Your Directors have pleasure in presenting the 24th Annual Report on thebusiness and operations of your Company along with the audited statement of accounts forthe year ended March 31 2018.
The Financial performance of your Company for the year ended March 31 2018 issummarized below:
|Particulars ||Year ended March 31 2018 ||Year ended March 31 2017 ||Year ended March 31 2018 ||Year ended March 31 2017 |
| ||(in Rs million) ||(in Rs million) ||(in Rs million) ||(in Rs million) |
| ||Consolidated ||Consolidated ||Standalone ||Standalone |
|Total Income ||10881.38 ||9399.21 ||10555.53 ||9101.58 |
|Total Expenses ||8268.23 ||7030.97 ||8002.35 ||6789.02 |
|Profit/(Loss) before Tax (PBT) ||2613.15 ||2368.24 ||2553.18 ||2312.56 |
|Profit/(Loss) after Tax (PAT) ||1717.85 ||1555.89 ||1679.82 ||1524.81 |
During the year under review the consolidated income of the Company increased to Rs10881.38 million compared to Rs 9399.21 million in the previous year registering growthof 15.8%. Net profit after tax for the group increased to Rs 1717.85 million from Rs1555.89 million representing a growth of 10.4%.
During the year under review the standalone income of the Company increased to Rs10555.53 million compared to Rs 9101.58 million in the previous year registering growthof 16%. The standalone profit after tax for the year increased by 10.2% to Rs 1679.82million compared to Rs 1524.81 million in the previous year.
The consolidated financial statements of your Company for the Financial Year 2017-18are prepared in compliance with applicable provisions of the Companies Act 2013Accounting Standards and Listing Regulations as prescribed by the Securities and ExchangeBoard of India (SEBI). The consolidated financial statements have been prepared on thebasis of audited financial statements of the Company and its Subsidiary Companies asapproved by their respective Board of Directors.
During the Financial Year your Company declared and paid an interim dividend of Rs1.50/- per equity share of face value of Rs 10/- each. In addition your Directors arepleased to recommend a dividend of Rs 3/- per equity share of face value of Rs 10/- eachas final dividend for the Financial Year 2017-18 for approval of the shareholders at theensuing Annual General Meeting ("AGM") of the Company.
If approved by the members the total dividend for the Financial Year shall be Rs4.50/- per equity share of face value of Rs 10/- each.
The Dividend Distribution Policy of the Company is attached herewith as Annexure 1 andforms an integral part of the Annual Report.
TRANSFER TO RESERVES
During the year under review no amount has been transferred to the General Reserve ofthe Company.
CHANGES IN SHARE CAPITAL
During the Financial Year 2017-18 the paid - up equity share capital of the Companyhas been increased from Rs 830661840/- to Rs 833327440/- pursuant to allotment of266560 Equity Shares of Rs 10/- each under the Employee Stock Option Plan 2010 of theCompany.
UPDATE ON SCHEME OF AMALGAMATION OF DELTA RIA AND PATHOLOGY PRIVATE LIMITED WITH THECOMPANY
The Board of Directors of your Company in their meeting held on May 12 2017 approveda Scheme of Amalgamation of Delta Ria And 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.
Subsequently the Scheme was filed before the Hon'ble New Delhi Bench of the NationalCompany Law Tribunal ('Hon'ble Tribunal' or 'NCLT'). The Company in compliance with thedirections issued by the Hon'ble Tribunal vide its order dated December 14 2017 convenedmeetings of Equity Shareholders and Unsecured Creditors on February 10 2018 at PHDChambers of Commerce No. 4/2 Siri Institutional Area August Kranti Marg NewDelhi-110016 for approving the said scheme of Amalgamation.
The Scheme was approved by the requisite majority of Equity Shareholders and UnsecuredCreditors of the Company in their respective meetings held on February 10 2018.
The Company subsequently filed a second motion application for approving the saidScheme of Amalgamation before the NCLT on February 23 2018 and the NCLT has vide itsorder dated April 17 2018 fixed the date of hearing as July 02 2018.
EMPLOYEES STOCK OPTION PLAN / SCHEME
During the year under review there has been no material change in the ESOP-2010/RSU-2016 Scheme(s) of the Company and these Schemes continue to be in compliance withrelevant/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/pdf/Information-as-per-SEBI-Regulations-FY-18.pdf.
A report on the performance and financial position of each of the subsidiaries for theyear ended March 31 2018 as per the Companies Act 2013 is set out in Annexure 2 andforms 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).
The Company has formulated a policy for determining material subsidiaries. The policymay be accessed on the website of the Companyhttps://www.lalpathlabs.com/investor/policies- and-programs.aspx.
During the year under review Dr. Lal Path Labs Bangladesh Private Limited become asubsidiary of the Company as a result of the acquisition of its 70% stake by the Company.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report forms an integral part of this AnnualReport and gives details of the overall industry structure developments performance andstate of affairs of the Company's business and other material developments during theFinancial Year.
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 2018 andthe date of the report.
During the Financial Year 2017-18 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 Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial
Personnel) Rules 2014 are provided in the prescribed format and annexed herewith asAnnexure 3 to this Report.
The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is provided in a separate annexureforming part of this report. Further the Report and the accounts are being sent to themembers excluding the aforesaid annexure. In terms of Section 136 of the Act the saidannexure is open for inspection at the Registered Office of the Company till the date ofthe ensuing Annual General Meeting. Any shareholder interested in obtaining a copy of thesame may write to the 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 have been accepted by the Board ofDirectors.
