DOLPHIN MEDICAL SERVICES LIMITED
ANNUAL REPORT 2011-2012
THE SHARE HOLDERS
Your Directors have great pleasure in presenting to you '20th Annual
Report' of your Company along with the Audited Accounts for the year ended
31st March 2012.
1. FINANCIAL RESULTS:
The Financial Results for the year ended 31st March 2012 are furnished
(Rs. In Lakhs)
Particulars 2010-11 2011-12
Operating Income 406.49 376.20
Other Income 14.45 0.38
Interest & Depreciation 138.32 37.90
Depreciation 59.36 64.59
Cash Profit/(Loss) 69.47 (80.14)
During the year under review your company has suffered huge losses due to
requirement of comprehensiveness of services i.e., the need to add
fulfledged laboratory services and other advanced modalities, and also
heavy marketing expenditure incurred disproportionate to the input the
reason of which is the heavy competition in the stand alone diagnostic
sector and also due to the lack of high end sophisticated diagnostic
equipment along with the added problems being faced regarding the premises.
The heavy interest on the bank loan and the indifferent inappropriate
handling of the account by the bank also contributed substantially to the
losses while bad debts to some extent also added to the situation. However
the management is making efforts for solving this issue at the earliest.
2. SUBSIDIARY COMPANIES:
During the year under review the Subsidiary Companies incorporated were not
able to record any progress. However the Board is exploring the possibility
of utilizing them for the envisaged purpose at the earliest.
The Directors have taken a decision not to recommend any dividend for the
year 2011-12, as the company has suffered huge losses.
4. PUBLIC DEPOSITS:
During the year under review the company has not accepted any 'public
deposit' as in defined in provision of Section 58A of the Companies Act,
1956 read with Companies (Acceptance of Deposits) Rules 1975 as amended
from time to time. There are no outstanding unclaimed deposits as on 31st
5. MANAGEMENT'S PERCEPTION:
PRESENT STATE OF AFFAIRS - AN OVERVIEW
During the year under review, the company has suffered huge losses due to
many intrinsic & extrinsic reasons. Some of them are, requirement of
comprehensiveness of services i.e., the need to add fulfledged laboratory
services and other advanced modalities, and also heavy marketing
expenditure incurred disproportionate to the input which is again partly
due to the heavy competition in the stand alone diagnostic sector and non
functioning of some of the major medical equipments. During this year there
was a major repair of electronic components and the non insurable high cost
tube of CT Scan equipment. While lack of sophisticatedness and advancement
in the diagnostic equipment is to some extent also the cause of reduction
in revenues, the prevailing competitive conditions are also not suitable
for standalone diagnostic services. The establishing of inhouse diagnostic
centres by many hospitals decreased the referral of patients to standalone
diagnostic centres - which are forced to depend on small time practitioners
and a few consultation clinics of specialists. This resulted in huge
increase in marketing expenditure and the added burden of increased
establishment expenses, which also led to substantial losses. The grim
power supply problem in the region also contributed its part for this
situation. The delay in meeting this added expenditure is costing heavily
to the organization. The Digital Radiography equipment also could not be
put to proper use due to mismatch between the old X-ray unit of outdated
model and the subsequently added Digital Radiography equipment. This was
represented to the bank for support many a time, but in vain. Now due to
the rapid change in the equipment models, newer comprehensive units with
in-built compatible DR and X-ray systems need to be purchased to make this
service available to the patients. Some other existing equipments also need
updation to cope up with the advanced modality services. Thus on the whole
there is lack of comprehensiveness in the services presently provided.
Other Equipment like MRIT had a repair in its main unit - the head, which
company is presently represented by a dealer outside India. Other causes
like repairs of other diagnostic Equipment, condemning of old assets that
are outdated and non-functioning, poorly equipped state to face the stiff
competition between diagnostic centres of the region, the heavy interest
burden of the bank and increase of running expenditure which is a
consequence of many of the above and other causes mentioned below added to
the complexity of the situation.
The uncertainty being faced on the outcome of the court cases on the
existing lease hold premises is also adding to the troubles of the company.
The hostile attitude and actions of the lessors of the premises are also
not conducive to optimize the utilization of the premises. The necessary
modifications, time and again which needed to be further made from time to
time for the premises in addition to those already made, involves further
investment, which could be further wasted depending on the outcome of the
From the beginning and more so since 2001, the lessor has been causing more
trouble than earlier to the company for the reasons best known to them and
the management had to spend most of the valuable time fighting for the
litigation and the company is leaving no stone unturned in fighting the
litigation in respect of the lease hold at various stages. The quagmire of
litigation the company was constrained to involve in respect of its
leasehold due to the mischief of the CSITA and M/s Tilak Enterprises has
also substantially contributed to the woes of the company. In view of the
looming uncertainty due to the said litigation, the company is not able to
make optimum use of the premises, as there is the fear of losing the
further investment as may be made for modifications and renovations to the
premises from time to time if the verdict of the Courts is going to be
adverse. This is in addition to the already invested huge amounts on the
premises over a period of many years on various occassions. Even though the
company is somehow able to get along with in the premises, we could go only
for moderate expansion and not the fulfledged updating, which is the
present exigency in view of the hard core competition prevailing in the
market, especially in the arena of medical diagnostic services. An attempt
was made by the company in 2008 to update some of the outdated equipment
but the high end models could not be installed. This is in substantial part
due to bank and other factors mentioned in the earlier AGM and also the
lack of cooperation by and the hostile atmosphere with the lessors - whose
cooperation and consent was required for erecting the exclusive high
tension transformers mandatory for such high end models. The grim power
problem also could not be addressed by the company by installing high end
noiseless power generators, which required a lot of additional space, which
again required the consent of the already hostile lessor of the premises.
