Notes to Accounts of Fortis Malar Hospitals Ltd.
Mar 31, 2018
1) Nature of operations
Fortis Malar Hospitals Limited (the âCompanyâ) was incorporated in the year 1989 to set up, manage and operate a multi-specialty hospital and the Company is a subsidiary of Fortis Hospitals Limited and Fortis Healthcare Limited is the Ultimate Holding Company. The Company has its state of the art Hospital facility in Chennai. Also Refer Note 51.
2) Statement of Compliance
The financial statements of the Company have been prepared in accordance with IND AS notified under the Companies (Indian Accounting Standards) Rules, 2015 to comply with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013 (to the extent notified and applicable). The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
2.1 Standards issued but not yet effective:
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying Ind AS 115, âRevenue from Contractsâ and amendments to Ind AS 21, Foreign currency transactions and advance consideration.
a) Amendment to Ind AS 21:
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material.
b) Notification of Ind AS 115:
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers. The effect on adoption of Ind AS 115 is expected to be insignificant.
5(b) Intangible Assets Under Development
Intangible Assets Under Development includes cost of development of software paid to M/s.Healthfore Technologies Rs. 72,15,569 (Previous year Rs. 60,15,570). Also Refer Note 33.
The average credit period is 30 days. No overdue interest is charged. Of the trade receivables balance as at March 31, 2018, ''5,01,52,236 is due from 3 third party service providers, 2 Government customers and 1 international customer. There are no other customer dues that represent more than 5% of the total balance of trade receivables.
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows.
During the year ended 31 March 2018, 20,000 Equity Shares of Rs. 10 each at a premium of Rs. 16.20 each were allotted to eligible employees under the Company''s Employees Stock Option Scheme (ESOP). The balance outstanding employee stock options as at 31 March 2018 is 140,000. (Refer Note (e) below)
(b) Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the case of interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(e) As at 31 March 2018, 140,000 equity shares (As at 31 March 2017 160,000 equity shares) of Rs. 10 each were reserved towards outstanding employee stock options granted / available for grant. (Refer Note 37).
(f) Refer Note 51 for equity shares that are issuable upon the Composite scheme of Arrangement and Amalgamation becoming effective.
Discounts and deductions amounting to Rs. 63,45,264 (Year Ended March 31, 2017- Rs. 1,30,16,710) are netted against Sale of In-Patient and Out-Patient Services.
3. Represents amount paid towards various services such as providing, maintaining and operating the Clinical Establishment (including infrastructure, fixtures and fittings etc.), out-patient department services, radio diagnostic services and other ancillary services provided by Fortis Health Management Limited to the Company in accordance with the agreement. Also refer Note 33
1. The Company accounts for costs incurred by / on behalf of the Related Parties based on the actual invoices / debit notes raised and accruals as confirmed by such related parties. The Related Parties have confirmed to the Management that as at 31 March 2018 and 31 March 2017 there are no further amounts payable to / receivable from them, other than as disclosed above.
2. Also Refer Note 43 for transactions entered with RWL Healthworld Limited and Note 51 for proposed scheme of Composite scheme of Arrangement and Amalgamation with SRL Limited.
4. Leases
Assets taken on Operating Lease:
The Group has operating lease agreements primarily for medical equipments and office/nursing accommodation etc., the lease terms of which are for a period ranging between 11 months to 15 years. During the year ended March 31, 2018, an amount of Rs. 16,111,453 (March 31, 2017 - Rs. 15,117,086) was paid towards lease rentals and other charges for the office space/nursing accommodation and Rs. 212,013,065 (March 31, 2017 - Rs. 200,316,786) towards Clinical Establishment Fee (including variable fee).
The above claims are pending with various Consumer Disputes Redressal Commissions and the Company has been advised by the legal counsel that there may not be any likely liability in respect of these matters and accordingly no provision has been recognized in these financial statements.
5. Employee Stock Option Plan
Employees (including senior executives) of the Company and its Subsidiary receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Malar Employee Stock Option Plan 2008 (Scheme) was approved by the board of directors of the Company on 31st July 2008/28th May 2009 and by shareholders in the annual general meeting held on 29th September, 2008 /21st August 2009. The following are some of the important conditions to the scheme: The details of activity under the Plan have been summarized below:
Vesting Plan:
- 25% of the option shall vest on the completion of 12 months from the grant date.
- 25% of the option shall vest on the completion of 24 months from the grant date.
- 25% of the option shall vest on the completion of 36 months from the grant date.
