Your Directors have pleasure in presenting here the Twenty Ninth AnnualReport of your Company along with the Audited Standalone and Consolidated FinancialAccounts and the Auditors' Report thereon for the Year ended March 312020.
the highlights of Consolidated and Standalone Financial Results of yourCompany are as follows:
(' In Lakhs)
|Particulars || |
|Year ended March 31 2020 ||Year ended March 31 2019 |
|Revenue from operations ||11187.20 ||14459.39 |
|other Income ||1118.58 ||1011.08 |
|Total Income ||12305.78 ||15470.47 |
|total Expenses ||11465.38 ||14702.19 |
|Profit before Finance Charges Taxes Depreciation & Amortisation (EBITDA) ||840.40 ||768.28 |
|Less: Finance Charges Depreciation & Amortization ||2033.90 ||489.21 |
|Profit / (Loss) before tax ||(1193.50) ||279.07 |
|Less: tax expenses ||(304.14) ||73.52 |
|Profit / (Loss) for the year ||(889.36) ||205.55 |
|other Comprehensive Income (Net of taxes) ||(7.32) ||12.32 |
|total Comprehensive Income for the year ||(896.68) ||217.87 |
(' In Lakhs)
|Particulars || |
|Year ended March 31 2020 ||Year ended March 31 2019 |
|Revenue from operations ||11187.20 ||14459.39 |
|other Income ||1092.34 ||968.44 |
|Total Income ||12279.54 ||15427.83 |
|total expenses ||11461.21 ||14702.63 |
|Profit before Finance Charges Taxes Depreciation & Amortisation (EBITDA) ||818.33 ||725.20 |
|Less: Finance Charges Depreciation & Amortisation ||2033.90 ||489.21 |
|Profit / (loss) before tax ||(1215.57) ||235.99 |
|Less: tax expenses ||(309.88) ||62.32 |
|Profit / (Loss) for the year ||(905.69) ||173.67 |
|other Comprehensive Income (Net of taxes) ||(11.16) ||11.12 |
|total Comprehensive Income for the year ||(916.85) ||184.79 |
STATE OF COMPANY'S AFFAIR OPERATING RESULTS AND PROFITS
Fortis Malar Hospital (formerly known as Malar Hospital) was acquiredby Fortis Group in early 2008. The hospital founded in 1989 has established itself as oneof the largest corporate hospitals in Chennai providing quality super specialty andmulti-specialty healthcare services. With a total bed-strength of 141 including 53 ICubeds the hospital focuses on providing comprehensive medical care in the areas ofCardiology and Cardiac Surgery Neuro Surgery Gynecology orthopedics GastroenterologyNeurology pediatrics Diabetics Nephrology and Internal Medicine.
Fortis Malar Hospital has a state of the art Cath Lab and multiplededicated cardiac operation theatres and intensive coronary care units. Several rare andcomplex Adult and pediatric Cardiac surgeries orthopedic and Joint replacementsNeurosurgeries and plastic reconstruction surgeries have been performed at this hospital.the hospital's obstetrics and Gynecology services are among the busiest in the citysuccessfully performing many complicated deliveries and surgeries. they are supported by adedicated Neonatology unit.
the year under consideration was an extremely challenging one for yourcompany. Already the business had been adversely impacted by non-availability of organsfor international patients since Q3 of the previous year. this trend continued in thefirst two quarters of this financial year. Added to this your hospital saw a few seniorclinicians leave in the first quarter. In November 2019 the CTVS team which had done morethan 300 transplants in your hospital in the last 5 years left to join another cityhospital.
towards the end of the year your company also got severely impacted bythe CoVID-19 pandemic. the occupancy in your hospital dropped to its lowest level of 35%owing to the lockdown announced by the Government decline in opDs and elective surgeries.We expect the situation to get worse in the first quarter of the year 2020-21 - andnormalcy to return by the third quarter of the year 2020-21.