In addition to those discussed above, the bank factors mentioned earlier in
the last Annual General Meeting also had a role to play. Because of these
uncertainties with regard to such issues and also the problem of leasehold
premises, we were not able to install the latest sophisticated diagnostic
equipment and we are constrained to manage with the possible moderate
expansion which could hardly withstand the present day competition which
has resulted in disproportionately increased expenditure, outweighing the
operational costs also. With the threat of eviction from the existing
premises hovering over, we are not able to achieve the desired growth and
progress. In contrast thereto, our competitors are equipped with relatively
better modern equipment capturing the demand from the local doctors at the
cost of our patronage, causing huge loss to our company.
The term Loan with Canara Bank has become NPA in November 2011 due to many
of the reasons already mentioned above and also the reasons clearly
mentioned in the last Annual Report. As a consequence of the account
becoming NPA with the bank, the bank has resorted to initiating steps for
auctioning the landed property of the company at a reserve price of its own
in addition to launching other legal measures. The matter was represented
to the DRT by the company and as of date is pending disposal.
STEPS PROPOSED BY THE BOARD FOR FUTURE BUSINESS DEVELOPMENT AND ENHANCED
Your company has already initiated steps for settling the NPA issue with
Canara Bank and has submitted a OTS proposal on 05th June 2012 and the bank
has placed it in the CANADALAT on 6th June 2012. But unfortunately the
proposal was not accepted by Canara Bank citing that our offer was low.
Your company is now taking further steps to once again propose OTS after
discussions with the Canara Bank Officials and arrive at a mutually
agreeable finality. New Steps and suggestions from Financial & other
strategic Consultants as may be required for improvement of Business or
alternative steps for solving this issue, are also being explored. The
company is taking all the necessary steps for rectifications and repair of
all the medical equipment and putting them to optimum use by measures
outweighing the regular market factors to the extent possible. But the
uncertainity pertaining to the premises is still hovering over and the
management will try to explore ways & means to overcome this problem also.
Recovery of other advances to possibly provide some reserves for the
company is one other measure being contemplated. The company is also
exploring the scope for starting new avenues of profitable business
activities as earlier envisaged and also as may be decided feasible in
6. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION & FOREIGN EXCHANGE
EARNINGS AND OUT GO:
The required information as per Sec.217 (1) (e) of the Companies Act 1956
is provided hereunder:
A. CONSERVATION OF ENERGY:
The Company has taken necessary steps to conserve the energy utilization
during the year under review.
B. TECHNOLOGY ABSORPTION:
1. Research and Development (R&D) : Rs.80.94 lakhs
2. Technology absorption, adoption
and innovation : NIL
C. FOREIGN EXCHANGE EARNINGS AND OUT GO:
Foreign Exchange Earnings : NIL
Foreign Exchange Outgo : NIL
7. INTERNAL CONTROL AND ITS ADEQUACY:
The Board is committed to ensure that the Company's 'internal control'
system remains effective and efficient in areas such as operations and
Security. For this purpose proper planning and effective conduct of the
'internal audit' is given top-most attention.
8. DIRECTORS' RESPONSIBILITY:
To best of their knowledge and belief and on the basis of information
furnished to them the Directors make following statement, which is required
to be made in terms of Section 217 (2AA) of the Companies Act, 1956:
(i) While preparing Annual Accounts, the applicable accounting standards
have been followed along with proper explanations
(ii) Appropriate accounting policies have been selected and applied
consistently and have 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 as at March 31, 2012 and of the losses of the company for the year
ended on that date.
(iii) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities.
(iv) The Annual Accounts of the Company have been prepared on basis of a
9. CORPORATE GOVERNANCE:
a) A note on Management Discussion and Analysis of Report is enclosed.
b) As per clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on Corporate Governance Practices followed by the Company
together with a certificate obtained from the auditors of the Company is
set out in Annexure, forming part of this report.
1O. PARTICULARS OF EMPLOYEES:
During the year under review, no employee of the company was in receipt of
remuneration for the whole year which in the aggregate was Rs.60,00,000/-
or more per annum nor was any employee in receipt of remuneration
Rs.5,00,000/- or more per month for the any part of the year in accordance
with the provisions of Section 217(2A) of the Companies Act, 1956, read
with the Companies (Particulars of Employees) Rules, 1975 as amended.
During the year under review, industrial relations of the company continued
to be cordial and peaceful.
In accordance with requirements of the Companies Act, 1956 and Articles of
Association of the Company, Mr. Vinay Vishnuraj Nayak retires by rotation.
He however is eligible for reappointment. The board has therefore
recommended his reappointment.
M/S Pinnamaneni & Co, Chartered Accountants, the Company's auditors term
office will conclude with this Annual General Meeting. They have expressed
willingness to accept the assignment for a further period on one more year.
They have also confirmed their eligibility for such an appointment under
Section 224(1B) of the Companies Act, 1956.The Board recommends firms re-
appointment as Company's auditors.
13. LISTING AT STOCK EXCHANGES:
The Equity Shares of the Company are listed on Bombay Stock Exchange
Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001.
Your Directors thank and appreciate all the executives, staff, Bankers,
Customers and Workers of the Company for their dedicated services.
By Order of the Board
For DOLPHIN MEDICAL SERVICES LIMITED
Place: Hyderabad, Sd/- Sd/-
Date: 15.08.2012 Dr. G.V. MOHAN PRASAD Dr. M. LAKSHMI SUDHA
MANAGING DIRECTOR WHOLE TIME DIRECTOR