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Fortis Healthcare Ltd.

BSE: 532843 Sector: Health care
NSE: FORTIS ISIN Code: INE061F01013
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OPEN 132.60
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VOLUME 166706
52-Week high 169.00
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P/E
Mkt Cap.(Rs cr) 10,279
Buy Price 135.60
Buy Qty 170.00
Sell Price 136.15
Sell Qty 160.00
OPEN 132.60
CLOSE 134.90
VOLUME 166706
52-Week high 169.00
52-Week low 113.20
P/E
Mkt Cap.(Rs cr) 10,279
Buy Price 135.60
Buy Qty 170.00
Sell Price 136.15
Sell Qty 160.00

Fortis Healthcare Ltd. (FORTIS) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting here the Twenty FourthAnnual Report of your Company along with the Audited Standalone and Consolidated FinancialStatements and the Auditors' Report thereon for the Year ended March 31 2020.

FINANCIAL RESULTS

The highlights of Consolidated Financial Results of your Company andits Subsidiaries are as follows:

(Rs in lacs)

Consolidated

Particulars Year ended March 31 2020 Year ended March 31 2019
Continuing Operations _ _
1. Operating Income 463232 446936
2. Other Income 5264 9240
3. Total Income (1+2) 468496 456176
4. Total Expenditure (Excluding finance cost depreciation & tax expenses) 402280 424414
5. Operating Profit (EBITDA) (3-4) 66216 31762
6. Finance Charges Depreciation & Amortization 49679 56975
7. Profit/ (loss) before exceptional items and tax (5-6) 16537 (25213)
8. Exceptional items 6183 (22238)
9. Profit/ (loss) before tax (7+8) 22720 (47451)
10. Tax Expenses 14787 11361
11. Net Profit/ (loss) for the year (9-10) 7933 (58812)
12. Share in profits of associate companies 1216 36441
13. Profit/ (Loss) for the year from continuing operations (11+12) 9149 (22371)
14. Discontinuing Operations _
Profit/ (Loss) before tax from discontinuing operations - -
Tax expense of discontinuing operations - -
Profit/ (Loss) after tax and before minority interest from discontinuing operations - -
Share in profits/ (losses) of associate companies - -
Profit for the year from discontinuing operations (B) - -
15. Profit/ (loss) for the year (13+14) 9149 (22371)
Profit for the year attributable to: _
Owners of the Company 5794 (29893)
Non-controlling interests 3355 7522
Profit for the year before other comprehensive income _
16. Other comprehensive income 11 (4517)
17. Total comprehensive income (15+16) 9160 (26888)
Total comprehensive income for the year attributable to: _
Owners of the Company 5947 (34449)
Non-controlling interests 3213 7561

The highlights of financial results of your Company as a Standaloneentity are as follows:

(Rs in lacs)

Standalone

Particulars Year ended March 31 2020 Year ended March 31 2019
Continuing Operations _ _
1. Operating Income 70185 65649
2. Other Income 93834 52449
3. Total Income (1+2) 164019 118098
4. Total Expenditure (Excluding finance cost depreciation & tax expenses) 63390 78192
5. Operating Profit (EBITDA) (3-4) 100629 39906
6. Finance Charges Depreciation & Amortization 25698 21941
7. Profit before exceptional items and tax (5-6) 74931 17965
8. Exceptional items (12863) -
9. Profit before tax (7+8) 62068 17965
10. Tax Expenses 10735 5656
11. Net Profit for the year (9-10) 51333 12309
12. Share in profits of associate companies - -
13. Profit for the year from continuing operations (11+12) 51333 12309
14. Discontinuing Operations _
Profit/ (Loss) before tax from discontinuing operations - -
Tax expense of discontinuing operations - -
Profit/ (Loss) after tax and before minority interest from discontinuing operations - -
Share in profits/ (losses) of associate companies - -
Profit for the year from discontinuing operations - -
15. Profit for the year (13+14) 51333 12309
16. Other comprehensive income (12) 22
17. Total comprehensive income (15+16) 51321 12331

STATE OF COMPANY'S AFFAIR OPERATING RESULTS AND PROFITS

Fiscal2019-20 witnessed a turn around in the Company's performanceled by a significant improvement in the hospitals business of the Company whichcontributes approx. 80% to consolidated revenues. For FY2019-20 basis the ConsolidatedFinancial Results the Company's total income from continuing operations stood at Rs4685 Crore compared to Rs 4562 Crore reported for the financial year 2018-19. TheCompany's revenue from operations stood at Rs 4632 Cr compared to Rs 4469 Cr forthe financial year 2018-19 a growth of 3.6%. This was primarily as a result of 6.4%growth in the hospital business while revenues of the diagnostics business revenues weresimilar to the previous year. The EBITDA of the company stood at Rs 662 Crore compared toRs 318 Crore for the previous corresponding year. EBITDA margin improved to 14.1% inFY19-20 versus 7% reported in FY18-19. This was largely driven by the healthy marginexpansion in the hospital business due to better revenue and various cost optimizationinitiatives. In addition the hospital business saw the significant impact on performancedue to the acquisition of portfolio of assets of the RHT Health Trust which savedsubstantial clinical establishment costs for the Company. Operationally the hospitalbusiness witnessed an improved product mix with Occupancy improving from 67% to 68% whileARPOB increased from Rs 1.52 Cr to Rs 1.59 Cr. However it is also pertinent to highlightthat the operating EBITDA of the company both for the hospitals and the diagnosticsbusiness was impacted in Q4 due to impact of the COVID pandemic which became pronouncedtowards the end of March due to the nationwide lockdown. The company's profit beforetax and before exceptional items for the financial year stood at Rs 165.4 Cr compared to aloss of Rs 252.1 Cr in FY18-19. This was as a result of the better operational performanceand lower finance costs which witnessed a reduction of 39%. The company's Profit forthe year from continuing operations attributable to owners of the company (PATMI) stood atRs 57.9 Cr compared to a loss of Rs 298.9 Cr in FY18-19. This was impacted negativelyimpacted by a non-cash Deferred Tax Asset (DTA) charge in Q3 FY20 of Rs 102 Crs. TheCompany de-recognized deferred tax asset (DTA) in respect of one of its subsidiariespartially o_-set due to recognition of DTA in certain other subsidiaries; both basis theirrespective future taxable profits. In FY20 PATMI includes an exceptional gain of Rs 61.8Cr which primarily pertains to profit on sale of certain investments. In FY19 PATMIincludes share in profit of associate companies amounting to Rs 333 Cr which was onaccount of RHT Health Trust ‘s profit on divestment of assets to Fortis in January2019. It also includes exceptional loss of Rs 222 Cr which primarily pertains toimpairments related to the goodwill and of certain assets.

Your Company aspires to be the most trusted healthcare organization inIndia and is committed to deliver quality healthcare services to patients in modernfacilities using advanced technologies ably supported by a team of skilled doctors nursesand healthcare professionals. Your company's stringent medical processes andprotocols are designed to deliver superior clinical outcomes and enhance patientsatisfaction. Most of our healthcare facilities provide secondary tertiary and quaternaryhealthcare services to patients in Cardiac Care Orthopedics Neurosciences OncologyRenal Care Metabolic diseases care and mother and childcare.

