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Kovai Medical Center & Hospital Ltd.

BSE: 523323 Sector: Health care
NSE: KOVAI ISIN Code: INE177F01017
BSE 00:00 | 14 Dec 702.40 -0.55
(-0.08%)
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NSE 05:30 | 01 Jan Kovai Medical Center & Hospital Ltd
OPEN 718.95
PREVIOUS CLOSE 702.95
VOLUME 180
52-Week high 1390.00
52-Week low 655.00
P/E 14.75
Mkt Cap.(Rs cr) 768
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 718.95
CLOSE 702.95
VOLUME 180
52-Week high 1390.00
52-Week low 655.00
P/E 14.75
Mkt Cap.(Rs cr) 768
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kovai Medical Center & Hospital Ltd. (KOVAI) - Director Report

Company director report

Dear Members

Your Directors take pleasure in presenting the Thirty Second Annual Report along withthe audited financial statements for the year ended 31st March 2018.

FINANCIAL HIGHLIGHTS (STANDALONE)

Rs. Lakhs

Particulars 2017-18 2016-17
Operating Income 59236.63 53107.33
Othe r Income 763.44 617.68
Total Income 60000.07 53725.01
Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) 13644.14 13086.91
Profit Before Taxation (PBT) 8941.90 9233.61
Less: Provision for Taxation 3144.16 3236.26
Profit After Taxation 5797.74 5997.35
Add: Other Comprehensive Income (3.48) (22.56)
Total Comprehensive Income for the year 5794.26 5974.79

RESULTS OF OPERATIONS STANDALONE

The income from operations for the financial year 2017-18 was Rs.59236.63 Lakhsregistering a growth of 11.54% over the previous year income of Rs.53107.33 Lakhs.Earnings before interest tax depreciation and amortization (EBITDA) were '13644.14Lakhs registering a growth of 4.26% over the previous year EBITdA of '13086.91 Lakhs.

Profit after tax (PAT) for the year was Rs.5797.74 Lakhs over the PAT of Rs.5997.35Lakhs in year 2016-17. Reduction in PAT is due to enhanced Depreciation and Amortisation(consequent to re-assessment of useful life of Property Plant & Equipment) amountingto Rs.703.91 Lakhs.

SUBSIDIARY COMPANY

Idhayam Hospitals Erode Limited is a wholly owned subsidiary of KMCH Limited. TotalIncome for the Financial Year 2017-18 was Rs.35.67 Lakhs an increase of 5.04% over theprevious year Total income of Rs.33.96 Lakhs.

A statement of salient features of financials of Idhayam Hospitals Erode Limitedpursuant to Section 129(3) of the Companies Act 2013 in Form AOC 1 is annexed as "Annexure- I" and forming part of the report.

Except the above the Company has no other Subsidiary Associate or Joint Venturecompany. Idhayam Hospitals Erode Limited is not a material subsidiary. The Board ofDirectors have formulated a policy for determining 'material' subsidiaries pursuant to theprovisions of the Listing regulations. The same is displayed on the website of the company(http://kmchhospitals.com/wp- content/uploads/2016/pdf/Policy_on_subsidiaries.pdf).

CONSOLIDATED FINANCIAL STATEMENTS

On consolidated basis income from operations from current year under review wasRs.59236.63 Lakhs higher by 11.54 % over year 2016-17 income of Rs.53107.33 Lakhs.

Profit after tax (PAT) for the year was Rs.5797.97 Lakhs over the PAT of Rs.6006.35Lakhs in year 2016-17.

MERGER

The Board at its meeting held on 03rd February 2017 approved the scheme of amalgamationof Idhayam Hospitals Erode Limited (Wholly Owned Subsidiary) with Kovai Medical Center andHospital Limited effective 1st April 2016.

Pursuant to an Order dated 21st November 2017 passed by the National Company LawTribunal Chennai Bench separate meetings of Unsecured Creditors and Equity Shareholdersof Kovai Medical Center and Hospital Limited was convened and held at the RegisteredOffice of the Company on 04th January 2018 approving with or without modification(s)the proposed Scheme of Amalgamation and Arrangement between Idhayam Hospitals ErodeLimited and Kovai Medical Center and Hospital Limited under Sections 230 to 232 of theCompanies Act 2013 and other applicable provisions of the Companies Act 2013.

