Your Directors have pleasure in presenting here the Twenty Fifth Annual Report of theCompany along with the Audited Standalone and Consolidated Financial Statements and theAuditors' Report thereon for the Year ended March 31 2021.
The highlights of Consolidated Financial Results of your Company are as follows:
|Particulars ||Consolidated || |
| ||Year ended March 31 2021 ||Year ended March 31 2020 |
|Continuing Operations || || |
|1 Operating Income ||403012 ||463232 |
|2 Other Income ||4656 ||5264 |
|3 Total Income (1+2) ||407668 ||468496 |
|4 Total Expenditure (Excluding finance cost depreciation & tax expenses) ||362568 ||402280 |
|5 Operating Profit (EBITDA) (3-4) ||45100 ||66216 |
|6 Finance Charges Depreciation & Amortisation ||45648 ||49679 |
|7 Profit/ (loss) before share of profit of equity accounted investees exceptional items and tax (5-6) ||(548) ||16537 |
|8 Share in profits of associate companies ||4756 ||1216 |
|9 Profit/ (loss) before exceptional items and tax (7+8) ||4208 ||17753 |
|10 Exceptional items ||121 ||6183 |
|11 Profit/ (loss) before tax (9+10) ||4329 ||23936 |
|12 Tax Expenses ||9946 ||14787 |
|13 Profit/ (Loss) for the year from continuing operations (11-12) ||(5617) ||9149 |
|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) ||(5617) ||9149 |
|Profit for the year attributable to: || || |
|Owners of the Company ||(10976) ||5794 |
|Non-controlling interests ||5359 ||3355 |
|Profit for the year before other comprehensive income || || |
|16 Other comprehensive income ||1034 ||11 |
|17 Total comprehensive income (15+16) ||(4583) ||9160 |
|Total comprehensive income for the year attributable to: || || |
|Owners of the Company ||(9974) ||5947 |
|Non-controlling interests ||5391 ||3213 |
The highlights of financial results of your Company as a Standalone entity are asfollows:
|Particulars ||Standalone || |
| ||Year ended March 31 2021 ||Year ended March 31 2020 |
|Continuing Operations || || |
|1. Operating Income ||63287 ||70185 |
|2. Other Income ||19198 ||93834 |
|3. Total Income (1+2) ||82485 ||164019 |
|4. Total Expenditure (Excluding finance cost depreciation & tax expenses) ||60495 ||63390 |
|5. Operating Profit (EBITDA) (3-4) ||21990 ||100629 |
|6. Finance Charges Depreciation & Amortisation ||25223 ||25698 |
|7. Profit before exceptional items and tax (5-6) ||(3233) ||74931 |
|8. Exceptional items ||5646 ||(12863) |
|9. Profit before tax (7+8) ||2413 ||62068 |
|10. Tax Expenses ||1993 ||10735 |
|11. Net Profit for the year (9-10) ||420 ||51333 |
|12. Share in profits of associate companies ||- ||- |
|13. Profit for the year from continuing operations (11+12) ||420 ||51333 |
|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) ||420 ||51333 |
|16. Other comprehensive income ||86 ||(12) |
|17. Total comprehensive income (15+16) ||506 ||51321 |
STATE OF COMPANY'S AFFAIR OPERATING RESULTS AND PROFITS
Fiscal 2020-21 was a challenging year for the healthcare sector due to COVID-19pandemic. The pandemic created a huge strain on the sector's workforce infrastructureand supply chain. Fortis also witnessed these challenges and had to re-prioritise its keystrategic areas earmarked for the year to focus on the management of the COVID crisis. TheCompany's performance in both of its hospital and diagnostics businesses was significantlyimpacted during the first two quarters of the year due to country-wide lockdown in Apriland May 2020. However the two businesses witnessed recovery during the latter half of theyear. The Company was also successfully able to navigate the challenges by ensuringsustainability
and continuity of business operations and maintaining a comfortable liquidity positionthrough the year.
For the FY 2020-2021 the Company reported a consolidated revenue from operations of '4030 Crores compared to ' 4632 Crores reported for FY 2019-20. Revenue from Hospitalbusiness stood at ' 3124 Crores compared to ' 3753 Crores reported during thecorresponding year. SRL Limited the diagnostic business of the company reported grossrevenues of ' 1035 Crores compared to ' 1016 Crores in the previous financial year. Thediagnostics business witnessed a healthy trend during H2 FY 2020-21 as the non-COVIDbusiness saw a significant recovery and also due to increase in demand for COVID and COVIDrelated tests. Considering elimination of inter-company revenue (within the group) netrevenue of
SRL Ltd was at ' 906 Crores compared to ' 879 Crores in FY 2019- 20.
The consolidated EBITDA of the Company stood at ' 451 Crores compared to ' 662 Croresfor the previous corresponding year. EBITDA margin of the Company stood at 11.2% in FY2020-21 versus 14.3% reported in FY 2019-20.
Hospital business EBITDA for FY 2020-21 was at ' 281 Crores compared to ' 476 Croresreported for FY 2019-20. EBITDA margin of the hospital business stood at 9.0% in FY2020-21 versus 12.7% in FY 2019-20.
The diagnostic business of the Company reported EBITDA of ' 200 Crores compared to '197 Crores reported in the previous corresponding year. EBITDA margin of the diagnosticbusiness stood at 19.3% (basis gross revenue) for the year FY 2020- 21 compared to 19.4%in FY 2019-20.
The consolidated EBITDA for the Company at ' 451 Crores in FY 2020-21 also accounts forthe operational and finance / forex costs related to certain non-operational internationalentities.
At the consolidated level the Company reported Profit Before Tax before andexceptional items of ' 42 Crores versus ' 178 Crores in the previous FY 2019-20. Profitafter tax for FY 202021 stood at a loss of ' 56 Crores compared to a profit of ' 91 Croresin the previous financial year.
The Company has a comfortable liquidity position with net debt of ' 849 Crores as onMarch 31 2021 versus ' 1004 Crores as of March 31 2020 (net debt to equity of 0.13x vs0.14x respectively). Gross debt of the Company stood at ' 1271 Crores as on March 312021 versus ' 1354 Crores as of March 31 2020. The Company's Net Debt / EBITDA(annualised) stood at healthy 1.04x in Q4 FY 2020-21 down from 1.52x in FY 2019-20.
All decisions at your Company are taken with the patient at the center. In line withits objective of becoming the most trusted healthcare provider in India your Companymakes efforts to consistently improve the quality of all its services. Your Company hasput together a winning combination of ultra-modern healthcare facilities equipped withbest-in-class diagnostic and therapeutic technology and a competent team comprising ofsome of the finest clinical and paramedical talent available in the country. Allfacilities owned and operated by your Company follow globally accepted medical protocolsand procedures and are focused on delivering the best possible clinical outcomes. YourCompany's healthcare facilities provide high standards of secondary tertiary andquaternary healthcare services in the specialties of Cardiac Sciences OrthopaedicsNeurosciences Oncology Sciences Renal Sciences Gastro Sciences and Mother and Childcare.