During the year your Company commenced several new medical programmesand specialties across various facilities whilst strengthening the existing medicalofferings. It launched a State-of-the-art Cancer Institute at Fortis BG Road a dialysiscentre at Fortis Vasant Kunj inaugurated the department of Physiotherapy at FEHIa next generation Cath Lab and a comprehensive Mother & Child Care wing at FortisFaridabad and a day care wing at Fortis Noida. Your Company also has a number of ambitiousprojects on the anvil aimed at spurring growth and development. The company aims toconsolidate its position in Cardiac Sciences and Orthopaedics while focusing on highgrowth specialties such as Oncology Neuro Sciences Gastro Sciences and Renal Sciences toimprove margins. Furthermore the company plans to commission over 1300 new beds over thenext 5 years in existing facilities to leverage economies of scale – majority of bedadditions are planned in Noida BG Road Shalimar Bagh FMRI Mohali and Arcot Road.Further details have been captured in the Management Discussion and Analysis Section ofthe Annual report. The healthcare verticals of the Company primarily comprise day carespecialty diagnostics and tertiary and quaternary care. As of March 31 2020 the Companyhad a network of 36 healthcare facilities (including projects under development) in Indiaand abroad with approximately 4000 operational beds including beds under the O&Mmodel. In addition its Indian diagnostics business has a presence in over 600 cities andtowns with an established strength of over 400 laboratories approximately 8200 Directclients and 1400 Collection centers. There has been no change in the nature of business ofthe Company during the year under review. The Company strives to provide high qualitya_ordable treatments with an emphasis on successful clinical outcomes and a superlativepatient experience.

SIGNIFICANT MATTERS DURING THE YEAR UNDER REVIEW

Your Company undertook a comprehensive strategic review and prioritizedkey areas to drive revenues and operational performance. These include aspects related toevaluating the current portfolio of your Company's facilities and planned bedexpansion initiating cost optimization measures across the network investing intechnology and medical equipment and further strengthening its clinical excellenceprogram. Further details of this are mentioned in the Business Strategy section of theManagement Discussion and Analysis Report (‘MDA'). Further the Board has fromtime to time during the year under review updated its stakeholders about the keydevelopments that took place by disseminating necessary information to the stock exchangesand through various means of communications to the investors. Some of key activities arementioned below:

? Changed Board and Key Managerial Personnel- During theyear under review the Board of Directors and Key Managerial Personnel underwent changesdetails whereof is separately disclosed in this report.

? Open Offer- The Board had at its meeting held on July 132018 accepted the binding bid made by IHH Healthcare Berhad (IHH). Pursuant thereto yourCompany entered into subscription Agreement for issuance of 235294117 Shares at a priceof Rs 170 per share for an aggregate consideration upto Rs 4000 crore (Rupees FourThousand Crore only) to Northern TK Venture Pte Ltd ("NTK") an indirect whollyowned subsidiary of IHH. Consequently in terms of Securities and Exchange Board of India(Substantial Acquisition of Shares and Takeovers) Regulations 2011 IHH made theMandatory Open Offer for acquisition of upto 197025660 Equity Shares representingadditional 26% of the expanded voting share capital of your Company ("Fortis OpenOffer") and another Mandatory Open Offer for acquisition of up to 4894308 fullypaid up equity shares of face value of Rs 10 each representing 26% of the fully dilutedvoting equity share capital of Fortis Malar Hospitals Limited (Fortis Malar Open Offer).After the public announcement regarding Fortis Open Offer and Fortis Malar Open Offer theHon'ble Supreme Court of India had on December 14 2018 passed an order("Order") directing "status quo with regard to sale of the controllingstake in Fortis Healthcare to Malaysian IHH Healthcare Berhad be maintained". Inlight of the Order Fortis Open Offer and Fortis Malar Open Offer were put on hold untilfurther order(s)/ clarification(s)/ direction(s) issued by the Hon'ble Supreme Courtof India. Application was filed by your Company for modification of the Order and forproceeding with _ Fortis Open Offer and Fortis Malar Open Offer. Vide its judgment dated15 November 2019 ("Judgment") the Hon'ble Supreme Court issued suo-motocontempt notice to among others your Company and directed its Registry to register afresh contempt petition in regard to alleged violation of the Order ("ContemptPetition"). In this respect the Hon'ble Supreme Court sought an enquiry into:(i) Whether the subscription by NTK for the Shares of your Company was undertaken afterthe Order and accordingly if such subscription was in violation of the Order; and (ii)The consummation of acquisition of healthcare assets from RHT Health Trust by yourCompany.

Your Company has filed a reply to the show cause notice issued in thesuo-moto contempt praying inter alia that the suo-moto contempt proceedings be droppedand Order be modified/ vacated such that Fortis Open Offer and Fortis Malar Open Offer mayproceed. Since the issuance of the Judgement several parties have filed applicationsbefore the Hon'ble Supreme Court for seeking various remedies Such as (i). Aminority shareholder of your Company ("Minority Shareholder") has soughtresumption of the Fortis Open Offer; (ii) Daiichi Sankyo Co. Ltd has sought permission tobe impleaded in the Suo- Moto Contempt; (iii) Securities Exchange Board of India hassought resumption of the Fortis Open Offer citing larger public interest at stake; (iv)NTK has filed applications to intervene in the Supreme Court Proceedings to be heard andfor vacation of the Order that continues to stay the Fortis Open Offer and Fortis MalarOpen Offer. The next date in the matter is yet to be notified.

? Update on EHIRCL Litigation- During the year under review theHon'ble Supreme court of India has passed a judgement in favour of one of the whollyowned subsidiaries of your Company viz. Escort Heart Institute & Research CentreLimited (EHIRCL). Facts of the case brie_y stated is that after Delhi DevelopmentAuthority (DDA) terminated the leases executed in favour of EHIRCL with respect to itsHospital at Okhla

Delhi EHIRCL had approached the Hon'ble High Court of Delhiseeking declaration that the notice of termination is bad in law. However DDA commencedproceedings for eviction of EHIRCL under the Public Premises (Eviction of UnauthorisedOccupant) Act 1971. The said notice of commencement was challenged by EHIRCL by way ofwrit petition under Article 226 of the Constitution of India filed before the Delhi HighCourt. The writ petition was dismissed by the Single Judge of the High Court. ThereafterEHIRCL filed a Letters Patent Appeal before a two judge bench of the High Court of Delhiwhich was also dismissed. The writ petition and the appeal were filed on the premise thatthe Estate Officer has no juris dictiontoin voke proceedings under the Public Premises(Eviction of Unauthorised Occupant) Act 1971. Against the said order EHIRCL filed aSpecial Leave Petition under Article 136 of the Constitution of India. The Hon'bleSupreme Court granted leave to appeal. The matter was taken up for final hearing and postdetailed arguments the Hon'ble Court allowed the appeal and quashed the proceedingsfor eviction of EHIRCL from its Hospital premises at Okhla Delhi.

DIVIDEND AND TRANSFER TO RESERVES

The Board of Directors of your Company have not recommended anydividend for the Financial Year 2019-20. Accordingly there has been no transfer togeneral reserves.

Your Company has formulated a Policy on Dividend Distribution in termsof SEBI Circular No. SEBI/LAD-NRO/6N/2016-17/008 and the same is available on the websiteof the Company at https:/www.fortishealthcare. com/investors - Corporate Governance/Policies/ Codes/ Policy on Dividend Distribution.

MATERIAL CHANGES

There are no material changes and commitments affecting the financialposition of your Company which have occurred between the end of the Financial Year 2019-20and the date of this report.

STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITHREFERENCE TO THE FINANCIAL STATEMENTS

Statutory Auditors have in their report to the Board of Directors onthe Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3of Section 143 of the Companies Act 2013 ("The Act") made the followingQualified Opinion and are categorised as "Qualified Opinion". TheDirectors' response to the comments of the auditors is given below:

Qualified Opinion

In conjunction with our audit of the consolidated financial statementsof the Company as of and for the year ended 31 March 2020 we have audited the internalfinancial controls with reference to consolidated financial statements of FortisHealthcare Limited (hereinafter referred to as the "Company" or "HoldingCompany") and such companies incorporated in India under the Companies Act 2013which are its subsidiary companies (together referred to as "the Group") and itsjoint venture companies (jointly controlled company) as of that date. In our opinionexcept for the effects/ possible effects of the material weakness described below on theachievement of the objectives of the control criteria to the best of our information andaccording to the explanations given to us and based on the consideration of the reports ofthe other auditors referred to in the Other Matters paragraph below the Company itssubsidiary companies its associates and joint venture companies which are companiesincorporated in India have in all material respects maintained adequate internalfinancial controls with reference to consolidated financial statements and such internalfinancial controls were operating effectively as at 31 March 2020 based on the internalfinancial controls with reference to consolidated financial statements criteriaestablished by such companies considering the essential components of such internalcontrols stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India (the"Guidance Note").

We have considered the material weakness identified and reported belowin determining the nature timing and extent of audit tests applied in our audit of theConsolidated Financial Statements of the Group for the year ended 31 March 2020 and thismaterial weakness has inter alia affected our opinion on the said Consolidated FinancialStatements and we have issued a qualified opinion on the said Consolidated FinancialStatements.

Basis for Qualified Opinion

As explained in paragraph (i) of "Basis for QualifiedOpinion" paragraph of our Audit Report on the consolidated financial statements forthe year ended 31 March 2020 pursuant to certain events/transactions in earlier yearsthe erstwhile Audit and Risk Management Committee (the "ARMC") of the HoldingCompany had initiated an independent investigation by an external legal firm and specialaudits by professional firms on matters relating to systemic lapses and override ofcontrols. The report has since been submitted and is subject to limitations on theinformation available to the external legal firm and their qualifications and disclaimersas described in their Investigation report. The management has also initiated additionalprocedures/ enquiries which are ongoing of certain entities in the Group that wereimpacted in respect of the matters investigated by the external legal firm. Consequentlyan overall assessment of the impact of the additional procedures/ enquiries and/orinvestigations on the consolidated financial Statements is yet to be concluded. Furtherthe investigation by different regulatory authorities in these matters is still ongoingand an overall assessment of the impact of the investigations is yet to be concluded.Pending final outcome of the regulatory investigations and additional procedures/enquiries and/or investigations by management completeness of identification ofdefficiencies cannot be ascertained.

A ‘material weakness' is a defficiency or a combination ofdefficiencies in internal financial control over financial reporting such that there isa reasonable possibility that a material misstatement of the company's annual orinterim financial statements will not be prevented or detected on a timely basis.

Directors' response to comments of the statutory auditors in theAudit Report:

With regard to the Basis for Qualified Opinion above pertaining to theInvestigation Report it is submitted that based on the investigation carried out by theexternal legal firm SEBI Interim orders dated October 17 2018 December 21 2018 andconfirmed vide order dated March 19 2019 and the information available at this stage allidentified / required adjustments/ disclosures arising from the findings in theInvestigation Report have been made. Further the Board initiated specific improvementprojects to strengthen the process and control environment for which assessment work hasbeen done and corrective action plans have been implemented. Further various regulatoryauthorities are currently undertaking their own investigation. Any further adjustments/disclosures if required would be made in the books of account pursuant to the actionsto be taken by the Board and as and when the results of the various investigations areknown. With regard to other comments all identified adjustments/disclosures have beenmade. For more details please refer to notes 14293031 and 32 of Consolidated FinancialStatements.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES

During the year under review:

? Fortis Healthcare International Limited (FHIL) a wholly ownedsubsidiary of the Company has consummated the sale of the entire shareholding representing28.89% of the total issued and paid up capital held by FHIL in The Medical and SurgicalCentre Limited on July 8 2019.

? SRL Diagnostics FZ LLC Dubai ("SRL FZ LLC") awholly owned subsidiary of SRL Limited has closed its board controlled subsidiary namedas SRL Diagnostics Middle East LLC Dubai ("SRL Middle East") throughrequesting cancellation of licence of SRL Middle East to relevant government authoritiesthere on August 30 2019.

Further note that your Board of Directors have adopted a policy fordetermining "material subsidiary" pursuant to the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The said policy is available athttps://www.fortishealthcare.com/ investors - Corporate Governance/ Policies/Codes/ Policyfor determination of Material Subsidiary. In terms of the said policy as on April 12020 Fortis Hospitals Limited (FHsL) International Hospital Limited (IHL) FortisHospotel Limited (FHTL) and SRL Limited are considered as Material Subsidiary(ies).Necessary compliances w.r.t. material subsidiaries have been duly carried out except thatyour Company is yet to appoint an Independent Director from the Board of Fortis HealthcareLimited on the Boards of IHL and FHTL

PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIESASSOCIATES AND JOINT VENTURE COMPANIES

The consolidated financial statements of your Company and itssubsidiaries prepared in accordance with applicable accounting standards issued by theInstitute of Chartered Accountants of India forms part of the Annual Report. In terms ofthe Section 136 of the Companies Act 2013 financial statements of the subsidiarycompanies are not required to be sent to the members of the Company. Your Company willprovide a copy of separate annual accounts in respect of each of its subsidiary to anyshareholder of the Company who asks for it and said annual accounts will be available forinspection. Performance and financial position of each of Subsidiaries Associates andJoint Ventures included in the Consolidated Financial Statements of your Company isenclosed herewith as "Annexure - I" in the prescribed format (FormAOC-1). The contribution of the subsidiary/associates/joint venture companies to theoverall performance of your Company is outlined in Note No. 27 of the ConsolidatedFinancial Statements for the year ended March 31 2020.

LOANS/ADVANCES/INVESTMENTS/GUARANTEES

Particulars of Loans / Advances / Investments / guarantees given andoutstanding during the Financial Year 2019-20 are mentioned in Notes to the FinancialStatements.

PUBLIC DEPOSITS

During the year under review your Company has not invited or acceptedany deposits from the public pursuant to the provisions of Section 73 of the CompaniesAct 2013 read with the Companies (Acceptance of Deposit) Rules 2014 and therefore noamount of principal or interest was outstanding in respect of deposits from the Public asof the date of Balance Sheet.

UTILISATION OF FUNDS

The details of utilization of funds raised through preferentialallotment during the year are mentioned in Notes to Financial Statements.

AUDITORS

? Statutory Auditors

M/s B S R & Co. LLP (Registration No. 101248W/ W-100022)Chartered Accountants has been appointed as Statutory Auditors of your Company for aperiod of five years i.e. up to the conclusion of the Annual General Meeting to be held inthe year 2024.

The statutory auditors have in their report to the Board of Directorson the consolidated financial statements of the Company made the following comments whichare self –explanatory and are catagorised as "Emphasis of Matter" hence nocomments in this regard have been offered by your Board of Directors: a) Note 14(II)(i)and 14(II)(ii) relating to the outcome of the civil suit/arbitrations with regard totermination of certain land leases allotted by Delhi Development Authority (DDA) and thematter related to non-compliance with the order of the Honorable High Court of Delhi inrelation to provision of free treatment/beds to poor by Escorts Heart Institute andResearch Centre Limited (‘EHIRCL'). b) Note 14(III) regarding matter relating totermination of Hospital lease agreement of Hiranandani Healthcare Private Limited one ofthe subsidiaries in the Group by Navi Mumbai Municipal Corporation (NMMC) vide orderdated 18 January 2018.

