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Metropolis Healthcare

BSE: 542650|NSE: METROPOLIS|ISIN: INE112L01020|SECTOR: Hospitals & Medical Services
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Directors Report Year End : Mar '19   

Dear Members,

The Directors take pleasure in presenting the 19th Annual Report on the business and operations of your Company along with the audited financial statements for the year ended 31 March 2019.

FINANCIAL RESULTS:

The key highlights of the standalone and consolidated audited financial statements of your Company for the financial year ended 31 March 2019 and comparison with the previous financial year ended 31 March 2018 are summarised below:

(Rs. in Lakhs)

Particulars

Standalone

Consolidated

For the year ended 31 March 2019

For the year ended 31 March 2018

For the year ended 31 March 2019

For the year ended 31 March 2018

Revenue from Operations

58,120.81

48,495.23

76,118.18

64,716.43

Other Income

2,052.32

1,563.25

821.32

776.82

Total Revenue

60,173.13

50,058.48

76,939.50

65,493.25

Less :Total expenses

45,254.20

36,532.03

58,141.30

49,125.20

Profit before share of equity accounted investees and Income tax

14,918.93

13,526.45

18,798.20

16,368.05

Share of loss for equity accounted investees ( net of tax)

-

-

(143.02)

-

Profit Before Tax

14,918.93

13,526.45

18,655.18

16,368.05

Less: Income tax

4,773.23

3,950.53

6,293.90

5,183.89

Profit after Tax

10,145.70

9,575.92

12,361.28

11,184.16

Basic Earning per share of face value of Rs. 2/- each

20.32

19.30

24.06

21.00

Diluted Earning per share of face value of Rs. 2/- each

20.28

19.19

24.02

20.89

OPERATIONAL PERFORMANCE & FUTURE OUTLOOK:

During the year under review, the standalone income from operations of the Company increased to Rs. 60,173.13/- Lakhs compared to Rs. 50,058.48/- Lakhs in the previous year, registering growth of 20.21%. The standalone profit after tax for the year increased to Rs. 10,145.70/- Lakhs as compared to Rs. 9,575.92 /- Lakhs in the previous year registering growth of 5.95%.

During the year under review, the consolidated income from operations of the Group increased by 17.48 % from Rs. 65,493.25/- Lakhs of the previous year to Rs. 76,939.50/Lakhs in the current year. The consolidated profit after tax for the group increased by 10.52% from Rs. 11,184.16/- Lakhs of the previous year to Rs. 12,361.28/- Lakhs in the current year.

The operating and financial performance of your Company has been covered in the Management Discussion and Analysis Report which forms part of the Annual Report. According to Frost & Sullivan, the Indian diagnostics market was valued at approximately Rs. 596/- billion in the financial year 2018, and is projected to grow to approximately Rs. 802/billion by financial year 2020, driven by favourable changes in demographics, improvements in health awareness, increased spend on preventive care and wellness, increase in medical tourists, increase in lifestyle-related ailments and rising penetration of insurance in India. We believe that the increasing prescription of diagnostic tests and services by healthcare providers in India, combined with the increasing awareness and spend on preventive care and wellness tests as well as a shift from the unorganised providers to the organised providers in the Indian diagnostics market creates a significant market opportunity for us.

In 2016, 13% of India’s total population was estimated to be above the age of 54 years and it is expected to increase to 15% by the financial year 2022. It is expected that the ageing population base in India and its predisposition to various chronic diseases will create a huge opportunity for the healthcare sector in the near future and pose a significant demand on the healthcare infrastructure to provide healthcare access for all.

The growth in the industry is being driven by various factors including which provide growth direction:

- Increase in evidence-based treatments

- Test perfection continuously increasing

- Huge demand-supply gap

- Government is promoting public private partnership (PPP)

- Changing disease profiles

- Increase in health insurance coverage

- Need for greater health coverage as population and life expectancy increase

- Rising income levels make quality healthcare services more affordable

- Demand for lifestyle diseases-related healthcare services

- Increase in preventive health check-ups and awareness amongst people about fitness

- Technology upgrade dependency on path-lab testing and turnaround time (TAT) and quality is increasing

- There is substantial increase in scalability in testing The diagnostics industry is witnessing a great deal of visibility and interest with more organised players driving regional growth. This is also resulting in gradual shift of the market from unorganised to more organised players thereby driving quality and efficiency standards. This sector has also attracted investments further fuelling competition but at the same time improving industry standards. India still has large rural markets which are either under serviced or not serviced at all by diagnostics and this provides the opportunity for growth in under penetrated areas although at significantly lower price points. In the urban markets too there are pockets of growth opportunities given the overall awareness on health care and health attitudes.