The secured creditors of the Company had provides their no objection to the scheme ofamalgamation.

Statutory Clearances from Regional Director Company Law Board Department of IncomeTax Government of India are awaited before the Tribunal hears and disposes the CompanyPetitions confirming the Scheme of Amalgamation.

DIVIDEND

Based on the Company's performance the Directors are pleased to recommend for approvalof the members a dividend of Rs.3.00 per share (30%) for the year 2017-18.

The dividend on equity shares if approved by the members would involve the cashoutflow of Rs.395.74 Lakhs including dividend distribution tax.

TRANSFER TO RESERVES

The company does not propose to transfer any amount out of the profit to reserves.

BOARD MEETINGS

The Board of Directors met four times during this financial year. The disclosure onBoard meetings and attendance of Directors are provided in the Corporate GovernanceReport.

AUDIT COMMITTEE

The composition of Audit Committee number of meetings held and the attendance ofDirectors there to have been provided under an identical head in the Corporate GovernanceReport.

CORPORATE SOCIAL RESPONSIBILITIES

During the year in pursuance of the recommendations of the CSR Committee the companyhad contributed '142.42 Lakhs being 2% of the average net profit of the company towardsimplementing the CSR activities. Annual Report on CSR as required under Section 135 readwith schedule VII and other applicable provisions of the Companies Act 2013 is appendedas "Annexure - II".

INFORMATION ON STATUS OF COMPANY'S AFFAIRS

Information on operational and financial performance etc. is provided in theManagement Discussion and Analysis Report which is annexed to the Directors' Report andhas been prepared inter-alia in compliance with the terms of SEBI (LODR) Regulations2015.

SHARE CAPITAL

The paid up equity share capital of the Company as on March 31 2018 aggregates to'109422620/- comprising of 10942262 equity shares of Rs.10/- each fully paid up.

CREDIT RATING

CARE has affirmed your company's Long term bank facilities 'CARE A+' (single Aplus) and short term bank facilities to 'CARE A1+' (A One plus) from 'CARE A1' ( AOne).

HOSPITAL ACCREDITATION

Your Hospital has been certified by National Accreditation Board for Hospitals andHealth care providers (NABH) for the delivery of high standards for safety and qualitycare to the patients.

DIRECTORS RESPONSIBILITY STATEMENT

In pursuance of section 134 (5) of the Companies Act 2013 the Directors herebyconfirm that:

a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) The Directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis; and

(e) The Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

(f) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively

BOARD EVALUATION

Pursuant to the provisions of Companies Act 2013 and SEBI (LODR) Regulations 2015 astructured questionnaire was administered after taking into consideration of variousaspects to the Board functioning composition of the Board and its Committees cultureexecution and performance of specific duties obligations and governance to ascertain theefficacy and functioning of Board and its members.

The performance evaluation of Independent Directors was completed. The Board ofDirectors have expressed their satisfaction with the outcome of the evaluation process.

The performance evaluation of the Chairman of the Board and Non-independent Directorswas carried out by the Independent Directors. The Independent Directors have expressedtheir satisfaction with the outcome of the evaluation process.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Pursuant to requirement of SEBI (LODR) Regulations 2015 the company has afamiliarization programme for the Independent Directors with regard to their role rightsresponsibilities in the company nature of the industry in which the company operatesbusiness model of the company etc. The Board members are provided with all the necessarydocuments/reports and internal policies to enable them to familiarize with the company'sprocedures and practices and the same is uploaded on the Company's website atwww.kmchhospitals.com/Familiarization _Programme_for_Independent_Directors.pdf

DIRECTORS

As per Article103(b) of the Articles of Association and Section 152(6) of the CompaniesAct 2013 except Dr. Nalla G Palaniswami and Dr. Thavamani Devi Palaniswami all otherExecutive and Non-Executive Non-Independent Directors are subject to retirement byrotation. Accordingly Dr. M.C.Thirumoorthi Director retires by rotation and beingeligible has offered himself for re-appointment.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received necessary declaration from each Independent Director of theCompany under Section149 (7) of the Companies Act 2013 that the Independent Directors ofthe Company met with the criteria of their Independence laid down in Section 149(6).

