Your Directors have pleasure in presenting the 23rd Annual Report on thebusiness and operations of your Company along with the audited statement of accounts forthe year ended 31st March 2017.
The Financial performance of your Company for the year ended 31st March2017 is summarized below:
|Particulars ||Year ended March 31 2017 ||Year ended March 31 2016 ||Year ended March 31 2017 ||Year ended March 31 2016 |
| ||Rs. (in Lakhs) ||Rs. (in Lakhs) ||Rs. (in Lakhs) ||Rs. (in Lakhs) |
| ||Consolidated ||Consolidated ||Standalone ||Standalone |
|Total Revenue ||91856.7 ||79634.9 ||88924.2 ||77131.3 |
|Total Expenses ||67583.5 ||58159.8 ||65278.3 ||56155.3 |
|Total Income before Interest Tax & Depreciation ||24273.2 ||21475.1 ||23645.9 ||20976.0 |
|Profit/(Loss) before Tax (PBT) ||23329.8 ||20071.6 ||22290.4 ||19175.3 |
|Profit/(Loss) after Tax (PAT) ||15519.4 ||13322.9 ||14720.9 ||12575.1 |
RESULT OF OPERATIONS
During the year under review the consolidated income from operations of the Companyincreased to ' 91856.7 Lakhs compared to ' 79634.9 Lakhs in the previous yearregistering growth of 15.3%. Net profit after tax for the group increased to ' 15519.4Lakhs from ' 13322.9 Lakhs representing a growth of 16.5%.
During the year under review the standalone income from operations of the Companyincreased to ' 88924.2 Lakhs compared to ' 77131.3 Lakhs in the previous yearregistering growth of 15.3%. The standalone profit after tax for the year increased by17.1% to ' 14720.9 Lakhs compared to ' 12575.1 Lakhs in the previous year.
During the Financial Year your Company declared and paid an interim dividend of '1.30/- per equity share of the face value of ' 10/-. In addition your Directors arepleased to recommend a dividend of ' 1.70/- per equity share as final dividend for theFinancial Year 201617 for approval of the shareholders at the ensuing Annual GeneralMeeting ("AGM") of the Company.
If approved by the members the total dividend for the Financial Year shall be ' 3/-per equity share.
The Dividend Distribution Policy of the Company is attached herewith as Annexure 1 andforms an integral part of the Annual Report.
TRANSFER TO RESERVES
Your Company proposes to transfer an amount of ' 1450 Lakhs to the General Reserve.
SCHEME OF AMALGAMATION
The Board of Directors of the Company in their meeting held on May 12 2017 approved aScheme of Amalgamation of Delta Ria & Pathology Private Limited a wholly ownedsubsidiary of the Company with the Company subject to requisite approvals under Section230 to 232 of the Companies Act 2013.
The Company shall now proceed to file an petition Application before the NationalCompany Law Tribunal Principal Bench New Delhi and National Company Law TribunalAhmedabad for approval of the Scheme of Amalgamation.
The appointed date for the Scheme if approved shall be April 01 2017 and the Schemeshall be effective from the date on which certified copies of the order of NationalCompany Law Tribunal Principal New Delhi and National Company Law Tribunal Ahmedabadsanctioning the Scheme is filed with the Registrar of Companies NCT of Delhi &Haryana at Delhi and Registrar of Companies Madhya Pradesh at Gwalior.
CHANGES IN SHARE CAPITAL
a. Increase/Reclassification of Authorized Share Capital
The Shareholders in their previous Annual General Meeting held on July 28 2016re-classified 19139675 0.01% Compulsorily Convertible Preference Shares of ' 10/- eachforming part of the Authorised Share Capital of the Company into equivalent number ofequity shares of face value ' 10/- each.
The Authorized Share Capital also got increased by ' 39000000/- (3900000 equityshares of ' 10/- each) pursuant to the Scheme of Amalgamation of Sanya Chemicals LimitedAmolak Diagnostic Private Limited Medex Healthcare Private Limited Medicave DiagnosticCentre Private Limited and Medicave Medical Systmes Private Limited with the Company
b. Increase in Paid up Equity Share Capital
During the year under review the Company allotted 389187 Equity Shares of ' 10/-each under the Employee Stock Option Scheme 2010 of the Company.
