Managerial Personnel during theyear.
Pursuant to the provisions of the Companies Act 2013 and in terms ofRegulation 17(10) of the SEBI Listing Regulations the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of the Committees. The manner in which the evaluation has beencarried out has been explained in the Corporate Governance Report.
The Board has on the recommendation of the Nomination &Remuneration Committee approved a policy for selection and appointment of DirectorsSenior Management and their remuneration. The Remuneration Policy is stated in theCorporate Governance Report.
Meetings of the Board
The Board met six times during the financial year the details of whichare given in the Corporate Governance Report.
The intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013.
The Board of Directors had constituted a Risk Management Committee toidentify elements of risk in different areas of operations and to develop a policy foractions associated to mitigate the risks. The Committee on a timely basis informed themembers of the Board of Directors about risk assessment and minimization procedures and inthe opinion of the Committee there was no risk that may threaten the existence of theCompany. The details of the Risk Management Committee are included in the CorporateGovernance Report.
Internal Financial Controls and their adequacy
The Company has an Internal Control System commensurate with the sizescale and complexity of its operations. The scope and authority of the Internal Audit (IA)function is defined in the Internal Audit Charter. To maintain its objectivity andindependence the Internal Audit function reports to the Chairman of the Audit Committeeof the Board. The details of the internal control system and its terms of reference areset out in the Management Discussion and Analysis Report forming part of the Board'sReport.
The Board of Directors has laid down internal financial controls to befollowed by the Company and the policies and procedures to be adopted by the Company forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information. The Audit Committee evaluates the internalfinancial control systems periodically.
Significant and Material Orders passed by the regulators or Courts.
There are no significant material orders passed by the Regulators /Courts which would impact the going concern status of the Company and its futureoperations.
directors' responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge hereby state and confirm:
a. that in the preparation of the annual financial statements for theyear ended March 31 2017 the applicable accounting standards have been followed alongwith proper explanations relating to material departures if any; b. that such accountingpolicies have been selected and applied consistently and judgement and estimates have beenmade that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company as at March 31 2017 and of the profit of the Company for the yearended on that date; c. that proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; d. that the annual financial statements have been prepared on agoing concern basis; e. that proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively. f. that systems to ensurecompliance with the provisions of all applicable laws were in place and were adequate andoperating effectively.
The paid up Equity Share Capital as on March 31 2017 was `695.63million. During the year under review the Company has not issued shares with differentialvoting rights nor granted stock options nor sweat equity. As of March 31 2017 thedetails of shareholding in the Company held by the Directors are set out in the CorporateGovernance Report forming part of the Board's Report and none of the directors holdconvertible instruments of the Company.
The Board at its meeting held on 28th May 2015 approved the proposal toundertake an issue of equity shares to the existing shareholders on a Rights basis of asum of upto `7500 million.
The purpose of the Rights Issue was to raise long term equity capitalfor the Company. The Company is awaiting necessary approvals for going ahead with theRights Issue.
Contracts and arrangements with related Parties
All contracts/arrangements/transactions entered by the Company duringthe financial year with related parties were in the ordinary course of business and on anarm's length basis. During the year the Company had not entered into anycontract/arrangement/transaction with related parties which could be considered materialin accordance with the policy of the Company on materiality of related party transactions.
The Policy on materiality of related party transactions and dealingwith related party transactions as approved by the Board may be accessed on theCompany's website www.apollohospitals.com. Your Directors draw the attention of themembers to the Notes to the financial statements which sets out related party disclosures.
None of the Directors have any pecuniary relationships or transactionsvis--vis the Company.
Particulars of Employees and related disclosures
In terms of the provisions of Section 197(12) of the Act read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended a statement showing the names and other particulars ofthe employees drawing remuneration in excess of the limits set out in the said rules areprovided in the Annual Report which forms part of this Report.
Disclosures relating to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are also provided in the Annual Reportwhich forms part of this Report.
Having regard to the provisions of Section 136(1) read with therelevant provisions of the Companies Act 2013 the Annual Report excluding the aforesaidinformation is being sent to the members of the Company. The said information is availablefor inspection at the Registered Office of the Company during working hours. Any memberinterested in obtaining such information may write to the Company Secretary and the samewill be furnished free of cost.