DIVIDEND:

During the year under review, the Board of Directors declared an interim dividend of Rs. 13.26 per equity share having face value of Rs. 2/- each (663%) which amounts to Rs. 66,53,69,297/-. An amount of Rs. 13,67,68,616/- was paid as dividend distribution tax on the interim dividend declared by the Board.

The interim dividend was paid to the shareholders on 11 February 2019.

The interim dividend be considered as final dividend for FY 2018-2019

The dividend declared is in accordance with the principles and criteria as set out in the Dividend Distribution Policy of the Company.

DIVIDEND DISTRIBUTION POLICY:

Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Disclosure, 2015 (“SEBI Regulations”/ “Listing Regulations”) require top 500 listed companies, based on the market capitalisation, to formulate Dividend Distribution Policy. As a good corporate governance practice and compliance of the said regulation, the Company has formulated its Dividend Distribution Policy. The Policy is uploaded on the website of the Company viz.: https://www.metropolisindia.com/about-metropolis/ investors

RESERVES:

Your Directors have proposed not to transfer any amount to General Reserves of the Company for the financial year 2018-19.

MATERIAL CHANGES AFFECTING THE COMPANY:

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and date of this report. There has been no change in the nature of business of the Company.

SCHEME OF ARRANGEMENT AND ACQUISITION: Amalgamation 2018

The Board of Directors of your Company at its meeting held on 16 March 2018 and the shareholders at its meeting held on 25 May 2018 as per the direction of National Company Law Tribunal, Mumbai Bench (NCLT) approved the scheme of amalgamation (“Scheme”) for amalgamation of Bacchus Hospitality Services and Real Estate Private Limited (“Bacchus”); Metropolis Healthcare (Chandigarh) Private Limited, Metropolis Healthcare (Jodhpur) Private Limited, Sanket Metropolis Health Services (India) Private Limited, Final Diagnosis Private Limited and Golwilkar Metropolis Health Services (India) Private Limited (collectively referred as “Wholly Owned Subsidiaries”) with the Company (“Transferee Company”) pursuant to the provisions of Section 230 to 232 and other applicable provisions of Companies Act, 2013.

National Company Law Tribunal, Ahmedabad bench vide its order dated 14 August 2018 and NCLT vide its order dated 30 August 2018 respectively approved the Scheme. The appointed date for the Scheme was 01 April 2018 and the Scheme has become effective with effect from 08 September 2018 upon filing of the certified copy of the Orders by the respective companies with the Registrar of Companies, Gujarat & Maharashtra at Mumbai respectively.

Upon the Scheme coming into effect all equity shares held by Transferee Company in the Wholly Owned Subsidiaries stand cancelled. Further, the Transferee Company on 08 September 2018 has allotted 26,57,731 fully paid up Equity Shares of Rs. 10/each in the ratio of 957,713 Equity Shares of Rs. 10/- each to the shareholders of Bacchus for every 10,00,000 Equity Shares of Rs. 10/- each held in Bacchus (Pre-bonus and Sub-division).

Acquisitions

During the year under review, the Company has acquired the remaining stake in the following subsidiaries: -

Sr. no.

Particular

Balance Stake

Total Consideration

Cash (Rs. in Lakhs)

Other than Cash* (Shares swap)

1

Desai Metropolis Health Services Private Limited (“Desai”)

18,400 equity shares of Desai

1,454.11

21,968 Equity Shares of Rs. 10/- each of the Company

2

Lab One Metropolis Healthcare Services Private Limited (“Lab One”)

65,170 equity shares of Lab One

680.82

9,554 Equity Shares of Rs. 10/- each of the Company

3

Micron Metropolis Healthcare Private Limited (“Micron”)

15,000 equity shares of Micron

283.00

-

4

Sudharma Metropolis Health Services Private Limited (“Sudharma”)

135 equity shares of Sudharma

1,349.74

12,853 Equity Shares of Rs. 10/- each of the Company

5

Dr. Patel Metropolis Healthcare Private Limited (“Patel Metropolis”)