SIGNIFICANT MATTERS DURING THE YEAR UNDER REVIEW OPEN OFFER
Pursuant to execution of Share Subscription Agreement on July 13 2018("SSA") Northern TK Venture Pte Ltd ("NTK" or the"Acquirer") a wholly owned subsidiary of IHH Berhard subscribed to 235294117new equity shares of Fortis Healthcare Limited ("FHL") with a face value of Rs.10 each ("Subscription Shares") constituting approximately 31.1% of the totalvoting equity share capital of FHL on a fully diluted basis ("Expanded Voting ShareCapital") for a total consideration of Rs. 4000 crore and FHL issued and allottedthe Subscription Shares by way of preferential allotment in accordance with the terms ofthe SSA ("Subscription"). As a consequence of the Subscription the Acquirertogether with IHH Healthcare Berhad ("PAC 1") and Parkway Pantai Limited("PAC 2") (collectively referred to as the "PACs") made a mandatoryopen offer by filing a public announcement dated July 13 2018. the Subscription wascompleted in accordance with the terms of the SSA on November 13 2018 and NTK became thecontrolling shareholder of FHL.
As a consequence of the Subscription NTK was required to carry out thefollowing:
(i) a mandatory open offer for acquisition of up to 197025660 equityshares of face value of Rs. 10 each in FHL representing additional 26% of the ExpandedVoting Share Capital of FHL at a price of not less than Rs. 170 per share ("FortisOpen Offer") or such higher price as required under the Securities and Exchange Boardof India ("SEBI") (Substantial Acquisition of Shares and Takeovers) Regulations2011 ("SEBI (SAST) Regulations"); and
(ii) in light of the acquisition of the controlling stake of FHL amandatory open offer for acquisition of up to 4894308 fully paid up equity shares offace value of Rs. 10 each in Fortis Malar Hospitals Limited ("Malar")representing 26% of the paid-up equity shares of Malar at a price of Rs. 58 per share("Malar Open Offer"). The Malar Open Offer is subject to the completion of theFortis open offer.
On December 14 2018 Hon'ble Supreme Court of India passed an order inthe matter of "Mr Vinay Prakash Singh v. Sameer Gehlaut & Ors." directing"status quo with regard to sale of the controlling stake in Fortis Healthcare toMalaysian IHH Healthcare Berhad be maintained" ("Order"). Pursuant theretodecision was taken not to proceed with the Fortis Open Offer and Malar Open Offer untilfurther order(s)/ clarification(s)/ direction(s) are issued by the Hon'ble Supreme Courtof India."
RECLASSIFICATION OF PROMOTERS
The Company received a request letter ("FHsL Letter") fromFortis Hospitals Limited ("FHsL") (immediate holding company and one of thePromoters) stating that FHsL is a wholly owned subsidiary of Fortis Healthcare Limited("FHL") and FHL vide its letter FHL/SEC/2019-20 dated June 03 2019 captioned"Reclassification of Promoters" intimated to stock exchanges [viz. BSE Limited("BSE") and National Stock Exchange of India Limited ("NSE")]regarding the approval granted by the stock exchanges viz. BSE & NSE forreclassification of the following promoters as public shareholders: Malvinder Mohan Singh- Trust Harpal Singh Abhishek Singh Malvinder Mohan Singh Shivinder Mohan SinghFortis Healthcare Holdings Private Limited Malav Holdings Private Ltd RHC HoldingPrivate Limited ("Erstwhile Promoters of FHL") and that the only remainingpromoter of FHL is Northern TK Venture Pte. Limited ("NTK"). Further Securitiesand Exchange Board of India ("SEBI") had on October 17 2018 December 212018March 19 2019 and June 28 2019 ("SEBI Orders") directed that Mr. MalvinderMohan Singh and Mr. Shivinder Mohan Singh shall not associate themselves with the affairsof FHL and FHsL in any manner whatsoever till further directions. FHsL being Promoterand largest shareholder of the Company is holding 11752402 equity shares representing62.71% stake. Further other than FHsL following entities are Promoter / Promoter GroupCompanies ("Identified Promoter / Promoter Group") of the Company:
