DIRECTORS' REPORT - 2014-15 Your Directors have pleasure in presenting their THIRTY SECOND Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2015 2. Dividend In view of the carry forward losses, of the company, your Board has not recommended dividend for the financial year 2014-15. 3. Reserves The Company has not transferred any amount to General reserve during the year. 4. Business and Operations Review Total Operating income increased, by 13.75% to Rs. 3629.69 lakhs during the financial year 2014-15 from Rs. 3190.92 lakhs in the previous year. Your Company has earned Profit after tax of Rs. 12.38 lakhs for the financial year 2014-15 against the loss of Rs.145.80 lakhs during the financial year 2013-14. Neurosurgery, Gastroenterology procedures, Orthopedics and Plastic surgery procedures launched during previous periods performed satisfactorily. The improvement in revenue coupled with stringent cost control measures taken by the management the EBIDTA has improved by Rs.101.38 lakhs. 5. Statement in respect of adequacy of internal financial controls with reference to the Financial Statements The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain independence of the Internal Audit function, the Internal Auditor reports to the Chairman of the Audit Committee. The Internal Audit Team along with the Process Team monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of internal audit, corrective actions in the respective areas are undertaken and controls strengthened. Significant audit observations and corrective actions thereon are reported to the Audit Committee of the Board Disclosure of particulars of loans/advances/ investments outstanding during the financial Year. The Company has not given any loans and advances to other body corporate and associates as specified under Section 186 of the Companies Act, 2013. 6. Deposits The Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet. 7. Statutory Auditors Section 139 of The Companies Act 2013 provided for the appointment of Statutory Auditors for a period of five years and hence M/s B S R & Co. LLP, Chartered Accountants, (ICAI Firm Registration No 101248W/W-100022) were appointed as the Statutory Auditors of the Company in the Annual General Meeting of the Company held on 27th September 2014 for a period till the conclusion of the Thirty Sixth Annual General Meeting. However their appointment requires ratification from the members at every AGM. Accordingly the Board of Directors recommends the ratification of appointment of the Statutory Auditors. 8. The details of significant and material orders passed by the regulators or courts or tribunals impactin g the going concern status an d company's operations in future. There are no significant and material orders passed by the regulators or courts or tribunals that may have an impact for the company as a going concern and /or company's operations. 9. Closure of Register of Members and Share Transfer Books The Register of Members and Share Transfer Books of the company will be closed with effect from 23rd September 2015 to 29th September 2015 (both days inclusive). 10. The Board observed that there are no qualifications or reservations or adverse remarks by the Statutory Auditors as well as by the Secretarial Auditor in their reports. 11. Share Capital The Company has not issued any equity shares with differential rights, sweat equity shares, employee stock options or employee stock purchase scheme. No shares have been transferred to Suspense account in terms of Clauses 5(A)(I)(g) and 5(A)(II)(h) of the Equity Listing Agreement. As at the end of the financial year the Company's Equity Share Capital stands at 163.08 lakhs consisting of 163.08 lakhs fully paid up Equity Shares of Re. 1 each. 12. Corporate Governance Your Company has been complying with the provisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. A separate report on Corporate Governance along with Practicing Company Secretary's certificate on compliance of the Corporate Governance norms as stipulated in Clause 49 of the Listing Agreement and Management Discussion & Analysis report forming part of this report are provided elsewhere in this Annual Report 13. Transfer to Investor Education and Protection Fund As required under the provisions of Section 205A and 205C and other applicable provisions of Companies Act, 1956 (the corresponding provisions in the Companies Act, 2013 have not been notified, and hence the earlier law is still applicable in respect of th ese provision s), di vi dends th at remain unpaid/unclaimed for a period of seven years, are to be transferred to the account administered by the Central Government viz., Investor Education and Protection Fund ("IEPF").There are no amounts which remain unpaid/unclaimed for a period of seven years and hence no amount has been transferred to "IEPF". 14. Extract of the Annual Return The extract of Annual Return as on the Financial Year ended 31st March 2015, as prescribed under Section 92 read with Rule 12 of Companies (Management and Administration) Rules, 2014 is attached to this report as Annexure 1. 15. Conservation of energy, technology absorption, foreign exchange earnings and outgo: The particulars required to be given as per Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are under i. Conservation of energy- Though the nature of the business of the company is such that the consumption of energy is not significant when compared to the overall cost of operations, the company takes all efforts to conserve energy and carries out periodical energy audits. ii. Technology absorption- Inspite of the fund constraints, the company is currently in the process of updating the technology in various fields of equipments. Within the limitations, everything possible was done to acquire, improve and update the technology. 16. Corporate Social Responsibility Corporate Social Responsibility (CSR) is a new initiative brought in by the Ministry of Company Affairs whereby every company having net worth of rupees 500 crore or more, or turnover of rupees 1000 crore or more or a net profit of rupees 5 crore or more during any financial year are mandated to serve society by contributing at least 2% of average net profits of the Company during three immediately preceding financial year's profit in various CSR activities as defined in Schedule VII of the Companies Act 2013. Your Company does not fall in any of the above categories and hence CSR rule is not applicable to the Company. However being a Healthcare Service provider, CSR has been integral part of the manner in which the Company doing the business. Your Company is committed to maintaining the highest standards of corporate social responsibility in all the business activities. The focus is to- Deliver patient centered care to the highest standards in comfortable surroundings. - Respect personal independence, patient's rights to make personal choices, decisions, and their right to privacy and to enjoy life in comfort and with dignity. - Develop our workforce by appropriate recruitment and training. - Respect the rights and dignity of every employee and treat them fairly and without discrimination. Encourage team building and the sharing of knowledge throughout the organization. - Recognize employees individual and team contributions and reward them appropriately. - Respect the rights of people in all communities in which we operate. - Behave with honesty and integrity in all our dealings and relationship with others. - Maintain internal controls and management systems adequate to ensure standards are met. - Seek to be honest and fair in our relationship with suppliers and contractors. - Encourage suppliers and contractors to abide by our standards. - Reduce energy, waste, water and paper consumptions where possible. - Use recycled products or products with a high recycled or reconditioned content where appropriate. - Respecting the environmental sustainability by keeping up the pollution control protocols. - Consciously undertaking programmes and activities towards public good and societal benefits. 