Apollo Hospitals Enterprises

The Directors are pleased to present the TWENTY SEVENTH ANNUAL REPORT
 and the audited statements of accounts for the year ended 31st March
 2008.
 
 Financial Results 
                                                        (Rs. in Million)
 For the year ended                 31st March 2008     31st March 2007
 
 Total Income                            11,500              8,995
 
 Profit before Extraordinary 
 Item and Taxation                        1,451              1,031
 
 Provision for Taxation                     433                354
 
 Net Profit before Extraordinary 
 Item afterTaxation                       1,018                676
 
 Extraordinary Item                         -                  325
 
 Net Profit after Extraordinary 
 Item and Taxation                        1,018              1,001
 
 Balance of Profit brought forward          892                339
 
 Profit Available for appropriations      1,910              1,340 
 Appropriations
 
 Dividend (inclusive of dividend tax)       412                298
 
 Transfer to General Reserve                250                150
 
 Balance carried forward to Balance sheet 1,248                892
 
 Results of Operations
 
 During the year under review, the gross revenue of the Company
 increased to Rs. 11,500 million compared to Rs.8995 million in the
 previous year, registering an impressive growth of 28%.  The profit
 after tax for the year increased by 51% to Rs.1,018 millions compared
 to Rs.676 millions in the previous year.
 
 During the year under review, the consolidated gross revenue of the
 Company increased to Rs. 12,399 million compared to Rs.9566 million in
 the previous year, registering an impressive growth of 30%.  Net profit
 after minority interest stood at Rs.771 million.
 
 Consolidated Financial Statements
 
 Your Company has been granted exemption from attaching the financial
 statements of the subsidiary companies in India and abroad, to the
 balance sheet  of your Company for the financial year 2007-2008,
 under section 212(8) of the Companies Act, 1956 by the Ministry of
 Corporate Affairs (MCA). A statement of summarized financials of all
 subsidiaries of your Company, pursuant to the approvals under Section
 212(8) of the Companies Act, 1956 forms part of this report. Any
 further information in respect of the annual report and the financial
 statements of the subsidiary companies of your Company will be made
 available to the members on request. In accordance with the Accounting
 Standards, AS-21 issued by the Institute of Chartered Accountants of
 India, Consolidated Financial Statements presented by your Company
 include the financial information of all its subsidiaries.
 
 Dividend
 
 The Board of Directors recommend a dividend of Rs. 6/- per Equity Share
 (60% on par value of Rs. 10/-) (as against 50% in the previous year) on
 58,685,702 equity shares of Rs.  10/- each for the financial year ended
 31st March 2008, which if approved at the forthcoming Annual General
 Meeting on 28th August 2008, will be paid to those shareholders whose
 names appear in the Register of Members as at the closing hours of
 business on 12th August 2008.  In respect of shares held in electronic
 form, the dividend will be paid on the basis of beneficial ownership
 furnished by Depositories viz., NSDL and CDSL for this purpose.
 
 The Register of Members and Share Transfer Books will remain closed
 from 13th August 2008 to 28th August 2008 (both days inclusive).
 
 Transfer of Reserves
 
 Your Company proposes to transfer Rs.250 million to the general reserve
 out of the amount available for appropriations- An amount of Rs.1,248
 million is proposed to be retained in the profit & loss account.
 
 Subsidiaries
 
 Your Company has six subsidiary companies as on March 31, 2008.  The
 statement in respect of the details of the subsidiary companies viz.,
 Unique Home Health Care Limited (UHHCL), AB Medical Centres Limited
 (ABMCL), Samudra Healthcare Enterprises Limited (SHEL), Apollo Health
 and Lifestyle Limited (AHLL), Imperial Hospital and Research Centre
 Limited (IHRCL) and Apollo Hospital (UK) Limited (AHUKL) pursuant to
 section 212 of the Companies Act, 1956, is attached to this report.
 