|Sl. No. ||Name ||PAN ||Number of shares held on March 31 2020 |
|1 ||PS Trust (Acting and Represented by its trustees Mr. Malvinder Mohan Singh and Dr. Shivinder Mohan Singh) ||AACTP6651N ||100 |
|2 ||Fortis Healthcare Holdings Private Limited ||AAACF6715A ||100 |
|3 ||Oscar Investments Ltd ||AAACO1722C ||0 |
|4 ||Shivi Holdings (P) Ltd ||AAACO2664H ||100 |
|5 ||RHC Finance Private Limited ||AAACW7196C ||100 |
|6 ||Todays Holdings Private Limited ||AACCT7136K ||100 |
|7 ||Malav Holdings Private Limited ||AADCM1170B ||0 |
|8 ||RHC Holding Private Limited ||AAKCS7686P ||0 |
In view of the letter received from FHsL and the facts stated hereinabove the Board considered the same and empowered certain officials to issue letters toIdentified Promoter / Promoter Group for intimating the decision of the Company withrespect to reclassification of status of said members as public shareholders. IdentifiedPromoters did not respond to the letters and emails sent by the Company on August 5 2019seeking their respective consent with respect to their reclassification. Therefore theBoard accorded its approval for proceeding with reclassification of said IdentifiedPromoters and the said proposal was also approved by the shareholders of the Company.Further the Company has made an application with said effect with BSE Limited for itsapproval and such application is pending for approval as on date of this Board Report.
OPERATIONAL AND FINANCIAL PERFORMANCE
Your company achieved a consolidated total income of Rs. 123.06 Croresduring the current year as against Rs. 154.70 Crores in the corresponding financial yearended 31st March 2019. EBITDA for the year stood at Rs. 8.40 Crore compared to Rs. 7.68Crore for the previous corresponding year. The Profit / (Loss) before tax for the periodstood at Rs. (11.93) Crores as against Rs. 2.79 Crores during the corresponding period.Profit / (Loss) for the year stood at Rs. (8.89) Crores in the current financial yearcompared to Rs. 2.06 Crores in the previous year.
Regarding the key performance indicators the Company's average revenueper occupied bed (ARPOB) for the current year stood at Rs. 171 lacs as against Rs. 169lacs in the previous year. The average length of stay (ALOS) was at 4.02 days in FinancialYear 2020 compared to 4.25 days in Financial Year 2019. Occupancy of the hospital duringthe year was at 48% as compared to 58% in the previous year. There has been no change inthe nature of business of the Company during the year under review.
DIVIDEND AND TRANSFER TO RESERVES
The Board of Directors of your Company has not recommended any dividendfor the FY 2019-20. Accordingly there has been no transfer to General Reserves.
particulars of Loans/Advances/Investments/Guarantees given &outstanding during the Financial Year 2019-20 are mentioned in notes to financialstatements.
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 Companies (Acceptance of Deposit) Rules 2014.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OFTHE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR 2019-20 AND THE DATEOF THE REPORT
there are no material changes and commitments affecting the financialposition of the Company which have occurred between the end of the financial year 2019-20and the date of the report.
STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITHREFERENCE TO THE FINANCIAL STATEMENTS
the Company has in place adequate internal financial controls withreference to financial statements. During the year such controls were tested and noreportable material weakness in the design or operation was observed.
DETAILS OF SUBSIDIARY
During the year under review the Company has only one subsidiaryCompany i.e. Malar Stars Medicare Limited. the main object of the said wholly-ownedsubsidiary company include setting up managing / administering hospital(s) and to provideMedicare and Healthcare services.
