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Kovai Medical Center & Hospital Ltd.

BSE: 523323 Sector: Health care
NSE: KOVAI ISIN Code: INE177F01017
BSE 15:40 | 07 Dec 1771.65 11.50






NSE 15:31 | 07 Dec 1771.60 15.30






OPEN 1751.90
52-Week high 1920.00
52-Week low 1311.60
P/E 19.58
Mkt Cap.(Rs cr) 1,938
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1751.90
CLOSE 1760.15
52-Week high 1920.00
52-Week low 1311.60
P/E 19.58
Mkt Cap.(Rs cr) 1,938
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 Sixth AnnualReport along with the audited financial statements for the year ended 31stMarch 2022.


( in lakhs)

Particulars 2021-22 2020-21
Operating Income 90599.66 69036.18
Other Income 1182.54 1185.35
Total Income 91782.20 70221.53
Earnings before Interest Tax Depreciation & Amortisation (EBITDA) 26933.66 20506.99
Profit Before Taxation (PBT) 14067.83 10573.62
Provision for Taxation 3641.77 2805.08
Profit After Taxation (PAT) 10426.06 7768.54
Add: Other Comprehensive Income (166.75) 127.61
Total Comprehensive Income for the year 10259.31 7896.15


The income from operations for the financial year 2021-22 was Rs90599.66 Lakhs registering an increase of 31.24% over the previous year income of Rs69036.18 Lakhs. Earnings before interest tax depreciation and amortization (EBITDA)were Rs 26933.66 Lakhs registering a growth of 31.33% over the previous year EBITDA of Rs20506.99 Lakhs. Profit after tax (PAT) for the year was Rs 10426.06 Lakhs over the PATof Rs 7768.54 Lakhs in year 2020-21.


The Company does not have any Subsidiary Company Joint Venture orAssociate Companies as defined in the Companies Act 2013.


Based on company's performance the Board of Directors are pleased torecommend a dividend of Rs 6/- per share (60%) - (Final Dividend Rs 3/- per share andSpecial Dividend Rs 3/- per share) for the Financial Year 2021-22 for approval of themembers. The dividend on equity shares if approved by the members would involve a cashoutflow of Rs 656.54 Lakhs.

Pursuant to Finance Act 2020 dividend income is taxable in the handsof the Shareholder with effect from 01 April 2020 and the Company is required to deducttax at source from dividend paid to Shareholders at the prescribed rates. For theprescribed rates for various categories Shareholders are requested to refer the FinanceAct 2020 relevant circulars and amendments thereof if any.

Further in terms of Regulation 43A of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations) the DividendDistribution Policy of the Company is available on the website of the Company at the link: Policy.pdf.


The Company does not propose to transfer any amount out of the profitto reserves.


During the year there were no changes in the nature of business of theCompany.


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


Your Company has been in the forefront of handling the COVID-19Pandemic. More than 600 Beds across various centers had been allocated for COVID-19Management especially in the second and third wave. Presently with the reduction in numbercases being affected by COVID-19 allocation of beds has also been reduced.

Your Company withstood the COVID-19 pandemic by working unitedenhancing humanity's fight against this pandemic. Our Doctors were strained and strivedduring the COVID-19 pandemic. KMCH being a major ICU Center and a hub for Extra CorporealMembrane Oxygenation (ECMO) worked with dedication taking on the most difficult ofCOVID-19 patients during the second and third waves. COVID-19 Vaccination Services stillcontinue in all the major centers of KMCH.


The Board of Directors met four times during this financial year. Thedisclosure on Board meetings and attendance of Directors are provided in the CorporateGovernance Report.


The composition of Audit Committee number of meetings held and theirattendance thereto have been provided under an identical head in the Corporate GovernanceReport.


During the year in pursuance of the recommendations of the CSRCommittee the Company had contributed Rs 210.75 Lakhs being 2% of the last three years'average net profit of the Company towards implementing the CSR activities. Annual Reporton CSR as required under Section 135 read with schedule VII and other applicableprovisions of the Companies Act 2013 is appended as "Annexure - I".


Information on operational and financial performance etc. is providedin the Management Discussion and Analysis Report which is annexed to the Directors'Report and has been prepared inter-alia in compliance with the terms of SEBI (LODR)Regulations 2015.