- 25% of the option shall vest on the completion of 48 months from the grant date.
Exercise Plan:
There shall be no lock in period after the options have vested. The vested options will be eligible to be exercised on the vesting date itself. Notwithstanding any provisions to the contrary in this plan the options must be exercised before the end of the tenure of the plan.
The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.
*Expected volatility has been determined considering the daily volatility of the stock prices on Bombay Stock Exchange, over a period prior to the date of grant, corresponding with the expected life of the options.
6 Employee benefits
(I) Defined Contribution Plan
The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are at rates specified in the rules of the scheme. The Companyâs contribution to Provident Fund aggregating '' 91,92,358 (Previous Year: '' 84,59,699) has been recognised in the Statement of Profit and Loss under the head Employee Benefits Expense.
(II) Defined Benefit Plans
The Company has a defined benefit gratuity plan, where under employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn basic salary) for each completed year of service subject to a maximum limit of Rs. 1,000,000 in terms of the provisions of Payment of Gratuity Act, 1972. Vesting occurs upon completion of 5 years of service.
(i) The current service cost and interest expense for the year are included in the "Employee Benefit Expenses" in the statement of profit & loss under the line item "Contribution to Provident and Other Funds"
(ii) The remeasurement of the net defined benefit liability is included in other comprehensive income.
* Based on India''s standard mortality table with modification to reflect the expected changes in mortality/others
Significant actuarial assumptions for the determination of defined obligation are discount rate, expected salary increase rate and mortality. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period while holding all other assumptions constant:
(i) If the discount rate is 50 basis point higher (lower) the defined benefit obligation would decrease by Rs. 1,365,000 (increase by Rs. 1,471,000) (As at March 31, 2017 ; decrease by Rs. 1,412,000 (increase by Rs. 1,307,000).
(ii) If the expected salary growth rate increase/(decreases) by 1% the defined benefit obligation would increase by Rs. 3,029,000 (decrease by Rs. 2,657,000) (As at March 31, 2017 ; increase by Rs. 2,904,000 (decrease by Rs. 2,537,000).
(iii) If the withdrawal rate increases/(decreases) by 5% the defined benefit obligation would decrease by Rs. 291,000 (increase by Rs. 307,000) (As at March 31, 2017 ; decrease by Rs. 470,000 (increase by Rs. 502,000).
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore in presenting the above sensitivity analysis the present value of defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
(III) Financial Risk Management Framework
The Company manages financial risk relating to the operations through internal risk reports which analyse exposure by degree and magnitude of risk. These risks include market risk (including interest rate risk and other price risk), credit risk and liquidity risk. The focus of the chief operating decision maker (CODM) is to assess the unpredictability of the financial environment and to mitigate potential adverse effects, if any, on the financial performance of the Company.
The Company does not enter into or trade financial instruments including derivative financial instruments for speculative purpose.
(IV) Liquidity Risk Management
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company consistently generated sufficient cash flows from operations to meet its financial obligations as and when they fall due.
The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
7. Fair Value Measurement
This note provides information about how the Company determines fair value of various financial assets and liabilities
(i) There are no financial assets and financial liabilities that are measured at fair value on a recurring basis.
(ii) Fair value of financial assets and financial liabilities that are not measured at fair value (Non-recurring):
# The tax rate used for the 2017-2018 and 2016-2017 reconciliations above is the Corporate tax rate of 30%, applicable surcharge and cess payable by corporate entities in India on taxable profits under the Indian Law.
8. During the previous year, the Company had transferred its outpatient pharmacy inventories to RWL Healthworld Limited (a group entity under common control) based on carrying value of inventories as on date of transfer (i.e. January 3, 2017).
9. Details of dues to Micro and Small Enterprises as per MSMED Act, 2006
During the period ended December 31, 2006, Government of India has promulgated an Act namely The Micro, Small and Medium Enterprises Development Act, 2006 which comes into force with effect from October 2, 2006. As per the Act, the Company is required to identify the Micro, Small and Medium suppliers and pay them interest on overdue beyond the specified period irrespective of the terms agreed with the suppliers.
*Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management and relied upon by the auditors.
10. Corporate social responsibility
During the year, the Company incurred an aggregate amount of Rs. 18,76,333/- (Previous year : 49,24,462) towards corporate social responsibility in compliance of Section 135 of the Companies Act 2013 read with relevant schedule and rules made thereunder.