Based on the advice given by external legal counsel the likelihood ofoutflow in the litigations in paragraph (a) and (b) above is remote and accordingly noprovision/adjustment has been considered necessary by the management with respect to theabove matters in the consolidated financial statements. c) We also draw attention to Note33 of the consolidated financial statements relating to the order dated 15 November 2019of the Hon'ble Supreme Court where it is stated that the Hon'ble Supreme Courthas issued suo-moto contempt notice to among others the Company and directed itsRegistry to register a fresh contempt petition in regard to alleged violation of its orderdated 14 December 2018. In this respect the

Hon'ble Supreme Court has sought an enquiry into (i) whether thesubscription by Northern TK Venture Pte Ltd. Singapore a wholly owned subsidiary of IHHHealthcare Berhad Malaysia to the shares of the Company was undertaken after the statusquo order was issued by the Hon'ble Court on 14 December 2018 and accordingly ifsuch subscription was in violation of this status quo order; and (ii) the consummation ofthe acquisition of healthcare assets from RHT Health Trust by the Company. As alsoexplained in the said note the management believes that it has a strong case on meritsand as per the current position of the case the liability if any arising out of thiscontingency cannot be determined at this stage. Accordingly at present no adjustment isrequired in the consolidated financial statements. d) We draw attention to Note 44 of theconsolidated financial statements which explains that due to a significant amount ofdividend received during the year from a wholly owned overseas subsidiary the‘income from financial assets' of the Company is more than 50 per cent of thegross income for the year ended 31 March 2020. Since the Company's financial assetsas at that date are also more than 50 per cent of its total assets the Company meets thecriteria for classification as a Non-Banking Financial Company (NBFC) as per press releaseby Reserve Bank of India (RBI) vide No. 1998-99/1269 dated 8-4-1999 as at 1 April 2020. Asper the Company such dividend is non-recurring in nature and does not represent incomefrom ordinary activities of the Company and the Company does not intend to carry on thebusiness as a NBFC. The Company has made a representation to the RBI in this regard. TheCompany has not received any response from RBI in this regard till date.

The statutory auditors have in their report to the Board of Directorson the consolidated financial statements of the Company made the following qualification:

Qualified Opinion

We have audited the consolidated financial statements of FortisHealthcare Limited (hereinafter referred to as the "Company" or the"Holding Company") and its subsidiaries (Holding Company and its subsidiariestogether referred to as "the Group") its associates and its joint ventureswhich comprise the consolidated balance sheet as at 31 March 2020 and the consolidatedstatement of profit and loss (including other comprehensive income) consolidatedstatement of changes in equity and consolidated statement of cash flows for the year thenended and notes to the consolidated financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the consolidated financial statements").

In our opinion and to the best of our information and according to theexplanations given to us and based on the consideration of reports of other auditors onseparate financial statements of such subsidiary and joint ventures as were audited by theother auditors and except for the effects/ possible effects if any of the mattersdescribed in the "Basis for Qualified Opinion" paragraphs of our report theaforesaid consolidated financial statements give the information required by the CompaniesAct 2013 ("Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the consolidatedstate of affairs of the Group its associates and joint ventures as at 31 March 2020 ofits consolidated profit other comprehensive income consolidated changes in equity andconsolidated cash flows for the year then ended.

Basis for Qualified Opinion

(i) As explained in Note 31 of the consolidated financial statementspursuant to certain events/transactions the erstwhile Audit and Risk Management Committee(the "ARMC") of the Company carried out an independent investigation and specialaudits by external professional firms on matters relating to systematic lapses/override ofinternal controls. As a result of investigation/ special audits the Company recordedadjustments in its books of accounts during the year ended 31 March 2018 which areexplained in Note 29 30 and 31 of the consolidated financial statements. However thereport of said investigation was subject to limitations on the information available tothe external professional firms; and their qualifications and disclaimers includingcompleteness of related party transactions which relate to or which originated prior toloss of control of erstwhile promoters/directors in the year ended 31 March 2018.

Further as explained in Note 31 and 32 of the consolidated financialstatements various regulatory authorities including Securities and Exchange Board ofIndia ("SEBI") and Serious Fraud Investigation Office ("SFIO") areundertaking their own investigations on these matters which are currently ongoing. Asexplained in Note 31(f) of the consolidated financial statements the management has alsoinitiated additional procedures/ enquiries which are ongoing of certain entities in theGroup that were impacted in respect of the matters investigated by the external legalfirm. Consequently an overall assessment of the impact of the additional procedures/enquiries and/ or investigations on the consolidated financial statements is yet to beconcluded.

Also as explained in Note 14(I) of the consolidated financialstatements a Civil Suit claiming Rs 25344 lacs was filed by a third party againstvarious entities including the Company and certain entities within the group relating to"Fortis SRL and La-Femme" brands. Based on legal advice of external legalcounsel the Management believes that the claims are without legal basis and not tenable.The matter is currently sub-judice. In view of the above we are unable to comment onfurther adjustments/ disclosures which may become necessary as a result of findingsarising out of the ongoing additional procedures/ enquiries/ investigations required ifany and outcome of civil suit on the consolidated financial statements includingcompleteness/accuracy of the related party transactions which relate to or whichoriginated prior to loss of control of erstwhile promoters/ directors in the year ended 31March 2018 the regulatory non-compliances if any and the consequential impact of theabove adjustments if any on the consolidated financial statements.

(ii) As explained in Note 34 of the consolidated financial statementsduring the year ended

31 March 2018 the Company concluded that it had paid amountaggregating to Rs 2002.39 lacs to the erstwhile Executive Chairman in excess of theamounts approved by the Central Government under Section 197 of the Companies Act 2013 ashis remuneration and other reimbursements. This is accordingly a non-compliance with theprovisions of Section 197 of the Companies Act 2013. Due to the uncertainty involved onrecoverability of the said amounts a provision for this amount has also been recorded inthe year ended 31 March 2018.

The matters stated above were subject matter of qualification in ouraudit opinion on the consolidated financial statements for the year ended 31 March 2019also.

Director's response to comments of the statutory auditors in theAudit Report:

(i) With regard to the comments of the statutory auditors in paragraph(i) of basis for qualified opinion of Audit Report pertaining to the InvestigationReport it is submitted that based on the investigation carried out by the external legalfirm SEBI Interim orders dated October 17 2018 December 21 2018 and confirmed videorder dated March 19 2019 and the information available at this stage all identified /required adjustments/ disclosures arising from the findings in the Investigation Reporthave been made. Further the Board initiated specific improvement projects to strengthenthe process and control environment for which assessment work has been done and correctiveaction plans have been implemented. Further various regulatory authorities are currentlyundertaking their own investigation. Any further adjustments/ disclosures if requiredwould be made in the books of account pursuant to the actions to be taken by the Boardand as and when the results of the various investigations are known. With regard to othercomments all identified adjustments/ disclosures have been made. For more details pleaserefer to notes 14(I) 29 30 31 and 32. (ii) With regard to the comments of the statutoryauditors in paragraph (ii) of basis for qualified opinion of Audit Report pertaining tothe amounts paid to the erstwhile Executive Chairman the Company having considered allnecessary facts has decided to treat as non est the LoA issued to the erstwhile ExecutiveChairman and is taking suitable legal measures to recover the payments made to him underthe LoA as well as all the

Company's assets in this possession. For more details pleaserefer to note 34.

