Apollo Hospitals Enterprises

1. Contingent Liabilities
 
 a.  Claims against the company not acknowledged as debts- Rs.
 267,121,672/- (Rs. 257,103,245/-).
 
 b.  Demand raised by Deputy Commissioner of Commercial Taxes
 (Enforcement) for VAT payable on the sale of Food and Beverages to the
 Patients, against which the Company has preferred an appeal with the
 Joint Commission of Commercial Taxes(Appeals) Mysore is Rs. 1,273,277/-
 (Rs. Nil)
 
 c.  The Company has executed bonds in favour of the President of India
 to the extent of Rs. 11,164,742/- (Rs. 11,164,742/-) pending its
 application for receipt of customs duty exemption certificates from the
 Government.
 
 d.  The Company fled a Special Leave Petition on 6th May 2008 before
 the Honourable Supreme Court against the judgement of the Divisional
 Bench of the Madras High Court dated 10th March 2008 allowing the
 reopening of the assessment for Assessment Year 2000-01 and disallowing
 the claim for set off of the unabsorbed depreciation.  The Special
 Leave Petition was admitted by the Honourable Supreme Court on 15th May
 2008. The Assessment Officer completed the assessment and raised a
 demand of Rs. 136,760,038/- which has since been stayed by the
 Honourable Supreme Court in its order dated 16th June 2008. Since in
 our opinion the amount is subjudice, the same has been treated as a
 contingent liability for the financial year ended 31st March 2009.
 
 e.  Estimated amount of contracts remaining
 
 b. Corporate Guarantees
 
 to be executed on capital account not provided for on account of the
 expansion cum diversifcation programme of the company Rs.
 4,986,109,680/- (Rs. 2,840,292,624/-).
 
 f.  Export obligation to be fulflled in the next eight years on
 availing of concessional duty on imports under 5% EPCG Scheme to the
 extent of eight times the duty saved, amounts to Rs. 884,188,176/- (Rs.
 364,864,512/-). The amount of duty saved during the year was Rs.
 65,522,104/- (Rs. 21,394,266/-).
 
 g.  The estimated customs duty guarantees given by the company in
 favour of the Assistant Collector of Customs, pending receipt of
 customs duty exemption certificates amounts to Rs. 99,700,026/- (Rs.
 99,700,026/-).
 
 This is subject to the result of writ petition pending in the Madras
 High Court with respect to the Chennai Hospital division Rs.
 73,709,545/- (Rs. 73,709,545/-) Application has been made for duty
 exemption certificates by the erstwhile Indian Hospitals Corporation
 Limited (Pharmaceutical division), which is pending with the
 Government. The estimated customs duty is Rs. 14,825,739/- (Rs.
 14,825,739/-).
 
 h. (i) Letters of credit opened by various banks in favour of foreign
 suppliers for consumables, spares, medicines and medical equipment
 amounts to Rs. 267,407,927/- (Rs. 210,907,655/-).
 
 a. Bank Guarantees as on 31.03.2009 Rs. 36,231,640/- (Rs. 18,614,458/-)
 
                                                        (Rs. in Crores.)
 
 On Behalf of              In Favour of As at 31.03.2009 As at 31.03.2008
 
 Apollo Hospitals Interna-      IDBI           5.00             5.00
 tional Limited
 
                                IDFC          15.75            15.75
 
 Total                                        20.75            20.75
 
 i.  (i) Additional liability for payment of sales tax on work orders
 pursuant to court proceedings between contractors and the State
 governments amounts to Rs.206,076/- (Rs.206,076/-).
 
 (ii) In respect of the claim for sales tax made by the Commercial Tax
 Department for Rs.1,039,135/- (Rs.  519,568/-) for the various
 assessment years, the matter is under contest.
 
 2.  The Company has pledged its 20,775,197 (20,775,197) equity shares
 in Apollo Gleneagles Hospitals Limited as a security for the loan
 advanced by IDFC and HDFC to Apollo Gleneagles Hospitals Limited.
 
 3. Details of Secured Loans and Security
 
 The Company has been granted an initial repayment holiday of 2 years
 with respect to the loans taken from Indian Bank, Bank of India and
 Canara Bank.
 
 a) Indian Bank
 
 Loan from Indian Bank is secured by way of:
 
 Equitable mortgage by deposit of title deeds/ registered mortgage of
 unencumbered property of the Company at Greams Road and Teynampet in
 Chennai and all fixed assets on pari passu basis.
 