 Unique Home Health Care Limited (UHHCL)
 
 UHHCL, a wholly owned subsidiary of the Company provides medical and
 paramedical services including doctors consultation, physiotherapy
 direct to patient homes and also offers paramedical service in
 hospitals to critically ill patients. For the year ended March 31, 2008
 UHHCL recorded a revenue of Rs.10.2 million and net profit of Rs.5
 million.
 
 AB Medical Centres Limited (ABMCL)
 
 ABMCL, a wholly owned subsidiary of the Company does not have any
 commercial operations as it has leased out its infrastructure viz.,
 Land, Building and Medical Equipment to the Company for running the
 Hospital. For the year ended March 31, 2008, ABMCL recorded an income
 of Rs.7.28 million and a net profit of Rs.4.44 million.
 
 Samudra Healthcare Enterprises Limited (SHEL)
 
 SHEL, a wholly owned subsidiary of the company, runs a 120 bed multi
 speciality hospital at Kakinada.  For the year ended March 31, 2008
 SHEL recorded revenue of Rs.88.25 million and a net profit of Rs.6.31
 million.
 
 Apollo Hospital (UK) Limited (AHUKL)
 
 AHUKL is a wholly owned foreign subsidiary of the Company and yet to
 commence its operations.
 
 Apollo Health and Lifestyle Limited (AHLL)
 
 AHLL, a subsidiary of the Company is engaged in the business of
 providing primary healthcare facilities through a network of franchised
 clinics across India offering specialist consultation, diagnostics,
 preventive health checks, telemedicine facilities and a 24- hour
 pharmacy all under one roof. For the year ended March 31, 2008 AHLL
 recorded revenue of Rs.84.26 million and a net profit of Rs.18.98
 million.
 
 Imperial Hospital and Research Centre Limited (IHRCL)
 
 IHRCL, a 51% subsidiary of the company owns a 240 bed multi speciality
 hospital at Bangalore.  The Company commenced its operations on 1st
 September 2007. For the year ended March 31, 2008 IHRCL recorded a
 revenue of Rs.239 million and a net loss of Rs.84 million.
 
 Corporate Social Responsibility
 
 Apollo Hospitals has always believed in only one vision: Providing
 distinctive, high quality, eco-friendly and safe healthcare and other
 services that not only work towards betterment of society but also
 promises utmost customer satisfaction.
 
 This is why the hospital has developed a sound and highly transparent
 management model that takes the interests of our customers,
 shareholders, investors, business partners, employees, communities and
 government bodies into account to maintain the best in corporate
 governance, risk management, corporate ethics and compliance.
 
 These activities are aimed not only at societal betterment but also to
 ensure the constant growth of Apollo Hospitals. Here are a few of our
 initiatives undertaken for social causes:
 
 Save a Childs Heart (SACH)
 
 SACH (Save a Childs Heart) is a community service initiative from the
 Apollo Hospitals with the aim of providing quality pediatric cardiac
 care and financial support to children from underprivileged sections of
 society suffering from heart diseases.
 
 This is a need-based initiative, which covers all aspects of congenital
 heart disease, a major socio-economic problem in India Established in
 April 2002, over 900 surgeries / interventions with a success rate of
 97% have been performed in this short span of time.  Over 30,000
 children with heart diseases have been screened across India so far.
 
 Regular Camps and screenings are conducted for underprivileged children
 through SACH and 84 free cardiac surgeries were performed successfully
 in Chennai this year.
 
 Apollo Cancer Screening Program (ACSP)
 
 Apollo Cancer Screening Program was launched on 17th February 2008.This
 program aims at detecting & treating cancer lesions, which can prevent
 cancer and is offered free for patients at Aragonda village. We are
 also offering the free screening at small villages in some parts of
 Chennai, Kancheepuram & Hubli
 
 Society to Aid the Hearing Impaired (SAHI)
 
 A foundation to help underprivileged children with impaired hearing,
 SAHIs team of experienced ENT specialists provide free screening and
 check- ups to children in rural areas with minimal access to modern
 medical treatment. All surgical treatments have been subsidised by
 Apollo Hospitals.
 