The statement of impact of Audit Qualification as stipulated inregulation 33(3)(d) is placed below:

Qualifications in the Auditor's Report

The Board of Fortis Healthcare Limited has dealt with the mattersstated in the qualifications in statutory auditor's report on the ConsolidatedFinancial Statement of Fortis Healthcare Limited ("the Parent" or "theCompany") and its subsidiaries (the Parent/ Company and its subsidiaries togetherreferred to as "the Group") and its share of profit /(Loss) of its jointventures and associates for the year ended March 31 2020 ("the Consolidated AnnualFinancial Statement") included in the Statement of Consolidated Financial Statement("the Consolidated Statement") to the extent information was available withthem.

(Rs in lacs)
Sl. Particulars No.

Audited Figures (as for qualifications)

Adjusted Figures (audited figures after reported before adjusting adjusting for qualifications) $

1 Turnover / Total income 468496 Not Determinable
2 Total Expenditure 451959 Do
3 Share of profit of associates and joint ventures (net) 1216 Do
4 Exceptional gain 6183 Do
5 Tax expense 14787 Do
6 Net Profit/(Loss) 9149 Do
7 Earnings Per Share 0.77 Do
8 Total Assets 1134782 Do
9 Total Liabilities 414223 Do
10 Net Worth * 720559 Do

"$" for Qualifications i) and ii) of the Auditor'sReport. * Including non-controlling interest of Rupees 54450 lacs

Qualification i) of the Auditor's Report

1. Details of Audit Qualification:

As per audit report para (i) of basis for qualified opinion

2. Type of Audit Qualification:

Qualified Opinion

3. Frequency of qualification:

Third time

4. For Audit Qualification(s) where the impact is quanti_ed bythe auditor Management's Views:

Not Applicable

5. For Audit Qualification(s) where the impact is not quanti_edby the auditor: (i) Management's estimation on the impact of audit qualification:

Not quanti_able.

(ii) If management is unable to estimate the impact reasons for thesame:

Please refer point no (i) above of Director's response to commentsof the statutory auditors in the Audit Report.

(iii) Auditors' Comments on (i) or (ii) above:

Due to the nature of various regulatory inquiries/ investigations theconsequential impact if any cannot be ascertained. Qualification ii) of theAuditor's Report

1. Details of Audit Qualification:

As per audit report para ii) of basis for qualified opinion

2. Type of Audit Qualification :

Qualified Opinion

3. Frequency of qualification:

Third time

4. For Audit Qualification(s) where the impact is quanti_ed bythe auditor Management's Views:

Not Applicable

5. For Audit Qualification(s) where the impact is not quanti_edby the auditor:

(i) Management's estimation on the impact of audit qualification:

Not quantifiable

(ii) If management is unable to estimate the impact reasons for thesame:

Please refer point no (ii) above of Director's response tocomments of the statutory auditors in the Audit Report.

(iii) Auditors' Comments on (i) or (ii) above:

A continuing qualification from previous year as non-compliance withsection 197 of the Companies Act 2013 is pending to be regularized.

? Cost Auditor

Pursuant to Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Rules 2014 the cost audit records maintained by yourCompany in respect of its hospital activity is required to be audited. Your Directors hadon the recommendation of the Audit and Risk Management Committee appointed M/s. JitenderNavneet & Co. Cost Accountants to audit the cost accounts of your Company for theFinancial Year 2019-20 at a remuneration of 3.5 lacs (plus out of pocket expenses andtaxes). As required under the Companies Act 2013 the remuneration payable to the costauditors is required to be placed before the Members in a general meeting for rati_cation.Accordingly a resolution seeking Member's rati_cation for the remuneration payableto M/s Jitender Navneet

& Co. Cost Auditors is included in the Notice convening theensuing Annual General Meeting. Further in terms of the Companies (Accounts) Rules 2014it is confirmed that maintenance of cost records as specified by the_ Central Governmentunder sub-section (1) of Section 148 of the Companies Act_2013 is applicable on yourCompany and accordingly such accounts and records_are properly made and maintained.

? Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies

(Appointment and Remuneration of Managerial Personnel) Rules 2014your Company has appointed M/s. Sanjay Grover & Associates Practicing CompanySecretary to undertake the Secretarial Audit of your Company. Your Company has compliedwith the provisions of Secretarial Standards to the extent feasible. The SecretarialAudit Report is enclosed herewith as "Annexure - II". The adverse remarksand Management response to the same is as given below:

S. Remarks by the Auditors Management Response
1. No independent director(s) of your Company were appointed on the board of Fortis Hospotel Limited and International Hospital Limitedbothbeingunlisted material subsidiaries of your Company which is not in compliance with Regulation 24(1) of LODR. The Board is in process of i d e n t i f y i n g the candidate for the said position(s).

• Internal Auditors

Upon the recommendation of the Audit and Risk Management Committee theBoard of Directors has appointed Mr. Rajiv Puri Head Risk and Internal Audit as the ChiefInternal Auditor of your Company and authorized him to engage independent firms forconducting the internal audit for the Financial Year 2019-2020 to enable him to extendadequate coverage of internal audit checks if needed. Accordingly Ernst & Young LLPwas engaged to carry out certain aspects of Internal Audit for your Company/itssubsidiaries to augment the review of the in-house team of internal audit led by the ChiefInternal Auditor. Besides the matters mentioned in basis for qualified opinion in theAuditors Report if any as per the requirement of Companies Auditor Report Order (CARO)Rules 2016 there was no fraud reported by the above stated auditors during the yearunder review.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS

During FY 19-20 there was no significant material order passed by theRegulators/ Courts which would impact the going concern status of your Company and itsfuture operations. Updates w.r.t. on going regulatory investigations (viz. SEBI and SFIO)and other legal matters are detailed in Notes to the Financial Statements. Further yourCompany is extending all cooperation in this regard.

CAPITAL STRUCTURE/STOCK OPTION

Your Company currently manages its stock options through "EmployeeStock Option Plan 2007" and "Employee Stock Option Plan 2011"("Schemes") as approved by the shareholders. The Nomination and RemunerationCommittee of the Board of Directors of your Company inter alia administers and monitorsthe Schemes of the Company. Each option when exercised would be converted into one fullypaid up equity share of Rs 10 each of your Company. During the year under review nooption was granted by the Company. Disclosure pursuant to the Securities and ExchangeBoard of India (Share Based Employee Benefits) Regulations 2014 for the year ended March31 2020 is available at the website of the Company the website of the Company at thewebsite of the Company at https://www. fortishealthcare.com/investors - Annual Report/ESOP Disclosure 2019-20.

During the year under review under the terms of the "EmployeeStock Option Plan 2007" 3200 stock options were exercised and under the terms of"Employee Stock Option Scheme 2011" No stock options were exercised. Thecertificate from the Statutory Auditors of your Company stating that the Schemes have beenimplemented in accordance with the SEBI Regulations would be placed at the ensuing AnnualGeneral Meeting for inspection by members.

Your Company has not made any provision of money for purchase of orsubscription for its own shares or of its holding Company.