Further note that the Board of Directors has adopted a policy fordetermining "material subsidiary" pursuant to Regulation 16(1 )(c) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The said policy isavailable athttps://www.fortismalar.com/frontend/investorrelations/Policy%20on%20Material%20Subsidiary%20Company-1559121470.pdf. Basis the Consolidated Audited Annual Accounts of the Company for the Financial Year2019-20 the Company has no "material non-listed subsidiary" in terms of policyand SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARY COMPANY
The consolidated financial statements of the Company and itssubsidiary prepared in accordance with applicable Indian Accounting Standards issued bythe Institute of Chartered Accountants of India forms part of the Annual Report. In termsof the Section 136 of the Companies Act 2013 financial statements of the subsidiarycompany will be provided to any shareholder of the Company who asks for it and said annualaccounts will also be kept open for inspection at the registered office of the Company andthat of subsidiary. Performance and financial position along with contribution of thesubsidiary to the overall performance of your Company which also included in theConsolidated Financial Statements of the Company is mentioned below:-
FORM NO. AOC - 1
(Pursuant to first proviso to sub-section (3) of section 129 read withrule 5 of Companies (Accounts) Rules 2014) Statement containing salient features of thefinancial statement of subsidiaries or associate companies or joint ventures
part A: Subsidiaries
(Amount in ')
|S. No. ||Particulars ||Year ended March 31 2020 |
|1 ||Name of the subsidiary ||MALAR STARS MEDICARE LIMITED |
|2 ||The date since when subsidiary was acquired ||N.A. |
|3 ||Reporting period for the subsidiary concerned if different from the holding company's reporting period ||Reporting period same as Holding Company |
|4 ||Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries. ||N.A. |
|5 ||Share Capital ||500000 |
|6 ||Reserves & Surplus ||19835949 |
|7 ||Total Assets ||22074085 |
|8 ||Total Liabilities ||1738136 |
|9 ||Investments ||Nil |
|10 ||Turnover ||1035000 |
|11 ||Profit before Taxation ||2207144 |
|12 ||Provision for Taxation ||573605 |
|13 ||Profit after Taxation ||1633539 |
|14 ||Proposed Dividend ||None |
|15 ||Extent of Shareholding (in percentage) ||100% |
1. Name of subsidiaries which are yet to commence operation - None
2. Name of subsidiaries which have been liquidated or sold during theyear - None
Part B: Associates and Joint Ventures
As on March 312020 the Company does not have any associate Companyand/or Joint Venture.
For and on behalf of the Board of Directors of Fortis Malar HospitalsLimited
|Daljit Singh ||C K Nageswaran |
|Chairman ||Whole Time Director |
|DIN 00135414 ||DIN 08236347 |
|Saravanan V. ||Mayank Jain |
|Chief Financial Officer ||Company Secretary & Compliance Officer |
|Membership No. 216567 ||Membership No. A 26620 |
1. STATUTORY AUDITOR
The Board of Directors considering the size and requirement of theCompany approved the appointment of M/s B S R & Co. LLP Chartered Accountants(Registration No. 101248W/W-100022) upon recommendations of Audit and Risk ManagementCommittee for a period of five years to conduct the statutory audit for the financialyears commencing from April 12019 to March 312024. the said appointment also approved bythe shareholders at twenty Eighth (28th) Annual General Meeting and they holdthe office of statutory auditor from the twenty eighth (28th) Annual GeneralMeeting until the conclusion of thirty third (33rd) Annual General Meeting tobe held in year 2024.
the Notes on financial statement referred to in the Auditors' Reportare self-explanatory and do not call for any further comments. the Auditors' Report doesnot contain any qualification reservation or adverse remark.
2. COST AUDITOR
pursuant to Section 148 of the Companies Act 2013 read with therelevant rules made thereunder or any amendments thereof the Company is required tomaintain cost records and accordingly such accounts and records are made and maintained bythe Company in respect of its hospital activity and the same is required to be audited.Your Board had upon the recommendation of the Audit & Risk Management Committeeappointed M/s Jitender Navneet & Co. Cost Accountants to audit the cost accounts ofthe Company for the Financial Year 2019-20 at a remuneration of upto Rs. 75000 (RupeesSeventy Five thousand) plus taxes and out-of-pocket expenses. As required under theCompanies Act 2013 the remuneration payable to the cost auditor is required to be placedbefore the members in a general meeting for ratification. Accordingly a resolutionseeking Member's ratification for the remuneration payable to M/s Jitender Navneet &Co. Cost Auditors is included in Notice convening the Annual General Meeting.
the Notes referred to in the Cost Auditors' Report are self-explanatoryand do not call for any further comments. the Cost Auditors' Report does not contain anyqualification reservation or adverse remark.