The details of the CSR spend are given below:
Gross amount required to be spent by the Company during the year: Rs. 19,09,163/-
11. Order / Notice Received from CMDA
The Company had earlier applied to the Chennai Metropolitan Development Authority (CMDA) for regularization of certain deviations in the construction of the Hospital. During the previous year ended March 31, 2016, CMDA has issued an Order stating that the regularization application made by the Company has not been allowed. The Company had preferred an appeal before the Secretary to the Government of Tamil Nadu, Housing and Urban Development Authority against the said Order.
On 3 May 2016 CMDA has also served a Locking & Sealing and De-occupation Notice to the Company stating that in view of CMDA''s Order dated 18 March 2016 referred above, the construction at the site of the Hospital premises is unauthorized and has called upon the Company to restore the land to its original position within 30 days from the date of the Notice. The Company appealed to the High Court of Judicature at Madras and obtained a stay order on 02 June 2016 directing CMDA not to proceed further, till the matter is disposed. As directed by the Honâble High Court, CMDA Officials inspected the hospital premises and directed the Company to provide ramp facility for easy evacuation of patients. The Company has ramped up its fire detection and safety measures, constructed horizontal walkways and also obtained a Certificate from an independent agency on the adequacy of measures taken for fire prevention and safety.
The Company, based on legal advice, believes that the above Order / Notices issued by CMDA are contestable and the same prima facie would not result in adverse impact on itâs operations as the Company has fair chance of success in the aforesaid Appeal / writ petition.
12. Status of Composite Scheme of Arrangement and Amalgamation
The Board of Directors of the Company at its meeting held on August 19, 2016 approved the proposal for the sale of its hospital business by way of a slump sale to Fortis Healthcare Limited (FHL) pursuant to a Composite scheme of Arrangement and Amalgamation (the Scheme) between the Company, FHL and SRL Limited (âSRLâ). Further, pursuant to the said Scheme, the diagnostic business of FHL (including investments held in SRL) shall get demerged into the Company in lieu of equity shares to be issued by the Company to the shareholders of FHL. The demerger shall be followed by SRL being merged with the Company as an integral part of the same Scheme and shares of the Company to be issued to the eligible shareholders of SRL. The Board of Directors of the Company, on December 14, 2017 by way of Resolution Passed by Circulation, approved the extension of the Long Stop Date to June 30, 2018 as per the Clause 61 of the Scheme. The Court heard the matter thrice since January 2018 and the next hearing is listed on May 25, 2018. The Scheme is subject to various judicial / regulatory and other required approvals. Pending such approvals, no effect of the proposed Scheme has been given in the Standalone Financial Statements.
13. Segment Reporting
The Company has a single operating segment, namely, health care services and the information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of performance focusses on this operating segment. Further the company does not have any separate geographic segment other than India. Accordingly, the amounts appearing in these financial statements relate to this operating segment.
14. Approval of Financial Statements
The financial statements were approved by the Board of Directors on May 15, 2018.
Mar 31, 2016
(ii) Shares issued during the year
During the year ended 31 March 2016, 11,250 Equity Shares of Rs. 10 each at a premium of Rs. 16.20 each were allotted to eligible employees under the Companyâs Employees Stock Option Scheme (ESOP). The balance outstanding employee stock options as at 31 March 2016 is 218,750. (Refer Note (vi) below)
(v) Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the case of interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(vi) As at 31 March 2016 218,750 equity shares (As at 31 March 2015 230,000 equity shares) of Rs. 10 each were reserved towards outstanding employee stock options granted / available for grant. (Refer Note 29)
Depreciation for the year ended 31 March 2015 includes:
- Transition adjustment recorded against Surplus in the Statement of Profit and Loss - Rs. 4,783,787
- Depreciation charged to the Statement of Profit and Loss for the year ended 31 March 2015 - Rs. 27,117,598
1 Hitherto, the Company was following First-in-First-out method for valuation of inventories. Effective 1 April 2015, the Company has changed its accounting policy for Inventory valuation to Weighted Average method to align the method of accounting with that of the Holding Company. Had the Company continued with the earlier policy of valuing inventory based on the First-in-first-out method as at 31 March 2016, the Profit before Tax for the year ended 31 March 2016, as estimated by the Management, would have been higher by Rs. 773,980.
(i) Represents amount paid towards various services such as providing, maintaining and operating the Clinical Establishment (including infrastructure, fixtures and fittings etc.), out-patient department services, radio diagnostic services and other ancillary services provided by Fortis Health Management Limited to the Company in accordance with the agreement.