The paid up equity share capital of the Company as on March 31 2022aggregates to Rs 1094.23 lakhs comprising of 10942262 equity shares of Rs 10/- eachfully paid up. There is no change in the paid-up share capital of the Company during theFinancial Year.


CARE Ratings Limited have re-affirmed your Company's Long term bankfacilities as 'CARE A+' (single A+) and short term bank facilities as 'CARE A1+' (A Oneplus).


Your Hospital has been certified by National Accreditation Board forHospitals and Healthcare providers (NABH) for the delivery of high standards for safetyand quality care to the patients.


Pursuant to the provisions of Companies Act 2013 and SEBI (LODR)Regulations 2015 a structured questionnaire was administered after taking intoconsideration of various aspects to the Board functioning composition of the Board andits Committees culture execution and performance of specific duties obligations andgovernance to ascertain the efficacy and functioning of Board and its members.

The performance evaluation of Independent Directors was completed. TheBoard of Directors have expressed their satisfaction with the outcome of the evaluationprocess. There has been no change in the circumstances affecting their status asIndependent Directors of the Company.

The performance evaluation of the Chairman of the Board andNon-Independent Directors was carried out by the Independent Directors. The IndependentDirectors have expressed their satisfaction with the outcome of the evaluation process.


Pursuant to the requirement of SEBI (LODR) Regulations 2015 theCompany has a familiarization programme for the Independent Directors with regard to theirrole rights responsibilities in the company nature of the industry in which the Companyoperates business model of the company etc. The Board members are provided with all thenecessary documents / reports and internal policies to enable them to familiarize with thecompany's procedures and practices and the same is uploaded on the Company's website at ID.pdf.


As per Article 103(b) of the Articles of Association and Section 152(6)of the Companies Act 2013 except Dr. Nalla G Palaniswami and Dr. Thavamani DeviPalaniswami all other Executive and Non-Executive Non-Independent Directors are subjectto retirement by rotation. Accordingly Dr. M.C.Thirumoorthi Director retires by rotationand being eligible has offered himself for re-appointment.


The Independent Directors have submitted their disclosures to the Boardindicating that they comply with all the requirements that are stipulated in Section 149(6) of the Companies Act 2013 and Regulation 16 (1) (b) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 so as to qualify themselves to act asIndependent Directors in the company. Further they have also declared that they are notaware of any circumstance or situation which exist or may be reasonably anticipated thatcould impair or impact their ability to discharge their duties with an objective andindependent judgement and without any external influence.

The Independent Directors of the Company have complied with therequirements of the provisions in relation to Independent Directors Databank as stated inthe Companies (Creation and Maintenance of Databank of Independent Directors) Rules 2019and the Companies (Appointment and Qualification of Directors) Rules 2014 as amended fromtime to time.

Mr.A.P.Ammasaikutti and Dr.K.Kolandaswamy have been appointed asIndependent Directors of the Company for a period of five years by way of Postal Ballot.


The Company has received necessary declaration from each IndependentDirector of the Company under Section 149 (7) of the Companies Act 2013 that theIndependent Directors of the Company met with the criteria of their Independence laid downin Section 149(6).


In pursuance of section 134 (5) of the Companies Act 2013 theDirectors hereby confirm that:

a) In the preparation of the annual accounts the applicable accountingstandards had been followed along with proper explanation relating to material departures

b) The Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the company for that period

c) The Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the 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 andoperating effectively

f) The Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively


Pursuant to Section 92 of the Companies Act 2013 read with Rule 12 ofthe Companies (Management and Administration) Rules 2014 the Annual Return is availableon the website of the Company on the following link:


Pursuant to SEBI (Prohibition of Insider Trading) (Amendment)Regulation 2018 dated 31st December 2018 the Company amended the "Code ofConduct for Insider Trading" and "Code of Practices and Procedures for FairDisclosure of Unpublished Price Sensitive Information". Consequently the Board ofDirectors brought in all the corresponding amendments to the above two mentioned Codes andnecessary disclosures have been made in our website under:


The Key Managerial Personnel of the company as stipulated under theCompanies Act 2013 are Dr. Nalla G Palaniswami Managing Director Dr. Thavamani DeviPalaniswami Joint Managing Director Dr. Arun N Palaniswami Executive Director CAM.K.Ravindra Kumar Chief Financial Officer and CS S.P.Chittibabu Company Secretary.