3. SECRETARIAL AUDITOR
pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 theCompany has appointed M/s Mukesh Agarwal & Co. practicing Company Secretary toundertake the Secretarial Audit of the Company. It is hereby confirmed that the Companyhas complied with the provisions of SS-1 i.e. Secretarial Standard on meetings of Board ofDirectors and SS-2 i.e. Secretarial Standard on General Meetings. the Report of theSecretarial Audit Report is annexed herewith as "Annexure I".
4. INTERNAL AUDITOR
Upon the recommendation of the Audit and Risk Management Committee theBoard of Directors had appointed Mr. Rajiv puri Head Risk and Internal Audit of theHolding Company as the Chief Internal Auditor of the Company and authorized him to engageindependent firms for conducting the internal audit. Accordingly EY was engaged toperform Internal Audit for the Company for financial year 2019-20.
During the period under review no fraud was reported by the abovestated Auditors.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
During FY 2019-20 there was no significant material order passed bythe Regulators/ Courts which would impact the going concern status of the Company and itsfuture operations.
STOCK OPTIONS AND CAPITAL STRUCTURE
the Nomination and Remuneration Committee of the Board of Directors ofthe Company inter alia administers and monitors the ESOp Scheme of the Company inaccordance with the applicable SEBI Guidelines. Each option when exercised would beconverted into one fully paid up equity share of Rs. 10 each of the Company.
the Company has not made any provision of money for purchase of orsubscription for its own shares or of its holding Company.
pursuant to the provisions of the Securities and Exchange Board ofIndia (Employees Stock Option Scheme and Employees Stock purchase Scheme) Guidelines1999 as amended from time to time the details of stock options as on March 312020 underthe "Malar Employees Stock Option plan 2008" are set out in the "Annexure-II"to this Board' Report.
The certificate from the Statutory Auditors of the Company stating thatthe Schemes have been implemented in accordance with the SEBI Guidelines would be placedat the Annual General Meeting for inspection by members.
the details pertaining to shares in suspense account are specified inthe report of Corporate Governance forming part of the Board Report.
EXTRACT OF ANNUAL RETURN
extract of Annual Return is annexed herewith as "AnnexureIII".
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
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 Technology Absorption and Foreign Exchange is given in "Annexure IV"forming part of the Board Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Management has the overall responsibility to design implement andmonitor an effective control environment that is aligned to the operating environment andinherent business risks. The internal control system has been designed to commensuratewith the nature of business size and complexity of operations and is monitored by themanagement to provide reasonable assurance on the achievement of objectives effectivenessand efficiency of operations reliability of financial reporting and compliance withapplicable laws and regulations.
An entity level control framework sets the control philosophy andprinciples which guide the organization policy and operating processes. Your Company hasinstitutionalized a robust process and internal control system commensurate with its sizeand operations. The organizational hierarchy role responsibility authority andaccountability structures have been defined to provide an enabling environment forbusiness functions and units to operate as per the designed control environment. Reviewand oversight procedures are designed to monitor effective adherence to design.
The internal control framework is supplemented with an internal auditprogram that provides an independent view of the efficacy and effectiveness of the processand control environment and through its observations provides an input to the managementto support continuous improvement program. The internal audit program is managed by anInternal Audit function directly reporting to the Audit & Risk Management Committee ofthe Board.
The scope and authority of the Internal Audit Function is derived fromthe Audit Charter approved by the Board. The Internal Audit function develops an internalaudit plan to assess control design and operating effectiveness as per the riskassessment methodology.
The Internal Audit function provides assurance to the Board andmanagement that a system of internal control is designed and deployed to manage keybusiness risks and is operating effectively. For the identified observations managementprovides an action plan to address the process and control deficiencies noted in theinternal audit reviews and action plans are monitored for compliance by the Internal AuditFunction under the supervision and guidance of the Audit and Risk Management Committee.