Employee Stock Options
No Employee Stock Options have been given to the employees of theCompany and thus no disclosure is required.
Corporate Social responsibility Initiatives
As part of its initiatives under Corporate Social Responsibility (CSR)the Company has undertaken projects in the areas of Rural Development Education andHealth. These projects are in accordance with Schedule VII of the Companies Act 2013. TheReport on CSR activities for the financial year 2016-2017 is annexed herewith as"Annexure A".
The Companies Act 2013 ("the Act") was notified effectiveApril 1 2014. Section 139 of the Act lays down the criteria for appointment and mandatoryrotation of statutory auditors. Pursuant to Section 139 of the Act read with the Companies(Audit and Auditors) Rules 2014 it is mandatory to rotate the statutory auditors oncompletion of two terms of five consecutive years. The Rules also lay down thetransitional period that can be served by the existing auditors depending on the number ofconsecutive years for which an audit firm has been functioning as auditor in the samecompany. The existing auditors S. Viswanathan LLP Chartered Accountants (FirmRegistration No. 004770S/S200025) have served the Company for over 10 years before the Actwas notified and will be completing the maximum number of transitional period (threeyears) at the ensuing thirty sixth Annual General Meeting.
Based on the recommendations of the Audit Committee the Board hasproposed the appointment of Deloitte Haskins & Sells LLP Chartered Accountants (FirmRegistration Number 117366 W/W100018) as the statutory auditors of the Company in theplace of S. Viswanathan LLP Charterd Accountant for approval of the members. DeloitteHaskins & Sells LLP will hold office for a period of five consecutive years from theconclusion of the Thirty Sixth Annual General Meeting of the Company till the conclusionof the forty First Annual General Meeting to be held in 2022 subject to ratification atevery Annual General Meeting. The first year of audit will be concerning the financialstatements for the year ending March 31 2018.
The auditors have consented and confirmed their eligibility forappointment as statutory auditors of the Company.
Pursuant to Section 148 of the Companies Act 2013 read with TheCompanies (Cost Records and Audit) Amendment Rules 2014 the Directors on therecommendation of the Audit Committee appointed M/s. Raman & Associates CostAccountants Chennai (ICWA Registration No.000050) to audit the cost accounts of theCompany for the financial year 2017-2018 on a remuneration of `1.50 million.
As required under the Companies Act 2013 the remuneration payable tothe cost auditor is required to be placed before the Members in a general meeting fortheir ratification. Accordingly a resolution seeking Member's ratification for theremuneration payable to M/s. Raman & Associates Cost Accountants Chennai (ICWARegistration No.000050) is included at Item No. 9 of the Notice convening the AnnualGeneral Meeting.
The Board has appointed Smt. Lakshmmi Subramanian Senior Partner M/s.Lakshmmi Subramanian & Associates a firm of Company Secretaries in Practice toconduct Secretarial Audit for the financial year 2016-2017. The Secretarial Audit Reportfor the financial year ended March 31 2017 is annexed herewith as "Annexure B".The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
Statutory auditors and Secretarial auditors report
The Directors hereby confirm that there is no qualificationreservation or adverse remark made by the statutory auditors of the company or in thesecretarial audit report by the practicing company secretary for the year ended 31stMarch 2017.
Particulars regarding Conservation of Energy Technology absorption andForeign Exchange Earnings and Outgo.
Information as required to be disclosed on conservation of energytechnology absorption and foreign exchange earnings and outgo stipulated under Section134(3)(m) of the Companies Act 2013 read with Rule 8 of The Companies (Accounts) Rules2014 is annexed herewith as "Annexure C".
Extract of annual return
The details forming part of the extract of the Annual Return in FormMGT-9 is annexed herewith as "Annexure D".
Your Directors wish to place on record their appreciation of thecontribution made by the employees at all levels towards the continued growth andprosperity of your Company.
Your Directors also wish to place on record their appreciation ofbusiness constituents banks and other financial institutions and shareholders of theCompany for their continued support.