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Lotus Eye Hospital & Institute Ltd.

BSE: 532998 Sector: Health care
NSE: LOTUSEYE ISIN Code: INE947I01017
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NSE 12:41 | 20 Nov 33.40 0.35
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OPEN 34.85
PREVIOUS CLOSE 33.70
VOLUME 175
52-Week high 42.65
52-Week low 17.80
P/E 105.31
Mkt Cap.(Rs cr) 70
Buy Price 33.70
Buy Qty 25.00
Sell Price 34.65
Sell Qty 50.00
OPEN 34.85
CLOSE 33.70
VOLUME 175
52-Week high 42.65
52-Week low 17.80
P/E 105.31
Mkt Cap.(Rs cr) 70
Buy Price 33.70
Buy Qty 25.00
Sell Price 34.65
Sell Qty 50.00

Lotus Eye Hospital & Institute Ltd. (LOTUSEYE) - Director Report

Company director report

DEAR SHAREHOLDERS

Your Directors have pleasure in presenting the 20th Annual Report of yourCompany together with the Audited Accounts for the year ended 31st March 2017.

FINANCIAL RESULTS ( in Lakhs )

Particulars 31.03.2017 31.03.2016
(Current year) (Previous year)
Income from Operations and other income 3467.84 3170.58
Less : Expenses 3427.67 3172.63
Profit / (Loss) before Tax 40.17 (2.05)
Less : Provision for Taxes :
Current Tax 7.67 -
MAT Credit Entitlement (7.67) -
Previous Year Tax 1.73 1.73
Deferred Tax (4.30) (12.13)
Profit / (Loss) after tax 42.74 10.08

REVIEW OF OPERATIONS AND PERFORMANCE:

Your company has reported a growth of 9.10 % on turnover of Rs. 3396.47 Lakhs duringthe financial year 2016-17 compared to the turnover of Rs. 3113.22 Lakhs in the previousfinancial year 2015-16.Your Company has reported a growth of 324.11 % on net profit of Rs.42.74 Lakhs during the financial year 2016-17 against a net profit of Rs. 10.08 Lakhsduring the previous financial year 2015-16.

DIVIDEND:

The Board of Directors are pleased to recommend a dividend of 5% (Re. 0.50 per share)for the financial year ended 31st March 2017 on the paid up equity sharecapital subject to approval of the members at the ensuing Annual General Meeting. Thedividend if approved will result in a payout of Rs. 103.98 Lakhs and shall be subject toDividend Distribution Tax to be paid by your Company.

SHARE CAPITAL:

The Paid up equity share capital as on 31st March 2017 is 2079.63 Lakhs.During the year under review the Company has not issued any shares to the Shareholders.The company has neither issued shares with differential voting rights nor granted stockoptions or sweat equity shares.

FINANCE:

Cash and cash equivalents as at 31st March 2017 is Rs. 498.47 Lakhs. TheCompany continues to focus on judicious management of its working capital receivablesinventories and other working capital parameters which are kept under strict check throughcontinuous monitoring.

RESERVES:

Reserves and Surplus of the Company increased by 1.49 % from Rs. 2868.86 Lakhs as on 31stMarch 2016 to Rs. 2911.60 Lakhs as on 31st March 2017.

DEPOSITS:

During the year under review your company has not accepted any deposits from publiccovered under Sections 73 to76 or any other relevant provisions of the Act and rulesframed thereunder.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

During the year under review your Company has not given any loans or guaranteescovered under the provisions of section 186 of the Companies Act 2013.

The detail of the investments made by the company is given in the notes to thefinancial statements.

OUTLOOK FOR THE CURRENT YEAR:

Your Company is planning to establish its own building in Tirupur the process toidentify a suitable land has been already initiated.

Your company will establish infrastructure facilities for separate super specialty forCornea and Retina at Peelamedu Main Hospital Coimbatore.

Your Company is planning to establish the new centre at Gobichettipalayam ErodeDistrict. Your Company also plans to establish couple of more centers in Tamilnadu andKerala.

CORPORATE SOCIAL RESPONSIBILITIES:

Your company does not falls within the bracket as prescribed by Section 135 of theCompanies Act 2013 and rules framed thereunder. Hence this clause is not applicable.