2 Exceptional item for the year ended March 31, 2016 amounting to Rs. 5,115,031 represents provision made by the Company for additional Bonus for financial year 2014-15 as well as for the relevant period for the financial year 2015-16, as per the Payment of Bonus (Amendment) Act, 2015.
3 Employee Benefits
The Company makes Provident Fund contributions to State administered fund for qualifying employees. The Company is required to contribute a specified percentage of the payroll costs to the Fund. The Company recognized Rs. 7,304,192 (Previous Year: Rs. 7,393,330) towards Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to the fund by the Company is at rates specified in the rules of the scheme.
4 Defined Benefit Plans
The Company has a funded gratuity scheme for its employees and the Gratuity liability has been made based on the actuarial valuation done as at the year end. The details of actuarial valuation as provided by the Independent Actuary is as follows:
a) The estimate of future salary increase takes into account inflation, seniority, promotion and other relevant factors. Further, the Management revisits the assumptions such as attrition rate, salary escalation etc., taking into account, the business conditions, various external/internal factors affecting the Company.
b) Discount rate is based on the prevailing market yields of Indian Government Bonds as at the Balance Sheet date for the estimated term of the obligation.
* The details of experience adjustments have been disclosed to the extent of information available.
d) The fund is 100% administered by Life Insurance Corporation of India (âLICâ). The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
e) Actual Return on Plan Assets for the year ended 31 March 2016 - Rs. 988,000 (Previous Year: Rs. 807,000)
f) Estimated amount of contribution to the funds during the year ended 31 March, 2017 as estimated by the management is Rs. 5,416,000 (Previous Year: Rs. 3,672,000).
5 Segment Reporting
The Company is engaged in providing health care services, which in the context of Accounting Standard 17 (Segmental Information) is considered as the only business segment and the amounts appearing in the financial statements relate to this single primary business segment. As such there are no separate business and geographic reportable segments as per AS-17 âSegment Reportingâ.
The Company accounts for costs incurred by / on behalf of the Related Parties based on the actual invoices / debit notes raised and accruals as confirmed by such related parties. The Related Parties have confirmed to the Management that as at 31 March 2016 and 31 March 2015 there are no further amounts payable to / receivable from them, other than as disclosed above.
6 Employee stock option plans
The Company provides share-based payment schemes to eligible employees of the Company and its subsidiary. The relevant details of the scheme and the grant are as given below.
Malar Employee Stock Option Plan 2008 (Scheme) was approved by the board of directors of the Company on 31st July 2008/28th May 2009 and by shareholders in the annual general meeting held on 29th September, 2008 /21st August 2009. The following are some of the important conditions to the scheme:
Vesting Plan
- 25% of the option shall vest on the completion of 12 months from the grant date.
- 25% of the option shall vest on the completion of 24 months from the grant date.
- 25% of the option shall vest on the completion of 36 months from the grant date.
- 25% of the option shall vest on the completion of 48 months from the grant date.
Exercise Plan
There shall be no lock in period after the options have vested. The vested options will be eligible to be exercised on the vesting date itself. Notwithstanding any provisions to the contrary in this plan the options must be exercised before the end of the tenure of the plan.
Effective Date
The plan shall be deemed to have come in to force on the 21 August 2009 or on such other date as may be prescribed by the board of directors of the Company subject to the approval of shareholders of the company in general meeting.
The weighted average remaining contractual life for the stock options outstanding as at 31 March 2016 is 0.75 years (31 March 2015: 1.75 years). The exercise price for options outstanding at the end of the year was Rs. 26.20 (31 March 2015: Rs. 26.20).
No stock options were granted during the current year or the previous year. The weighted average fair value of stock options at the last grant date was Rs. 13.45. The Black Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:
The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.
The Company measures the cost of ESOP using the intrinsic value method. Had the Company used the fair value model to determine compensation, its profit after tax and earnings per share as reported would have changed to the amounts indicated below:
7 Operating Leases
The Company has operating lease agreements primarily for medical equipments and office space, the lease terms of which are for a period of 11 months to 3 years. For the year ended 31 March 2016, an amount of Rs. 12,147,047 (Previous Year Rs. 7,567,421) was paid towards lease rentals and other charges for the office space. The future minimum lease payments under operating leases are as follows:
*Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management.
The cases are pending with various Consumer Disputes redressal Commissions. The Company has been advised by its legal counsel that it is possible, but not probable, the action will succeed and accordingly no provision for liability has been recognized in the financial statements.
