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Kovai Medical Center and Hospital Directors Report, Kovai Medical Reports by Directors
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Kovai Medical Center and Hospital

BSE: 523323|NSE: KOVAI|ISIN: INE177F01017|SECTOR: Hospitals & Medical Services
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Directors Report Year End : Mar '18    Mar 17

Dear Members,

The Directors take pleasure in presenting the Thirty Second Annual Report along with the audited financial statements for the year ended 31st March 2018.

FINANCIAL HIGHLIGHTS (STANDALONE) Rs. Lakhs

Particulars

2017-18

2016-17

Operating Income

59,236.63

53,107.33

Othe r Income

763.44

617.68

Total Income

60,000.07

53,725.01

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)

13,644.14

13,086.91

Profit Before Taxation (PBT)

8,941.90

9,233.61

Less: Provision for Taxation

3,144.16

3,236.26

Profit After Taxation

5,797.74

5,997.35

Add: Other Comprehensive Income

(3.48)

(22.56)

Total Comprehensive Income for the year

5,794.26

5,974.79

RESULTS OF OPERATIONS STANDALONE

The income from operations for the financial year 2017-18 was Rs. 59,236.63 Lakhs registering a growth of 11.54% over the previous year income of Rs. 53,107.33 Lakhs. Earnings before interest, tax, depreciation and amortization (EBITDA) were Rs.13,644.14 Lakhs registering a growth of 4.26% over the previous year EBITdA of Rs.13,086.91 Lakhs.

Profit after tax (PAT) for the year was Rs. 5,797.74 Lakhs over the PAT of Rs. 5,997.35 Lakhs in year 2016-17. Reduction in PAT is due to enhanced Depreciation and Amortisation (consequent to re-assessment of useful life of Property, Plant & Equipment) amounting to Rs. 703.91 Lakhs.

SUBSIDIARY COMPANY

Idhayam Hospitals Erode Limited is a wholly owned subsidiary of KMCH Limited. Total Income for the Financial Year 2017-18 was Rs. 35.67 Lakhs an increase of 5.04% over the previous year Total income of Rs. 33.96 Lakhs.

A statement of salient features of financials of Idhayam Hospitals Erode Limited pursuant to Section 129(3) of the Companies Act 2013 in Form AOC 1 is annexed as “Annexure - I” and forming part of the report.

Except the above, the Company has no other Subsidiary, Associate or Joint Venture company. Idhayam Hospitals Erode Limited is not a material subsidiary. The Board of Directors have formulated a policy for determining ‘material’ subsidiaries pursuant to the provisions of the Listing regulations. The same is displayed on the website of the company (http://kmchhospitals.com/wp-content/uploads/2016/pdf/Policy_on_subsidiaries.pdf).

CONSOLIDATED FINANCIAL STATEMENTS

On consolidated basis, income from operations from current year under review was Rs. 59,236.63 Lakhs, higher by 11.54 % over year 2016-17 income of Rs. 53,107.33 Lakhs.

Profit after tax (PAT) for the year was Rs. 5,797.97 Lakhs over the PAT of Rs. 6,006.35 Lakhs in year 2016-17.

MERGER

The Board at its meeting held on 03rd February 2017 approved the scheme of amalgamation of Idhayam Hospitals Erode Limited (Wholly Owned Subsidiary) with Kovai Medical Center and Hospital Limited effective 1st April 2016.

Pursuant to an Order dated 21st November, 2017 passed by the National Company Law Tribunal, Chennai Bench, separate meetings of Unsecured Creditors and Equity Shareholders of Kovai Medical Center and Hospital Limited was convened and held at the Registered Office of the Company, on 04th January, 2018, approving with or without modification(s), the proposed Scheme of Amalgamation and Arrangement between Idhayam Hospitals Erode Limited and Kovai Medical Center and Hospital Limited under Sections 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013.

The secured creditors of the Company had provides their no objection to the scheme of amalgamation.

Statutory Clearances from Regional Director, Company Law Board, Department of Income Tax, Government of India are awaited before the Tribunal hears and disposes the Company Petitions confirming the Scheme of Amalgamation.

DIVIDEND

Based on the Company’s performance, the Directors are pleased to recommend for approval of the members a dividend of Rs. 3.00 per share (30%) for the year 2017-18.

The dividend on equity shares, if approved by the members would involve the cash outflow of Rs. 395.74 Lakhs including dividend distribution tax.

TRANSFER TO RESERVES

The company does not propose to transfer any amount out of the profit to reserves.