DIRECTORS:

Appointment / Re-appointment:

Dr. S.K. Sundaramoorthy has been re-appointed by the Board of the Company at theirmeeting held on 31st January 2017 for another term of five years with effectfrom 1st April 2017 subject to approval of the members at the ensuing AnnualGeneral Meeting.

Directors retiring by rotation:

Dr. Kavetha Sundaramoorthy (DIN: 02050806) Director of the Company retires by rotationat the forthcoming Annual General Meeting and being eligible offers herself forre-appointment.

Information regarding the Directors seeking appointment / re-appointment:

Resume and other information regarding the Directors seeking appointment/re-appointment as required by Regulation 36 of the SEBI (LODR) Regulations 2015 has beengiven in the Notice convening the 20th Annual General Meeting and in theStatement pursuant to Section 102 of the Act.

Declaration by Independent Directors:

All Independent Directors have given declaration that they meet the criteria ofindependence as laid down under section 149(6) of the Companies Act 2013 and regulation16(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Familiarisation Programme:

Your Company has adopted policy on Familiarization programme of Independent Directors.During the year under review one programme was conducted by the company details of suchprogramme for familiarisation of the Independent Directors are put on the website of theCompany at the following web-link : https://www.lotuseye.org/investors.

Statutory Disclosure:

None of the Directors of the Company are disqualified as per the applicable provisionsof the Act.

BOARD EVALUATION:

Pursuant to the provisions of Companies Act 2013 and SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 the Board has carried out an evaluation of itsown performance the Directors individually as well as evaluation of the working of itsCommittees.

The criteria for performance evaluation are as under:

Performance Evaluation of Board:

Key Parameters: Degree of fulfillment of key responsibilities; Board structure andcomposition; Establishment and delineation of responsibilities to Committees;Effectiveness of Board processes information and functioning; Board Culture and Dynamics;Quality of relationship between the Board and the Management; Efficacy of communicationwith external stakeholders etc.

Self Assessment of the Performance by Individual Directors (including IndependentDirector):

Key Parameters: Attendance at meetings; contribution at meetings; independence ofjudgment; direction / guidance to senior management etc.

Self Assessment of the Performance by the Board Level Committees:

Key Parameters: Degree of fulfillment of key responsibilities; Adequacy of CommitteeComposition; Effectiveness of meetings; Committee dynamics; Quality of relationship of thecommittee with the Board and the management etc.

The Directors have expressed their satisfaction with the evaluation process.

REMUNERATION POLICY:

The Policy on Board Diversity and Nomination & Remuneration Policy as recommendedby the Nomination & Remuneration Committee have been approved by the Board ofDirectors. The said policies are annexed to the Board's Report as "Annexure-VI"and are also available on the Company's website at the following link:https://www.lotuseye.org/investors.

MEETINGS:

During the year four Board Meetings four Audit Committee Meetings three Nominationand Remuneration Committee Meetings and one Stakeholders' Relationship Committee wereconvened and held. The details of these meetings are given in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Companies Act 2013 and Secretarial Standard.

COMMITTEES OF THE BOARD:

Currently the Company has three Committees i.e. Audit Committee Nomination andRemuneration Committee and Stakeholders' Relationship Committee. All the committees areIndependent under the Chairmanship of an Independent Director. The details of thecompositions terms of reference meetings etc. of said Committees are given in theReport on Corporate Governance which forms part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT:

In terms of Section 134 (5) of the Companies Act 2013 the Directors would like tostate that:

I. In the preparation of the annual accounts the applicable accounting standards havebeen followed.

II. Appropriate accounting policies have been selected and applied consistently andjudgments and estimates that have been made are reasonable and prudent so as to give atrue and fair view of the company at the end of the financial year and of the company forthat period.

III. Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the companies Act 2013 forsafeguarding the assets of the company and for the preventing and detecting fraud andother irregularities.

IV. Annual accounts have been prepared on going concern basis.

V. Internal financial controls to be followed by the company and that such internalfinancial control are adequate and were operating effectively.

VI. Devised proper system to ensure compliance with the provisions of all applicablelaws and that such system were adequate and operating effectively.