During the course of FY 2020-21 your Company launched several new medical programmesand clinical services at its various facilities across the country. A Home IsolationSupport Programme for COVID -19 positive patients was launched by Forits Memorial ResearchInstitute (FMRI) Gurugram Fortis Anandapur Kolkata launched the city's only Dual SourceDual Energy Somatom Drive CT scanner which is 24 times faster than any other CT scanmachine. Fortis Hospital Mulund introduced Central Mumbai's first Tesla AdvancedBiomatrix MRI to ramp up the Radiology offerings. Fortis Hospital BG Road Bengaluruinstalled the first state of the art Biplane Cath lab in the state of Karnataka which willprovide advanced care for neurovascular disorders.
Your Company plans to launch a number of new projects aimed to fulfil the growingdemand. The Company aims to further consolidate its position in Cardiac Sciences andOrthopaedics while focusing on high growth specialties such as Oncology Neuro SciencesGastro Sciences and Renal Sciences. Furthermore the Company plans to commission over1300 new beds over the next 3 to 4 years in existing facilities to leverage economies ofscale - majority of bed additions are planned in Noida BG Road Anandapur MulundShalimar Bagh FMRI Mohali and Arcot Road.
The healthcare verticals of the Company primarily comprise day care specialtydiagnostics and tertiary and quaternary care. As of March 31 2021 the Company had anetwork of 27 healthcare facilities in India with approximately 4100 operational bedsincluding beds under the O&M model.
In addition its Indian diagnostics business has a presence in over 600 cities andtowns with an established strength of over 425 laboratories 20+ radiology / imagingcenters; 48+ Accreditations (NABL/NABH/CAP) and a footprint spanning 2250+ customer touchpoints.
There has been no change in the nature of business of the Company during the year underreview. The Company endeavors to provide high quality healthcare services with an emphasison successful clinical outcomes and a superlative patient experience.
SIGNIFICANT MATTERS DURING THE YEAR UNDER REVIEW
The Company undertook a comprehensive strategic review and prioritised key areas todrive revenues and operational performance. These include aspects related to evaluatingthe current portfolio of the Company's facilities and planned bed expansion initiatingcost optimisation measures across the network investing in technology and medicalequipment and further strengthening its clinical excellence program. Further details ofthis are mentioned in the Business Strategy section of the Management Discussion andAnalysis Report ('MDA'). Further the Board has from time to time during the year underreview updated its stakeholders about the key developments that took place bydisseminating necessary information to the stock exchanges and through various means ofcommunications to the investors. Some of key activities are mentioned below:
Changed Board and Key Managerial Personnel-
During the year under review the Board of Directors and Key Managerial Personnelunderwent changes details whereof are separately disclosed in this report.
Open Offer- The Board had at its meeting held on July 13 2018 accepted thebinding bid made by IHH Healthcare Berhad (IHH). Pursuant thereto your Company enteredinto subscription Agreement dated July 13 2018 for issuance of 2352941 17 Shares at aprice of ' 170 per share for an aggregate consideration upto ' 4000 Crores (Rupees FourThousand Crores only) to Northern TK Venture Pte Limited ("NTK") an indirectwholly owned subsidiary of IHH. Consequently after obtaining regulatory and statutoryapprovals such as from Securities and Exchange Board of India Competition Commission ofIndia and in terms of Securities and Exchange Board of India (Substantial Acquisition ofShares and Takeovers) Regulations 2011 IHH made the Mandatory Open Offer for acquisitionof upto 197025660 Equity Shares representing additional 26% of the expanded voting sharecapital of your Company ("Fortis Open Offer") and another Mandatory Open Offerfor acquisition of up to 4894308 fully paid up equity shares of face value of ' 10 eachrepresenting 26% of the fully diluted voting equity share capital of Fortis MalarHospitals Limited ("Fortis Malar Open Offer").
After the Preferential Allotment on November 13 2018 public announcement was made onDecember 7 2018 regarding Fortis Open Offer and Fortis Malar Open Offer thereafter 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 Court ofIndia. 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 dated November 15 2019 ("Judgment") theHon'ble Supreme Court issued suo-moto contempt notice to among others your Company anddirected its Registry to register a fresh contempt petition in regard to alleged violationof the Order ("Contempt Petition"). In this respect the Hon'ble Supreme Courtsought 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.
The Company has filed a reply to the show cause notice issued in the suo-moto contemptpraying inter alia that the suo-moto contempt proceedings be dropped and Order bemodified / vacated such that Fortis Open Offer and Fortis Malar Open Offer may proceed.Since the issuance of the Judgement several other parties have filed applications beforethe Hon'ble Supreme Court for seeking various remedies including (i) A minorityshareholder of your Company ("Minority Shareholder") has sought resumption ofthe Fortis Open Offer; (ii) Daiichi Sankyo Co. Ltd has sought permission to be impleadedin the Suo- Moto Contempt; (iii) Securities and Exchange Board of India has soughtresumption of the Fortis Open Offer citing larger public interest at stake; (iv) NTK hasfiled applications to intervene in the Supreme Court Proceedings to be heard and forvacation of the Order that continues to stay the Fortis Open Offer and Fortis Malar OpenOffer. On August 14 2020 an application has been submitted before the Hon'ble SupremeCourt of India seeking permission for change of name brand and logo of your Company andits subsidiaries. The matter is sub-judice.
Other Matters: The Company's Board of Directors initiated additional procedures/enquiries of certain entities in the Group that were impacted in respect of the mattersinvestigated by an appointed external legal firm. Pending completion of the additionalprocedures / enquiries ("Additional Procedures / Enquiries") and since theearlier investigation was subject to the limitations on the information available to theother external legal firm (being subject to their qualifications and disclaimers asdescribed in their investigation report as disclosed in the audited financial statementsfor the years ended March 31 2018 March 31 2019
ANNUM REPORT 7070021 87
and March 31 2020) certain audit qualifications were made in respect of FHL'sfinancial statements for those financial years as the statutory auditors were unable tocomment on the nature of those matters the provisions established thereof or any furtherpotential impact on the financial statements. In order to resolve the same the Boardmandated the management to undertake review of certain areas in relation to historicaltransactions for the period April 12014 to September 30 2018 involving additionalverification by engaging independent experts with specialised forensic skills to assistwith the Additional Procedures/Enquiries and conduct data gathering exercise in connectiontherewith. The independent experts submitted their report which was discussed andconsidered by the Board in its meeting held on September 16 2020.
The Board noted that the Additional Procedures / Enquiries prima facie revealedfurther instances of payments made to the erstwhile promoters or to their directly orindirectly related parties including erstwhile promoter group entities which werepotentially improper. All of the amounts identified in the Additional Procedures /Enquiries had been previously provided for or expensed in the financial statements of FHLor its subsidiaries with full disclosures. There are no further improper transactionsidentified by the Additional Procedures / Enquiries or / by the management which had notbeen expensed or provided. In connection with the potentially improper transactions yourCompany has undertaken a detailed review of each case to assess the Company's legal rightsand has initiated appropriate legal action. Complaint has been filed with the EconomicOffences Wing ("EOW") in November 2020 against erstwhile promoters / erstwhilepromoters group company in respect of certain transactions which is being investigated.
DIVIDEND AND TRANSFER TO RESERVES
The Board of Directors of the Company have not recommended any dividend for the FY2020-21. Accordingly there has been no transfer to general reserves and the Company wouldlike to retain its profit this year to strengthen its business.
Refer the Company's policy on Dividend Distribution available on the website of theCompany at https:/www. fortishealthcare.com/investors - Corporate Governance / Policies /Codes / Policy on Dividend Distribution.
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the FY 2020-21 and the date of this report.
STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS
Statutory Auditors in their report to the Board of Directors on the Internal FinancialControls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of theCompanies Act 2013 ("The Act") have given the opinion that the Company and suchcompanies incorporated in India which are its subsidiary companies and joint venturecompanies (jointly controlled company) have in all material respects adequate internalfinancial controls with reference to consolidated financial statements and the financialstatements of the Company and such internal financial controls were operating effectivelyas at March 31 2021 based on the internal financial controls with reference toconsolidated financial statements and the financial statements of the Company criteriaestablished considering the essential components of such internal controls stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India. The Auditor's opinion on adequacy andoperating effectiveness of internal control is self-explanatory.
DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES
During the year under review there has been no change in the subsidiaries / jointventure and associate Companies.
Further note that your Board of Directors have adopted a policy for determining"material subsidiary" pursuant to the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The said policy is available at https://www.fortishealthcare.com/investors - Corporate Governance / Policies / Codes / Policy fordetermination of Material Subsidiary.
In terms of the said policy as on April 12021 Fortis Hospitals Limited (FHsL)International Hospital Limited (IHL) Fortis Hospotel Limited (FHTL) and SRL Limited areconsidered as Material Subsidiary(ies). Necessary compliances w.r.t. material subsidiarieshave been duly carried out.
Further during the year under review a material subsidiary of the Company i.e. SRLLimited ("SRL") executed SRL PE amendment agreement dated March 30 2021 toamend the terms of the existing Shareholder Agreement dated June 12 2012 between SRLLimited and International Finance Corporation Nylim Jacob Ballas India Fund III LLCResurgence PE Investments Limited (collectively referred as "PE Investors") andFortis Healthcare Limited for incorporating new exit rights of the PE Investors.Simultaneously to align with the amendment the Exit Agreement dated June 12 2012executed amongst Fortis Healthcare Limited SRL and the PE Investors was terminated. Postclosure of the year under review a material subsidiary of the Company i.e. SRL acquiredbalance 50% stake in joint venture DDRC SRL Diagnostics Private Limited ('DDRC SRL') interms of Share Purchase Agreement dated March 24 2021 and thereby DDRC SRL became astep-down subsidiary of the Company effective April 5 2021.
PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES AND JOINTVENTURE COMPANIES
The consolidated financial statements of your Company and its subsidiaries prepared inaccordance with applicable accounting standards issued by the Institute of CharteredAccountants of India forms part of the Annual Report. In terms of the Section 136 of theCompanies Act 2013 financial statements of the subsidiary companies are not required tobe sent to the members of the Company. Your Company will provide a copy of separate annualaccounts in respect of each of its subsidiary to any shareholder of the Company who asksfor it and said annual accounts will be available for inspection. Performance andfinancial position of each of Subsidiaries Associates and Joint Ventures included in theConsolidated Financial Statements of your Company is enclosed herewith as "Annexure -I" in the prescribed format (Form AOC-1).
The contribution of the subsidiary/associates/joint venture companies to the overallperformance of your Company is outlined in Note No. 27 of the Consolidated FinancialStatements for the year ended March 31 2021.
LOANS / ADVANCES / INVESTMENTS / GUARANTEES
Particulars of Loans / Advances / Investments / guarantees given and outstanding duringthe FY 2020-21 forms part of the Notes to the Financial Statements.
During the financial year under review the Company has not invited or accepted anydeposits from the public pursuant to the provisions of Section 73 of the Companies Act2013 read with the Companies (Acceptance of Deposit) Rules 2014 and therefore no amountof principal or interest was outstanding in respect of deposits from the Public as of thedate of Balance Sheet.
UTILISATION OF FUNDS
The details of utilisation of funds raised through preferential allotment during theyear are mentioned in Notes to Financial Statements.
M/s B SR & Co. LLP (Registration No. 101248W/W- 100022) Chartered Accountantswere appointed as Statutory Auditors of your Company for a period of five years i.e. up tothe conclusion of the Annual General Meeting to be held in the year 2024.
The statutory auditors have in their report to the Board of Directors on theconsolidated financial statements of the Company made the following comments which areself-explanatory and are categorised as "Emphasis of Matter" hence no commentsin this regard have been offered by your Board of Directors: a) Note 28 and Note 29 of theconsolidated financial statements which deal with various matters including the ongoinginvestigation by Serious Fraud Investigation Office ("SFIO") and ongoingadjudication proceedings by Securities and Exchange Board of India ("SEBI") onFortis Healthcare Limited (hereinafter referred to as "the Company" or the"Holding Company") and its subsidiaries (Holding Company and its subsidiariestogether referred to as "the Group") regarding alleged improper transactions andnon-compliances with laws and regulations including Companies Act 2013 (including mattersrelating to remuneration paid to managerial personnel) and SEBI laws and regulations.These transactions and non-compliances relate to or originated prior to take over ofcontrol by present board of directors in the year ended 31 March 2018. As mentioned in thenote the Group has been submitting information required by SFIO and has responded to theSEBI notice and is also cooperating in the regulatory investigations/ proceedings.
As explained in the said note the Group had recorded significant adjustments/provisions in its books of account during the year ended March 31 2018. The Company haslaunched legal proceedings
and has also filed a complaint with the Economic Offences Wing ('EOW') againsterstwhile promoters and their related entities based on the findings of the investigationconducted by the Group. Further based on management's detailed analysis and consultationwith external legal counsel a further provision has been made and recognised in thecurrent year for any contingency that may arise from the aforesaid issues. As per themanagement any further impact to the extent it can be reliably estimated as at presentis not expected to be material.
b) Note 30 of the consolidated financial statements relating to the order dated 15November 2019 of the Hon'ble Supreme Court where it is stated that the Hon'ble SupremeCourt has 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 December 14 2018. In this respect the Hon'ble Supreme Court has sought an enquiryinto (i) whether the subscription by Northern TK Venture Pte Ltd. Singapore a whollyowned subsidiary of IHH Healthcare Berhad Malaysia to the shares of the Company wasundertaken after the status quo order was issued by the Hon'ble Court on December 14 2018and accordingly if such subscription was in violation of this status quo order; and (ii)the consummation of the acquisition of healthcare assets from RHT Health Trust by theCompany. As also explained in the said note the management believes that it has a strongcase on merits and as per the current position of the case the liability if any arisingout of this contingency cannot be determined at this stage. Accordingly at present noadjustment is required in the consolidated financial statements.
c) As explained in Note 14(I) of the consolidated financial statements a Civil Suitclaiming ' 25344 lacs was filed by a third party against various entities including theCompany and certain entities within the Group relating to "Fortis SRL andLa-Femme" brands. Based on legal advice of external legal counsel the Managementbelieves that the claims are without legal basis and not tenable. Further as mentioned inNote 30 of the consolidated financial statements the tenure of brand license agreemententered by the Company has expired and the Company has filed an application before theHon'ble Supreme Court of India seeking permission for change of company name brand andlogo. The matter is currently sub-judice.
d) Note 14(II)(i) and 14(II)(iii) of the consolidated financial statements relating tothe outcome of civil suit with regard to termination of certain land leases allotted byDelhi Development Authority (DDA) and the matter related to non-compliance with the orderof the Hon'ble High Court of Delhi in relation to provision of free treatment/ beds topoor by EHIRCL. Based on the advice given by external legal counsel no provision /adjustment has been considered necessary by the management with respect to the abovematters in these consolidated financial statements considering the uncertainty relatingto the outcome of these matters.
e) Note 14(111) of the consolidated financial statements which describes in detail thematter relating to the termination of hospital lease agreement by Navi Mumbai MunicipalCorporation vide order dated January 18 2017 of Hiranandani Healthcare Private Limited("HHPL") one of the subsidiaries in the Group. HHPL has filed a Writ Petitionbefore the Hon'ble Supreme Court of India challenging the Termination Order which ispending hearing and disposal. Based on the opinion obtained from the legal counsel themanagement is confident that HHPL will be able to successfully defend the terminationorder. However due to uncertainties involved the ultimate outcome will be ascertained ondisposal of the said petition.
f) Note 37 of the consolidated financial statements which describes the economic andsocial consequences the Group is facing as a result of COVID-19 which is impacting supplychains / demand / personnel available for work and or being able to access of offices/hospitals.