CORPORATE SOCIAL RESPONSIBILITY -JOURNEY THROUGH THE YEAR (2019-20)
As a responsible corporate citizen and a member of the Indianhealthcare ecosystem we at Fortis Malar Hospitals Ltd. strongly believe that we canmeaningfully alleviate the problem of inequitable access to quality healthcare. Bycreating and supporting social sector programmes linked to health and well-being we seekto leverage our skills experience capabilities technologies and facilities to address acritical social need for the vulnerable sections of society. We have continuously enabledprogrammes and initiatives based on rigorous needs assessment leading creating socialawareness and change in the communities.
The CSR initiatives for Fortis Malar Hospitals Limited are focussed oncontributing to need based program either through Fortis CSR Foundation a special Purposevehicle designated to carry out CSR activities or through Trust/NGO/Society focussed onneed based programs for the community. Fortis CSR Foundation ("FCSRF") is whollyowned subsidiary of Fortis Healthcare Ltd. (ultimate Indian parent of Fortis Malar) andCompany limited by shares not for profit registered under section 8 of the Companies Act2013.
The CSR activities are carried out in a collaborative and inclusivemanner not only to align and synergise the social enterprise work of the group companiesbut also to expand their circle of partnerships with Government Non-GovernmentOrganisations (NGOs) other corporates and individuals.
Working with a dedicated team of employees and Volunteers FCSRFfocuses on four programs namely: AANCHAL CHHAYA SAVERA SEWA. These programs worktowards:
Supporting treatment of under-privileged children suffering fromcongenital heart defect under its Umeed-Dhadkan initiative (AANCHAL)
Support access to medical care through charitable dispensaries(CHHAYA)
Design models on health information dissemination to reach tovulnerable sections of the community and provide awareness on preventive and remedialhealthcare through different channels of communication (SAVERA)
Provide timely medical relief in the event of disasters (SEWA)
Fortis Malar Hospitals Limited has chosen to support preventive healthhealth education and disaster relief initiatives under Section 135 of Companies Act 2013.
Better health is central to human happiness and well-being. It alsomakes an important contribution to economic progress as healthy population live longerand are more productive. the key to a healthy life is awareness/knowledge of how to stayhealthy which is in line with India's Sustainable Development Goal of Good health andwell-being.
Fortis Malar Hospitals Ltd. in FY 19-20 supported the following underthe Savera Program
Keeping in view the spread of Novel Corona Virus (CoVID-19) in Indiaits declaration as pandemic by World Health organisation (WHo) and notification of it as a'Disaster' by Government of India the CSR funds was contributed to support the efforts ofthe government to tackle the coronavirus pandemic. The CSR funds were contributed to PrimeMinister's National Relief Fund.
Fortis Group has always been committed to support the government'sefforts in providing relief during disasters. Earlier through program SEWA a DisasterRelief Initiative Fortis has provided medical relief services in an organised manner topeople affected by Disasters.
The details of particulars pursuant to Section 134(3)(o) of theCompanies Act 2013 read with rule 9 of the Companies (CSR) Rules 2014 is given in 'Annexure- V' forming part of this report.
DIRECTORS & KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Companies Act 2013 and theArticles of Association of the Company Mr. Daljit Singh Non-Executive Non-IndependentDirector of the Board of Directors of the Company is liable to retire by rotation at theensuing Annual General Meeting and being eligible has offered himself for re-appointment.The Board on the recommendation of the Nomination and Remuneration Committee proposes hisre-appointment to the shareholders of the Company.
Brief resume of director seeking re-appointment/regularisation alongwith other details as stipulated under Regulation 36 of SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 are provided in the Corporate GovernanceReport.
During the period under review Mr. Ravi Rajagopal IndependentDirector appointed with effect from October 23 2019.
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed both under the Companies Act 2013 and the SEBI (Listing Agreement andDisclosure Requirements) Regulations 2015.
There are no inter-se relationship between the Board Members.