BOARD MEETINGS

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

AUDIT COMMITTEE

The composition of Audit Committee, number of meetings held and the attendance of Directors there to have been provided under an identical head in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITIES

During the year in pursuance of the recommendations of the CSR Committee the company had contributed Rs.142.42 Lakhs being 2% of the average net profit of the company towards implementing the CSR activities. Annual Report on CSR as required under Section 135 read with schedule VII and other applicable provisions of the Companies Act, 2013 is appended as “Annexure - II”.

INFORMATION ON STATUS OF COMPANY’S AFFAIRS

Information on operational and financial performance etc., is provided in 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.

SHARE CAPITAL

The paid up equity share capital of the Company as on March 31, 2018 aggregates to Rs.10,94,22,620/- comprising of 10942262 equity shares of Rs. 10/- each fully paid up.

CREDIT RATING

CARE has affirmed your company’s Long term bank facilities ‘CARE A ’ (single A plus) and short term bank facilities to ‘CARE A1 ’ (A One plus) from ‘CARE A1’ ( A One).

HOSPITAL ACCREDITATION

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

DIRECTORS RESPONSIBILITY STATEMENT

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

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

(b) The Directors had selected such accounting policies and applied them consistently and made judgements 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;

(c) 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;

(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 the company and that such internal financial controls are adequate and were operating effectively.

(f) 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

BOARD EVALUATION

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

The performance evaluation of Independent Directors was completed. The Board of Directors have expressed their satisfaction with the outcome of the evaluation process.

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

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Pursuant to requirement of SEBI (LODR) Regulations 2015, the company has a familiarization programme for the Independent Directors with regard to their role, rights, responsibilities in the company, nature of the industry in which the company operates, business model of the company etc. The Board members are provided with all the necessary documents / reports and internal policies to enable them to familiarize with the company’s procedures and practices and the same is uploaded on the Company’s website at www.kmchhospitals.com/Familiarization _Programme_for_Independent_Directors.pdf

DIRECTORS

As per Article103(b) of the Articles of Association and Section 152(6) of the Companies Act, 2013, except Dr. Nalla G Palaniswami and Dr. Thavamani Devi Palaniswami, all other Executive and Non-Executive Non-Independent Directors are subject to retirement by rotation. Accordingly, Dr. M.C.Thirumoorthi, Director retires by rotation and being eligible has offered himself for re-appointment.

DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received necessary declaration from each Independent Director of the Company under Section149 (7) of the Companies Act, 2013 that the Independent Directors of the Company met with the criteria of their Independence laid down in Section 149(6).

COMPLIANCE OF CODE OF CONDUCT

The compliance of code of conduct by Directors have been affirmed by the Managing Director and is disclosed in the Corporate Governance Report.

KEY MANAGERIAL PERSONNEL

The Key Managerial Personnel of the company as stipulated under the Companies Act 2013 are Dr. Nalla G Palaniswami, Managing Director, Dr.Thavamani Devi Palaniswami, Joint Managing Director, Dr. Mohan S Gounder, Joint Managing Director, Dr. Arun N Palaniswami, Whole Time Director, CA M.K.Ravindra Kumar, Chief Financial Officer and CS S.P.Chittibabu, Company Secretary.

CA P.K.Gopikrishnan, Chief Financial Officer resigned from the services of the Company on 31st May 2017 after 12 years of service. The Board of Directors express their gratitude for the services during his tenure. CA M.K.Ravindra Kumar joined the Company as Chief Financial Officer with effect from 01st June 2017.

PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

The particulars regarding conservation of energy, technology absorption and foreign exchange earnings and expenditure stipulated under Section 134(3)(m) of the Companies Act 2013 read witht he Companies (Accounts) Rule, 2014, are annexed here with as”Annexure-III”and forms part of this Report.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year, there were no changes in the nature of business of the company or any of its subsidiary.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

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

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT 2013

As on March 31, 2018, the Company has neither provided nor there any outstanding loans or guarantees covered under the provisions of Section 186 of the Act. The details of Investments covered under the provisions of Section 186 of the Act are given in Note No.5 to the financial statements.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The company has set up vigil mechanism for Directors and Employees to report their genuine concerns, the details of which are given in the Corporate Governance Report. The policy on Vigil Mechanism and Whistle Blower Policy have been posted on the website of the Company (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 of business duly approved by the Audit Committee of the Board. Hence there are no transactions which are either not in arm’s length or which are material in nature requiring 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 uploaded on the Company’s website at http://www.kmchhospitals.com/pdf/PolicyRelated Party Transaction.pdf.

RISK MANAGEMENT

The steps taken by the company to mitigate the risk are disclosed under an identical head 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 is annexed herewith as “Annexure - IV” 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 in future.