 Aragonda model of health care
 
 To address the problem of inadequate health care for people in rural
 areas, Apollo Hospitals has launched the Telemedicine Unit in Aragonda
 village in Chittoor district, Andhra Pradesh.  In addition to providing
 advanced, yet affordable health care to over 50,000 people, the project
 offers the following services:
 
 Telemedicine services - Referral services, second opinion, post- acute
 care, interpretation service and health education.
 
 Physical infrastructure - Clean water supply, sanitation, drainage,
 solid waste management and better roads.
 
 Preventive health care programmes A community service initiative from
 Apollo in partnership with the primary health care centers
 
 Health Insurance - A unique scheme propagated by Gram Panchayat in
 association with National Insurance Corporation (NIC) and Oriental
 Insurance Corporation (OIC), enables residents of rural areas to get a
 health insurance cover of upto Rs. 15,000 , by paying only Re.1 per day
 for a family of five. Apollo Hospitals bears the extra cost
 
 DISHA Distance healthcare advancement project
 
 An initiative partnered by Apollo hospitals, Philips, ISRO and the Dhan
 Foundation, DISHA is a mobile Tele-clinical van that will reach out to
 areas that do not have access to advanced medical care. This facility
 offers super- specialty and specialty tele- consultation, lab
 facilities, onsite consultation, secondary and tertiary care when
 needed.
 
 Increase in Paid-up Share Capital
 
 During the year, the paid-up share capital of the Company increased
 from Rs.516,385,830/- (consisting of 51,638,583 equity shares of
 Rs.10/- each) to Rs.586,857,020/- (consisting of 58,685,702 equity
 shares of Rs.10/- each), consequent to the allotment of 7,047,119
 equity shares to Apax Mauritius FDI One Limited. These shares were
 issued at a premium of Rs.595.07 per share and have been listed at
 Bombay Stock Exchange Limited (BSE) and National Stock Exchange India
 Limited, (NSE), Mumbai.
 
 Issue of convertible Equity Share Warrants to Promoters
 
 During the year under review, your company issued 1,549,157 convertible
 share warrants to Dr.  Prathap C Reddy, one of the promoters of the
 company on preferential basis under the applicable SEBI guidelines. Dr.
 Prathap C Reddy paid an upfront 10% of the amount in the month of
 October 2007 and the remaining 90% amount is to be paid within 18
 months.
 
 These warrants have been issued with a convertible option to be
 exercised within a period of 18 months from the date of allotment i.e.
 18th April 2009.  Each warrant issued can be converted into one equity
 share of the company of nominal value of Rs.10/- each at a price of
 Rs.497.69 which includes a premium of Rs.487.69 per share calculated in
 accordance with SEBI (Disclosure and Investor Protection) Guidelines,
 2000.
 
 The objective of this preferential issue was to fund future growth
 plans for setting up new hospitals and other healthcare related assets,
 addition of new facilities at the existing hospitals and to meet long
 term working capital / general corporate requirements.
 
 Proceeds of GDR and Preferential Issues
 
 The details of utilization of proceeds of GDR and Preferential Issues
 up to 31st March 2008, are set out in the statement attached herewith
 as Annexure - A
 
 British American Hospitals Enterprise Limited
 
 The Company formed a Joint Venture Company, British American Hospitals
 Enterprise Limited (BAHEL) in association with British American
 Investment Co (Mauritius) Ltd (BAI), BAI Medical Centres Limited
 (BMCL), subsidiary of BAI to set up a multi speciality hospital on a
 state land provided by Government of Mauritius. In this regard, a Joint
 Venture Agreement has been signed on 31st July 2007.
 
 Hospital at Karur
 
 Your company has taken over the 50 bed hospital known as SV Loga
 Hospital at Karur on long term lease and commence its operations
 shortly in the name of Apollo Hospitals.
 
