Dear Members,
Your Directors take pleasure in presenting the Thirty Eighth Annual Report along with the audited financial statements for the year ended 31st March, 2024.
FINANCIAL HIGHLIGHTS
( in lakhs)
Particulars
Operating Income
Other Income
Total Income
Earnings before Interest, Tax, Depreciation & Amortization (EBITDA)
Profit Before Taxation (PBT)
Provision for Taxation
Profit After Taxation (PAT)
Add: Other Comprehensive Income
Total Comprehensive Income for the year
RESULTS OF OPERATIONS
The income from operations for the financial year 2023-24 wasRs. 1,21,955.27 Lakhs registering an increase of 19.59% over the previous year income ofRs. 101,974.68 Lakhs. Earnings before interest, tax, depreciation and amortization (EBITDA) wereRs. 36,263.68 Lakhs over the previous year EBITDA ofRs. 28,450.10 Lakhs. Profit after tax (PAT) for the year wasRs. 17,973.07 Lakhs over the PAT ofRs. 11,576.61 Lakhs in year 2022-23.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
The Company does not have any Subsidiary Company, Joint Venture or Associate Companies as defined in the Companies Act, 2013.
DIVIDEND
Based on companyRs.s performance, the Board of Directors are pleased to recommend a dividend of ^ 10/- per share (100%) for the Financial Year 2023-24 for approval of the members. The dividend on equity shares, if approved by the members would involve a cash outflow ofRs. 1094.23 lakhs.
Pursuant to Finance Act, 2020, dividend income is taxable in the hands of the Shareholder with effect from 01 April 2020 and the Company is required to deduct tax at source from dividend paid to Shareholders at the prescribed rates. For the prescribed rates for various categories, Shareholders are requested to refer the Finance Act, 2020, relevant circulars and amendments thereof, if any.
Further in terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Dividend Distribution Policy of the Company is available on the website of the Company at the link: https://kmchhospitals.com/wp-content/uploads/2021/06/KMCH-Dividend-Distribution-Policy-.pdf.
TRANSFER TO RESERVES
The Company does not propose to transfer any amount out of the profit to reserves.
CHANGE IN THE NATURE OF BUSINESS, IF ANY
During the year, there was no change in the nature of business of the Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There was no material change 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.
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 their attendance thereto have been provided under an identical head in the Corporate Governance Report.
CSR COMMITTEE
The composition of CSR Committee, number of meetings held and their attendance thereto have been provided under an identical head in the Corporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITIES
During the year under review in pursuance of the recommendations of the CSR Committee, the Company had commitment ofRs. 271.25 Lakhs being 2% of the last three yearsRs. 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 - III" to this report.
INFORMATION ON STATUS OF COMPANYRs.S AFFAIRS
Information on operational and financial performance etc. is provided in the Management Discussion and Analysis Report, which is annexed to the DirectorsRs. 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, 2024 aggregates to ^ 1,094.23 lakhs comprising of 1,09,42,262 equity shares of ^ 10/- each fully paid up. There is no change in the paid-up share capital of the Company during the Financial Year 2023-24.
CREDIT RATING
CARE Ratings Limited have re-affirmed your CompanyRs.s Long term bank facilities asRs.CARE A+Rs. (single A+) and short term bank facilities asRs.CARE A1+Rs. (A One plus).
HOSPITAL ACCREDITATION
Your Hospital has been certified by National Accreditation Board for Hospitals and Healthcare providers (NABH) for the delivery of high standards for safety and quality care to the patients.
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. There has been no change in the circumstances affecting their status as Independent Directors of the Company.
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 the 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 companyRs.s procedures and practices and the same is uploaded on the CompanyRs.s website at https://www.kmchhospitals.com/Policy/FP ID.pdf.
DIRECTORS
Dr. Mohan S Gounder, Director retires by rotation and being eligible has offered himself for re-appointment.