 Hypothecation to the bank by way of First Charge of inventory of goods,
 produce and merchandise, vehicles, plant & machinery, consumer durables
 which are now in the possession of the company and/or to be purchased
 out of the bank’s loan, book debts, outstanding monies, recoverable
 claims, bills, contracts, engagements, securities, investments and
 rights.
 
 b) Bank of India
 
 Loan from Bank of India is secured by way of:
 
 Hypothecation by way of First charge of all tangible movable
 properties, all tangible movable machineries and plants (both present
 and future), assets and stocks (both present and future), all the
 present and future book debts, outstandings, money receivables, claims,
 bills which are now due and owing or which may at any time during the
 continuance of this security becomes due and owing to the Company.
 
 c) Canara Bank
 
 The loan is secured by way of pari passu First Charge on Project assets
 to be created out of the term loan of Canara Bank along with Bank of
 India.
 
 i. The company expects to contribute Rs.2 million to its gratuity plan
 next year.
 
 ii. Expected return on plan assets is based on expectation of the
 average long term rate of return expected on investments of the fund
 during the estimated term of the obligations.  The Gratuity scheme is
 invested in Gratuity Pay plan offered by ICICI.
 
 iii. The estimate of future salary increase, considered in actuarial
 valuation, take account of infation, seniority, promotion and other
 relevant factors such as demand and supply in the employment market.
 
 4. During the year, the Foreign Exchange loss (the difference between
 the spot rates on the date of the transactions, and the actual rates at
 which the transactions are settled) amounting to Rs.31,087,438/-
 (Foreign Exchange Gain of Rs. 18,807,335/-) has been adjusted to the
 Profit and Loss Account, which is in conformity to the Accounting
 Standard 11 on ‘Accounting for the effects of changes in Foreign
 Exchange rates’ issued by the Institute of Chartered Accountants of
 India.  However the notification no. G.S.R. 225(E) issued by Ministry of
 Corporate Affairs on 31st March 2009, has not been considered in the
 books since the company does not have any Long term foreign currency
 monetary items.
 
 5. Leases
 
 In respect of Non- cancellable Operating Leases
 
 Lease payments recognised in the Profit & Loss Account is Rs.
 571,420,839/- (Rs. 383,995,969/-)
 
 Lease agreements are renewable for further period or periods on terms
 and conditions mutually agreed between the lessor and AHEL.
 
 Variations/Escalation clauses in lease rentals are made as per mutually
 agreed terms and conditions by the lessor and AHEL.
 
 6. The 1,550,000 equity share warrants issued to Smt. Sangita Reddy
 during the year 2006-07 at the minimum price of Rs. 442.55 as fixed in
 accordance with the guidelines for preferential issues of the
 Securities and Exchange Board of India (Disclosure and Investor
 Protection) Guidelines 2000 has been converted in to equity shares of
 Rs.10/- each fully paid on 22nd August 2008.
 
 The 1,549,157 share warrants issued to Dr.  Prathap C Reddy 19th
 October 2007 was converted into 1,549,157 equity shares of Rs.10/- each
 fully paid up at a price of Rs.497.69 per equity share including
 premium of Rs.487.69 per equity share on 18th April 2009.
 
 7.  The Company has issued 9,000,000 Global Depository Receipts during
 the year 2005-06.  Total GDRs converted into underlying equity shares
 during the year is 171,910 (2007-08: 757,800) and total GDRs converted
 upto 31st March 2009 is 4,310,600 (2007 -08 : 4,138,690).
 
 8.  The Company has invested in Non-Convertible Debentures of Citicorp
 Finance (India) Limited. These debentures are secured by way of
 mortgage and charge over movable financial assets and immovable assets
 of citicorp as identifed by the Company.
 
 9.  During the year 2002-03, on a review of fixed assets, certain
 selected medical equipment were identifed and impaired. For the current
 year, on a review as required by Accounting Standard 28 ‘ Impairment of
 Assets’, the management is of the opinion that no impairment loss or
 reversal of impairment loss is required, as conditions of impairment do
 not exist.
 
 During the year, the amount transferred to Investors Education and
 Protection Fund of the Central Government as per the provisions of
 Section 205A and 205C of the Companies Act, 1956 is Rs. 1,668,843/-
 (Rs. 1,702,011/-) in aggregate which comprises of Rs.1,386,843/-
 (1,378,635/-) as unclaimed dividend and Rs. 282,000/- (Rs. 323,376/-)
 as unclaimed deposit.
 
 10. Additional net deferred tax liability of Rs. 36,863,326/- (Rs.
 19,061,407/-) for the period has been recognized in the Profit & Loss
 account.
 
 The company adjusts the amount of deferred tax liability carried
 forward by applying the tax rate that has been enacted or substantively
 enacted at the date of the Balance Sheet on accumulated timing
 differences. Such adjustment has not been effected
 this year since the tax rates have not changed for the Fiscal 2008-09.
 
 The effects on such Deferred Tax Liability, if any, arising out of
 assessments completed but under contest under various stages will be
 made on the appeals being decided.
 
