Your Directors take pleasure in presenting the Thirty Fourth Annual Report along withthe audited financial statements for the year ended 31st March 2020.
| || || |
|Particulars ||2019-20 ||2018-19 |
|Operating Income ||71172.88 ||62839.05 |
|Other Income ||1059.14 ||823.99 |
|Total Income ||72232.02 ||63663.04 |
|Earnings before Interest Tax Depreciation & Amortisation (EBITDA) ||17865.07 ||14055.65 |
|Profit Before Taxation (PBT) ||11191.27 ||9284.45 |
|Provision for Taxation ||1732.56 ||3270.18 |
|Profit After Taxation ||9458.71 ||6014.27 |
|Add: Other Comprehensive Income ||112.12 ||(25.34) |
|Total Comprehensive Income for the year ||9570.83 ||5988.93 |
RESULTS OF OPERATIONS
The income from operations for the financial year 2019-20 was 71172.88 Lakhsregistering a growth of 13.26% over the previous year income of 62839.05 Lakhs. Earningsbefore interest tax depreciation and amortization (EBITDA) were 17865.07 Lakhsregistering a growth of 27.10% over the previous year EBITDA of 14055.65 Lakhs. Profitafter tax (PAT) for the year was 9458.71 Lakhs over the PAT of 6014.27 Lakhs in year2018-19.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATES
The Company does not have any Subsidiary Company Joint Venture or Associate Companiesas defined in the Companies Act 2013.
Based on company's nine months performance the Board of Directors declared an InterimDividend of 3/- per share (30%) for the Financial Year 2019-20. The total cash outflow was395.74 Lakhs including dividend distribution tax. The Interim Dividend paid may be treatedas Final Dividend.
TRANSFER TO RESERVES
The Company does not propose to transfer any amount out of the profit to reserves.
The Board of Directors met five times during this financial year. The disclosure onBoard meetings and attendance of Directors are provided in the Corporate GovernanceReport.
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 186.29 Lakhs being 2% of the last three years average net profit ofthe Company towards implementing the CSR activities. Annual Report on CSR as requiredunder Section 135 read with schedule VII and other applicable provisions of the CompaniesAct 2013 is appended as "Annexure - I".
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.
The paid up equity share capital of the Company as on March 31 2020 aggregates to109422620/- comprising of 10942262 equity shares of 10/- each fully paid up.
CARE has affirmed your Company's Long term bank facilities 'CARE A+' (single A+)and short term bank facilities to CARE A1+' (A One plus) from 'CARE A1' ( AOne).
Your Hospital has been certified by National Accreditation Board for Hospitals andHealthcare providers (NABH) for the delivery of high standards for safety and quality careto 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 judgments 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 the 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 provisions ofall applicable laws and that such systems were adequate and operating effectively
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.There has been no change in the circumstances affecting their status as IndependentDirectors of the Company.
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 the 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 athttps://www.kmchhospitals.com/wp-content/uploads/2019/07/Familiarization_programme_for_Independent_Directors.pdf
As per Article 103(b) of the Articles of Association and Section 152(6) of theCompanies Act 2013 except Dr. Nalla G Palaniswami and Dr. Thavamani Devi Palaniswamiall other Executive and Non-Executive Non-Independent Directors are subject to retirementby rotation. Accordingly Dr. Mohan S Gounder Director retires by rotation and beingeligible has offered himself for re-appointment.
At the 33rd Annual General Meeting of the Members of the Company held on 16thAugust 2019 five Independent Directors namely Mr.Kasi K Goundan Dr.M.ManickamCA.A.M.Palanisamy Mr.A.K.VenkatasamyMr.K.Saminathan were re-appointed as IndependentDirectors of the Company for a second period of five (5) years with effect from 3rdSeptember 2019.
Dr. M.A.Muthusethupathi Independent Director of the Company retired on 2ndSeptember 2019 and did not opt for re-appointment. The Board wishes to express theirgratitude for all the valuable services rendered by him during the tenure of his ofservice.
Mrs.R.Bhuvaneshwari a Corporate Lawyer was appointed as Independent Director of thecompany with effect from 3rd September 2019 at the 33rd AnnualGeneral Meeting of the Company held on 16th August 2019 for a period of five(5) years.
The Board is of the opinion that Mrs.R.Bhuvaneshwari possess requisite integrityexpertise experience and proficiency.