During the year 2019-20 seven meetings were held by the Board ofDirectors. The details of board/committee meetings and the attendance of Directors areprovided in the Corporate Governance Report.
Disclosures regarding the following are also mentioned in report onCorporate Governance forming part of this report:
1. Composition of Committee(s) of the Board of Directors 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 Time Directorif any.
Pursuant to the provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 Nomination & RemunerationCommittee (NRC) is required to specify the manner for effective evaluation ofperformance of Board its committees and individual directors to be carried out either bythe Board or by the NRC or by an independent external agency (IEA). For thefinancial year 2019-20 NRC has appointed Strengths Masters (opC) private Limited (SMPL)independent external agency to carry out board evaluation process and monitor and presentfinal report thereon. SMpL carried out performance evaluation of Board of DirectorsChairman as well as the evaluation of the working of its Committees viz. Audit and RiskManagement Committee Nomination and Remuneration Committee Stakeholders RelationshipCommittee and Corporate Social Responsibility Committee.
The following process of evaluation was followed:
|S. ||Process ||Remarks ||Criteria for Evaluation (including Independent |
|No. || || ||Directors) |
|1. ||Kick off Board evaluation program ||the Chairperson kick start the process. Appointed and designated independent external agency as process Coordinator. ||NA |
|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 |
Disclosures pursuant to Rule 5 of 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
(Amount in ')
|Name of the Director* ||Remuneration of Director ||Median Remuneration of employees ||Ratio |
|Mr. C K Nageswaran ||5145708 ||320000 ||1:16 |
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 |
|Mr. C K Nageswaran ||Whole time Director ||4% |
|Mr. Saravanan V ||Chief Financial officer ||NA |
c) The percentage increase in the median remuneration of employeesin the financial year 2019-20 is 14% (4% in the last year)
d) the number of permanent employees on the rolls of Company is 538as on March 312020.
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 increases already made in the salaries of employees other than the managerial personnel ||6% |
|(B) percentile increases in the managerial remuneration ||6% |
|Comparison of (A) and (B) ||0% |
|Justification ||NA |
|Any exceptional circumstances for increase in the managerial remuneration ||N/A |
f) Salary details along with the variable component and other benefitsof the remuneration being paid to directors are detailed below:
(Amount in ')
|Name of the Director* ||Salary Allowances & ||Performance Incentives ||Retiral Benefits ||Service Contract (As Whole time Director) |
| ||Perquisites || || ||Tenure Notice Period |
|Mr. C K Nageswaran ||5145708 ||600000 ||324394 ||3 years w.e.f. october 02 2018 3 Months |
* None of the other Directors was paid any remuneration except sittingfees and the fees paid for services rendered in the professional capacity.
g) Remuneration has been paid to Directors and KMps as per BoardGovernance Document / the Remuneration policy of the Company;
h) Remuneration Policy:
the Board has on the recommendation of the Nomination &Remuneration Committee framed a remuneration policy for selection and appointment ofDirectors Senior Management and their remuneration including criteria for determiningqualifications positive attributes independence of a Director etc. and the same is alsoavailable on the website of the Company at the linkhttps://www.fortismalar.com/frontend/investorrelations/Governance%20Document-1571650694.pdf.
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 the Company will be provided upon request. In terms of Section136 of the Companies Act 2013 the Board Report and Accounts are being sent to theMembers and others entitled thereto excluding the information on employees' particularswhich is available for inspection by the Members at the Registered office and/or Corporateoffice of the Company during business hours between 10.00 am to 12.00 noon on working days(Except Saturday) of the Company up to the date of the ensuing Annual General Meeting. Ifany Member is interested in obtaining a copy thereof such Member may write to the CompanySecretary in this regard.
RELATED PARTY TRANSACTIONS
There are a few significant Related Party Transactions made by theCompany with other related parties. Disclosures as required under Section 134(3)(h) readwith Rule 8(2) of the Companies (Accounts) Rules 2014 are given in "AnnexureVI" in Form AoC 2 as specified under the Companies Act 2013.