INDEPENDENT DIRECTORS
All the Independent Directors have submitted their disclosures to the Board indicating that they comply with all the requirements that are stipulated in Section 149 (6) of the Companies Act, 2013 and Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 so as to qualify themselves to act as Independent Directors in the company. Further they have also declared that they are not aware of any circumstance or situation which exist or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective and independent judgement and without any external influence.
All the Independent Directors of the Company have complied with the requirements of the provisions in relation to Independent Directors Databank as stated in the Companies (Creation and Maintenance of Databank of Independent Directors) Rules, 2019 and the Companies (Appointment and Qualification of Directors) Rules, 2014 as amended from time to time.
Mr. M. Rathinasamy, retired Income Tax Commissioner was appointed as Independent Director of the Company with effect from 10th January, 2024 through Postal Ballot on 5th January, 2024 for a period of five (5) years.
DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Company has received necessary declaration from each Independent Director of the Company under Section 149 (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).
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 judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the company for that period;
c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the 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;
e) The Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and 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;
ANNUAL RETURN
Pursuant to Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return is available on the website of the Company on the following link: https://kmchhospitals.com/annualreturn/
COMPLIANCE OF CODE OF CONDUCT
Pursuant to SEBI (Prohibition of Insider Trading) (Amendment) Regulation 2018 dated 31st December 2018, the Company amended the "Code of Conduct for Insider Trading" and "Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information". Consequently, the Board of Directors brought in all the corresponding amendments to the above two mentioned Codes and necessary disclosures have been made in our website under: http://www.kmchhospitals.com/Policy/COC.pdf
INSURANCE
The CompanyRs.s properties, equipmentRs.s and stocks are adequately insured against all major risks. The Company has also taken DirectorsRs. and OfficersRs. Liability Policy to provide coverage against the liabilities arising on them.
DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF
The disclosure under this clause is not applicable as the Company has not undertaken any one-time settlement with the banks or financial institutions during the year under review.
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. Arun N Palaniswami, Executive Director, CA. P.K. Gopikrishnan, Chief Financial Officer and CS R.Ponmanikandan, Company Secretary.
APPOINTMENT AND REMUNERATION CRITERIA OF KEY MANAGERIAL PERSONNEL
The appointment of Key Managerial Personnel and remuneration paid to Managing Directors or Executive Directors is within the purview of the provisions of Section 196 and 197 of the Companies Act, 2013. The Company pays remuneration by way of salary, perquisites etc., to its Managing Directors and Executive Director in line with the approvals accorded by the General Meetings and in pursuance of the recommendation of the Nomination and Remuneration Committee as per the guiding principles laid down in the Nomination and Remuneration Policy. The Nomination and Remuneration Policy of the Company is available on the website of the Company at the link
https://kmchhospitals.com/wp-content/uploads/2016/pdf/Nomination Remuneration & Evaluation Policy.pdf PARTICULARS OF EMPLOYEES
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 employees of the company will be provided upon request.
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 with the Companies (Accounts) Rules, 2014, are as under:
Energy Conservation
Energy conservation involves reducing energy use to save resources and minimize environmental impact. This practice is crucial in the hospital industry due to the high energy demands of medical facilities, which operate 24/7 and require reliable energy for patient care, medical equipment, lighting, heating, and cooling. Key strategies for energy conservation in hospitals include:
1. Energy Management System: Our hospital monitors energy consumption through an Energy Management System. Areas with high electricity usage are closely observed, and alternative solutions are explored to optimize energy utilization.
2. Energy-Efficient Equipment: We deploy 5-star rated energy-saving equipment and use movement sensors in specific areas, ensuring lighting is automatically activated based on human presence.
3. Centralized A/C Plant and LED Lights: Operating a centralized A/C plant and using LED lights help in reducing energy consumption.
4. Solar Power Generation: Generating electric power through a solar power plant further supports our energy conservation efforts.
By implementing these energy conservation strategies, hospitals can significantly reduce energy consumption, lower operational costs, and contribute to a healthier environment.