COMPLIANCE OF CODE OF CONDUCT

The compliance of code of conduct by Directors have been affirmed by the ManagingDirector and is disclosed in the Corporate Governance Report.

KEY MANAGERIAL PERSONNEL

The Key Managerial Personnel of the company as stipulated under the Companies Act 2013are Dr. Nalla G Palaniswami Managing Director Dr.Thavamani Devi Palaniswami JointManaging Director Dr. Mohan S Gounder Joint Managing Director Dr. Arun N PalaniswamiWhole Time Director CA M.K.Ravindra Kumar Chief Financial Officer and CS S.P.ChittibabuCompany Secretary.

CA P.K.Gopikrishnan Chief Financial Officer resigned from the services of the Companyon 31st May 2017 after 12 years of service. The Board of Directors expresstheir gratitude for the services during his tenure. CA M.K.Ravindra Kumar joined theCompany as Chief Financial Officer with effect from 01st June 2017.

PARTICULARS REGARDING CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND EXPENDITURE

The particulars regarding conservation of energy technology absorption and foreignexchange earnings and expenditure stipulated under Section 134(3)(m) of the Companies Act2013 read witht he Companies (Accounts) Rule 2014 are annexed here with as"Annexure-III"andforms part of this Report.

CHANGE IN THE NATURE OF BUSINESS IF ANY

During the year there were no changes in the nature of business of the company or anyof its subsidiary.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments affecting financial position of thecompany which have occurred between the end of the financial year of the company to whichthe Financial Statements relate and date of the report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT 2013

As on March 31 2018 the Company has neither provided nor there any outstanding loansor guarantees covered under the provisions of Section 186 of the Act. The details ofInvestments covered under the provisions of Section 186 of the Act are given in Note No.5to the financial statements.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The company has set up vigil mechanism for Directors and Employees to report theirgenuine concerns the details of which are given in the Corporate Governance Report. Thepolicy on Vigil Mechanism and Whistle Blower Policy have been posted on the website of theCompany (http://kmchhospitals.com/wp-content/uploads/2016/pdf/Whistle_Blower_Policy.pdf).

RELATED PARTY TRANSACTIONS AND POLICY ON RELATED PARTY TRANSACTIONS

All transactions with Related Parties are at arm's length and in the ordinary course ofbusiness duly approved by the Audit Committee of the Board. Hence there are notransactions which are either not in arm's length or which are material in naturerequiring disclosure in Form AOC - 2. Hence Form AOC-2 is not annexed to thisreport.

The Board has formulated Policy on Related Party Transactions and the same is uploadedon the Company's website at http://www.kmchhospitals.com/pdf/PolicyRelated PartyTransaction.pdf.

RISK MANAGEMENT

The steps taken by the company to mitigate the risk are disclosed under an identicalhead in the Management Discussion and Analysis forming part of Directors' Report.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act 2013 and rule 12(1) of the Companies(Management and Administration) Rules 2014 an extract of Annual Return in MGT 9 isannexed herewith as "Annexure - IV" and forming part of this report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant and material orders passed by the Regulators/Courts/Tribunalswhich would impact the going concern status and the company's operations in future.

HUMAN RESOURCE DEVELOPMENT

Your Company continues to place great importance to the development of human resourcessegment and the sustained focus on retention through employee engagement initiatives hasmade the employees realize their potential.

Learning and Development has provided various learning platforms which includeclassroom and online self - learning modules to meet the development need of employees tohelp build their skills knowledge and capability.

The total strength of the employees of the Company as on 31st March 2018 was 4051 Nos. INDUSTRIALRELATIONS

The industrial relations scenario continued to be cordial during the year under review.

PARTICULARS OF REMUNERATION PAID TO KEY MANAGERIAL PERSONNEL

The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of theremuneration of Directors Key Managerial Personnel and employees are enclosed as "Annexure- V" forming part of the report.

The Nomination and Remuneration Policy of the company has been disclosed on the websiteof the company and the web link thereon is http://www.kmchhospitals.com/pdf/Nomination.Remuneration Evaluation policy.pdf.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The company has in place a Prevention of Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at the work place (Prevention Prohibitionand Redressal) Act 2013. An Internal Complaint Committee has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under the policy.