The statutory auditors have in their report to Board of Directors on the consolidatedfinancial statements of the Company given a qualified opinion as follows: Qualifiedopinion
We have audited the consolidated financial statements of Fortis Healthcare Limited(hereinafter referred to as "the Company" or the "Holding Company")and its subsidiaries (Holding Company and its subsidiaries together referred to as"the Group") its associates and its joint ventures which comprise theconsolidated balance sheet as at March 31 2021 and the consolidated statement of profitand loss (including other comprehensive income) consolidated statement of changes inequity and consolidated statement of cash flows for the year then ended and notes to theconsolidated financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "the consolidatedfinancial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of reports of other auditors on separatefinancial statements of such subsidiary and joint ventures as were audited by the otherauditors and except for the possible effects if any of the matter described in the"Basis for Qualified Opinion" paragraph of our report the aforesaidconsolidated financial statements give the information required by the Companies Act 2013("the 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 March 31 2021 ofits consolidated loss other comprehensive income consolidated changes in equity andconsolidated cash flows for the year then ended.
Basis for Qualified Opinion
We draw attention to Note 40 of the consolidated financial statements which explainsthat due to a significant amount of dividend received during the previous year ended March31 2020 from a wholly owned overseas subsidiary the 'income from financial assets' ofthe Company was more than 50 percent of the gross income for the year then ended. Furtherin view of the investments in subsidiaries and financing provided to them the Company'sfinancial assets as at that date are also more than 50 percent of its total assets.Consequently the Company technically meets the "principal business test"criteria for classification as a Non-Banking Financial Company (NBFC) as per press releaseby Reserve Bank of India (RBI) vide No. 1998-99/1269 dated April 08 1999 as at April 012020 and is required to obtain a certificate of registration as a NBFC. As per theCompany such dividend is non-recurring in nature and does not represent income fromordinary activities of the Company and the Company does not intend to carry on thebusiness as a NBFC. Accordingly the Company vide its letter dated November 08 2019 hadmade a representation to the RBI that keeping in view the objective behind the principalbusiness test criteria its registration as a NBFC should not be required. Subsequent tothe completion of audit of the standalone financial statements of the Company for the yearended March 31 2020 we as statutory auditors have also intimated the RBI regarding theCompany technically meeting the Principal Business Test and regarding the above referredrepresentation by the Company to the RBI which inter alia stated that the Company isprimarily engaged in the healthcare business and that the Company has represented to theRBI that it does not presently or in future intend to undertake the business ofnon-banking financial institution. Further in September 2020 the Company has writtenanother letter to RBI with a request to confirm that no such registration as a NBFC isrequired. RBI advised the Company to submit to it the financial results for the quartersended June 30 2020 September 30 2020 and December 31 2020 which were duly submitted bythe Company.
Pending resolution of the matter with RBI we are unable to comment on the impactthereof if any on the consolidated financial statements for the year ended March 312021.
Director's response to comments of the statutory auditors in the Audit Report:
With regard to the comments of the statutory auditors in paragraph basis for qualifiedopinion of Audit Report pertaining to NBFC registration it has been explained in Note 40of the consolidated financial statements as per the RBI's 'Master Direction- Non-BankingFinancial Companies Auditor's Report (Reserve Bank) Directions 2016' on the issue ofNBFC registration the statutory auditor is to examine whether the company has obtained aCertificate of Registration from the RBI when the "company is engaged in the businessof nonbanking financial institution as defined in section 45-I(a) of the RBI Act andmeeting the Principal Business Criteria (Financial Asset/ income pattern)". TheCompany has in Note 40 of the consolidated financial statements clarified that while ittechnically would meet the Principal Business Test due to this significant dividend onaccount of the one-off transaction it does not and does not intend to carry on thebusiness as 'non-banking financial institution'. The Board has also noted and confirmed byway of a board resolution that the significant dividend received during the previous yearended March 312020 does not represent income from ordinary activities of the Company andthat the Company does not intend to carry on the business as an NBFC. In this backdropthe requirement for registration as a 'non-banking financial institution' should notarise.
The Company also has made a representation to the RBI in November 2019 i.e. more thana year ago that while the Company technically would meet the Principal Business Test dueto this significant dividend on account of the one- off transaction it does not and doesnot intend to carry on the business as an NBFC and hence keeping in view the objectivebehind the test its registration as a NBFC should not be required. Subsequent to thecompletion of audit of the financial statements of the Company for the year ended March31 2020 the statutory auditor of the Company has also intimated the RBI regarding theCompany technically meeting the Principal Business Test and regarding the above referredrepresentation by the company to the RBI which inter alia stated that the Company isprimarily engaged in the healthcare business and that the Company has represented to theRBI that it does not presently or in future intend to undertake the business ofnon-banking financial institution. Further during the current year the Company wrote aletter to RBI with a request to confirm that no such registration as a NBFC is required.It also requested for a meeting to give an opportunity to the Company to explain itsposition on the matter. During the current quarter ended March 312021 RBI advised theCompany to submit to it the financial results for the quarter ended June 30 2020September 30 2020 and December 31 2020 which was duly submitted. Further as evidentfrom these financial statements the criteria for principal business test is not met as atMarch 31 2021. For more details please refer to note 40.
The statement of impact of Audit Qualification as stipulated in regulation 33(3)(d) isplaced below:
Qualification in the Auditor's Report
The Board of Fortis Healthcare Limited has dealt with the matters stated in thequalification in statutory auditor's report on the Consolidated Financial Statement ofFortis Healthcare Limited ("the Parent" or "the Company") and itssubsidiaries (the Parent/Company and its subsidiaries together referred to as "theGroup") and its share of profit /(Loss) of its joint ventures and associates for theyear ended March 31 2021 ("the Consolidated Annual Financial Statement")included in the Statement of Consolidated
Financial Statement ("the Consolidated Statement") to the extent informationwas available with them.
|Sl. Particulars No. ||Audited Figures (as reported before adjusting for qualification) ||Adjusted Figures (audited figures after adjusting for qualification) $ |
|1 Turnover / Total income ||407668 ||Not Determinable |
|2 Total Expenditure ||408216 ||---Do--- |
|3 Share of profit of associates and joint ventures (net) ||4756 ||---Do--- |
|4 Exceptional gain ||121 ||---Do--- |
|5 Tax expense ||9946 ||---Do--- |
|6 Net Profit/(Loss) ||(5617) ||---Do--- |
|7 Earnings Per Share ||(1.45) ||---Do--- |
|8 Total Assets ||1115468 ||---Do--- |
|9 Total Liabilities ||443687 ||---Do--- |
|10 Net Worth* ||671781 ||---Do--- |
"$" for Qualification of the Auditor's Report.