15,000 equity shares of Patel Metropolis

867.00

-

6

R. V. Metropolis Diagnostic & Health Care Center Private Limited (“RV Metropolis”)

785 equity shares of R.V Metropolis

1,897.29

20,221 Equity Shares of Rs. 10/- each of the Company

7

Bokil Golwilkar Metropolis Healthcare Private Limited (“Bokil”)

2,42,400 equity shares of Bokil

192.00

-

*(Pre Sub-Division of Shares)

CHANGE IN NATURE OF BUSINESS:

There was no change in the nature of the business or any activity of business of the Company during the year under review. SHARE CAPITAL:

Increase in Authorised Share Capital and Sub-Division

a) The authorised share capital of the Company has been increased from Rs. 55,00,00,000/- divided into 5,50,00,000 Equity Shares of Rs. 10/- each to Rs. 59,15,08,030/- divided into 5,91,50,803 Equity Shares of Rs. 10/- each by virtue of Order passed by NCLT dated 30 August 2018 approving the Scheme of Amalgamation.

b) The authorised share capital of the Company has been sub-divided from Rs. 59,15,08,030/- divided into 5,91,50,803 Equity Shares of Rs. 10/- each to Rs. 59,15,08,030/- divided into 29,57,54,015 Equity Shares of Rs. 2/- each with effect from 20 September 2018.

Change in Paid-up Share Capital:

During the year under review, the Company has made following allotments, whose details are as under:

Date of allotment

No. of Equity Shares of Rs. 10/- each

Remarks

08.09.2018

26,57,731

The Board of Directors by passing circular resolution dated 08 September 2018, approved the allotment of 26,57,731 Equity Shares of Rs. 10/- each to Bacchus Hospitality Services and Real Estate Private Limited, pursuant to the Scheme of Amalgamation of Bacchus Hospitality Services and Real Estate Private Limited, Metropolis Healthcare (Chandigarh) Private Limited, Metropolis Healthcare (Jodhpur) Private Limited, Final Diagnosis Private Limited, Sanket Metropolis Health Services (India) Private Limited and Golwilkar Metropolis Health Services (India) Private Limited with the Company.

11.09.2018

32,800

The Board of Directors by passing circular resolution dated 11 September 2018, approved the allotment of 32,800 Equity Shares of Rs. 10/- each pursuant to exercise of stock options under the Metropolis Employees Stock Option Scheme 2007.

11.09.2018

8,703

The Board of Directors by passing circular resolution dated 11 September 2018, approved the allotment 8,703 Equity Shares of Rs. 10/- each at a premium of Rs. 2,569/- per Equity Shares upon conversion of One (1) Warrant of Rs. 20,000/-.

13.09.2018

64,596

The shareholders at the Annual General Meeting held on 10 September 2018, approved the allotment of 64,596 Equity Shares of Rs. 10/- each at a premium of Rs. 4,068/- (the price was determined pursuant to valuation report received from Almondz Global Securities Limited; Category- I Merchant Banker) for consideration other than cash on preferential allotment /Private Placement basis to discharge the part of purchase consideration for the acquisition of remaining stake in following subsidiaries: -

1. Lab One Metropolis Healthcare Services Private Limited;

2. Desai Metropolis Health Services Private Limited;

3. R.V. Metropolis Diagnostic and Health Care Centre Private Limited; and

4. Sudharma Metropolis Health Services Private Limited.

15.09.2018

3,85,990

The shareholders at the Extra Ordinary General Meeting held on 14 September 2018, approved the allotment of 3,85,990 Bonus shares in the ratio of 1 Equity Share of Rs. 10/- each for every 25 existing Equity Shares of Rs. 10/- each held by shareholders as on record date i.e. 14 September 2018, by capitalisation of sum standing to the credit of capital redemption reserve and securities premium account amounting to Rs. 3.86/- Lakhs.

20.09.2018

-

The paid-up share capital of the Company has been sub-divided from Rs. 10,03,57,360/- divided into 1,00,35,736 Equity Shares of Rs. 10/- each to Rs. 10,03,57,360/- divided into 5,01,78,680 Equity Shares of Rs. 2/- each.

The paid up equity share capital of the Company as on 31 March 2019 was Rs. 10,03,57,360/-.

During the year under review, the Company has not issued shares with differential voting rights, has not bought back any shares, it has neither issued sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company.