During the year 2017-18 no complaints were received by the company related to sexualharassment.

DEPOSITS

As per Section 73 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014 the company has not accepted any deposits from the public duringthe year.

SECRETARIAL AUDIT

Pursuant to 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 KSR & Co. Company Secretaries LLP Coimbatore a firm of CompanySecretaries in Practice to undertake the Secretarial Audit of the company for theFinancial Year 2017-18. Secretarial Audit Report is annexed herewith as "Annexure-VI" forming part of the report.

COST AUDIT

In terms of Section 148 and other applicable provisions of the Companies Act 2013 readwith Companies (Cost Records and Audit) Rules 2014 Mr.V.Sakthivel Cost Accountant M/sRKMS & Associates Tirupur was appointed as Cost Auditor of the company by the Boardon recommendation of Audit Committee for the Financial Year 2018-19. The remuneration ofthe Cost Auditor is subject to ratification by the members at the ensuing Annual GeneralMeeting.

STATUTORY AUDITORS

M/s. Haribhakti & Co. LLP Chartered Accountants (FRN.: 103523W/W100048) wereappointed as Statutory Auditors of the Company for five consecutive years at the AnnualGeneral Meeting held on 25th September 2015 and the term enures up to the completion ofthe Audit of the Financial Year 2019-20. However in the context of certain proposedinternal restructuring in the Audit Firm the Company has opted for an early rotation.This was discussed with the Audit Firm and in order to facilitate smooth transition fromfinancial year 2018-19 they have chosen to resign from the position of Statutory Auditorsof the Company upon the completion of the audit for the financial year 2017-18 and haveconveyed their No-Objection to the Company appointing another Statutory Auditor for thefinancial year 2018-19 vide their letter dated 11th June 2018.

As per the provisions of Section 139(8) of the Companies Act 2013 casual vacancycaused by the resignation of auditors can be filled by the Board within 30 days of vacancyand is required to be approved by the Company in general meeting within three monthsthereof. Hence the Board of Directors at their meeting held on 23rd June 2018 appointedM/s.VKS Aiyer & Co. Chartered Accountants (FRN: 000066S) Coimbatore to fill thecasual vacancy and that they will hold office until this Annual General Meeting. The Boardproposes that M/s.VKS Aiyer & Co. Chartered Accountants (FRN: 000066S) may beappointed as the Statutory Auditors of the Company for a period of 5 years in terms ofSection 139(1) of the Companies Act 2013.

M/s. VKS Aiyer & Co. Chartered Accountants (FRN: 000066S) have conveyed theirconsent to be appointed as the Statutory Auditors of the Company along with a confirmationthat their appointment if made by the members would be within the limits prescribedunder the Companies Act 2013.

Your Board recommends the appointment of M/s VKS Aiyer & Co. CharteredAccountants (FRN: 000066S) as Statutory Auditors of the Company to hold office from theconclusion of this Annual General Meeting to the conclusion of the sixth consecutiveAnnual General Meeting to be held in the year 2023.

LISTING WITH STOCK EXCHANGE

The equity shares of the Company are listed on the Bombay Stock Exchange Limited.

CORPORATE GOVERNANCE

Your Company has been complying with the provisions of Corporate Governance asstipulated in Chapter IV and other relevant provisions of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. A separate report on Corporate Governancealong with Practising Company Secretary's certificate on compliance of the CorporateGovernance norms as stipulated in Regulation 34(3) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Management Discussion & Analysisforming part of this report are provided elsewhere in this Annual Report.

ACKNOWLEDGEMENTS

The Board expresses its grateful appreciation for the continued assistance andco-operation received from Government Authorities Financial Institutions BanksCustomers Suppliers and investors.

The Board also places on record its appreciation for the dedication and commitmentextended by its consultants and employees at all levels and their contribution to thegrowth and progress of the company.

For and on behalf of the Board

Sd/- Sd/-
Place: Coimbatore DR. NALLA G PALANISWAMI CA.A.M.PALANISAMY
Date : 23.06.2018 MANAGING DIRECTOR DIRECTOR