HUMAN RESOURCE DEVELOPMENT

Your Company continues to place great importance to the development of human resources segment and the sustained focus on retention through employee engagement initiatives has made the employees realize their potential.

Learning and Development has provided various learning platforms which include classroom and online self - learning modules to meet the development need of employees to help build their skills, knowledge and capability.

The total strength of the employees of the Company as on 31st March 2018 was 4051 Nos.

INDUSTRIAL RELATIONS

The industrial relations scenario continued to be cordial during the year under review.

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 the remuneration of Directors, Key Managerial Personnel and employees are enclosed as “Annexure - V” forming part of the report.

The Nomination and Remuneration Policy of the company has been disclosed on the website of the company and the web link thereon is http://www.kmchhospitals.com/pdf /Nomination.Remuneration Evaluation policy.pdf.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The company has in place a Prevention of Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the work place (Prevention, Prohibition and Redressal) Act 2013. An Internal Complaint Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under the policy.

During the year 2017-18, no complaints were received by the company related to sexual harassment.

DEPOSITS

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 the public during the year.

SECRETARIAL AUDIT

Pursuant to provisions of Section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the company has appointed M/s KSR & Co. Company Secretaries LLP, Coimbatore, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the company for the Financial Year 2017-18. Secretarial Audit Report is annexed herewith as “Annexure -VI” forming part of the report.

COST AUDIT

In terms of Section 148 and other applicable provisions of the Companies Act 2013, read with Companies (Cost Records and Audit) Rules 2014, Mr.V.Sakthivel, Cost Accountant, M/s RKMS & Associates, Tirupur was appointed as Cost Auditor of the company by the Board on recommendation of Audit Committee for the Financial Year 2018-19. The remuneration of the Cost Auditor is subject to ratification by the members at the ensuing Annual General Meeting.

STATUTORY AUDITORS

M/s. Haribhakti & Co. LLP, Chartered Accountants, (FRN.: 103523W/W100048) were appointed as Statutory Auditors of the Company for five consecutive years at the Annual General Meeting held on 25th September 2015 and the term enures up to the completion of the Audit of the Financial Year 2019-20. However in the context of certain proposed internal restructuring in the Audit Firm, the Company has opted for an early rotation. This was discussed with the Audit Firm and in order to facilitate smooth transition from financial year 2018-19, they have chosen to resign from the position of Statutory Auditors of the Company upon the completion of the audit for the financial year 2017-18 and have conveyed their No-Objection to the Company appointing another Statutory Auditor for the financial year 2018-19 vide their letter dated 11th June 2018.

As per the provisions of Section 139(8) of the Companies Act, 2013, casual vacancy caused by the resignation of auditors can be filled by the Board within 30 days of vacancy and is required to be approved by the Company in general meeting within three months thereof. Hence the Board of Directors at their meeting held on 23rd June 2018 appointed M/s.VKS Aiyer & Co., Chartered Accountants (FRN: 000066S), Coimbatore to fill the casual vacancy and that they will hold office until this Annual General Meeting. The Board proposes that M/s.VKS Aiyer & Co., Chartered Accountants, (FRN: 000066S), may be appointed as the Statutory Auditors of the Company for a period of 5 years in terms of Section 139(1) of the Companies Act, 2013.

M/s. VKS Aiyer & Co., Chartered Accountants, (FRN: 000066S), have conveyed their consent to be appointed as the Statutory Auditors of the Company along with a confirmation that, their appointment, if made by the members, would be within the limits prescribed under the Companies Act, 2013.

Your Board recommends the appointment of M/s VKS Aiyer & Co., Chartered Accountants, (FRN: 000066S) as Statutory Auditors of the Company, to hold office from the conclusion of this Annual General Meeting to the conclusion of the sixth consecutive Annual General Meeting to be held in the year 2023.

LISTING WITH STOCK EXCHANGE

The equity shares of the Company are listed on the Bombay Stock Exchange Limited.

CORPORATE GOVERNANCE

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

ACKNOWLEDGEMENTS

The Board expresses its grateful appreciation for the continued assistance and co-operation received from Government Authorities, Financial Institutions, Banks, Customers, Suppliers and investors.

The Board also places on record its appreciation for the dedication and commitment extended by its consultants and employees at all levels and their contribution to the growth and progress of the company.

For and on behalf of the Board

Sd/- Sd/-

Place: Coimbatore DR. NALLA G PALANISWAMI CA.A.M.PALANISAMY

Date : 23.06.2018 MANAGING DIRECTOR DIRECTOR

Source : Dion Global Solutions Limited
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