EMPLOYEES STOCK OPTION PLAN / SCHEME
During the year under review there has been no material change in theES0P-2010/ESPS-2015/RSU-2016 Scheme(s) of the Company and these Schemes continue to be incompliance with relevant/ applicable ESOP Regulations/clauses.
Further the details required to be provided under the SEBI (Share Based EmployeeBenefits) Regulations 2014 are disclosed on the website of the Company and can beaccessed at https://www.lalpathlabs.com/investor/quarterly-results.aspx .
The consolidated financial statements of your Company for the
Financial Year 2016-17 are prepared in compliance with applicable provisions of theCompanies Act 2013 Accounting Standards and Listing Regulations as prescribed by theSecurities and Exchange Board of India (SEBI). The consolidated financial statements havebeen prepared on the basis of audited financial statements of the Company and itssubsidiary Companies as approved by their respective Board of Directors.
A report on the performance and financial position of each of the subsidiariesassociates and joint venture companies as per the Companies Act 2013 is set out inAnnexure 2 and forms an integral part of this Annual Report.
The annual accounts of the subsidiaries shall also be made available to the Members ofthe Company/Subsidiary Companies seeking such information at any point of time. The annualaccounts of the subsidiaries are also available for inspection for any Member duringbusiness hours at the Registered Office of the Company and subsidiary companies and havealso been uploaded on the website of the Company (www. lalpathlabs.com).
MANAGEMENT DiSCUSSiON AND ANALYSiS
The Management Discussion and Analysis forms an integral part of this Annual Report andgives details of the overall industry structure developments performance and state ofaffairs of the Company' business and other material developments during the FinancialYear.
BUSiNESS RESPONSiBiLiTY REPORT
The Business Responsibility Report ('BRR') forms an integral part of this AnnualReport. The Report provides a detailed overview of initiatives taken by your Company fromenvironmental social and governance perspectives.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION
No material changes and commitments other than disclosed as part of this reportaffecting the financial position of the Company have occurred between March 31 2017 andthe date of the report.
During the Financial Year 2016-17 your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read together with the Companies(Acceptance of Deposits) Rules 2014.
CORPORATE GOVERNANCE REPORT
In compliance with the provisions of SEBI (Listing Obligations and DisclosureRequirements) regulations 2015 a separate report on corporate governance along with acertificate from the Practicing Company Secretary on its compliance forms an integralpart of this Annual Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the prescribed format and annexedherewith as Annexure 3 to this Report.
The statement containing particulars of employees as required under Section 197(12) ofthe Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is provided in a separate annexure forming part of thisreport. Further the Report and the accounts are being sent to the members excluding theaforesaid annexure. In terms of Section 136 of the Act the said annexure is open forinspection at the Registered Office of the Company till the date of the ensuing AnnualGeneral Meeting. Any shareholder interested in obtaining a copy of the same may write tothe Company Secretary.
The composition of Audit Committee has been detailed in the Corporate GovernanceReport forming part of this Annual Report.
All recommendations made by the Audit Committee has been accepted by the Board ofDirectors.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review following changes occurred in the position of Directors/Key Managerial Personnel of the Company:
Mr. Sandeep Singhal and Mr. Naveen Wadhera resigned as Nominee Directors with effectfrom October 07 and November 30 2016 respectively. Dr. Murugan Rajaram Pandian resignedas an Independent Director with effect from February 14 2017.
The Board places on record its appreciation for the services rendered by them duringtheir tenure with the Company.
Dr. Om Prakash Manchanda CEO & Whole Time Director is liable to retire by rotationat the ensuing AGM pursuant to the provisions of Section 152 of the Companies Act 2013read with the Companies (Appointment and Qualification of Directors) Rules 2014 and beingeligible offers himself for reappointment. Brief profile of the Director and other relatedinformation has been detailed in the Notice convening the 23rd AGM of yourCompany.
KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Sections 2(51) 203 of the Companies Act 2013read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014the following are the Key Managerial Personnel of the Company:
1. (Hony) Brig. Dr. Arvind Lal - Chairman and Managing Director
2. Dr. Om Prakash Manchanda - CEO and Whole Time Director
3. Dr. Vandana Lal - Whole Time Director
4. Mr. Dilip Bidani - Chief Financial Officer; and
5. Mr. Rajat Kalra - Company Secretary
ANNUAL EVALUATION OF BOARD'S PERFORMANCE:
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out annual performanceevaluation of its own performance the Directors individually as well as the evaluation ofall Committees of the Board for the Financial Year 2016-17. A structured
questionnaire was prepared after taking into consideration inputs received from theDirectors covering various aspects of the Board's functioning such as adequacy of thecomposition of the Board and its Committees Board culture execution and performance ofspecific duties obligations and governance. A separate exercise was carried out toevaluate the performance of individual Directors who were evaluated on parameters such aslevel of engagement and contribution independence of judgment safeguarding the interestof the Company and its minority shareholders etc. The performance evaluation of theIndependent Directors was carried out by the entire Board. The performance evaluation ofthe Non Independent Directors was carried out by the Independent Directors.
The directors expressed their satisfaction with the evaluation process.
The Board has on the recommendation of the Nomination & Remuneration Committee ofthe Company framed a policy for selection and appointment of Directors Key ManagerialPersonnel Senior Management and their remuneration.
The Policy is set out as Annexure 4 and forms an integral part of this Annual Report.
NUMBER OF MEETINGS OF THE BOARD AND ITS COMMITTEES & DETAILS OF ATTENDANCE
The details of the meetings of the Board of Directors and its Committees and attendanceby Directors/Members convened during the Financial Year 2016-17 are given in theCorporate Governance Report which forms an integral part of this Auunal Report.
DECLARATION OF INDEpENDENCE
Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the provisions ofCompanies Act 2013 read with the Schedules and Rules issued thereunder as well as SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors confirm that:
a) in the preparation of the annual accounts for the Financial Year ended 31stMarch 2016 the applicable accounting standards and Schedule III of the Companies Act2013 have been followed and there are no material departures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of your Company as at 31st March 2017 and ofthe profit and loss of the Company for the Financial Year ended 31st March2017;
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a 'going concern' basis;
e) proper internal financial controls laid down by the Directors were followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
AUDITORS AND AUDITORS' REPORT
I. Statutory Auditors
The Members are informed that M/s S.R. Batliboi & Co. LLP Chartered Accountantsare Statutory Auditors of the Company since 2005-06 and are required to retire by rotationat the conclusion of the ensuing Annual General Meeting (AGM).
As per the provisions of the Companies Act 2013 an audit firm functioning as auditorof the Company for ten years or more after the commencement of provisions of Section139(2) of the Act may be appointed in the same Company for further period of three yearsfrom April 1 2014. As maximum statutory tenure of M/s S.R. Batliboi & Co. LLP tocontinue as auditors is about to end and hence they are not eligible to be considered forre-appointment at the ensuing AGM of the Company.
The Board of Directors therefore on the recommendation of Audit Committee haveappointed M/s. Deloitte Haskins & Sells Chartered Accountants (Firm Registration No.117366W/ W100018) as statutory auditors of the Company for a period of five (5) yearssubject to the approval of the members at the AGM.
The appointment of M/s. Deloitte Haskins & Sells Chartered Accountants ifapproved by the members of the Company will take effect from the conclusion of theensuing AGM.
They have confirmed their eligibility to the effect that their appointment if madewould be within the prescribed limit under the Act and that they are not disqualified forappointment.
A resolution proposing appointment of M/s. Deloitte Haskins & Sells CharteredAccountants Chartered Accountants as Statutory Auditors of the Company pursuant toSection 139 of the Companies Act 2013 forms part of the Notice for the ensuing AGM.
Further the Auditors Report being self-explanatory does not call for any furthercomments from the Board of Directors.
During the period under review no incident of frauds was reported by the StatutoryAuditors pursuant to Section 143(12) of the Companies Act 2013.