The information required pursuant to Section 197 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of the remuneration of Directors Key Managerial Personnel and employees aredetailed in this Report.

The Nomination and Remuneration Policy of the company has beendisclosed on the website of the Company and the web link thereon is Policy.pdf


The particulars regarding conservation of energy technology absorptionand foreign exchange earnings and expenditure stipulated under Section 134(3)(m) of theCompanies Act 2013 read with the Companies (Accounts) Rules 2014 are as under:

Energy Conservation

Energy conservation means the efforts made to reduce the consumption ofenergy by using less of an energy service. Your Company constantly and continuouslyapplies all efforts for optimum utilization of the resources. Energy consumption ismonitored through Energy Management System. Through this system areas which consume highvolume of electricity are monitored and alternate steps are taken to optimize energyutilization.

Other energy conservation techniques that are employed include usingequipment with 5 star ratings use of movement sensors in bathrooms of the patient rooms(i.e. the lights are operated based upon human movement) operating a centralized A/cplant and phasing out tube lights with LED lights.

Your Company adopts the concept of 'Sustainable Development' i.e.meeting the needs of the present without compromising the ability of future generations tomeet their own needs. By following this concept your Company has been operating a 5.25 MWSolar Power Generation Plant and Wind Mills which caters to 80% of electricity requirementper annum and through which the Company has been saving 51% on its electricity bills.

Caring for the Environment

Your Company adopts the concept of zero discharge technology underwhich an effluent treatment plant had been set up and the sewage water is treated fortoxic effluents. The treated water is used for horticulture within the premises. Acomprehensive waste management system has been implemented and through thisbio-degradable food wastes are decomposed and biogas is produced for captive consumptionin the hospital canteen which in turn results in reduced LPG cost.

All the vehicles that are operated for the company adhere to pollutioncontrol regulations. Periodic maintenance activities are undertaken to comply withprescribed regulations and vehicle efficiency.

Technology Absorption

Despite the prevalence of the pandemic your Company has continued toinvest in newer technologies. During the year 2021-22 the Company invested in a newtechnique employed to control heart rhythms that are caused by abnormal electrical signalstraveling from the pulmonary veins to the atria. Cryoablation offers ablation cathetersthat use cryo (liquid NO2) energy to create lesions through the rapid removal of heat fromcardiac cells.

Your Company installed an advanced 3D mammography system from Hologica world leader in mammography equipment which is not only extremely accurate but also thefastest system. This allows us to do a 3 dimensional mammography in four seconds withhighest resolution.

Investment in equipment during the year 2021-22 amounts to Rs 5048.03Lakhs.

Foreign Exchange Earnings & Outgo

(i) Earnings in Foreign Currency

<p >Foreign Currency amount realized from NRE bank accounts in respect offee for education during the year ended March 31 2022: Rs 459.00 Lakhs (Previous Year: Rs591.79 Lakhs)

(ii) Expenditure in Foreign Currency

Expenditure in foreign currency during the year ended March 31 2022was Rs 69.86 Lakhs (Previous Year: Rs 1493.38 Lakhs).


As on March 31 2022 the Company has neither provided nor there wereany outstanding loans or guarantees covered under the provisions of Section 186 of theCompanies Act 2013. The details of Investments covered under the provisions of Section 186of the Act are given in Note No.6.


KMCH has an Internal Control System commensurate with the size scaleand complexity of its operations. Your Company has a proper and adequate system ofinternal controls. These controls ensure transactions are authorized recorded andreported correctly and assets are safeguarded and protected against loss from unauthorizeduse or disposition. In addition there are operational controls covering the entirespectrum of internal financial controls.

The Audit committee defines the scope and authority of the InternalAuditor. The Audit Committee comprises of professionally qualified Directors whointeract with the statutory auditors internal auditors and management in dealing withmatters within its terms of reference. A detailed program of internal audits andmanagement review supplements the process of internal financial control framework.

To maintain its objectivity and independence the Internal Auditorreports to the Chairman of the Audit Committee of the Board. The internal auditor monitorsand evaluates the efficacy and adequacy of internal control system in the Company itscompliance with operating systems accounting procedures and policies at all locations ofthe Company. Based on the report of internal auditor process owners undertake correctiveaction in their respective areas and thereby strengthen the controls. Significant auditobservations and corrective actions proposed to fix the observations are presented to theAudit Committee of the Board.