 11.  Bank of Bahrain and Kuwait BSC had granted a loan of USD 3 Million
 during 2003-04 to the company. The company had entered into a forward
 currency contract with HDFC Bank in Indian rupees at a fixed interest
 rate for hedging the foreign currency fuctuation risk and the interest
 rate risk. The tenure of this derivative contract matches the tenure of
 the loan. The outstanding unsettled contracts as on 31st March 2009
 amounts to Nil.  (Rs. 4,800,000/-). The loan has been fully repaid in
 July 2008.
 
 12.  Gain/loss on currency swap transactions during the year on
 unsettled contracts as on 31st March 2009 accounted for in the Profit
 and Loss Account is Nil (Nil).
 
 13.  Sundry Debtors, Loans and Advances
 
 i. Confromations of balances from Debtors, Creditors and for Deposits
 are yet to be received in a few cases though the company has sent
 letters of confromation to them. The balances adopted are as appearing 
 in the books of accounts of the Company.
 
 ii. Sundry Debtors represent the debt outstanding on sale of
 pharmaceutical products, hospital services and project consultancy fees
 and is considered good.  The company holds no other securities other
 than the personal security of the debtors.
 
 iii. Sundry Debtors and Loans and Advances shown under the head Current
 Assets includes the amounts due from concerns which are under same
 management or in which some of the Directors are interested as
 Directors /Trustees, which amounts Rs. 449,633,277/- (Rs.
 379,684,656/-).
 
 iv. Accrued patient collections constitute Rs. 85,110,193/- (Rs.
 87,237,648/-) of Sundry Debtors.
 
 v. Advances and deposits represent the advances recoverable in cash or
 in kind or for value to be realised. The amounts of these advances and
 deposits are considered good for which the company holds no security
 other than the personal security of the debtors.
 
 14.  Power Generation
 
 The Electricity charges incurred in respect of main hospital is net of
 Rs. 8,078,300 /- (Rs. 7,461,095/-) [units qualifed KWH - 1,615,660
 (1,492,219)], being the rebate received from TNEB for Wind Electric
 Generators owned & run by the Company.
 
 15.  The company has been exempted by the Ministry of Corporate
 Affairs, vide Order No: 46/69/2009 - CL-III, from publishing the
 quantitative particulars as per Para 3(ii)(d) of Part II of Schedule VI
 of the Companies Act, 1956 with respect to the total value of turnover,
 purchases, goods traded, sales, consumption of raw materials etc., for
 the financial year ended 31.03.2009 and hence the same is not disclosed
 for this financial year.
 
 16.  The Company has been exempted from publishing the financial
 statements for seven of its subsidiaries which are required to be 
 attached to the company’s accounts, under Sec.212(1) of the Companies 
 Act, 1956 for the financial year ended 31.03.2009.
 
 17.  In the process of acquiring Apollo Gleneagles Hospitals Limited
 (AGHL) in Kolkata, Apollo Hospitals Enterprise Limited had initially
 invested Rs.3 crores [ 0.5 crores towards equity and Rs.2.5 crores to
 discharge other liabilities of AGHL, erstwhile Duncan Gleneagles
 Hospital Limited (DGHL)] to acquire 50.26% holding in the DGHL
 (subsequently reduced to 49%,now increased to 50%). AGHL assigned an
 unsecured debt of Rs.17.6 crores existing in its books to Apollo
 Hospitals Enterprise Limited.  As a measure of prudence, this amount is
 not recognized as an advance or investment in the books of Apollo
 Hospitals Enterprise Limited currently and will be accounted for as and
 when the amount(s) are received.
 
 18.  On review of the operations of setting up the Hospital in Noida,
 the Company has re- assigned the lease agreement between itself and the
 lessor to its associate, Indraprastha Medical Corporation Limited by
 extinguishing its rights and privileges in the original lease deed
 dated 27.10.2001.
 
 19.  In respect of the Income Tax claims of Rs. 2,367.52 Lakhs (Rs.
 2,767.91 Lakhs) by the Income Tax Department, the amount is under
 contest. Rs. 1,400.91 Lakhs has been adjusted by the Income Tax
 Department from the various amounts refundable to the Company.
 
 20.  National Saving Certificates shown under investments are pledged
 with the Chief Ration Officer, Government of Andhra Pradesh.
 
 21.  The Company has no suppliers who fall into the category of Micro,
 Small and Medium Enterprises as defned in “The Micro, Small
 
 and Medium Enterprises Development Act, 2006”. Hence there is no amount
 due to Micro, Small and Medium Enterprises for the financial year ended
 31st March 2009 (Nil).
 
 22.  Figures of the current period and previous year have been rounded
 off to the nearest rupee.
 
 23.  Figures in brackets relate to the fgures for the previous year.
 
 24.  Previous year fgures have been regrouped and reclassifed wherever
 necessary to conform with current years classification.