* Including non-controlling interest of ' 59800 Lakhs.
Qualification of the Auditor's Report
1. Details of Audit Qualification:
As per audit report para on "Basis for Qualified Opinion"
2. Type of Audit Qualification:
3. Frequency of qualification:
4. For Audit Qualification(s) where the impact is quantified by the auditorManagement's Views:
5. For Audit Qualification(s) where the impact is not quantified by the auditor:
(i) Management's estimation on the impact of audit qualification:
(ii) If management is unable to estimate the impact reasons for the same:
Please refer to Director's response to comments of the statutory auditors in the AuditReport as stated in above Directors' Report.
(iii) Auditors' Comments on (i) or (ii) above:
The Company technically meets the "principal business test" criteria forclassification as a Non-Banking Financial Company (NBFC). As per the Company suchsignificant dividend income recorded in the year ended March 31 2020 is non-recurring innature and does not represent income from ordinary activities of the Company and theCompany does not intend to carry on the business as a NBFC. The Company has writtenletters to RBI with a request to confirm that no such registration as a NBFC is required.Pending resolution of the matter with RBI we are unable to comment on the impact thereofif any on the financial statements for the year ended March 312021.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 the cost audit records maintained by the Company inrespect of its hospital activity is required to be audited. Your Directors had on therecommendation of the Audit Committee appointed M/s. Jitender Navneet & Co. CostAccountants to audit the cost accounts of the Company for the FY 2020-21 at a remunerationupto ' 3.5 Lakhs (plus out of pocket expenses and taxes). As required under the CompaniesAct 2013 the remuneration payable to the cost auditors is required to be placed beforethe Members in a general meeting for ratification. Accordingly a resolution seekingMember's ratification for the remuneration payable to M/s Jitender Navneet & Co.Cost Auditors is included in the Notice convening the ensuing Annual General Meeting.Further in terms of the Companies (Accounts) Rules 2014 it is confirmed thatmaintenance of cost records as specified by the Central Government under sub-section (1)of Section 148 of the Companies Act 2013 is applicable on the Company and accordinglysuch accounts and records are properly made and maintained.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Sanjay Grover & Associates Practicing Company Secretary to undertakethe Secretarial Audit of the Company. The Company has complied with the provisions ofSecretarial Standards
to the extent feasible. The Secretarial Audit Report is enclosed herewith as"Annexure - II".
Upon the recommendation of the Audit and Risk Management Committee the Board ofDirectors has appointed Mr Rajiv Puri Head Risk and Internal Audit as the Chief InternalAuditor of the Company and authorised him to engage independent firm(s) if needed forconducting the internal audit for the FY 2020-2021 to enable him to extend adequatecoverage of internal audit checks. Accordingly PWC was engaged to carry out certainaspects of Internal Audit for the Company / its subsidiaries to augment the in-house teamof internal audit team led by the Chief Internal Auditor.
Besides the matters mentioned in basis for qualified opinion in the Auditors Reportif any as per the requirement of Companies Auditor Report Order (CARO) Rules 2016there was no fraud reported by the above stated auditors during the year under review.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
During FY 2020-21 the Company received an order dated November 12 2020 passed by theSecurities and Exchange Board of India (SEBI) revoking its earlier interim orders readwith confirmatory order qua Best Healthcare Private Limited Fern Healthcare PrivateLimited and Modland Wears Private Limited and directed that the ongoing proceedings besubstituted with adjudication proceedings. The order clarified that the Company and FortisHospitals Limited (FHsL) were at liberty to pursue remedies under law as deemedappropriate by them against the above mentioned entities in respect of their role in thediversion of funds.
Subsequently a Show-Cause Notice (SCN) was issued by SEBI to various entitiesincluding the Company and FHsL on November 20 2020 which alleged that the consolidatedfinancials of FHL at the relevant period were untrue and misleading for the shareholdersand the Company has circumvented certain provisions of the SEBI Act Securities Contracts(Regulation) Act 1956 and certain SEBI regulations.
In response a joint representation / reply was filed by the Company and FHsL onDecember 28 2020 praying for quashing of the SCN on various grounds after which oralsubmissions in response to the SCN were made in a personal hearing before the SEBI WholeTime Member on January 20 2021 and a written synopsis of the same was also filedthereafter. We await the outcome of the hearing before SEBI. Details of this matter isprovided in note 29(a) of consolidated financial statements.
a mmi i a i DcnrrDT -i 03
CAPITAL STRUCTURE / STOCK OPTION
The Company currently manages its stock options through "Employee Stock OptionPlan 2007" and "Employee Stock Option Plan 2011" ("Schemes") asapproved by the shareholders. The Nomination and Remuneration Committee of the Board ofDirectors of the Company inter alia administers and monitors the Schemes of the Company.Each option when exercised would be converted into one fully paid up equity share of ' 10each of the Company. During the year under review no option was granted by the Company.Disclosure pursuant to the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 for the year ended March 31 2021 is available at the websiteof the Company at https://www.fortishealthcare.com/investors - Annual Report / ESOPDisclosure 2020-21.
During the year under review "no stock options were exercised under the terms ofthe "Employee Stock Option Plan 2007 and "Employee Stock Option Scheme2011".
The certificate from the Statutory Auditors of the Company stating that the Schemeshave been implemented in accordance with the SEBI Regulations would be placed at theensuing Annual General Meeting for inspection by members. The Company has not made anyprovision of money for purchase of or subscription for its own shares or of its holdingCompany.
Details pertaining to shares in suspense account are specified in the report ofCorporate Governance forming part of the Board Report.
Extract of Annual Return is enclosed herewith as "Annexure - III".
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
The particulars required under Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 regarding Conservation of Energy andTechnology Absorption is given in "Annexure - IV" forming part of the Board'sReport. Further details pertaining to Foreign Exchange Earnings and Outgo is as givenbelow:
Total Foreign Exchange Earned and Used (Based on Standalone Financial Statements)during the financial year ended March 31 2021:
|Particulars ||Amount (in ' Crores) |
|Foreign Exchange earned in terms of ||2.10 |
|Actual Inflows || |
|Foreign Exchange outgo in terms of ||1.06 |
|Actual Outflows || |
Note: Earning and expenditure in foreign currency is on accrual basis.
CORPORATE SOCIAL RESPONSIBILITY - OUR JOURNEY THROUGH THE PAST YEAR
During FY 2020-21 Fortis Healthcare Limited along with its subsidiaries contributed atotal of ' 14.25 Crores towards various Corporate Social Responsibility (CSR) initiatives.
As a responsible corporate member of the Indian healthcare ecosystem Fortis HealthcareLimited strongly believes that we can meaningfully alleviate the problem of inequitableaccess to quality healthcare. By creating and supporting social sector programmes linkedto health and well-being we seek to leverage our skills experience capabilitiestechnologies and facilities to address a critical social need for the vulnerable sectionsof society. Following a rigorous needs assessment we have enabled initiatives &programmes aimed at creating social awareness and bringing about a positive change in thecommunities.
