Your Directors have pleasure in presenting here the Twenty Seventh Annual Report ofyour Company along with the Audited Standalone and Consolidated Financial Accounts and theAuditors Report thereon for the Year ended March 31 2018.
The highlights of Consolidated and Standalone Financial Results of your Company are asfollows:
(Rs. In Lacs)
| ||Consolidated |
|Particulars ||Year ended March 31 2018 ||Year ended March 31 2017 |
|Continuing Operations || || |
|Operating Income ||14919.27 ||14055.99 |
|Other Income ||844.18 ||796.95 |
|Total Income ||15763.45 ||14852.94 |
|Total Expenditure ||14744.43 ||13966.17 |
|Operating Profit ||1019.02 ||886.77 |
|Less: Finance Charges Depreciation & Amortization ||459.88 ||439.90 |
|Profit / (Loss) before exceptional items and tax ||559.14 ||446.87 |
|Exceptional items ||- ||- |
|Profit / (Loss) before tax ||559.14 ||446.87 |
|Less: Tax Expenses ||226.96 ||135.43 |
|Net Profit for the year ||332.18 ||311.44 |
|Other Comprehensive Income (Net of Taxes) ||12.69 ||(24.41) |
|Total Comprehensive Income for the year ||344.87 ||287.03 |
|Profits/ (Loss) attributable to minority interest ||- ||- |
|Share in profits of associate companies ||- ||- |
|Profit/ (Loss) for the year from continuing operations (A) ||344.87 ||287.03 |
|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/ (loss) of associate companies ||- ||- |
|Profits/ (loss) attributable to minority interest ||- ||- |
|Profit for the year from discontinuing operations (B) ||- ||- |
|Profit for the year (A+B) ||344.87 ||287.03 |
|Operating Income ||14919.27 ||14055.99 |
|Other Income ||818.46 ||756.26 |
|Total Income ||15737.73 ||14812.25 |
|Total Expenditure ||14746.86 ||13968.52 |
|Operating Profit ||990.87 ||843.73 |
|Less: Finance Charges and Depreciation ||459.88 ||439.90 |
|Profit/ (loss) before exceptional items and tax ||530.99 ||403.83 |
|Exceptional items ||- ||- |
|Profit/ (loss) before tax ||530.99 ||403.83 |
|Less: Tax Expenses ||216.87 ||121.80 |
|Net Profit for the year ||314.12 ||282.03 |
|Other Comprehensive Income (Net of Taxes) ||12.30 ||(24.04) |
|Total Comprehensive Income for the year ||326.42 ||257.99 |
STATE OF COMPANYS AFFAIR OPERATING RESULTS AND PROFITS
Fortis Malar Hospital (formerly known as Malar Hospital) was acquired by Fortis Groupin early 2008. The hospital founded in 1989 is established as one of the largestcorporate hospitals in Chennai providing quality super specialty and multi-specialtyhealthcare services. Fortis Malar Hospitals with 180 beds focuses on providingcomprehensive medical care in the areas of Cardiology and Cardiac Surgery Neuro SurgeryGynecology Orthopedics Gastroenterology Neurology Pediatrics Diabetics Nephrologyand Internal Medicine.
Fortis Malar Hospital has a state of the art Cath Lab and multiple dedicated cardiacoperation theatres and intensive coronary care units. Several rare and complex Adult andPediatric Cardiac surgeries Orthopedic and Joint replacements Neurosurgeries andPlastic reconstruction surgeries have been performed at this hospital. The hospitalsObstetrics and Gynecology services are among the busiest in the city successfullyperforming many complicated deliveries and surgeries. They are supported by a dedicatedNeonatology unit.
Fortis Malar has been doing exceptional clinical work and has achieved the uniquedistinction of completing around 250 Heart / Lung transplants reinforcing its position asa world class super specialty tertiary care centre. Additionally it has made a mark foritself by performing complex and high end surgeries particularly in Cardiology NeurologyMother and Child Care among others. We are delighted with the great work being done byour team of doctors nurses paramedics and other staff members and are confident that wewill continue to deliver world class clinical programs with consistently superior resultsin the future as well.
OPERATIONAL AND FINANCIAL PERFORMANCE
During the Financial Year 2017-18 your Company achieved a consolidated income fromoperations of Rs. 149.19 Cr against Rs. 140.56 Cr during the last Financial Year endedMarch 31 2017 representing a growth of 6% over the previous year. Consolidated OperatingEBITDA for the year stood at Rs. 1.75 Cr compared to Rs. 0.90 Cr in the previous year.Profit before exceptional item and tax stood at Rs. 5.59 Cr compared to Rs. 4.47 Cr in thecorresponding period. Consolidated net profit for the year was Rs. 3.32 Cr compared to Rs.3.11 Cr in the previous year.