RELATED PARTY TRANSACTIONS:

All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the company at large. Accordingly no transactions are being reported in FormAOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts)Rules 2014.

INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY:

The Board reviews from time to time the adequacy and effectiveness of the Company'sinternal financial controls. This year was no exception. The reviews conducted during theyear did not reveal any material deficiencies in the internal financial control structure.

SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

There is no significant and material orders passed by the Regulators / Courts /Tribunals which would impact the going concern status and Company's operations in future.

SUBSIDIARY COMPANIES:

The Company does not have any subsidiary company.

CHANGE IN NATURE OF BUSINESS IF ANY:

During the year under review there is no change in nature of business of the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There are no material changes and commitments affecting financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe Financial Statements relate and date of the report.

CODE OF CONDUCT:

The Board of Directors have approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings / behaviors of any form and the Board has laid down thedirectives to counter such acts. The code laid down by the Board is known as "Code ofConduct for Board of Directors and Senior Executives" which forms an Appendix to theCode. The Code has also been posted on the Company's website at the following link:https:// www.lotuseye.org/investors

The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders. The Code gives guidance through examples on the expectedbehavior from an employee in a given situation and the reporting structure.

All the Board Members and the Senior Management personnel have confirmed compliancewith the Code. All Management Staff were given appropriate training in this regard.

KEY MANAGERIAL PERSONNEL:

The details of the Key Managerial Personnel of the Company their appointment /cessation during the year under review and remuneration are given in the Extract of AnnualReturn annexed hereto and forming a part of this Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

Your Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behaviour.

Your Company is committed to developing a culture where it is safe for any WhistleBlower to raise concerns about any poor or unacceptable practice and any event ofmisconduct. The alleged misconduct may be classified in many ways; namely violation of alaw rule regulation and / or a direct threat to public interest such as health andsafety violations and corruption.

Your Company will not tolerate any form of victimization and will take appropriatesteps to protect a bona fide whistle blower and shall treat any retaliation as a seriousdisciplinary offence that merits disciplinary action. The Company will protect theidentity of the whistle blower if so desired provided that the whistle blower will needto attend any disciplinary hearing or proceedings as may be required for investigation ofthe complaint. The mechanism provides for a detailed complaint and investigation process.If circumstances so require the employee can make complaint directly to the Chairman ofthe Audit Committee. The said mechanism can also be availed by the Directors of theCompany.

`Whistle Blower Policy' of your Company is available on the website of the Company atthe following link: https://www.lotuseye.org/investors

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.

The same Code is available in the website of your Company at the following link :https://www.lotuseye.org/investors

All Board Directors and the designated employees have confirmed compliance with theCode.

AUDITOR'S REPORT:

The observation made in the Auditors' Report read together with relevant notes thereonare self explanatory and hence do not call for any further comments under Section 134 ofthe Companies Act 2013.

AUDITORS:

The Auditors M/s. VEKAM & Associates Chartered Accountants whose tenure asprescribed under the Companies Act 2013 (hereinafter "the Act") shall be overat the ensuing Annual General Meeting of the company. It is proposed to appointM/s.Anbarasu & Jalapathi Chartered Accountants having registration no. 010795S at theensuing Annual General Meeting who shall hold office till the conclusion of 25thAnnual General Meeting subject to ratification at every Annual General Meeting.

INTERNAL AUDITORS:

M/s. Anbarasu & Jalapathi Chartered Accountants was appointed as the InternalAuditors of the Company for the financial year 2016-17 pursuant to Section 138(1) of theAct.

SECRETARIAL AUDIT/AUDITORS:

Pursuant to provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed P. Eswaramoorhy and Company (CP No. 7069) Company Secretaries to undertake theSecretarial Audit of the Company for the financial year 2016-17.

As required under section 204 (1) of the Companies Act 2013 the Company has obtained asecretarial audit report. The Company Secretary in Practice has made its observation inSecretarial Audit Report (MR-3) which is annexed herewith as

"Annexure - II"

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as "Annexure -III".

BUSINESS RISK MANAGEMENT:

The Company has a robust Risk Management framework to identify evaluate business risksand opportunities. This framework seeks to create transparency minimise adverse impact onthe business objectives and enhance the Company's competitive advantage. As part of theRisk Management framework the Company reviewed periodically the various risks andfinalised the mitigation plans. The identified risk areas were covered by the InternalAudit and major risks were discussed periodically.