 Corporate Governance
 
 Pursuant to clause 49 (VII) of the Listing Agreement with the Stock
 Exchanges, a separate report on Corporate Governance forms part of the
 Directors Report in the Annual Report.  Your Company is compliant with
 the requirements of the Listing Agreement and necessary disclosures
 have been made in this regard in the Corporate Governance Report.
 
 A certificate from the Auditors of the Company regarding compliance
 with conditions of Corporate Governance as stipulated under Clause 49
 of the Listing Agreement is attached to this report.
 
 Human Resources Development
 
 Our employees are our assets as they are the key players for our
 continual growth and success. We value the service they deliver at
 every touch point to bring in service excellence to our patients and
 their families.  All our initiatives revolve around two important
 factors namely our PEOPLE and our PROCESSES.
 
 A number of employee engagement activities have been rolled out during
 this year through Project APPLE (Apollo passion for people) with an aim
 to build and nurture every employee as a Brand Ambassador for Apollo.
 Project ECHO (Every contact has an opportunity) is yet another
 initiative aiming at retaining Doctors as they are the key drivers of
 our business.
 
 In our endeavour to improve the efficiency and effectiveness of our
 processes, we institutionalized Lean Six Sigma.  We have a pool of 35
 Green Belt Champions currently executing various projects.
 
 Directors Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies (Amendment) Act 2000, the
 Directors of the Company hereby state and confirm that:
 
 - In the preparation of the annual accounts for the year, the
 applicable accounting standards had been followed along with proper
 explanations and there were no material departures;
 
 - 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 of the
 Company for that period.
 
 - The Directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of Companies Act, 1956 for safeguarding the assets of the
 Company and for preventing and detecting fraud and other
 irregularities;
 
 - The Directors had prepared the annual accounts on a going concern
 basis.
 
 Fixed Deposits
 
 The total deposits with the Company as on 31st March 2008 was Rs.141.33
 million (Rs. 154.95 million as on 31st March 2007) which include
 deposits for an aggregate of value of Rs.6.94 million (Rs.  10.61
 million as on 31st March 2007) not claimed by the depositors. Out of
 these deposits, an aggregate value of Rs.1.22 million have since been
 repaid / renewed.
 
 Directors
 
 As per the provisions of Articles of Association of Company, four
 Directors of the Company viz., Shri. Rajkumar Menon, Shri. Khairil
 Anuar Abdullah, Shri. G.Venkatraman and Smt. Suneeta Reddy retires by
 rotation at the ensuing Annual General Meeting and are eligible for
 re-appointment.
 
 New Directors
 
 Shri. Neeraj Bharadwaj, was appointed as an Additional Director with
 effect from 19th November 2007.
 
 The Board of Directors at its meeting held on 19th November 2007
 appointed Shri.Sandeep Naik as an alternate director to Shri. Neeraj
 Bharadwaj.
 
 Auditors
 
 The auditors,
 
 M/s. S. Viswaqathan, Chartered Accountants, retire at the ensuing
 Annual General Meeting and have confirmed their eligibility and
 willingness to accept office, if reappointed.
 
 Particulars of Employees as per Section 217(2A) of the Companies Act,
 1956.
 
 Particulars of Employees required under Section 217(2A) of the
 Companies Act, 1956 and the Companies (Particulars of , Employees)
 Rules, 1975 as amended forms part of this report and attached herewith
 as Annexure B Particulars regarding Conservation of Energy, Technology
 Absorption and Foreign Exchange Earnings and Outgo.
 
 Particulars as required to be disclosed as per the Companies
 (Disclosure of Particulars in the Report of Board of Directors) Rules,
 1988 are set out in the statement attached herewith as Annexure C.
 
 Acknowledgement
 
 Your Directors wish to place on record their appreciation of the
 contribution made by the employees at all levels, to the continued
 growth and prosperity of your company. Your Directors also wish to
 place on record their appreciation of business constituents, banks and
 other financial institutions, shareholders, of the Company for their
 continued support.
 
                         For and on behalf of the Board of Directors
 
 Place : Chennai                                 Dr. Prathap C Reddy
 Date  : 24th June 2008                           Executive Chairman