The Company has set up vigil mechanism for Directors and Employees toreport their genuine concerns the details of which are given in the Corporate GovernanceReport. During the Financial Year no complaints or concerns were received by the Chairmanof the Audit Committee under the Vigil Mechanism. Vigil Mechanism and Whistle BlowerPolicy is available in the Company's website


All transactions with Related Parties are at arm's length and in theordinary course of business duly approved by the Audit Committee of the Board. Hence thereare no transactions 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 this report.

The Board has formulated Policy on Related Party Transactions and thesame is uploaded on the Company's website at


The steps taken by the Company to mitigate the risk are disclosed underan identical head in the Management Discussion and Analysis forming part of Directors'Report.


There are no significant and material orders passed by the Regulators /Courts / Tribunals which would impact the going concern status and the Company'soperations in future.

Further no application against the Company has been filed or is pendingunder the Insolvency and Bankruptcy Code 2016. The Company has not done any one timesettlement with any Bank or Financial Institutions.


Your Company continues to place great importance to the development ofhuman resources segment and the sustained focus on retention through employee engagementinitiatives has made the employees realize their potential. Learning and Development hasprovided various learning platforms which include classroom and online self - learningmodules to meet the development need of employees to help build their skills knowledgeand capability.

The total strength of the employees of the Company as on 31stMarch 2022 was 4678.


Disclosures pertaining to remuneration and other details as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.

a) The ratio of remuneration of each Director to the median employee'sremuneration for the financial year and such other details as prescribed is as givenbelow:

S. No. Name of the Director Ratio
1 Dr.Nalla G Palaniswami 138x
2 Dr.Thavamani Devi Palaniswami 135x
3 Dr. Arun N Palaniswami 75x
4 Dr. Mohan S Gounder -
5 Dr.M.C.Thirumoorthi -
6 Dr.Purani P Palaniswami -
7 Mr.Kasi K Goundan -
8 Dr.M.Manickam -
9 CA.A.M.Palanisamy -
10 Mr.K.Saminathan -
11 Mrs. R. Bhuvaneswari -
12 Mr.A.P.Ammasaikutti -
13 Dr.K.Kolandaswamy -

• The median remuneration of employees of the Company was Rs 3.00Lakhs.

• For this purpose sitting fees paid to Directors have not beenconsidered as remuneration.

• During the year Non-Executive Directors received only SittingFees as remuneration.

b) The percentage increase in remuneration of each Director ChiefFinancial Officer Company Secretary in the financial year:

S. No. Name of the Director / CFO / CS % Increase / (Decrease) in remuneration
1 Dr.Nalla G Palaniswami 24.26%
2 Dr.Thavamani Devi Palaniswami 23.94%
3 Dr. Arun N Palaniswami 218.27%
4 Dr. Mohan S Gounder -
5 Dr.M.C.Thirumoorthi -
6 Dr.Purani P Palaniswami -
7 Mr.Kasi K Goundan -
8 Dr.M.Manickam -
9 CA.A.M.Palanisamy -
10 Mr.K.Saminathan -
11 Mrs. R. Bhuvaneswari -
12 Mr.A.P.Ammasaikutti -
13 Dr.K.Kolandaswamy -
14 CA.M.K.Ravindra Kumar 10.33%
15 CS.S.P.Chittibabu 5.69%

c) The percentage increase / (decrease) in the median remuneration ofemployees in the financial year: 20.45%.

d) Number of permanent employees on the rolls of the Company: 4678

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:

The average percentile increase in salaries to employees other thanmanagerial personnel is 20.45%.