All Related party transactions are placed before the Audit and RiskManagement Committee for approval as required under SEBI (Listing obligations andDisclosure Requirements) Regulations 2015. prior omnibus approval of the Audit and RiskManagement Committee is obtained for the transactions which are of foreseen and repetitivenature. the transactions entered into pursuant to such omnibus approval so granted areaudited and a statement giving details of all related party transactions is placed beforethe Audit and Risk Management Committee on a quarterly basis.
the Company has developed a Related party transactions policy /Framework and Standard operating procedures for the purpose of identification andmonitoring of such transactions. the policy on Related party transactions as approved bythe Board is uploaded on the Company's website and the same is available at the link:https://www.fortismalar.com/frontend/investorrelations/Related-Partv-Transactions-Framework-Document-1557140823.pdf.
None of the Directors has any pecuniary relationship or transactionvis-a-vis the Company except to the extent of sitting fees and the fees paid for servicesrendered in the professional capacity and remuneration approved by the Board of Directorsand as disclosed in this Annual Report.
RISK MANAGEMENT POLICY
the 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 Enterprise Risk Management ("ERM")policy is to provide a formalized framework to enable judicious allocation of resources onthe critical areas which can adversely impact the Company's ability to achieve itsobjectives. the policy is applicable to the Company and its subsidiaries. this frameworkenables the management to develop and sustain a risk-conscious culture wherein there isa high degree of organization-wide awareness and understanding of external and internalrisks associated with the business. the policy defines an architecture and oversightstructure to assist effective implementation. By clearly defining terms and outliningroles and responsibilities ERM promotes risk ownership accountability self-assessmentand continuous improvement to minimize adverse impact on achievement of businessobjectives and enhance the Company's competitive advantage. the details thereof arecovered under the Management and Discussion Analysis Report which forms part of the AnnualReport.
POLICY FOR PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT
Your Company has adopted a policy for prevention prohibition andRedressal of sexual harassment. We have not received any complaint relating to sexualharassment during the year hence no complaint is pending as on March 312020. the Companyhas complied with provisions relating to the constitution of Internal Complaints Committeeunder the Sexual Harassment of Women at Workplace (prevention prohibition and Redressal)Act 2013. the same may also be read in terms of Companies (Accounts) Rules 2014.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under reviewas stipulated under Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of this Annual Report.
REPORT ON CORPORATE GOVERNANCE
Your Company continues to place greatest emphasis on managing itsaffairs with diligence transparency responsibility and accountability. Your Company iscommitted to adopting and adhering to the best Corporate Governance practices recognizedglobally. Your Company understands and respects its fiduciary role and responsibilitytowards stakeholders and the society at large and strives hard to serve their interestsresulting in creation of value and wealth for all stakeholders at all times.
the report of Board of Directors of the Company on Corporate Governanceis given in the section titled "Report on Corporate Governance" forming part ofthis Annual Report.
Certificate of M/s. Mukesh Agarwal & Co. Company Secretary inWhole-time practice regarding compliance with the Corporate Governance requirements asstipulated in Clause F Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed with the Corporate Governance Report.
CODE OF CONDUCT
Declaration by Mr. C K Nageswaran Whole-time Director confirmingcompliance with the 'Code of Conduct' is enclosed with Corporate Governance Report.
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 the preparation of the annual accounts for the year ended March312020 the applicable accounting standards has been followed along with properexplanation relating to material departures;
b) the directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company for financial year endedMarch 312020 and of the loss of the Company for the said period;
c) the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d) the directors had prepared the annual accounts on a going concernbasis;
e) the directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and
f) the directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
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 the 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 the Company.
Your Directors also greatly appreciate the commitment and dedication ofall the employees at all levels that has contributed to the growth and success of theCompany. Your Directors also thank all the strategic partners business associates Banksfinancial institutions and our shareholders for their assistance co-operation andencouragement to the Company during the year.
| ||By the Order of the Board |
| ||For Fortis Malar Hospitals Limited |
|Date: June 12 2020 ||Daljit Singh |
|Place: Gurugram ||Chairman |