The Company's CSR initiatives follow a 'need based' program approach. 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 the Company are in line with India's SustainableDevelopment Goal (SDG) of 'Good health and well-being' and also supporting Governmentinitiative as per Schedule VII of Section 135 of the Companies Act 2013.
The Company and its subsidiaries supported the efforts of the Government in the fightagainst COVID-19 Research & Development and Central Armed Police Forces (CAPF) &also supported Central Para Military Forces (CPMF) veterans and their dependents includingwidows.
Fortis Healthcare Limited and Fortis Hospotel Limited: This year Company and one of itswholly owned subsidiary viz Fortis Hospotel Limited contributed its CSR Fund to"Bharat Ke Veer" fund to support Central Armed Police Forces
(CAPF) & Central Para Military Forces (CPMF) veterans and their dependentsincluding widows. A fund-raising initiative by the Ministry of Home Affairs Govt. ofIndia on behalf of members of the Indian paramilitary Forces. They are always on duty andhave round the clock commitments throughout the year without any consideration for leaveholidays weekends festivals and personal commitments. They work in a very hazardousconditions and stress compiled with unhygienic living conditions. Many lost their life interrorist / Naxalite attacks. Our contribution will support the dependents and widows ofBraveheart heroes.
Escorts Heart Institute and Research Centre Limited and SRL Limited:
This year Escorts Heart Institute and Research Centre Limited and SRL Limitedcontributed CSR fund to ICMR (The Indian Council of Medical Research) fund to supportresearch and development projects in the field of science technology engineering andmedicine. The fund to ICMR is duly approved CSR fund as per Schedule VII of Section 135 ofthe Companies Act. The ICMR has always attempted to address itself to the growing demandsof scientific advances in biomedical research on the one hand and to the need of findingpractical solutions to the health problems of the country on the other.
Particulars pursuant to Clause O of Sub-Section 3 of Section 134 of The Companies Act2013 read with Rule 9 of Companies (Corporate Social Responsibility) Rules 2014 is givenin "Annexure V".
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company as on date of this report comprises twelvedirectors of which one is a Managing Director and CEO (Executive Director) four areIndependent Directors and rest of the seven directors are Non-Executive &Non-Independent Directors. Pursuant to Sections 152 of the Companies Act 2013 Dr. KelvinLoh Chi Keon and Mr Heng Joo Joe Sim are liable to retire by rotation and being eligibleoffers themselves for re-appointment at the forthcoming Annual General Meeting of theCompany. During the year under review the Board of Directors has appointed Mr. DilipKadambi and Ms Shailaja Chandra as Directors of the Company w.e.f. June 4 2020 and June28 2020 respectively. The matter(s) related to their appointment was placed before theshareholders at the twenty fourth Annual General Meeting of the Company held on August 312020.
During the year under review the Board of Directors has co-opted Mr Takeshi Saito andMr Joerg Ayrle as an additional director(s) w.e.f. September 1 2020 & March 31 2021respectively. The matter(s) related to their appointment are being placed at theforthcoming Annual General Meeting. Further during the year under review Mr Low SoonTeck has resigned from directorship of the Company w.e.f. June 4 2020. Your Board placeson record its appreciation for the contribution made by Mr. Low Soon Teck during hisassociation with the Company.
Dr. Ashutosh Raghuvanshi was appointed as Chief Executive Officer with effect fromMarch 18 2019 and Chief Executive Officer and Managing Director ('CEO & MD') of theCompany with effect from March 19 2019 for a period of three years. The matter related tohis re-appointment as CEO & MD for a further period of three years with effect fromMarch 19 2022 is being placed at the forthcoming Annual General Meeting. Brief resume ofthe directors being appointed and / or proposed to be regularised at the forthcomingAnnual General Meeting is separately disclosed in the Notice of the ensuing Annual GeneralMeeting.
All Independent Directors have submitted declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. During the FY2020-21 Ten (10) meetings were held by the Board of Directors. The details of 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 Raghuvanshi ||Managing Director and Chief Executive Officer |
|Mr Vivek Kumar Goyal ||Chief Financial Officer |
|Mr Sumit Goel ||Company Secretary |
Disclosures regarding the following are mentioned in report on Corporate Governanceforming part of this report.
1. Composition of Committee(s) of the Board of Director and other details;
2. Details of establishment of Vigil Mechanism;
3. Details of remuneration paid to all the Directors including Stock options; and
4. Commission received by Independent Director(s); if any.
Pursuant to the provisions of Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board and the respective committees arerequired to carry out performance evaluation of the Board as a body the Directorsindividually Chairman as well as that of its Committees.
The Board of Directors of the Company in order to give objectivity to the evaluationprocess identified an independent third party for conducting board evaluation exercise forthis financial year.
The following process of evaluation was approved by the Nomination and RemunerationCommittee and the Board of Directors:
|S. Process No. ||Remarks ||Criteria for Evaluation (including Independent Directors) |
|1. Kick Off 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 2020-21 was presented at a meeting of the Board of Directors held on May 29 2021. ||NA |
Disclosures pursuant to Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are as under:
(a) Comparison and ratio of the remuneration of each director to the medianremuneration of the employees of the Company for the FY 2020-21
|Name of the Director ||Remuneration of Director (' in Crores) ||Median Remuneration of Employees (' in Crores) ||Ratio |
|Dr. Ashutosh Raghuvanshi ||6.22 ||0.021 ||283:1 |
(b) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any
during the financial year under review: During the year there was no change in theremuneration / no increments were given across the Group due to COVID pandemic.
(c) The percentage increase in the median remuneration of employees in the financialyear - NIL
(d) The number of permanent employees on the rolls of the Company is 2680 as on March31 2021 as compared to 2644 as on March 31 2020.
(e) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and any exceptionalcircumstances for increase in the managerial remuneration
|Particulars ||For the FY 2020-21 |
|(A) Average percentile increases already made in the salaries of employees other than the managerial personnel ||During the year no increments were given across the Group due to COVID |
|(B) Percentile increase in the managerial remuneration ||pandemic. |
|Comparison of (A) and (B) || |
|Justification || |
|Any exceptional circumstances for increase in the managerial remuneration || |
(f) During the FY 2020-21 ' 25010160 variable pay was paid to Dr. AshutoshRaghuvanshi MD and CEO ' 8019150 to Mr Vivek Kumar Goyal Chief Financial Officer and' 571122 to Mr. Sumit Goel Company Secretary for FY 2019-20.
(g) Remuneration paid to Directors and KMPs is as per the Remuneration Policy of theCompany.
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration including criteria for determining qualifications positive attributesindependence of a Director etc. The same is governed by Board of Directors GovernanceStandard and it is available on the website of the Company at https://www.fortishealthcare.com/investors - Corporate Governance / Policies / Codes / BoardGovernance Document. Details of Remuneration Policy and changes if any are stated in theCorporate Governance Report.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company will be provided upon request. In terms of Section 136 of the CompaniesAct 2013 the Report and Accounts are being sent to the Members and others entitledthereto excluding the information on employees' particulars which is available forinspection by the Members.
RELATED PARTY TRANSACTIONS
Disclosures as required under Section 134(3)(h) read with Rule 8(2) of the Companies(Accounts) Rules 2014 are given
in "Annexure - VI" in Form AOC- 2 as specified under the Companies Act 2013.
The Related Party Transactions are placed before the Audit Committee for approval asrequired under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.Prior omnibus approval of the Audit Committee is obtained for the transactions which areof 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 Committee for their review on a quarterlybasis.