Details pertaining to shares in suspense account are specified in thereport of Corporate Governance forming part of the Board Report. Extract of Annual Returnis enclosed herewith as "Annexure – III".

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

The particulars required under Section 134(3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 regarding Conservationof Energy and Technology Absorption is given in "Annexure – IV"forming part of the Board's Report. Further details pertaining to Foreign ExchangeEarnings and Outgo is as given below: Total Foreign Exchange Earned and Used (Based onStandalone Financial Statements)

Particulars Amount
(in Rs Crore)
Foreign Exchange earned in terms of Actual Inflows 8.15
Foreign Exchange outgo in terms of Actual Outflows 4.84

Note: Earning and expenditure in foreign currency is on accrual basis.

CORPORATE SOCIAL RESPONSIBILITY - OUR JOURNEY THROUGH THE PAST YEAR

Good health is central to human happiness and well-being. It also makesan important contribution to economic progress as a healthy population lives longer andis more productive. As a responsible corporate member of the Indian healthcare ecosystemthe Company strongly believes that it can meaningfully alleviate the problem ofinequitable access to quality healthcare. By creating and supporting social sectorprogrammes linked to health and well-being we seek to leverage our skills experiencecapabilities technologies and facilities to address a critical social need for thevulnerable sections of society. Following a rigorous needs assessment we have enabledinitiatives & programmes aimed at creating social awareness and bringing about apositive change in the well being of the community in the communities.

The Company's CSR initiatives follow a ‘need based'program approach. CSR initiatives are carried out either through Fortis CSR Foundation aspecial purpose vehicle (SPV) designated to carry out CSR activities or through aTrust/NGO/Society focussed on need based programs for the community. Fortis CSR Foundation(FCSRF) is a wholly owned subsidiary of the Company and is a Company limited by sharesnot-for-profit registered under Section 8 of the Companies Act 2013. The CSR activitiesare carried out in a collaborative and inclusive manner not only to align and synergisethe social enterprise work of the group companies but also to expand the circle ofpartnerships with Government Non-Government Organisations (NGOs) other Corporates andIndividuals. The CSR initiatives of your company are in line with India's SustainableDevelopment Goal (SDG) of ‘Good health and well-being.' Working with a dedicatedteam of employees and volunteers the Foundation focuses on four programs namely:AANCHAL CHHAYA SAVERA & SEWA.

Through these programs we:

• Supported treatment of more than 1000 underprivileged childrenso far su_ering from congenital heart defects under the Umeed-Dhadkan initiative(AANCHAL).

• Facilitate access to primary medical care through charitabledispensaries outreach clinics & health camps (CHHAYA). In this program we havetreated over 5.64 lacs people through OPD Clinics & covered over 2.34 lacs peoplethrough Health Awareness camps.

• Health information dissemination to reach vulnerable sections ofthe community and provide awareness on preventive and remedial healthcare leveragingdifferent channels of communication (SAVERA). During the year under review 60 Aaganwadiworkers trained in First Aid and Basic Life Support. Provide timely medical relief topeople affected in the event of calamities/ disasters (SEWA) detailed under FortisHospotel Limited Program.

The Company and its subsidiaries supported SEWA SAVERA & CHHAYAprograms as also supported the efforts of the Government in the _ght against COVID-19.

Fortis Healthcare Limited:

In the wake of Novel Coronavirus (COVID-19) being declared a pandemicby World Health Organisation

(WHO) and its notification as a ‘Disaster' by Government ofIndia the Company's CSR fund was donated to support the Government's efforts ofmitigating the spread and impact of COVID-19. The CSR fund was contributed to PrimeMinister's National Relief Fund (PMNRF).

Fortis Malar Hospitals Limited:

The CSR fund contribution went towards supporting the Government'sefforts to mitigate the spread and impact of COVID-19. The CSR fund was contributed toPrime Minister's National Relief Fund (PMNRF).

Hiranandani Healthcare Private Limited: a) Hiranandani HealthcarePrivate Limited supported Savera Program through Fortis CSR Foundation: First-Aid andBasic Life Support training was provided to 60 Aanganwadi workers in Maharashtra. Thebeneficiaries of this program are Vikas Mahila Anganwadi workers from Omkar SadanMankund Maharashtra. The trainings have equipped the beneficiaries with the wherewithalto address emergency medical needs of the community. b) The CSR fund of this company wasalso contributed to support the efforts of the government to mitigate the spread andimpact of COVID-19. The CSR fund was contributed to Prime Minister's National ReliefFund (PMNRF).

Escorts Heart Institute and Research Centre Limited:

The CSR fund contribution went towards supporting the Government'sefforts to mitigate the spread and impact of COVID-19. The CSR fund was contributed toPrime Minister's National Relief Fund (PMNRF).

Fortis Hospotel Limited:

a) Fortis Hospotel Limited supported Fortis CSR Foundation's SEWAProgram focusing on disaster relief: India has been historically vulnerable to naturaldisasters with floods cyclones earthquakes and landslides being a recurrent phenomenon.In the event of a disaster thousands of lives are affected and livelihoods worthmillions are destroyed. SEWA is a Disaster Relief Initiative that aims to provideemergency support to people affected by disasters in an organised and time sensitivemanner. SEWA's core commitment is to support the government's efforts inproviding relief to the displaced and the affected during disasters. In July 2019 whenAssam was affected by Floods Fortis Hospotel Limited through SEWA contributed to ChiefMinisters Disaster Relief Fund Assam to support and aid rehabilitation efforts of thestate government for the flood-affected victims.

b) CSR fund was also donated to support the Government's effortsto mitigate the spread and impact of COVID-19. The CSR fund was contributed to PrimeMinister's National Relief Fund (PMNRF). Last year Fortis hospitals across thenetwork received donations of Rs 95.88 Lacs from 4506 employees towards a relief fund forfloods in Kerala. This donation which was collected by Fortis CSR Foundation wascontributed to Chief Minister's Disaster Relief Fund Kerala during FY 19-20 (overand above Section 135 contribution)

SRL Limited:

SRL Limited supported CHHAYA Program through Fortis CSR Foundation:This program is designed to provide primary and basic healthcare services to people inneed through charitable clinics located in different geographies and through HealthCamps.

(i) Charitable Dispensaries CHHAYA program provides access to medicalcare through Charitable Dispensaries and Health Camps. Under the initiative 7 charitabledispensaries and 3 outreach clinics are being run. Each dispensary is manned by aqualified MBBS doctor nurse and paramedic staff. The dispensaries provide free access toprimary healthcare services for routine ailments and are open 6 days a week to serve thecommunity. Fortis CSR Foundation has treated over 1.18 Lac people through the followingcharitable dispensaries in FY 2019-20:

1. Golden Temple Dispensary Amritsar

% All India Women Conference (AIWC)

2. Birla Mandir Dispensary New Delhi

3. Durgiana Temple Dispensary Amritsar

% Rag Pickers School Amritsar*

4. Aggarwal Dharamshala Dispensary Bhogal New Delhi

5. Ramakrishna Ashram Dispensary Dehradun

• Purukul School for Underprivileged Dehradun*

6. Anubhavi Ashram Dispensary Haridwar

7. Gurudwara Sach Khand Darbar Dispensary Udaipur (ii) Health Campsthrough NGO partners of Fortis CSR Foundation Under this initiative the Foundationcollaborates with like-minded partners to conduct health camps for economically weakersections of society.