Your company embraces the principle of "Sustainable Development," which means meeting present needs without compromising the ability of future generations to meet their own. In line with this concept, your company operates a 5.25 MW solar power generation plant and purchases wind-generated power, covering nearly 68% of the annual power requirement. This practice has enabled your company to save approximately 31% on the annual power bill. Additionally, the company has expanded its capacity by adding a further 5 MW solar power plant.
Caring for the Environment
Caring for the environment is essential for ensuring the health and well-being of our planet and future generations. It involves adopting practices that protect and preserve natural resources, reduce pollution, and promote sustainability.
Caring for the environment is a shared responsibility that requires collective action and commitment. By making
conscious choices and adopting sustainable practices, we can protect our planet and ensure a healthy, thriving environment for generations to come. Every effort counts, and together, we can make a significant difference.
Your company embraces the concept of Zero Discharge Technology, under which an effluent treatment plant has been established to treat sewage water for toxic effluents. The treated water is then utilized for horticulture within the premises, promoting sustainable water use.
In addition, a comprehensive waste management system has been implemented. Through this system, biodegradable food waste are decomposed, and biogas is produced for captive consumption in the hospital canteen. This initiative not only effectively manages waste but also results in reduced LPG costs, contributing to both environmental sustainability and cost savings.
All vehicles operated by the company adhere to stringent pollution control regulations. Regular maintenance initiatives are conducted to ensure vehicle efficiency, environmental care, and compliance with these regulations. This proactive approach helps in reducing emissions, improving fuel efficiency, and contributing to a cleaner environment.
Technology Absorption
Your company continues to invest in the latest technologies. In the year 2023-24, the company has installed Al-driven CORI Robotic Joint Replacement equipment and a 3D C-Arm, enhancing our capabilities and commitment to cutting- edge medical advancements.
This intraoperative device assists trauma and orthopaedic surgeons in enhancing and optimizing surgical outcomes in a safe environment, particularly for complex pelvic acetabular fractures and difficult fracture reconstruction surgeries. The 3D technology enables surgeons to plan and manage their surgical work with precision in advance, allowing them to visualize the outcome accurately before the surgery even begins. This advanced technology facilitates precise placement of screws and implants, maximizing success rates and avoiding metal work-related malposition.
Additionally, this platform allows for the real-time creation of a 3D model of the patientRs.s cardiac anatomy, enabling physicians to easily identify and treat areas of the heart where abnormal rhythms originate. KMCH is proud to be the first in Tamil Nadu to utilize this new cardiac mapping system, furthering our commitment to pioneering medical advancements.
Investment in equipment during the year 2023-24 amounts toRs. 5239.02 Lakhs.
Foreign Exchange Earnings & Outgo
(i) Earnings in Foreign Currency
Foreign Currency amount realized from NRE bank accounts in respect of fee for education during the year ended March 31, 2024:Rs. 661.31 Lakhs (Previous Year:Rs. 588.06 Lakhs).
(ii) Expenditure in Foreign Currency
During the Financial Year 2023-24 there were no foreign currency expenditure. (Previous Year:Rs. 588.06 Lakhs)
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013
As on March 31, 2024, the Company has neither provided nor there were any outstanding loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of Investments covered under the provisions of Section 186 of the Act are given in Note No.6 to the financial statements.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
KMCH has an Internal Control System, commensurate with the size, scale and complexity of its operations. Our Company has a proper and adequate system of internal controls. These controls ensure transactions are authorized, recorded and reported correctly and assets are safeguarded and protected against loss from unauthorized use or disposition.
In addition, there are operational controls, covering the entire spectrum of internal financial controls.
The Audit committee defines the scope and authority of the Internal Auditor. The Audit Committee comprises of professionally qualified Directors, who interact with the statutory auditors, internal auditors and management in dealing with matters within its terms of reference. A detailed program of internal audits and management review, supplements the process of internal financial control framework.