The Company has developed a Related Party Transactions Framework for the purpose ofidentification and monitoring of such transactions.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website at https://www.fortishealthcare.com/investors - Corporate Governance /Policies / Codes / Policy on Related Party Transactions.
None of current Directors have had any pecuniary relationship or transaction vis-a-visthe Company except to the extent of sitting fees and remuneration approved by the Board ofDirectors and / or shareholders of the Company as disclosed in this Annual Report.
RISK MANAGEMENT POLICY
The Company has designed a risk management policy and framework for riskidentification assessment mitigation plan development and monitoring of action tomitigate the risks. The key objective of the ERM policy is to provide a formalisedframework to enable judicious allocation of resources on the critical areas which canadversely impact the Company's ability to achieve its objectives. The policy is applicableto the Company and its subsidiaries. This framework enables the management to develop andsustain a risk-conscious culture wherein there is a high degree of organisation-wideawareness and understanding of external and internal risks associated with the business.The policy defines an architecture and oversight structure to assist effectiveimplementation. By clearly defining terms and outlining roles and responsibilities ERMpromotes risk ownership accountability self-assessment and continuous improvement tominimise adverse impact on achievement of business objectives and enhance the Company'scompetitive advantage. The details thereof are covered under the Management and DiscussionAnalysis Report which forms part of the Annual Report
POLICY FOR PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT
The Company has adopted a Policy for Prevention Prohibition and Redressal of SexualHarassment. As per the requirement of the Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 and Rules made thereunder the Companyhas constituted Internal Complaints Committees (ICC). During the FY 2020-21 the Companyreceived Three ('3') complaints on sexual harassment and Three ('3') complaints wereresolved with appropriate action taken and no complaint was pending as on March 31 2021.The same may also be read in terms of Companies (Accounts) Rules 2014.
As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015Corporate Governance Report with Auditors' certificate thereon and Management Discussionand Analysis Report are attached which form part of this report.
CODE OF CONDUCT
Declaration by Dr. Ashutosh Raghuvanshi Managing Director and Chief Executive Officerconfirming compliance with the 'Fortis Code of Conduct' is enclosed with CorporateGovernance Report.
CERTIFICATE BY STATUTORY AUDITORS FOR DOWNSTREAM INVESTMENT
A certificate from the Statutory Auditors of the Company stating that the Company hasduly complied with the requirements of downstream investment made by the Company to secondlevel entities in accordance with Foreign Exchange Management (Transfer or Issue ofSecurity by a Person Resident Outside India) Regulations 2017 would be available at theAnnual General Meeting for inspection by members.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
(a) in the preparation of the Annual Accounts the applicable accounting standards havebeen followed along with
proper explanations relating to material departures therefrom if any;
(b) The selection and application of accounting policies were assessed for theirconsistent application and judgements and estimates were made that are reasonable andprudent so as to give a true and fair view of the state of the affairs of your Company atthe end of the financial year and of the profit of your Company for the Financial Yearended March 312021;
(c) except for the findings of the Investigation Report done earlier and the findingsof the additional procedures/ enquiries concluded during the year all of which pertainedto earlier years described in Note 28 in the Notes to the Consolidated FinancialStatements and Note 27 in the notes to the Standalone Financial Statements 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 been prepared on a going concern basis for the reasons statedin Note 36 in the Notes to the Consolidated Financial Statements and Note 30 in the notesto the Standalone Financial Statements;
(e) except for certain control lapses identified in the Investigation Report doneearlier and in the findings of the additional procedures/enquiries concluded during theyear all of which pertained to earlier years as described in Notes 28 in the Notes to theConsolidated Financial Statements and Note 27 in the Notes to the Standalone FinancialStatements proper internal financial controls have been laid down and that such internalfinancial controls are adequate and are operating effectively; and
(f) except for the matters on related parties and managerial remuneration all of whichpertained to earlier years described in Note 28 (A) (ii) and 28 (C) (vi) in the Notes tothe Consolidated Financial Statements and Note 27 (A) (ii) and 27 (C) (vi) in the notes tothe Standalone Financial Statements there are proper systems in place to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.
Your Directors take this opportunity to thank all doctors nurses technicians andstaff members who have been battling COVID-19. Their heroic performance under enormousstress is what really makes us a world-class healthcare provider. Your Directors offertheir deepest condolences to the bereaved families of Fortisians who lost their loved onesand pray for the early recovery of those who have been infected. Ensuring the health andwell-being of our employees especially the frontline healthcare workers is paramount andthe steps taken towards ensuring their protection during the COVID pandemic ispraiseworthy. At the same time the Fortis team is playing a significant role in theongoing nation-wide vaccination drive in tandem with the Government directivesreaffirming our pivotal role as a trustworthy healthcare provider.
Your Directors are glad to place on record that Fortis has posted a strong financialperformance in spite of the pandemic. This is truly amazing and the Board is proud of eachone of you for this achievement. It speaks volumes about your dedication and commitment.Your Board is confident that the team will do much better as the situation improves. YourDirectors are very appreciative of the fantastic work being done and have high hopes thatyou will continue to deliver wonderful outcomes.
Your Directors also place on record their gratitude to the Central Government StateGovernments and all other Government agencies for the assistance co-operation andencouragement they have extended to the Company. Your Directors also greatly appreciatethe commitment and dedication of all the employees at all levels that has contributed tothe growth and success of the Company. Your Directors also thank all the strategicpartners business associates Banks financial institutions and our shareholders fortheir assistance co-operation and encouragement to the 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: May 29 2021 ||Date: May 29 2021 |
|Place: Gurugram ||Place: New Delhi |
Statement pursuant to first proviso to Sub-Section(3) of Section 129 read with Rule 5of Companies (Accounts) Rules 2014 related to subsidiaries
|S. Name of the NO. subsidiary ||Reporting period for the subsidiary concerned if different from the holding company's reporting period || |
Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries.