PARTICULARS OF EMPLOYEES:

Statements containing the details as required in terms of the provisions of Section 197of the Act read with Rule 5(1) (2) and (3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are attached to this Report as "Annexure–I". During the year under review no complaint /case was filed pursuant toSexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORT:

Management Discussion & Analysis Report which form an integral part of thisReport is set out as separate annexure as

"Annexure –IV".

The Corporate Governance Report together with the Certificate from the Auditors of theCompany regarding compliance with the requirements of Corporate Governance as stipulatedin SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 which form anintegral part of this report is set out as separate annexure as "Annexure –V".

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The details of Energy Technology Absorption Foreign Exchange Earnings and Outgo areas under:

a) Conservation of Energy:

Steps taken for conservation The operation of the Company being service related require normal consumption of electricity. The Company is taking every necessary step to reduce the consumption of energy.
Steps taken for utilizing alternate sources of energy Nil
Capital investment on energy conservation equipments In view of the nature of activities carried on by the Company there is no capital investment on energy conservation equipments.

b) Technology Absorption:

Efforts made for technology absorption Nil
Benefits derived Nil
Expenditure on Research & Development if any Nil
Details of technology imported if any Nil
Year of import Nil
Whether imported technology fully absorbed Nil
Areas where absorption of imported technology has not taken place if any Nil

c) Foreign Exchange Earnings / Outgo ( in Lakhs):

Earnings Nil
Outgo 74.94

ACKNOWLEDGEMENT:

Your Company and its Directors wish to extend their sincerest thanks to the Members ofthe Company Bankers State Government Local Bodies Customers Suppliers ExecutivesStaff at all level and all other stakeholders for their continuous cooperation andassistance.

Annexure - I to Board's Report

STATEMENT OF DISCLOSURE OF REMUNERATION UNDER SECTION 197(12) OF COMPANIES ACT 2013AND RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)RULES 2014.

i) Ratio of the remuneration of each director1 to the median remuneration ofthe employees of the Company for the financial year 2016-17 :

Name Designation Ratio
1. Dr. S.K. Sundaramoorthy Chairman cum Managing Director 31.82:1
2. Ms. Sangeetha Sundaramoorthy Whole-time Director 3.64:1

ii) Percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary and Manager in the financial year 2016-17 :

Name Designation % increase in remuneration
1. Dr. S.K. Sundaramoorthy Chairman cum Managing Director Nil
2. Ms. Sangeetha Sundaramoorthy Whole-time Director Nil
3. CA M.Venkatachalapathi2 Chief Financial Officer Nil
4. CA S. Saravana Ganesh3 Chief Financial Officer Nil
5. CS Aditya Sharma4 Company Secretary Nil

iii) The percentage increase in the median remuneration of employees in the financialyear 2016-17:

10% increase on salaries in 2016-17 over 2015-16 based on the median remuneration

iv) The number of permanent employees on the rolls of Company:

There were 357 numbers of permanent employees on the rolls of the Company as on31.03.2017. (Previous year : 335)

v) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

The average increase in the salary of employees during the year was 10% while there isno increment reported in managerial remuneration.

vi) Affirmation that the remuneration is as per the remuneration policy of the Company:

It is hereby confirmed that the remuneration paid during the year 2016-17 is as per theNomination & Remuneration Policy of the Company.

Notes :

1. Other directors' except Kavetha Sundaramoorthy entitled to receive sitting feesonly.

2. CA M. Venkatachalapathi Chief Financial Officer (CFO) has resigned w.e.f. 17thJanuary 2017.

3. CA S. Saravana Ganesh has been appointed as Chief Financial Officer (CFO) w.e.f. 31stJanuary 2017.

4. CS Aditya Sharma has been appointed as Company Secretary w.e.f. 30th May2016.

STATEMENT OF DISCLOSURE OF REMUNERATION UNDER SECTION 197 OF COMPANIES ACT 2013 ANDRULE 5(2) AND 5(3) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)RULES 2014

No employee is drawing salary more than prescribed amount as per above provision(s).