Regarding the key performance indicators the Companys average revenue peroccupied bed (ARPOB) improved significantly during the current year to Rs. 173 lacs fromRs. 155 lacs in the previous year. The average length of stay (ALOS) stood at 4.00 days inFinancial Year 2018 compared to 3.39 days in Financial Year 2017. Occupancy of thehospital during the year was at 58% compared to 61% of the previous year. There has beenno change in the 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 dividend for the FY2017-18. Accordingly there has been no transfer to General Reserves.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICHHAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR 2017-18 AND THE DATE OF THE REPORT
The Board of Directors of your Company at its meeting on August 19 2016 approved acomposite scheme of arrangement and amalgamation between your Company Fortis HealthcareLimited ("FHL") SRL Limited ("SRL") and theirrespective shareholders and creditors ("Scheme") for (i) thetransfer of the undertaking business and operations of your Company including assets andliabilities pertaining to the hospital business as identified in the Scheme ("TransferredUndertaking") as a going concern by way of slump sale from your Company toFHL in lieu of payment of a lumpsum consideration by FHL to your Company ("BusinessTransfer"); (ii) the transfer by way of a demerger of the undertakingsbusiness activities and operations of FHL pertaining exclusively to the diagnosticsbusiness of FHL as identified in the Scheme ("Demerged Undertaking") toyour Company and consequent issue of equity shares by your Company to shareholders of FHL("Demerger"); (iii) the amalgamation of all the undertakings andentire business of SRL with your Company and dissolution of SRL without winding up; theconsequent issue of equity shares by your Company to the shareholders of SRL and thecancellation of equity shares of SRL held by your Company ("Amalgamation")and various other matters consequential or otherwise integrally connected therewithincluding the reduction of the securities premium account of FHL and the reorganization ofthe share capital of your Company pursuant to the provisions of Sections 230 to 232 of theCompanies Act 2013 ("Act") (corresponding to Sections 391-394 of theCompanies Act 1956 read with Section 52 and Section 66 of the Act (corresponding toSections 100 to 103 of the Companies Act 1956) Section 2(1B) of the Income Tax Act1961 and any other applicable provisions of the Act or Companies Act 1956.
The Scheme also received the approval of the Competition Commission of India on October14 2016. The BSE Limited conveyed its no adverse observations/no objections to the Schemevide letter dated November 11 2016. Subsequently the Scheme had also been approved bythe creditors and equity shareholders of your Company on April 26 2017 and April 27 2017respectively.
The Board of Directors of your Company on December 14 2017 approved the extension ofthe long stop date of December 31 2017 set out in Clause 61 of the Scheme to June 302018. The Board of Directors of your Company on June 13 2018 approved withdrawal of theScheme due to reasons beyond the Companys control the process had already takenover 18 months. Due to the inordinate delay in the approval of the composite scheme ofdemerger and less than optimum performance of diagnostics business during the period ofdelay it was not suitable for the Companys shareholders to continue with thisscheme as the valuation ascribed earlier to diagnostics business not appropriate now.Also the Company is a strong independent listed company and can continue to operatethrough a single hospital business model. Further National Company Law TribunalChandigarh vide its order dated June 15 2018 approved the scheme as withdrawn.
STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportable materialweakness in the design or operation was observed.
DETAILS OF SUBSIDIARY
During the year under review the Company has only one subsidiary Company i.e. MalarStars Medicare Limited. The main objects of the said wholly-owned subsidiary includesetting up managing / administering hospital(s) and to provide Medicare and Healthcareservices.
Further note that the Board of Directors has adopted a policy for determining"material subsidiary" pursuant to Regulation 16(1)(c) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The said policy is availableathttp://www.fortismalar.com/wp-content/uploads/2017/11/Policy-on-Material-Subsidiary-Company.pdf.Basis the Consolidated Audited Annual Accounts of the Company for the Financial Year2017-18 the Company has no "material non-listed subsidiary" in terms SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARY COMPANY
The consolidated financial statements of the Company and its subsidiary prepared inaccordance with applicable Indian accounting standards issued by the Institute ofChartered Accountants of India forms part of the Annual Report. In terms of the Section136 of the Companies Act 2013 financial statements of the subsidiary company will beprovided to any shareholder of the Company who asks for it and said annual accounts willalso be kept open for inspection at the registered office of the Company and that ofsubsidiary. Performance and financial position of the subsidiary included in theConsolidated Financial Statements of the Company is mentioned below:-