LISTING OF EQUITY SHARES:

Your Directors are pleased to inform that, subsequent to the year under review, your Company completed the initial public offering of its equity shares (“IPO”) by way of an offer for sale of up to 1,36,85,095 equity shares of face value of Rs. 2/- each of the Company, by the Selling Shareholders i.e. 62,72,335 Equity Shares by Dr. Sushil Kanubhai Shah (Promoter Selling Shareholder) and 74,12,760 Equity Shares by CA Lotus Investments (Investor Selling Shareholder), for cash at a price of Rs. 880/- per equity share determined through book building process. Equity shares transferred in the IPO constituted 27.27% of the post-offer equity share capital of the Company.

Pursuant to listing of equity shares on stock exchanges, your Company enjoys the benefit of enhanced brand name and creation of public market for the equity shares of the Company.

The IPO opened on 3 April 2019 (for anchor investors the IPO opened and closed on 2 April 2019) and closed on 5 April 2019. The IPO received an overwhelming response from all categories of investors and was subscribed by 5.83 times except Employees quota.

Post allotment / transfer in the IPO, the equity shares of your Company got listed and commenced trading on the BSE Limited and the National Stock Exchange of India Limited on 15 April 2019.

MEMORANDUM OF ASSOCIATION:

During the year, the Memorandum of Association of the Company was amended for increase in authorised share capital of the Company Rs. 55,00,00,000/- divided into 5,50,00,000 Equity Shares of Rs. 10/- each to Rs. 59,15,08,030/divided into 5,91,50,803 Equity Shares of Rs. 10/- each pursuant to the Order passed by NCLT dated 30 August 2018 approving the Scheme of Amalgamation and further pursuant to shareholders approval in the Extra-ordinary General meeting held on 14 September 2018 for subdivision of authorised share capital of the Company from Rs. 59,15,08,030/- divided into 5,91,50,803 Equity Shares of Rs. 10/- each to Rs. 59,15,08,030/- divided into 29,57,54,015 Equity Shares of Rs. 2/- each with effect from 20 September 2018.

ALTERATION OF ARTICLES OF ASSOCIATION:

During the year, the shareholders at their meeting held on 24 September 2018 adopted a new set of Articles of Association (comprising of “Part A” and “Part B”) pursuant to the proposed Initial Public Offering. Up to the date of listing of the Company’s equity shares on the recognised stock exchanges in India, Part A prevailed over Part B and in the event of any inconsistency, contradiction, conflict or overlap between Part A and Part B (subject to applicable laws), and Part A shall stand automatically terminated and cease to have any force and effect on and from the date of listing of the Company’s equity shares on the recognised stock exchanges i.e. BSE Limited and the National Stock Exchange of India Limited i.e. 15 April 2019, without requiring any further action by the Company or its shareholders.

DEPOSITS:

Your Company has not accepted/invited deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

During the year, the Company has not taken loan from the promoter directors.

MATERIAL SUBSIDIARY:

The Company has formulated a Policy for determining Material Subsidiaries. The Company does not have any Material Subsidiary as per the parameters laid down under the Policy. The Policy is uploaded on the website of the Company viz.: https://www. metropolisindia.com/about-metropolis/investors

SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES:

The Subsidiary Companies of your Company continued to perform in their respective areas as per plans and thus contributed robustly to the overall growth of the Company in terms of revenue and profits of the Company and overall performance of the Group.

During the year, your Company had 10 domestic subsidiaries and 7 overseas subsidiaries (including five step-down subsidiaries) and one foreign branch which is considered as a foreign Company in the respective country. Also, your Company has 1 domestic Joint Venture Company and 1 overseas Associate Company.

A statement containing salient features of the financial statement of subsidiaries, associate companies and joint ventures, as per Section 129 (3) of the Companies Act, 2013, are mentioned in Annexure - 1 to this Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL: Appointment/Resignations from the Board of Directors

In terms of Section 149, 152 read with Schedule IV and all other applicable provisions of the Companies Act, 2013 and The Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modifications or re-enactment thereof for the time being in force), the Independent Directors are appointed for a term of five years and are not liable to retire by rotation.

The Company has received declarations from the Independent Directors confirming that they meet with the criteria of independence as prescribed under Section 149 (6) of the Companies Act, 2013.

During the year under review, the Company has appointed Mr. Vivek Gambhir (DIN: 06527810), Mr. Sanjay Bhatnagar (DIN: 00867848) and Mr. Milind Shripad Sarwate (DIN: 00109854) as Independent Directors of the Company at the annual general meeting of the Company held on 10 September 2018 with effect from 07 September 2018.