To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board. The internal auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company.
Based on the report of internal auditor, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions proposed to fix the observations are presented to the Audit Committee of the Board.
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. During the Financial Year, no complaints or concerns were received by the Chairman of the Audit Committee under the Vigil Mechanism. Vigil Mechanism and Whistle Blower Policy is available in the CompanyRs.s website:
https://kmchhospitals.com/wp-content/uploads/2016/pdf/Whistle Blower 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. During the year 2023-24, no complaints were received by the Company related to sexual harassment.
RELATED PARTY TRANSACTIONS AND POLICY ON RELATED PARTY TRANSACTIONS
All transactions with Related Parties are at armRs.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 armRs.s length or which are material in nature requiring disclosure in Form AOC - 2 is annexed herewith as "Annexure-II" forming part of the report.
The details of Related Party Transactions during FY 2023-24, including transaction with person or entity belonging to the promoter/ promoter group which hold(s) 10% or more shareholding in the Company are provided in the accompanying financial statements. (Refer Note No. 44).
The Board has formulated Policy on Related Party Transactions and the same is uploaded on the CompanyRs.s website at http://www.kmchhospitals.com/Policy/RPT Policy.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 DirectorsRs. 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 CompanyRs.s operations in future.
DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE YEAR
No applications have been made against the Company during the year under the review and no proceedings are pending against the Company under the Insolvency and Bankruptcy Code, 2016.
The Company has not done any one time settlement with any Bank or Financial Institutions.
HUMAN RESOURCE DEVELOPMENT
Our company continues to prioritize the development of our human resources. By maintaining a strong focus on retention through employee engagement initiatives, we have helped our employees realize their full potential. Our learning and development programs offer various platforms, including classroom and online self-learning modules, to meet employeesRs. developmental needs and enhance their skills, knowledge, and capabilities.
The total strength of the employees of the Company as on 31st March 2024 was 5286.
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 or its members during the year. Hence, no deposit is outstanding as on 31.03.2024.
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 2023-24. Secretarial Audit Report is annexed herewith as "Annexure - IV" forming part of the report.
COMPLIANCE OF SECRETARIAL STANDARDS
The Company has complied with the Secretarial Standards notified under Section 118 of the Companies Act, 2013. 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, Coimbatore was appointed as Cost Auditor of the company by the Board on recommendation of Audit Committee for the Financial Year 2024-25. The report of the cost auditors will be filed with ROC on due date.
STATUTORY AUDITORS
The members had at the 37th Annual General Meeting held on 25th August, 2023 approved the appointment of M/s VKS Aiyer & Co., Chartered Accountants (FRN: 000066S), Coimbatore for a period of five years from 2023-24 to 2027-28.
The Statutory Auditor has issued an unmodified opinion on the Financial Statements of the Company as of and for the year ended 31st March, 2024. Their report on the Companies (AuditorRs.s Report) Order, 2020 ("CARO"), issued by the Central Government of India in terms of section 143(11) of the Act, details one qualifications regarding the following:
1. Non-Registration of Lease Agreeements
Management Response : All Lease Agreements with more than 11 monthsRs. tenor, require registration with Department of Revenue, Ministry of Commercial Taxes and Registration, Government of Tamil Nadu. The Company is in the process of registering the Lease Agreements.
LISTING WITH STOCK EXCHANGE
The equity shares of the Company are listed on BSE Limited and listing fees were paid upto date.
CORPORATE GOVERNANCE
Your Company continues to comply 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 Practicing Company SecretaryRs.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.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
A Business Responsibility And Sustainability Report describing the initiatives taken by the Company from an environmental, social and governance perspective, as required in terms of the provisions of Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 annexed separately forms part of this Annual Report.
ACKNOWLEDGEMENTS
The Board also wishes to acknowledge the dediction and commitment of its consultants and employees at all levels and express gratitude for thier ongoing contribution to the CompanyRs.s growth and progress.