The percentile increase granted to managerial personnel is 42.82%

f) We affirm that the remuneration paid to Directors Key ManagerialPersonnel and Employees is as per the remuneration policy approved by the Board ofDirectors of the Company.

g) Statement of Employees receiving remuneration not less than RupeesEight Lakhs Fifty Thousand per month:

Name Dr. Nalla G Palaniswami Dr. Thavamani Devi Palaniswami Dr. Arun N Palaniswami
Designation Managing Director Joint Managing Director Executive Director
Gross Remuneration Rs 414.56 Lakhs Rs 406.50 Lakhs Rs 224.67 Lakhs
Qualification MBBS MD AB (USA) MBBS AB (USA) MBBS MD-Internal Medicine
Age in Years 80 74 42
Date of Commencement of Employment 01 October 1989 29 July 2000 25 September 2015
Last Employment Hypertension Obesity and Risk Factor Clinic Wayne State University Detroit USA Consultant in Paediatric and Adolescence City Clinic Detroit USA Consultant in Internal Medicine in Hawaii USA

Note :

• Dr. Nalla G Palaniswami Dr. Thavamani Devi Palaniswami &Dr. Arun N Palaniswami are related to each other. Dr. Thavamani Devi Palaniswami is Dr.Nalla G Palaniswami's wife. Dr. Arun N. Palaniswami is the son of Dr. Nalla G Palaniswamiand Dr. Thavamani Devi Palaniswami.

• Dr. Thavamani Devi Palaniswami owns more than 2% of the equityshares of the Company as on 31st March 2022.

• Gross remuneration comprises salary commission allowancesmonetary value of perquisites.

h) Statement of Particulars of Employees Pursuant to the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided in AnnexureII forming part of this Report.


As per Section 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 the company has not accepted any deposits from thepublic or its members during the year.


Pursuant to provisions of Section 204 of the Companies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed 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

2021- 22. Secretarial Audit Report is annexed herewith as"Annexure - III" forming part of the report.


The Company has complied with the Secretarial Standards notified underSection 118 of the Companies Act 2013. COST AUDIT

In terms of Section 148 and other applicable provisions of theCompanies Act 2013 read with Companies (Cost Records and Audit) Rules 2014Mr.V.Sakthivel Cost Accountant M/s RKMS & Associates Coimbatore was appointed asCost Auditor of the company by the Board on recommendation of Audit Committee for theFinancial Year 2022-23. The remuneration of the Cost Auditor is subject to ratification bythe members at the ensuing Annual General Meeting.


The members had at the 32nd Annual General Meeting held on06th August 2018 approved the appointment of M/s VKS Aiyer & Co. CharteredAccountants (FRN: 000066S) Coimbatore for a period of five years from 2018-19 to 2022-23.

The Statutory Auditor has issued an unmodified opinion on the FinancialStatements of the Company as of and for the year ended 31st March 2022. Theirreport on the Companies (Auditor's Report) Order 2020 ("CARO") issued by theCentral Government of India in terms of section 143(11) of the Act details twoqualifications regarding the following:

a) Non-Registration of Lease Agreements

Management Response : All Lease Agreements with more than 11 months'tenor require registration with Department of Revenue Ministry of Commercial Taxes andRegistration Government of Tamil Nadu. The Company is in the process of registering allLease Agreements and will be completed shortly.

b) Misappropriation of Cash

Management Response : The Board is confident that Internal FinancialControls exist within the organisation and is fairly robust. The incident referred was anaccident and it must be noted that substantial cash has since been recovered and thebalance will be reimbursed by the Insurance company. The management has since ensured thatall corrective measures have been taken so that such incidents do not recur.


The equity shares of the Company are listed on BSE Limited.


Your Company has been complying with the provisions of CorporateGovernance as stipulated in Chapter IV and other relevant provisions of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. A separate report on CorporateGovernance along with Practising Company Secretary's certificate on compliance of theCorporate Governance norms as stipulated in Regulation 34(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and Management Discussion &Analysis forming part of this report are provided elsewhere in this Annual Report.


A Business Responsibility Report describing the initiatives taken bythe Company from an environmental social and governance perspective as required in termsof the provisions of Regulation 34(2)(f) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 annexed separately forms part of this Annual Report.


The Board expresses its grateful appreciation for the continuedassistance and co-operation received from Government Authorities Financial InstitutionsBanks Customers Suppliers and investors.

The Board also places on record its appreciation for the dedication andcommitment extended by its consultants and employees at all levels and their contributionto the growth and progress of the Company.

For and on behalf of the Board
Sd/- Sd/-
Place: Coimbatore Date : 27.05.2022 DR. NALLA G PALANISWAMI CA.A.M.PALANISAMY
DIN:00013536 DIN:00112303