1. Menstrual Hygiene Awareness camps & distribution of sanitary padkits: Conducted 28 awareness camps for women and adolescent girls in urban slums and ruralareas of Delhi NCR Uttarakhand Uttar Pradesh & Punjab. Covered over 11500 women andgirls through these awareness camps and distributed over 11500 sanitary pad kits to them.

2. Eye Screening camps & distribution of eye glasses: Conducted 510camps covering a total of 60766 people who were screened for vision related problems(Adults 50195 & Children 10571) in urban slums and rural areas of Delhi NCR PunjabWest Bengal & Rajasthan. 43211 spectacles (Adults 41034 & Children 2177) weredistributed through these camps.

CSRfundwasalsodonatedtosupporttheGovernment's efforts to mitigatethe spread and impact of COVID-19. The CSR fund was contributed to Prime Minister'sNational Relief Fund (PMNRF).

Particulars pursuant to Clause O of Sub-Section 3 of Section 134 of TheCompanies Act 2013 read with Rule 9 of Companies (Corporate Social Responsibility) Rules2014 is given in "Annexure V".

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors of your Company as on date of this reportcomprises nine directors of which one (1) is a Managing Director and CEO (ExecutiveDirector) and three (3) are Independent Directors. Rest of the Five

(5) directors are Non-Executive & Non-Independent Directors.Pursuant to Sections 152 of the Companies Act 2013 Mr. Shirish Moreshwar Apte is liableto retire by rotation and being eligible offers himself for re-appointment at theforthcoming Annual General Meeting of your Company. Further Dr. Chi Keon Kelvin Loh Mr.Heng Joo Joe Sim Dr. Farid Bin Mohamed Sani and Mr. Dilip Kadambi who were appointed onthe Board of your Company on September 28 2019 November 26 2019 December 30 2019 andJune 4 2020 respectively are proposed to be appointed in the forthcoming Annual GeneralMeeting. Further the following changes took place in the directorship during theFinancial Year 2019-20 and till the date of this report: a) Dr. Chi Keon Kelvin Loh Mr.Heng Joo Joe SimDr. Farid Bin Mohamed Sani and Mr. Dilip Kadambi were appointed asAdditional Directors (Non-Executive Director) of your Company on September 28 2019November 26 2019 December 30 2019 and June 42020 respectively. b) The appointment ofDr. Tan See Leng Dr. Chan Boon Kheng Mr. Low Soon Teck Mr. Chintamani Aniruddha Bhagatand Mr. Shirish Moreshwar Apte (as Non-Executive Directors) and Dr. Ashutosh Raghuvanshi(as Chief Executive Officer and Managing Director) were regularized by the members in theannual general meeting ("AGM") of your Company held on September 26 2019. c)Further Dr. Tan See Leng Dr. Chan Boon Kheng and Mr. Chintamani Aniruddha Bhagatresigned on September 27 2019 October 31 2019 and December 2 2019 respectively. Briefresume of the directors being appointed and/or proposed to be regularized at theforthcoming Annual General Meeting is separately disclosed in the Notice of the ensuingAnnual General Meeting. All Independent Directors have submitted declarations that theymeet the criteria of independence as laid down under Section 149(6) of the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Duringthe Financial Year 2019-20 six meetings were held by the Board of Directors. The detailsof board/ committee meetings and the attendance of Directors are provided in the CorporateGovernance Report.

Details of Key Managerial Personnel are as under:

Name Designation
Dr. Ashutosh Managing Director and Chief
Raghuvanshi Executive Officer
Mr. Girish Kumar Chief Financial Officer (Resigned
Gupta effective April 8 2019)
Mr. Vivek Kumar Chief Financial Officer (Appointed
Goyal w.e.f April 8 2019)
Mr. Sumit Goel Company Secretary

report on Corporate Governance forming part of this report.

1. Composition of Committee(s) of the Board of Director and otherdetails;

2. Details of establishment of Vigil Mechanism;

3. Details of remuneration paid to all the Directors including Stockoptions; and

4. Commission received by Managing Director and/ or Whole TimeDirector; if any.

BOARD EVALUATION

Pursuant to the provisions of Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board and the respectivecommittees are required to carry out performance evaluation of the Board as a body theDirectors individually Chairman as well as that of its Committees. The Board of Directorsof your Company in order to give objectivity to the evaluation process identified anindependent third party for conducting board evaluation exercise for this financial year.

The following process of evaluation was approved by the Nomination andRemuneration Committee and the Board of Directors:

S. Process No. Remarks Criteria for Evaluation (including Independent Directors)
1. Kick O_ Board Evaluation _ Program The Chairperson kick starts the process. Appointed and designated independent external agency as Process Coordinator _
2. Evaluation forms and _ One to One discussion _ Process Coordinator interacted with the Board members to assess performance invite direct feedback and seek inputs to identify opportunities for improvement. Process Coordinator circulated the feedback questionnaire to the board members and invited_ feedback from individuals after collecting the key findings one to one discussions were conducted to seek further clarity. This includes Board focus (Strategic inputs) Board Meeting Management KPI's suggestions to improve Board performance Board Effectiveness Management Engagement governance risk management and addressing of follow up requests. _ _
3. Evaluation by the Board _ and of Independent Directors _ A compilation of the individual self- assessments and one to one discussions were placed at the meetings of the Independent Director's (ID's) and the Board of Directors (BoD) for them to review collectively. This includes demonstration of integrity commitment attendance at the meetings contribution and participation professionalism contribution while developing Annual Operating Plans demonstration of roles and responsibilities review of high risk issues & grievance redressed mechanism succession planning working of Board Committees etc.
4. Final recording and _ reporting Based on the above a final report on Board Evaluation 2019-20 was presented at a meeting of the Board of Directors. NA _

MANAGERIAL REMUNERATION

Disclosures pursuant to Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are as under:

(a) Comparison and ratio of the remuneration of each director to themedian remuneration of the employees of the Company for the Financial Year 2019-20

Name of the Director Remuneration of Director (Rs Crore) Median Remuneration of Employees (Rs Crore) Ratio
Dr. Ashutosh Raghuvanshi 7.00 0.031 (Only FHL) 223 : 1

* Dr. Ashutosh Raghuvanshi joined on 18-Mar-19 and his salary for themonth of March 2019 was paid with April 19 month's salary.

(b) The percentage increase in remuneration of each director ChiefFinancial Officer Chief Executive Officer Company Secretary or Manager if any duringthe financial year under review

Name of Director/ KMP Designation *% increase in Remuneration
Dr. Ashutosh Raghuvanshi Managing Director and Chief Executive Officer N.A.
#Mr. Vivek Kumar Goyal Chief Financial Officer N.A.
Mr. Sumit Goel Company Secretary 4.50%

#Appointed w.e.f. April 8 2019

*% increase in remuneration is effective 1st April 2019.

(c) The percentage increase in the median remuneration of employees inthe financial year is 10.3% (Median remuneration increase of the employees is eligiblefor appraisal as on 1st April 2019)

(d) The number of permanent employees on the rolls of Company is 2644as on March 31 2020. (e) Average percentile increase already made in the salaries ofemployees other than the managerial personnel in the last financial year and itscomparison with the percentile increase in the managerial remuneration and justificationthereof and any exceptional circumstances for increase in the managerial remuneration

Particulars For the Financial Year 2019-20
(A) Average percentile increase already made in the salaries of employees other than the managerial personnel 6.8%
(B) Percentile increase in the managerial remuneration -
Comparison of (A) and (B) Justification - 6.8% is the companyaverage. The increment band for eligible employees was 0% to 10%.
Any exceptional circumstances for increase in the managerial remuneration NA

(f) During the financial year 2019-20 no variable pay was paid to Dr.Ashutosh Raghuvanshi MD and CEO and Mr. Vivek Kumar Goyal- Chief Financial Officer.Further Company Secretary was paid Rs 1.62 Lakh as "Exgratia" in themonth of May 2019.