II. Cost Auditors
In terms of the Section 148 of the Companies Act 2013 read with Companies (CostRecords and Audit) Rules 2014 the Company is required to maintain cost accountingrecords and get them audited every year. The Board appointed M/s A.G. Agarwal &Associates Cost Accountants as cost auditors of the Company for the Financial Year2017-18 at a fee of ' 50000 (Rupees Fifty Thousand only) plus applicable taxes and out ofpocket expenses subject to the ratification of the said fees by the shareholders at theensuing Annual General Meeting.
III. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhas appointed M/s Sanjay Grover & Associates Company Secretaries ("StatutoryAuditors") to conduct the Secretarial Audit of your Company. The Secretarial AuditReport is annexed herewith as Annexure 5 and forms an integral part of this Annual Report.
The Statutory Auditors have made an observation in their Report dated May 12 2017 forthe Financial Year 2016-17. The particulars of such observation and the managementresponse to that is as under:
During the audit period the Company has complied with the provisions of the ActRules Regulations Guidelines and Standards to the extent applicable as mentioned aboveexcept that the Company has paid remuneration to (Hony) Brig. Dr. Arvind Lal (Chairman& Managing Director) and Dr. Vandana Lal (Whole-time Director) during the audit periodwhich is yet to be approved by members of the Company.
The shareholders of the Company in their Annual General Meeting held on July 28 2016approved increase in the remuneration as specified u/s 197(1) of the Companies Act 2013of Dr. Om Prakash Manchanda CEO & Whole Time Director for exercise of vested stockoptions granted to him under the Employee Stock Option Plan. The Central Government videits e-mail/letter dated January 09 2017 also approved increase in such remuneration toDr. Manchanda.
The Secretarial Auditors of the Company M/s Sanjay Grover and Associates are of theopinion that the total remuneration paid to Dr. Om Prakash Manchanda as per the saidCentral Government approval for the Financial Year 2016-17 (including perk value arisingdue to exercise of stock options) exceeds the limits of Managerial Remuneration specifiedu/s 197(1) of the Companies Act 2013 and therefore approval of the shareholders shallalso be required under Section II of Part II of Schedule V for payment of remuneration tothe other two Executive Directors i.e. (Hony) Brig. Dr. Arvind Lal Chairman and ManagingDirector and Dr. Vandana Lal Whole Time Director.
The Board of Directors of the Company in their meeting on May 12 2017 took note of theobservation of Secretarial Auditor and in the interest of governance agreed seeking suchadditional approval from the shareholders even though the Board Members were aware thatthe Company has been legally opined that no further approval is required.
Accordingly the Notice of the Annual General Meeting contains the requisiteresolutions for payment of remuneration to (Hony) Brig. Dr. Arvind Lal & Dr. VandanaLal for approval by the Members.
Besides the above the Secretarial Auditor Report is selfexplanatory does not call forany further comments from the Board of Directors.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT- 9 inaccordance with Section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 are set out herewith as Annexure 6 and formsan integral part of this Annual Report.
RELATED PARTY TRANSACTIONS
In line with the requirements of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 your Company has formulated a Policy onRelated Party Transactions which is also available on Company's website at https://www .lalpathlabs.com/investor/policies-and-programs.aspx. The Policy intends to ensure thatproper reporting approval and disclosure processes are in place for all transactionsbetween the Company and Related Parties. All Related Party Transactions are placed beforethe Audit Committee for review and approval. Prior omnibus approval is obtained forRelated Party Transactions on a quarterly basis for transactions which are of repetitivenature and / or entered in the Ordinary Course of Business and are at Arm's Length.
All Related Party Transactions entered during the year were in Ordinary Course of theBusiness and on Arm's Length basis. No Material Related Party Transactions i.e.transactions exceeding ten percent of the annual consolidated turnover as per the lastaudited financial statements were entered during the year by your Company. Accordinglythe disclosure of Related Party Transactions as required under Section 134(3)(h) of theCompanies Act 2013 in Form AOC-2 is not applicable.
LOANS AND INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 is included in Note 12 of the Notes to the FinancialStatements.
Your Company recognizes that risk is an integral part of business and is committed tomanaging the risks in a proactive and efficient manner. Your Company periodically assessesrisks in the internal and external environment along with the cost of treating risks andincorporates risk treatment plans in its strategy business and operational plans. As onthe date of this report the Company don't forsee any critical risk which threatens itsexistence.