8. During the year, the Company incurred an aggregate amount of Rs. 2,739,439 towards corporate social responsibility in compliance of Section 135 of the Companies Act 2013 read with relevant schedule and rules made there under. The details of the CSR spend are given below:
(i) Gross amount required to be spent by the Company during the year: Rs. 2,735,724
(ii) Amount spent by the Company during the year:
9 Order / Notice Received from CMDA
The Company had earlier applied to the Chennai Metropolitan Development Authority (CMDA) for regularization of certain deviations in the construction of the Hospital. During the current year, CMDA has issued an Order dated 18 March 2016 stating that the regularization application made by the Company has not been allowed. The Company has preferred an appeal before the Secretary to the Government of Tamil Nadu, Housing and Urban Development Authority against the said Order, which is pending disposal.
On 3 May 2016 CMDA has also served a Locking & Sealing and De-occupation Notice to the Company stating that in view of CMDAâs Order dated 18 March 2016 referred above, the construction at the site of the Hospital premises is unauthorized and has called upon the Company to restore the land to its original position within 30 days from the date of the Notice. The Company has initiated legal action by filing a writ petition before the High Court of Madras to impugn the said notice.
The Company, based on legal advice, believes that the above Order / Notices issued by CMDA are contestable and the same prima facie would not result in adverse impact on itâs operations as the Company has fair chance of success in the aforesaid Appeal / writ petition.
10. Previous Year Figures
Previous yearâs figures have been regrouped / reclassified, wherever necessary, to correspond with the current yearâs classification / disclosure.
11. Approval of Standalone Financial Statements
The Board of Directors of the Company has reviewed the realizable value of all the current assets and has confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognized in the standalone financial statements. In addition, the Board, has also confirmed the carrying value of the non-current assets in the standalone financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these standalone financial statements in its meeting held on 24 May 2016.
Mar 31, 2015
1. Corporate information
Fortis Malar Hospitals Limited (''the Company'') was incorporated in the
year 1989 to set up, manage and operate a multi-specialty hospital and
it commenced its commercial operations in the year 1992. The Company is
a subsidiary of Fortis Hospitals Limited.
2. Basis of preparation,
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under section 133 of the Companies Act 2013 (''the Act''), read together
with paragraph 7 of the Companies (Accounts) Rules 2014. The financial
statements have been prepared on an accrual basis and under the
historical cost convention. The accounting policies adopted in the
preparation of financial statements are consistent with those of
previous year except the change in accounting policy explained below.
Note B:
Shares held by holding/ ultimate holding company and /or their
subsidiaries/ associates Of the above :
11,752,402 Equity Shares (Previous year - 11,752,402 equity shares) are
held by Fortis Hospitals Limited , the holding company.
Note C: Details of shareholders having more than 5% interest in the
Company
Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31,2015, the amount of per share dividend
recognized as distributions to equity shareholders was Rs. 0.50 per share
(March 31,2014 : Rs. 0.50 per share).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
3 Segment reporting
Primary Segment
The Company is engaged in providing health care services, which in the
context of Accounting Standard 17 (Segmental Information) is considered
as the only business segment. Accordingly, no separate segmental
information has been provided herein.
Secondary Segment - Geographical Segment
The Company operates in India and therefore mainly caters to the needs
of the domestic market. Therefore, there are no reportable geographical
segments.
4 Capital and other commitments
At March 31, 2015, the Company has capital commitments of Rs. 8,393,299
(March 31, 2014 : Rs. 517,500) towards purchase of assets.
5 a. Contingent liabilities
31 March 2015 31 March 2014
Claims against the Company not acknowledged
as debts (in respect of compensation demanded 80,249,842 81,892,872
by the patients / their relatives for
negligence).
b. Litigation
1) Matters of litigation, if any, the outcome of which in the opinion
of Management is considered probable thereby requiring provision, have
been provided for under the requirements of Indian GAAP.
2) Amount mentioned in Note 6(a) above represents compensation demanded
by the patients/their relatives for negligence and are pending with
various Consumer Disputes Redressal Commissions. The Company has been
advised by its legal counsel that it is possible, but not probable, the
action will succeed and accordingly no provision for liability has been
recognized in the financial statements.
6 The Company does not have any foreign currency exposure as at March
31, 2015 and March 31, 2014. The Company does not have any outstanding
derivative instruments as at March 31, 2015 and March 31,2014.