I. Retirement by rotation and subsequent re-appointment:
Dr. Vandana Lal Whole Time Director is liable to retire by rotation at the ensuing AGMpursuant to the provisions of Section 152 of the Companies Act 2013 read with theCompanies (Appointment and Qualification of Directors) Rules 2014 and being eligibleoffers herself for reappointment. Appropriate resolution for her re-appointment is beingplaced for the approval of the shareholders of the Company at the ensuing AGM. The Briefprofile of Dr. Vandana Lal and other related information has been detailed in the Noticeconvening the 24th AGM of your Company.
II. Re-appointment of Independent Directors:
The term of office of Mr. Arun Duggal Mr. Anoop Mahendra Singh Mr. Harneet SinghChandhoke Mr. Sunil Varma and Dr. Saurabh Srivastava as Independent Directors expires onAugust 20 2018. The Board of Directors based on performance evaluation of all the aboveIndependent Directors recommends their re-appointment to the shareholders for a secondterm of five (5) consecutive years commencing from August 21 2018. Brief profile of allthe above Independent Directors and other related information has been detailed in theNotice convening the 24th AGM of your Company
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.
In the opinion of the Board Independent Directors fulfill the conditions specified inCompanies Act 2013 read with the Schedules and Rules issued thereunder as well as SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and are independentfrom Management.
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 2017-18. A structured questionnaire wasprepared after taking into consideration inputs received from the Directors coveringvarious aspects of the Board's functioning such as adequacy of the composition of theBoard and its Committees Board culture execution and performance of specific dutiesobligations and governance. A separate exercise was carried out to evaluate theperformance of individual Directors who were evaluated on parameters such as level ofengagement and contribution independence of judgment safeguarding the interest of theCompany and its minority shareholders etc. The performance evaluation of the IndependentDirectors was carried out by the entire Board. The performance evaluation of the NonIndependent 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 2017-18 are given in theCorporate Governance Report which forms an integral part of this Annual Report.
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 March 312018 the applicable accounting standards and Schedule III of the Companies Act 2013have 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 March 31 2018 and of the profitand loss of the Company for the Financial Year ended March 31 2018;
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 have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
AUDITORS AND AUDITORS' REPORT
I. Statutory Auditors
The shareholders at the 23rd AGM approved the appointment of M/s. DeloitteHaskins & Sells LLP Chartered Accountants (Firm Registration No. 117366W/W - 100018)as the Statutory Auditors for a period of five (5) years i.e. from the conclusion of the23rd AGM till the conclusion of 28th AGM of the Company subject toratification of the appointment by the shareholders at every Annual General Meeting.
However pursuant to the notification dated May 07 2018 issued by the Ministry ofCorporate Affairs the requirement for ratification of Statutory Auditors at every AnnualGeneral Meeting has been done away with.
Accordingly M/s. Deloitte Haskins & Sells LLP Chartered Accountants shallcontinue as the Statutory Auditors of the Company till the conclusion of 28thAGM in terms of the shareholders resolution dated July 20 2017 passed at the 23rdAGM.
The Statutory Auditors of the Company have not reported any fraud as specified underthe second proviso of Section 143(12) of the Companies Act 2013 (including any statutorymodification(s) or re-enactment(s) for the time being in force).
The Auditors' Report for the Financial Year ended March 31 2018 does not contain anyqualification reservation or adverse remark.
Further the Auditors' Report being self-explanatory does not call for any furthercomments from the Board of Directors.
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 of Directors on the basis ofrecommendations from Audit Committee has appointed M/s A.G. Agarwal & Associates CostAccountants as cost auditors of the Company for the Financial Year 2018-19 at a fee of Rs60000 (Rupees Sixty Thousand only) plus applicable taxes and out of pocket expensessubject to the ratification of the said fees by the shareholders at the ensuing AGM.
III. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhad appointed M/s PDS & Co. Company Secretaries ("Secretarial Auditors") toconduct the Secretarial Audit of your Company for the Financial Year 2017-18.
The Secretarial Audit Report for the Financial Year ended March 31 2018 is annexedherewith as Annexure 5 and forms an integral part of this Annual Report. The SecretarialAudit Report does not contain any qualification reservation or adverse remark.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return of the Company as on March 31 2018 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 read with the Companies (Meetings of Board and its Powers)Rules 2014 as on March 31 2018 are set out in Note 13 15B and 16 to the StandaloneFinancial Statements of the Company.
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 on the date of this report the Company does not foresee anycritical risk which threatens its existence.
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 ofsocial environmental and economic concerns in its business operations. CSR involvesoperating Company's business in a manner that meets or exceeds the ethical legalcommercial and public expectations that society has of businesses. In alignment withvision of the Company through its CSR initiatives your Company will enhance valuecreation in the society through its services conduct and initiatives so as to promotesustained growth for the society.
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 welfareand 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.
The Company conducts sessions for employees to build awareness amongst employees aboutthe Policy and the provisions of Prevention of Sexual Harassment of Women at WorkplaceAct.
During the period under review 2 (Two) complaints were received by the ICC of which 1(one) was disposed of and the other one was under review as of March 31 2018.
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.
Installed 50KW Solar Rooftop power plant system for generation of natural energysaving.
II. Foreign exchange earnings and outgo
|S. No. ||Particulars ||Amount |
| || ||(in Rs million) |
|1 ||Foreign Exchange Earnings ||115.00 |
|2 ||Foreign Exchange Outgo ||37.18 |
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 2017-18 suchcontrols were tested and no reportable material weakness in the design or operation wasobserved.
The Directors have in the Directors Responsibility Statement confirmed the same to thiseffect.
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.COMPLIANCE OF SECRETARIAL STANDARDS The Company has duly complied with SecretarialStandards issued by the Institute of Company Secretaries of India on Meetings of the Boardof Directors (SS-1) and General Meetings (SS-2).
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
| ||(Hony) Brig. Dr. Arvind Lal |
|Place: Mussoorie ||Chairman & Managing Director |
|Date: May 14 2018 ||DIN: 00576638 |