(g) Remuneration paid to Directors and KMPs is as per the RemunerationPolicy of the Company. REMUNERATION POLICY

The Board has on the recommendation of the Nomination and RemunerationCommittee framed a policy for selection and appointment of Directors Senior Managementand their remuneration including criteria for determining qualifications positiveattributes independence of a Director etc. Details of Remuneration Policy and changes ifany are stated in the Corporate Governance Report.

Your Company has from time to time familiarized the Board of Directorswith the Company's operations their roles rights responsibilities in your Companynature of the industry in which your Company operates business model of your Companyetc. The same is governed by a template viz Board of Directors Governance Standard and itis available on the website of the Company at https://www.fortishealthcare.com/ investors- Corporate Governance/ Policies/Codes/ Board Governance Document.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of employees of your Company will be provided upon request. In terms of Section136 of the Companies Act 2013 the Report and Accounts are being sent to the Members andothers entitled thereto excluding the information on employees' particulars which isavailable for inspection by the Members.

RELATED PARTY TRANSACTIONS

Disclosures as required under Section 134(3)(h) read with Rule 8(2) ofthe Companies (Accounts) Rules 2014 are given in "Annexure - VI" inForm AOC- 2 as specified under the Companies Act 2013. The Related Party Transactions areplaced before the Audit and Risk Management Committee for approval as required under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. Prior omnibusapproval of the Audit and Risk Management Committee is obtained for the transactions whichare of a foreseeable and repetitive nature. The transactions entered into pursuant to theomnibus approval so granted are audited and a statement giving details of all relatedparty transactions is placed before the Audit and Risk Management Committee for theirreview on a quarterly basis. Your Company has developed a Related Party TransactionsFramework and Standard Operating Procedures for the purpose of identification andmonitoring of such transactions.

The policy on Related Party Transactions as approved by the Board isuploaded on the Company's website at https://www.fortishealthcare.com/investors -Corporate Governance/ Policies/Codes/ Policy on Related Party Transactions. None of thecurrent Directors has any pecuniary relationship or transaction vis--vis your Companyexcept to the extent of sitting fees and remuneration approved by the Board of Directorsand/or shareholders of your Company and as disclosed in this Annual Report.

RISK MANAGEMENT POLICY

Your Company has designed a risk management policy and framework forrisk identification assessment mitigation plan development and monitoring of action tomitigate the risks. The key objective of the ERM policy is to provide a formalizedframework to enable judicious allocation of resources on the critical areas which canadversely impact your Company's ability to achieve its objectives. _The policy isapplicable to the Company and its subsidiaries. This framework enables the management todevelop and sustain a risk-conscious culture wherein there is a high degree oforganization-wide awareness and understanding of external and internal risks associatedwith the business. The policy defines an architecture and oversight structure to assisteffective implementation. By clearly defining terms and outlining roles andresponsibilities ERM promotes risk ownership accountability self-assessment andcontinuous improvement to minimize adverse impact on achievement of business objectivesand enhance your Company's competitive advantage. The details thereof are coveredunder the Management and Discussion Analysis Report which forms part of the Annual Report.

POLICY FOR PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT

Your Company has adopted a Policy for Prevention Prohibition andRedressal of Sexual Harassment. As per the requirement of the Sexual Harassment of Womenat Workplace (Prevention Prohibition & Redressal) Act 2013 and Rules madethereunder your Company has constituted Internal Complaints Committees (ICC). During theFinancial Year 2019-20 your Company has received 10 complaints on sexual harassment and 9complaints have been resolved with appropriate action taken and 1 complaint was pending ason March 31 2020. The same may also be read in terms of Companies (Accounts) Rules 2014.

DISCLOSURE REQUIREMENTS

As per SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Corporate Governance Report with Auditors' certificate thereon andManagement Discussion and Analysis Report are attached which form part of this report.

CODE OF CONDUCT

Declaration by Dr. Ashutosh Raghuvanshi Managing Director and ChiefExecutive Officer confirming compliance with the ‘Fortis Code of Conduct' isenclosed with Corporate Governance Report.

CERTIFICATE BY STATUTORY AUDITORS FOR DOWNSTREAM INVESTMENT

A certificate from the Statutory Auditors of your Company stating thatyour Company has duly complied with the requirements of downstream investment made by yourCompany to second level entities in accordance with Foreign Exchange Management (Transferor Issue of Security by a Person Resident Outside India) Regulations 2017 would beavailable at the Annual General Meeting for inspection by members.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Section 134(3)(c) of the Companies Act 2013: (a) in thepreparation of the Annual Accounts the applicable accounting standards have been followedalong with proper explanations relating to material departures therefrom; (b) we haveassessed the selection and application of accounting policies for their consistentapplication and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of the affairs of your Company at the end of thefinancial year and of the profit of your Company for the Financial Year ended March 312020;

(c) except for the findings of the Investigation Report includingmatters on internal control described in Note 31 in the Notes to the ConsolidatedFinancial Statements and Note 29 in the notes to the Standalone Financial Statements andour inability at this juncture to make a determination on whether a fraud has occurred onyour Company considering the limitations on the information available to Luthra and theirqualifications and disclaimers as described in their investigation report proper andsufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of your Company andfor preventing and detecting fraud and other irregularities; (d) the Statements have beenprepared on a going concern basis for the reasons stated in Note 42 in the Notes to theConsolidated Financial Statements and Note 33 in the notes to the Standalone FinancialStatements; (e) except for certain systemic and control lapses identified in theInvestigation Report as described in Notes 31 in the Notes to the Consolidated FinancialStatements and Note 29 in the Notes to the Standalone Financial Statements properinternal financial controls have been laid down and that such internal financial controlsare adequate and are operating effectively; and (f) except for the matters on relatedparties and managerial remuneration described in Note 31 (e) and 34 in the Notes to theConsolidated Financial Statements and Note 29 (e) and 32 in the notes to the StandaloneFinancial Statements and certain systemic and control lapses as detailed in Note 31 inthe Notes to the Consolidated Financial Statements and in Note 29 in the Notes to theStandalone Financial Statements there are proper systems in place to ensure compliancewith the provisions of all applicable laws and that such systems are adequate andoperating effectively.

ACKNOWLEDGEMENT

Your Directors place on record their gratitude to the CentralGovernment State Governments and all other Government agencies for the assistanceco-operation and encouragement they have extended to your Company.

Your Directors also take this opportunity to extend a special thanks tothe medical fraternity and patients for their continued cooperation patronage and trustreposed in your Company. Your Directors also greatly appreciate the commitment anddedication of all the employees at all levels that has contributed to the growth andsuccess of your Company. Your Directors also thank all the strategic partners businessassociates Banks financial institutions and our shareholders for their assistanceco-operation and encouragement to your Company during the year.

By Order of the Board of Directors

For Fortis Healthcare Limited

Sd/- Sd/-
Ashutosh Raghuvanshi Indrajit Banerjee
MD & CEO Independent Director
DIN: 02775637 DIN: 01365405
Date: June 17 2020 Date: June 17 2020
Place: Gurugram Place: Delhi

.