RE-APPOINTMENT OF JOINT MANAGING DIRECTOR
The members of the Company vide their Annual General Meeting held on 25thSeptember 2015 had appointed Dr.Thavamani Devi Palaniswami as Joint Managing Director fora period upto 28th July 2020. The Board in its meeting held on 20thJune 2020 had resolved to re-appoint Dr. Thavamani Devi Palaniswami for a period of fiveyears. The Nomination and Remuneration Committee and Audit Committee in its meeting heldon 20th June 2020 had recommended the re-appointment and remuneration of Dr.Thavamani Devi Palaniswami for a period of five years subject to the approval of members.The proposed re-appointment of Dr. Thavamani Devi Palaniswami as Joint Managing Directorand the payment of remuneration are in conformity with Schedule V of the Companies Act2013.
DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each Independent Director of theCompany under Section 149 (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
Pursuant to SEBI (Prohibition of Insider Trading) (Amendment) Regulation 2018 dated 31stDecember 201 The Company amended the "Code of Conduct for Insider Trading" and"Code of Practices and Procedures for Fair Disclosure of Unpublished Price SensitiveInformation". Consequently the Board of Directors brought in all the correspondingamendments to the above two mentioned Codes and necessary disclosures have been made inour website under:http://www.kmchhospitals.com/wp-content/uploads/2019/04/Code-of-conduct-for-prevention-of-Insider-Trading-and-Code-of-Fire-disclosure-.pdf
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. Arun N Palaniswami Executive Director CA M.K.Ravindra KumarChief Financial Officer and CS S.P.Chittibabu Company Secretary.
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 "AnnexureIV" 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 ishttp://kmchhospitals.com/wp-content/uploads/2016/pdf/Nomination_Remuneration_&_Evaluation_Policy.pdf
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 with the Companies (Accounts) Rules 2014 are annexed herewith as "Annexure- II" and forms part of this Report.
CHANGE IN THE NATURE OF BUSINESS IF ANY
With the commencement of operation in KMCH Institute of Health Sciences and Research(KMCH-IHSR) (KMCH Medical College) the Company has got two business segments:
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.
Your Company as a prime healthcare service provider has taken all standard mandatoryand precautionary protections as per the guidelines issued by the Ministry of Health andFamily Welfare Government of India and Government of Tamil Nadu to ensure that theDoctors Nurses Staff and Para Medical Team and all patients are safe. Hygiene procedureslike Wearing Face Masks Using Hand Wash / Rub and Social Distancing was implementedextensively across all the Hospital Centers.
Following the request of Government of Tamil Nadu KMCH Medical College Hospital hasconverted its 128 bed Hospital into a dedicated COVID-19 Hospital. A separate team ofDoctors Nurses and para medical staff were formed and the Hospital is run with necessaryequipment including Personal Protective Equipment (PPE) Ventilators etc.
One of the divisions of KMCH its Molecular Biology Department was recent accredited byNational Accreditation Board for Testing & Calibration Laboratories (NABL) for Testingof COVID-19 Virus. This accreditation has helped us in becoming one of the approvedCOVID-19 Testing Laboratory.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
As on March 31 2020 the Company has neither provided nor there any outstanding loansor guarantees covered under the provisions of Section 186 of the Companies Act 2013. Thedetails of Investments covered under the provisions of Section 186 of the Act are given inNote No.6 Financial Assets Non-current to 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 this report.
The Board has formulated Policy on Related Party Transactions and the same is uploadedon the Company's website athttp://www.kmchhospitals.com/wp-content/uploads/2019/05/Related-Party-Transaction-Policy.pdf
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 - III" 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 /Tribunals which would impact the going concern status and the company's operations infuture.
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 variouslearning platforms which include classroom and online self - learning modules to meet thedevelopment need of employees to help build their skills knowledge and capability.
The total strength of the employees of the Company as on 31st March 2020 was4516 Nos.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to the Report as Annexure IV.
Statement containing particulars of Top 10 Employees and Employees drawing remunerationin excess of limits prescribed under Section 197(12) of the Act read with Rule 5(2) and(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isprovided in Annexure IV forming part of this Report.
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 2019-20 no complaints were received by the company related to sexualharassment.
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 or itsmembers during the year.
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 2019-20. Secretarial Audit Report is annexed herewith as "Annexure- V" forming part of the report.
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 Coimbatore was appointed as Cost Auditor of the company by theBoard on recommendation of Audit Committee for the Financial
Year 2020-21. The remuneration of the Cost Auditor is subject to ratification by themembers at the ensuing Annual General Meeting.
The members had at the 32nd Annual General Meeting held on 06thAugust 2018 approved the appointment of M/s VKS Aiyer & Co. Chartered Accountants(FRN: 000066S) Coimbatore for a period of five years from 2018-19 to 2022-23.
LISTING WITH STOCK EXCHANGE
The equity shares of the Company are listed on BSE Limited.
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.
BUSINESS RESPONSIBILITY REPORT
A Business Responsibility Report describing the initiatives taken by the Company froman environmental social and governance perspective as required in terms of theprovisions 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 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.