|Share capital ||Reserves & surplus ||Total assets ||Total Liabilities ||Investments ||Turnover ||Profit before taxation ||Provision for taxation ||Profit after taxation ||Proposed Dividend ||% of shareholding * |
|1 Escorts Heart Institute and Research Centre Limited ||March SI 202 I ||INR ||1.00 ||256.29 ||57.5SI.02 ||S7.I55.74 ||293 1 S.43 ||65751.05 ||25773.72 ||(2950.70) || ||(2950.70) || ||100.00% |
|2 Fortis Healthstaff Limited ||March SI 202 I ||INR ||1.00 ||490.00 ||(1699.90) ||94.S3 ||1304.73 ||- ||0.02 ||(266.22) ||- ||(266.22) ||- ||100.00% |
|3 Fortis Asia Healthcare Pte. Ltd ||March SI 202 I ||USD ||73.2 I ||I 62 I 9.40 ||(124926.65) ||5204.21 ||1 1391 1.47 ||5.I97.S5 ||- ||(2S 13.94) ||- ||(2SI 3.94) ||- ||100.00% |
|4 Fortis Healthcare International Pte. Limited ||March SI 202 I ||SGD ||54.40 ||95J6S.I2 ||(SS 47 5.35) ||7391.42 ||69S.65 ||6339.44 ||35.59 ||(120.69) ||0.5S ||(121.27) || ||100.00% |
|5 Men a Healthcare Investment Company Limited ||March SI 202 I ||AED ||IS.77 ||I9.S2 ||(909.50) ||34.44 ||924.1 3 ||34.44 ||" || ||" ||" || ||S2.54% |
|6 Medical Management Company Limited ||March SI 202 I ||AED ||IS.77 ||32.55 ||744.56 ||S96.7I ||1 19.59 ||- ||- ||- ||- ||- ||- ||S2.54% |
|7 SRL Diagnostics FZ-LLC ||March SI 202 I ||AED ||I 9.94 ||2S2.00 ||(2206.17) ||2615.22 ||4539.39 ||- ||1595.52 ||(1530.33) ||- ||(1530.33) ||- ||100.00% |
|8 Hiranandani Healthcare Private Ltd ||March SI 202 I ||INR ||1.00 ||56 1.33 ||3940.55 ||9.369.S9 ||4.S6S.0 1 ||- ||S675.27 ||(145.OS) ||- ||(145.OS) ||- ||100.00% |
|9 Fortis La Femme Limited ||March SI 202 I ||INR ||1.00 ||5.00 ||(91.93) ||2.01 ||SS.94 ||- ||0.02 ||(S.04) ||- ||(S.04) ||- ||100.00% |
|10 Fortis CSR Foundation ||March SI 202 I ||INR ||1.00 ||5.00 ||24.20 ||3S.22 ||9.02 ||- ||66.12 ||6.26 ||- ||6.26 ||- ||100.00% |
|I I SRL Limited ||March SI 202 I ||INR ||1.00 ||7.S42.55 ||109344.37 ||I36.952.S5 ||19765.93 ||40350.03 ||S0S93.66 ||12494.19 ||3249.99 ||9244.20 ||- ||56.93% |
|12 SRL Diagnostics Private Limited ||March SI 202 I ||INR ||1.00 ||395.S2 ||9.S59.29 ||26027.47 ||15772.36 ||950.SS ||27666.2S ||5.040.SS ||677.26 ||4363.62 ||- ||100.00% |
|IS SRL Reach Limited ||March SI 202 I ||INR ||1.00 ||SO 0.00 ||(S6S.07) ||6S7.57 ||755.64 ||- ||55S.IS ||(207.10) ||- ||(207.10) ||- ||100.00% |
|14 Fortis Healthcare International Limited ||March SI 202 I ||USD ||73.2 I ||227.30 ||162S.SS ||2474.3S ||6IS.20 ||- ||32.5S ||(39.25) ||- ||(39.25) ||- ||100.00% |
|15 Fortis Global Healthcare (Mauritius) Limited ||March 3 I 202 I ||USD ||73.2 I ||373.53 ||(34OS 1.42) ||1 1 0.89 ||33.SIS.7S ||- ||- ||(1451.29) ||- ||(1451.29) ||- ||100.00% |
|16 Fortis Hospitals Limited ||March 3 I 202 I ||INR ||1.00 ||799S.76 ||(59292.2 1) ||3 57588.5(0 ||40S.SS 1.95 ||42340.97 ||20343 1.13 ||(26283.01) ||56S.66 ||(26 S5 1.67) ||- ||100.00% |
|17 Fortis Cancer Care Limited ||March 3 I 202 I ||INR ||1.00 ||5.00 ||(3730.30) ||2.2S ||3.727.5S ||- ||0.2 1 ||(294.98) ||- ||(294.98) ||- ||100.00% |
|18 Fortis Malar Hospitals Limited ||March 3 I 202 I ||INR ||1.00 ||1875.70 ||67S5.SS ||1 6.69S.54 ||S036.96 ||5.00 ||7732.53 ||(1146.66) ||(345.33) ||(SO 1.33) ||- ||62.71 % |
|19 Malar Star Medicare Limited ||March 3 I 202 I ||INR ||1.00 ||5.00 ||212.SS ||225.66 ||7.7S ||- ||25.25 ||15.50 ||1.04 ||1 4.46 ||- ||62.71 % |
|20 Fortis Health Management (East) Limited ||March 3 I 202 I ||INR ||1.00 ||5.00 ||(1204.98) ||34.10 ||1234.OS ||" ||" ||(106.53) ||" ||(106.53) ||" ||100.00% |
|21 Birdie and Birdie Realtors Private Limited ||March 3 I 202 I ||INR ||1.00 ||1.00 ||(1 4568.59) ||9111.62 ||23679.21 ||" ||6.SS ||(1838.68) ||" ||(1 S3S.6S) ||" ||100.00% |
|22 Stellant Capital Advisory Services Private Limited ||March 3 I 202 I ||INR ||1.00 ||1750.00 ||29S(J. 55 ||4.S60.00 ||129.45 ||I.2SS.5I ||5700.97 ||(199.04) ||S25.79 ||(1024.83) || ||100.00% |
|23 Fortis Hospotel Limited ||March 3 I 202 I ||INR ||1.00 ||561 17.02 ||149773.SO ||216303.14 ||10412.32 ||95340.90 ||21507.94 ||I3.726.S5 ||3566.8 1 ||104 60.04 ||- ||100.00% |
|24 RHT Health Trust Manager Pte Ltd ||March 3 I 202 I ||SGD ||54.40 ||609.45 ||10069.75 ||1 1017.71 ||33S.5I ||9.6S2.99 ||75.IS ||(469.72) ||(43.50) ||(426.22) ||- ||100.00% |
|25 Fortis Emergency Services Limited ||March 3 I 202 I ||INR ||1.00 ||5.00 ||(7190.25) ||912.96 ||S.09S.2 1 ||- ||1 1 6.6S ||(660.54) ||- ||(660.54) ||- ||100.00% |
|26 Fortis C-Doc Healthcare Limited ||March 3 I 202 I ||INR ||1.00 ||676.77 ||(3064.55) ||705.53 ||3093.31 ||- ||U974.S7 ||(502.99) ||- ||(502.99) ||- ||60.00% |
|27 Escorts Heart and Super Speciality Hospital Limited ||March 3 I 202 I ||INR ||1.00 ||3392.52 ||9219.25 ||74.0S3.26 ||6 147 1.49 ||17775.00 ||7775.14 ||(2134.41) ||(530.37) ||(1604.04) || ||100.00% |
|28 International Hospital Limited ||March 3 I 202 I ||NR ||I 330 ||33963.13 ||60067.S5 ||265779.03 ||1 7 1748.05 ||S7.90S.52 ||27227.29 ||422.2 1 ||ISI.7I ||240.50 ||- ||1 00.00% |
|29 Hospitalia Eastern Private Limited ||March 3 I 202 I ||NR ||1.00 ||5.10 ||(12297.22) ||12628.46 ||24920.5S ||- ||OSS ||(1702.33) ||- ||(1702.33) ||- ||100.00% |
|30 Fortis Health Management Limited ||March 3 I 202 I ||NR ||1.00 ||250.00 ||(5S.S07.46) ||62461.62 ||12 10 19.OS ||52050.02 ||3733.31 ||(7792.25) ||- ||(7792.25) ||- ||100.00% |
* The percentage of shareholding is considered on fully diliuted basis and alsoincludes indirect shareholding.
Notes: The following information shall be furnished at the end of the statement:
1. Names of subsidiaries which are yet to commence operations-Nil
2. Names of subsidiaries which have been liquidated or sold during the year-Refer thesection "details of subsidiary Joint Venture/Associate Companies under Board Report.