Mr. Rajiv Devinder Sahney (DIN 00022896) was acting as an Independent Director on the Board of the Company. He resigned as an Independent Director from the Board of the Company with effect from conclusion of the Board Meeting held on 07 September 2018 due to his pre-occupation.

Mr. Mihir Jagdish Doshi (DIN 01283331) was acting as an Independent Director of the Company. On 10 September 2018, the Shareholders at their meeting re-designated Mr. Mihir Jagdish Doshi as Non-executive & Nonindependent Director w.e.f. 07 September 2018.

Dr. Duru Sushil Shah (DIN: 00180126) was acting as Nonexecutive Director of the Company. She resigned as Non executive Director from the Board of the Company with effect from conclusion of the Board Meeting held on 07 September 2018 due to her pre-occupation.

Mr. Neeraj Bharadwaj (DIN: 01314963) was acting as NonExecutive Non Independent Director of the Company. He resigned as a Non-Executive Non Independent Director from the Board of the Company with effect from conclusion of the Board Meeting held on 24 September 2018.

Pursuant to the Shareholders Agreement dated 24 September 2018 (“Second Amendment Agreement”) entered by and amongst Dr. Sushil Kanubhai Shah, Ms. Ameera Sushil Shah, Dr. Duru Sushil Shah, CA Lotus Investments, METZ Advisory LLP and the Company; CA Lotus Investments had a right to nominate an observer to the Board to attend and participate in the Board or any other Committee meetings thereof. Accordingly, Mr. Neeraj Bharadwaj was appointed as an observer of the Board of the Company w.e.f. 24 September 2018.

Pursuant to the letter dated 25 April 2019 received from CA Lotus Investments, Mr. Neeraj Bharadwaj ceases to act as an observer to the meetings of the Board and any committees of the Company effective from listing of Equity Shares on BSE Limited and the National Stock Exchange of India Limited on 15 April 2019.

Appointment/Resignation of the Key Managerial Personnel

In accordance with the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following are the Key Managerial Personnel of the Company:

- Ms. Ameera Sushil Shah as Managing Director of the Company.

- Dr. Sushil Kanubhai Shah as Chairman & Executive Director of the Company

- Mr. Vijender Singh as Chief Executive Officer of the Company.

- Mr. Tushar Manohar Karnik as Chief Financial Officer of the Company.

- Mr. Jayant Prakash as Head Legal, Company Secretary and Compliance Officer of the Company.

During the year under review there was no change in Key Managerial Personnel.

Directors Retiring By Rotation

In accordance with the provisions of the Companies Act 2013, Dr. Sushil Kanubhai Shah, Chairman & Executive Director of the Company is liable to retire by rotation and being eligible, offers himself for re-appointment at ensuing Annual General Meeting of the Company.

On the basis of the written representations received from the directors, none of the above directors are disqualified under Section 164 (2) of the Companies Act, 2013.

DIRECTORS’ RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information and explanation obtained by them, the Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) That in preparation of the Annual Financial Statements for the year ended 31 March 2019; the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

(b) That such accounting policies as mentioned in the notes to the Financial Statements have been selected and applied consistently and judgements and estimates have been made that are reasonable and prudent so as to give true and fair view of the Statement of Affairs of the Company as at 31 March 2019 and of the Profit of the Company for the year ended on that date.

(c) That proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) That the Annual Financial Statements have been prepared on a going concern basis.

(e) That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

(f) That proper Internal Financial Controls were in place and that the Financial Controls were adequate and were operating effectively.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report (“MDA”) on the operations of the Company, as required under the SEBI Regulations is provided in a separate section and forms an integral part of this Report.

NOMINATION AND REMUNERATION POLICY:

The Company has a Nomination and Remuneration Policy in place. For details on the same, please refer to the Corporate Governance Report.

COMMITTEES OF THE BOARD:

Your Company has several committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of laws and statutes applicable to the Company.

In order to ensure focused attention on business and for better governance and accountability, the Board has constituted the following committees:

a) Audit Committee;

b) Nomination and Remuneration Committee;

c) Stakeholder Relationship Committee;

d) CSR Committee;

e) Risk Management Committee.

The details with respect to the composition, powers, roles, terms of reference, etc. of the aforesaid committees are given in details in the “Report on Corporate Governance” of the Company which forms part of the Annual Report.

MEETINGS OF THE BOARD:

During the year under review, the Board of Directors met Nine (9) times. For details of the meetings of the Board of Directors, please refer to the Corporate Governance Report.