17. Particulars of Employees Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided elsewhere in the Annual Report. No employee of the Company was in receipt of remuneration during the financial year 2014-15 in excess of the sum prescribed under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. 18. Directors and Key Managerial Personnel The details about the changes in the Directors and Key Managerial Personnel by way of appointment, resignation, etc. and Disclosure of relationships between directors inter-se under Clause 49 VIII E 2 of Equity Listing Agreement is included as a part of Corporate Governance Report. The Directors who are liable to retire by rotation and also whether they offer for reappointment is included in the Notice of AGM. The Statement of Declarations from Independent Directors that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act 2013, has been obtained from the Independent Directors and the Board has taken on record the same 19. Declaration given by Independent Directors All the Independent Directors of the Company have given their declaration under Section 149 (6) of the Companies Act 2013, confirming that they are in compliance with the criteria as laid down in the above said Section for being an Independent Director of the Company. Further, there has been no change in the circumstances which may affect their status as independent director during the year. 20. Policy on Directors' Appointment and Remuneration including criteria for determining qualifications, positive attributes, independence of a director The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for the selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. 21. Particulars of contracts or arrangements with related parties During the financial year 2014-15 the contracts and arrangements entered by the Company with related parties were on an "arm's length" basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interests of the Company at large. The policy on materiality of Related Party Transactions as approved by the Board is uploaded on the Company's website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. The details of contracts or arrangements with related parties entered during the year were given in a separate annexure to the report in Annexure 2 22. Risk Management Policy The Risk Management Policy of the Company elaborates the various methods in identification, assessment, monitoring and mitigation of various risks that the company may face in its business. The Company's enterprise Risk Management approaches identifies and categorizes the major risk relating to Operations and Finance. The Company's objective is to achieve a balance between acceptable levels of risk and reward in effectively managing its Operational, Financial, Business and other risks. 23. Secretarial Audit Report Pursuant to Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Alagar & Associates, Practicing Company Secretary as the Secretarial Auditors of the Company in the Board Meeting held on 14th February 2015.The Secretarial Report issued by on Company's Secretarial Auditor M/s. Alagar & Associates is annexed and forms part of this Report in Annexure 3. 24. Number of meetings of Board The detail of number of meetings of Board of Directors is included as a part of Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 25. Composition of Audit Committee The Audit Committee of the Company has been constituted in accordance with the provisions of Section 177 of Companies Act, 2013 read with Clause 49 of the Listing Agreements with the Stock Exchange. The details of the Audit Committee are included as a part of Corporate Governance Report. 26. Details of establishment of vigil mechanism The Company has formulated and adopted a vigil mechanism for employees to report genuine concerns to the Chairman of the Audit Committee. The policy provides opportunities for employees to access in good faith, the Audit Committee, if they observe unethical and improper practices. The Whistle Blower policy of the Company is available in the website of the Company. The link for the same is <http://www.kauveryhospital.com/investors%23>. 27. Board Evaluation Pursuant to the provisions of the Companies Act 2013 and Listing Agreement, the Board of Directors of the Company has completed a formal evaluation of their performance and that of its Committees and individual directors. The independent Directors evaluated the performance of the non-Executive Directors, Chairman and the Board at a meeting of Independent Directors held on March 30, 2015. The Board of Directors in their meeting held on August 14, 2015 evaluated the Independent Directors individually. Directors were evaluated on various criteria including attendance, participation in Board Meetings and the willingness and commitment to devote the extensive time necessary to fulfill his/her duties. 28. Listing fees: The Company confirms that it has paid the annual listing fees for the year 2015-16 to Bombay Stock Exchange. 29. Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013: The Company has in place a Policy on Sexual Harassment Prevention, in accordance with the requirements of the "Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" All employees are covered under this policy. The company has not received any complaints under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013 during the financial year 2014-15. 30. Directors' Responsibility Statement as required under Section 134 (5) of the Companies Act, 2013 In terms of provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that: (I) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures. (ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period (iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities (iv) the directors had prepared the annual accounts on a going concern basis ; (v) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively ; and (vi) the directors, had laid down internal financial controls and such internal financial controls are adequate and were operating effectively. 31. Acknowledgements We thank the various Government Agencies and Banks for their continued support and co-operation to the Company. We place on record our appreciation of the contribution made by our employees, consultants and officers of the Company during the year under report. For and on behalf of the Board (Dr S Chandrakumar) MANAGING DIRECTOR & CEO Place: Chennai Date :14th August, 2015 |