Your Company through its risk management policy strives to contain impact andlikelihood of the risks within the risk appetite as agreed from time to time with theBoard of Directors.
Your Company has a Vigil Mechanism in place as required under Section 177 of theCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulation 2015. No matter was reported during the year under review. More details inthis regard have been outlined in the Corporate Governance Report annexed to this reportand are also available under Investor Section on the Company's web-site(www.lalpathlabs.com ).
CORPORATE SOCIAL RESPONSIBILITY
For your Company Corporate Social Responsibility (CSR) means the
integration of social environmental and economic concerns in its business operations.CSR involves operating Company's business in a manner that meets or exceeds the ethicallegal commercial and public expectations that society has of businesses. In alignmentwith vision of the Company through its CSR initiatives your Company will enhance valuecreation in the society through its services Conduct & initiatives so as to promotesustained growth for the society.
The Board of your Company has constituted the CSR Committee to help the Company toframe monitor and execute the CSR activities of the Company. The constitution of the CSRCommittee consists of (Hony) Brig. Dr. Arvind Lal (Chairman and Managing Director) Dr. OmPrakash Manchanda (CEO & Whole Time Director) and Mr. Harneet Singh Chandhoke(Independent Director).
The Board of your Company has further formulated and adopted a policy on CorporateSocial Responsibility. The CSR Policy of your Company outlines the Company's philosophyfor undertaking socially useful programs through the creation of a CSR Trust for welfare& sustainable development of the community at large as part of its duties as aresponsible corporate citizen.
The disclosure as per Rule 8 of the Companies (Corporate Social Responsibility Policy)Rules 2014 is annexed as Annexure 7 and forms an integral part of this Annual Report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti-Sexual Harassment Policy in compliance with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment.
During the period under review six complaints were received by the ICC and the samewere disposed of.
conservation of energy technology absorption and
FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134 of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 is set out hereunder:
I. Conservation of energy and Technology Absorption
Maintaining power factor (PF) up to .99 (unity).
Contract electricity demand of the building moderated biannually in accordancewith operational demand. Leading to reduction of fixed charges during lean period.
Recycling of RO waste water and treated lab waste as part of water conservation.
Post reports of energy Audit of Lab chiller load is directed to two of the moreefficient chillers.
Descaling done of chillers to improve efficiency and retuned the evaporatorpressure drop and condenser water flow to maximize efficiency of chillers.
Replaced cooling tower fills and eliminator to improve efficiency of coolingtower.
Reduction in number of chillers operational during off peak hours and switchingon only cooling water pump to maintain set temperature.
Installing split AC in areas which are operating extended hours to avoid therunning of entire floor AHU.
All utilities functions are operated during off peak hours this gives advantageof off peak hours Tariff rebate extended by NDPL.
Optimizing operations of two elevators during peak and off time.
During winters when the load demand is reduced we proactively shut down one ofthe transformer alternately to save transformer loss.
LED lights change from conventional lights for energy saving exercise.
II. Foreign exchange earnings and outgo
The information on Foreign Exchange earnings is included
in Note 42 & outgo in Note 40 of the Notes to the Financial
DETAILS ON INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
Your Company has in place an adequate internal financial control framework withreference to financial and operating controls.
During Financial Year 2016-17 such controls were tested and no reportable materialweakness in the design or operation was observed.
The directors have in the Directors Responsibility Statement under paragraph (e)confirmed the same to this effect.
SIGNIFICANT/MATERIAL oRDERS PASSED BY THE REGuLATORS
There are no significant/material orders passed by the Regulators or Courts orTribunals impacting the going concern status of your Company and its operations in future.
Your Directors wish to convey their gratitude and place on record their appreciationfor all the employees at all levels for their hard work solidarity cooperation anddedication during the year. Your Directors sincerely convey their appreciation tocustomers shareholders vendors bankers business associates regulatory and governmentauthorities for their continued support.
| ||For and on behalf of Board of Directors |
|Place : New Delhi ||(Hony) Dr. Brig. Arvind Lal |
|Dated : May 12 2017 ||Chairman & Managing Director |
| ||DIN: 00576638 |