PERFORMANCE EVALUATION OF THE BOARD:

In compliance with the provisions of the Companies Act, 2013 and Regulation 25(4)(a) of the SEBI Regulation, annual performance evaluation of the Board and its Directors individually was carried out. Various parameters such as the Board’s functioning, composition of its Board and Committees, execution and performance of specific duties, obligations and governance were considered for evaluation. The performance evaluation of the Board as a whole was carried out by the Independent Directors. The performance evaluation of each Independent Director was also carried out by the Board.

The Board of Directors expressed their satisfaction with the evaluation process.

FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS:

Pursuant to the SEBI Regulations, the Company has worked out a Familiarisation programme for the Independent Directors, with a view to familiarise them with their role, rights and responsibilities in the Company, nature of Industry in which the Company operates, business model of the Company, etc.

Through the Familiarisation programme, the Company apprises the Independent Directors about the business model, corporate strategy, business plans and operations of the Company. Directors are also informed about the financial performance, annual budgets, internal control system, statutory compliances etc. They are also familiarised with Company’s vision, core values, ethics and corporate governance practices.

Details of Familiarisation programme of Independent Directors with the Company are available on the website of the Company https://www.metropolisindia.com/about-metropolis/investors

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with the provisions of Section 133 of the Companies Act, 2013 and Ind AS 110 - Consolidated Financial Statement read with Ind AS 28 - Investment in Associates and Ind AS 31 - Interests in Joint Ventures, the audited consolidated financial statement is forming part of this Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

EXTRACT OF ANNUAL RETURN:

The extract of annual return in Form MGT 9 as required under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 is available on the website of the Company at the link: https:// www.metropolisindia.com/about-metropolis/investors and the same is attached as Annexure - 2.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 and the Rules made thereunder are given in the notes to Financial Statements.

INSTANCES OF FRAUD, IF ANY, REPORTED BY THE STATUTORY AUDITORS:

During the year under review, the Statutory Auditors had not reported any fraud under Section 143 (12) of the Companies Act, 2013, therefore no detail is required to be disclosed under Section 134 (3) (ca) of the Companies Act, 2013.

RELATED PARTY TRANSACTIONS:

The Board has formulated and adopted a Related Party Transactions Policy (“RPT Policy”) for the purpose of identification, monitoring and reporting of related party transactions. The RPT Policy as approved by the Board is uploaded on the Company’s website viz. https://www. metropolisindia.com/about-metropolis/investors All Related Party Transactions entered into during the Financial Year were on arm’s length basis and were 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 interest of the Company at large.

Further since transactions with the related parties are not material in accordance with the Related Party Transactions Policy, the particulars of such transactions with the related parties are not required to be reported by the Company in Form AOC-2.

All Related Party Transactions are placed before the Audit Committee.

The members may refer to note no. 40 to the financial statements which set out related party disclosures.

STATUTORY AUDITORS:

B S R & Co. LLP, Chartered Accountants (ICAI Firm No. 101248W/W-100022) was appointed as Statutory Auditors of the Company, for a term of 5 (five) consecutive years, at the 17th Annual General Meeting (AGM) held on 18 September 2017. They have confirmed that they are not disqualified from continuing as Statutory Auditors of the Company. Further, in terms of Companies (Amendment) Act, 2017 notified w.e.f. 07 May 2018, the requirement of Section 139(1) of Companies Act, 2013 stands omitted and the ratification of appointment of the Statutory Auditor at every AGM is not required.

The Notes on financial statement referred to in the Auditors’ Report are self-explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation, adverse remark or disclaimer save and except mentioned below;

1) With reference to Clause (i) (c) of Annexure A to the Standalone Independent Auditors Report regarding the title deeds being in the names of the entities which got merged with the Company in the past:

- The Company is in the process of getting the title deeds registered in the name of the Company.

2) With reference to Qualified Opinion to the Consolidated Independent Auditors Report regarding the Company has not consolidated the financial statements of an Associate Company, Star Metropolis Health Services Middle East LLC:

- Due to non-availability of financial information from the J.V. partner, accounts of associate company could not be consolidated.

RISK MANAGEMENT POLICY:

The Company has adopted a Risk Management Policy wherein all material risks faced by the Company are identified and assessed. The Risk Management framework defines the risk management approach of the Company and includes collective identification of risks impacting the Company’s business and documents their process of identification, mitigation and optimisation of such risks. The Policy is uploaded on the website of the Company https:// www.metropolisindia.com/about-metropolis/investors

INTERNAL FINANCIAL SYSTEMS AND THEIR ADEQUACY:

The Company has an internal control system. All these controls were operating effectively during the year.

The Company has adequate internal financial controls. During the year, such controls were tested to find out any weaknesses in them. Services of professional consultants were obtained to remove such weaknesses and ensure robust internal financial controls and to ensure that these controls are operating effectively.

The Company is complying with all the applicable Indian Accounting Standards (Ind AS). The accounting records are maintained in accordance with generally accepted accounting principles in India. This ensures that the financial statements reflect true and fair financial position of the Company.

MAINTENANCE OF COST RECORDS:

Provisions of maintenance of cost records as specified by the Central Government under Section 148 (1) of Companies Act, 2013 is applicable to the Company. Accordingly, such cost accounts and cost records are made and maintained by the Company.

COST AUDITOR:

As per Section 148 of the Act, the Company is required to have the audit of its cost records conducted by a Cost Accountant. The Board of Directors of the Company has on the recommendation of the Audit Committee, approved the appointment of Messrs. Joshi Apte & Associates (Registration No. 00240) as the Cost Auditors of the Company to conduct cost audit prescribed under the Companies (Cost Records and Audit) Rules, 2014 for the year ending 31 March 2020. The Board of Directors on recommendation of the Audit Committee approved remuneration of Rs. 1 Lakh plus applicable taxes and out of pocket expenses, subject to ratification of their remuneration by the Members at the forthcoming AGM. Messrs. Joshi Apte & Associates have, under Section 141 of the Act and the Rules framed thereunder furnished a certificate of their eligibility and consent for appointment. Messrs. Joshi Apte & Associates, have vast experience in the field of cost audit and have conducted the audit of the cost records of the Company for the past several years.

INTERNAL AUDITOR

Pursuant to the provisions of Section 138 of the Companies Act, 2013 and The Companies (Accounts) Rules, 2014, on the recommendation of the Audit Committee, Suresh Surana & Associates LLP, were appointed by the Board of Directors to conduct internal audit reviews of the Company.

DISCLOSURE OF REMUNERATION OR COMMISSION RECEIVED BY A MANAGING OR WHOLE-TIME DIRECTOR FROM THE COMPANY’S HOLDING OR SUBSIDIARY COMPANY:

The Managing Director and Whole Time Director have not received any remuneration from the Company’s Holding or Subsidiary Company.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:

The Company has taken initiatives to discharge its CSR duties as required under Section 135 of the Companies Act, 2013 and has spent part of the amount till date and is in the process of spending the balance sum over a period of time. However, the Company has not been able to spend part of the amount during the year under review.

The complete details on the CSR activities is enclosed herewith as Annexure - 3. The CSR Policy of the Company is available on the website of the Company https://www. metropolisindia.com/about-metropolis/corporate-social-responsibility-2/

CORPORATE GOVERNANCE:

Your Company is committed to achieve the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set by the Regulators. A separate section on Corporate Governance practices followed by the Company as stipulated under Regulation 43(3) and Schedule V of the SEBI Regulations, together with a certificate from M/s. Manish Ghia & Associates, a firm of Company Secretaries in Practice, confirming Compliance to the conditions as stated in Regulation 34(3) of the SEBI Regulations forms part of this Annual Report.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT:

Pursuant to Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s. Manish Ghia & Associates, Practicing Company Secretaries, Mumbai, to undertake the Secretarial Audit of the Company for the financial year ended 31 March 2019. The Secretarial Audit Report in the prescribed Form No. MR-3 is attached as Annexure - 4.

The following are the clarifications to the observations given by the Secretarial Auditor in their Audit report:

(a) The composition of Nomination and Remuneration Committee of the Board of Directors was not in accordance with the provisions of Section 178 of the Act up to 06 September 2018 as the Managing Director was a member of the Committee;

- The Company has initiated to take the necessary steps for regularising the non-compliance. The constitution of the Nomination and Remuneration Committee has been revised w.e.f. 07 September 2018.

(b) in respect of one of the meeting of board of directors in which the facility of video conferencing was made available, the recording of the same is reported to have been corrupted and accordingly is unavailable;

- Due to technical issue, the video recording has got corrupted. The Company will henceforth take proper measures and care in this regard.

(c) the Company has not fully spent the mandated 2% of average net profits of the Company on Corporate Social Responsibility (CSR) activities during the financial year;

- The reasons for the same are forming part of Annexure - 3 of the Board’s Report.

(d) some properties are yet to be mutated in the name of the Company, accordingly to that extent the same are not in compliance with provisions of Section 187 of the Act;

- The Company is in the process of getting the title deeds registered in the name of the Company.

(e) in the consolidated financial statements for the year ended 31 March 2018 the financials of Company’s overseas Joint Venture viz., Star Metropolis Healthcare Middle East LLC, Dubai, UAE (JV) have not been consolidated as such financial statements have not been made available by its overseas JV;

- Due to non-availability of financial information from the J.V. partner, accounts of associate company could not be consolidated.

(f) the submission of Annual Performance Report in respect of Company’s overseas Joint Venture (JV) viz., Star Metropolis Healthcare Middle East LLC, Dubai, UAE to RBI during the year under review is not based on the audited annual accounts of the preceding financial year of the JV; and

- Due to non-availability of financials, the Company was unable to file the Annual Performance Report.

(g) the submission of revised annual return on foreign liabilities and assets (based on the audited financials) for the year ended 31 March 2018 to the Reserve Bank of India (RBI) have been made after the due date.

- The Company had filed the Provisional foreign liabilities and assets (FLA) on time, but there was an inadvertent delay of few days in filing the final FLA.

CREDIT RATING:

The Company has obtained credit rating. For the details on the same, please refer to the Corporate Governance Report.

EMPLOYEE STOCK OPTIONS:

The Company has two ESOP Schemes namely:

1. Revised Metropolis Employee Stock Option Scheme 2007 (MESOS- 2007)

2. Metropolis Employee Stock Option Scheme 2015 (MESOS - 2015)

The details of “Revised Metropolis Employee Stock Options Scheme 2007” (MESOS - 2007) and “Metropolis Employee Stock Option Scheme 2015 (MESOS- 2015)” including the number of outstanding options are given in the Annexure - 5 forming part of this Report.

INDUSTRIAL RELATIONS:

The Company’s relations with all its employees remained cordial and satisfactory during the year under review.

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197(12) of The Companies Act, 2013 read with Rule 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company are given in Annexures - 6 hereunder and forms part of this report.

Pursuant to the provisions of the first proviso to Section 136(1) of the Companies Act, 2013, the disclosure under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) will be sent to the members of the Company on request.

Further, the said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary at the Corporate Office of the Company.

DEMATERIALIZATION OF SHARES:

All the Shares of your Company are in Dematerialisation mode. The ISIN of the Equity Shares of your Company is INE112L01020.

REGISTRAR & SHARE TRANSFER AGENT:

Your Company’s Registrar and Share Transfer Agent is:

Link Intime India Private Limited C-101, 1st Floor, 247 Park, Lal Bahadur Shastri Marg, Vikhroli (West), Mumbai - 400 083, Maharashtra, India.

STATUTORY DISCLOSURES:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3) of The Companies (Accounts) Rules, 2014 is as follows:

VIGIL MECHANISM/ WHISTLEBLOWER:

The Company has in place a vigil mechanism for Director and employees to report their genuine concerns about unethical behaviour, actual or suspected fraud, or violation of the Company’s code of conduct.

The Whistleblower Policy of the Company is available on the website of the Company at https://www.metropolisindia.com/ about-metropolis/investors/

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

The Company has measures in place for prevention of sexual harassment in accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company did not receive any complaint during the Financial year 2018-19.

COMPLIANCE WITH SECRETARIAL STANDARDS:

The Company has devised proper systems to ensure compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and the Company complies with all the applicable provisions of the same during the year under review.

CAUTIONARY STATEMENT:

Statements in this Report, particularly those which relate to Management Discussion and Analysis as explained in a separate Section in this Report, describing the Company’s objectives, projections, estimates and expectations may constitute ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.

APPRECIATIONS:

The Directors acknowledge the valuable contribution of all its employees in the continuous growth of the Company and making it a dominant player in the market.

Further, they on behalf of the Company would like to express their sincere gratitude to the Medical Profession for their unconditional support.

They would also like to thank the Company’s Joint Venture Partners, Banks and other stakeholders for their contribution in the Company’s growth and in its operations.

For and on behalf of the Board of Directors

Dr. Sushil Kanubhai Shah

Place: Mumbai Chairman & Executive Director

Date: 13 May 2019 (DIN: 00179918)

Source : Dion Global Solutions Limited
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