7 Gratuity
The Company has a defined benefit gratuity plan, whereby the employees
are entitled to gratuity benefit on the basis of last salary drawn and
completed number of years of service.
The following table summarises the components of net benefit expense
recognised in the statement of profit and loss and the fund status and
amounts recognised in the balance sheet
The principal assumptions used in determining gratuity and
post-employment medical benefit obligations for the Company''s plans are
shown below:
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
related factors, such as supply and demand in the employment market.
The Company expects to contribute Rs. 3,672,000 to gratuity in the next
year (March 31, 2014: Rs. 1,965,000).
The fund is 100% administered by Life Insurance Corporation of India
("LIC"). The overall expected rate of return on assets is determined
based on the market prices prevailing on that date, applicable to the
period over which the obligation is to be settled.
Amounts for the current and previous four years are as follows:
8 Employee stock option plans
The Company provides share-based payment schemes to its employees. The
relevant details of the scheme and the grant are as given below.
Malar Employee Stock Option Plan 2008 (Scheme) was approved by the
board of directors of the Company on 31st July 2008/28th May 2009 and
by shareholders in the annual general meeting held on 29th September,
2008 /21st August 2009. The following are some of the important
conditions to the scheme:
Vesting Plan
- 25% of the option shall vest on the completion of 12 months from
the grant date.
- 25% of the option shall vest on the completion of 24 months from
the grant date.
- 25% of the option shall vest on the completion of 36 months from
the grant date.
- 25% of the option shall vest on the completion of 48 months from
the grant date.
Exercise Plan
There shall be no lock in period after the options have vested. The
vested options will be eligible to be exercised on the vesting date
itself. Notwithstanding any provisions to the contrary in this plan the
options must be exercised before the end of the tenure of the plan.
Effective Date
The plan shall be deemed to have come in to force on the 21 August 2009
or on such other date as may be prescribed by the board of directors of
the Company subject to the approval of shareholders of the company in
general meeting.
The details of activity under the Scheme are summarized below:
The weighted average remaining contractual life for the stock options
outstanding as at 31 March 2015 is 1.75 years (31 March 2014: 2.75
years). The range of exercise prices for options outstanding at the end
of the year was Rs. 10. (31 March 2014: Rs. 10).
No stock options were granted during the current year or the previous
year. The weighted average fair value of stock options at the last
grant date was Rs. 13.45. The Black Scholes valuation model has been used
for computing the weighted average fair value considering the following
inputs:
The expected life of the stock is based on historical data and current
expectations and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that
the historical volatility over a period similar to the life of the
options is indicative of future trends, which may also not necessarily
be the actual outcome.
The Company measures the cost of ESOP using the intrinsic value method.
Had the Company used the fair value model to determine compensation,
its profit after tax and earnings per share as reported would have
changed to the amounts indicated below:
9 Related Party Disclosures
9.1. Related parties where control exists
Relationship Name of the related Party
Ultimate Holding Company Fortis Healthcare Limited
Holding Company Fortis Hospitals Limited
Subsidiary Company Malar Stars Medicare Limited
14.2. Related parties with whom transactions have taken place during
the year
Relationship Name of the related party
Ultimate Holding Company Fortis Healthcare Limited
Holding Company Fortis Hospitals Limited
Key Management Personnel Mr.V.Vijayarathna (Whole-time Director)
(resigned from July 26 2014)
Mr Raghunath P (Whole time Director)
(with effect from July 26, 2014)
Mr. Akshaya Kumar Singh
(Chief Financial Officer)
Mr. Sumit Goel (Company Secretary)
Subsidiary Company Malar Stars Medicare Limited
Enterprises under common control Fortis Health Management Limited
Lalitha Healthcare Private Limited
Super Religare Laboratories Limited
10 Operating lease payments
Operating lease agreements have been entered in to by the Company with
respect to office premises and medical equipment All lease commitments
are cancellable. The total lease payments made during the year are as
follows:
11 Details of dues to micro and small enterprises as defined under the
MSMED Act, 2006
There is no overdue amount payable to Micro, Small and Medium
Enterprises as defined under The Micro, Small and Medium Enterprises
Development Act, 2006. Further, the Company has not paid any interest
to any Micro, Small and Medium Enterprises during the current year and
previous year.
12 Expenditure on Corporate Social Responsibility (CSR)
For the year ended March 31, 2015 the Company has incurred expenditure
of Rs. 1.18 lakhs as compared to expenditure required to be spent under
section 135 of the Act of Rs. 25.94 lakhs resulting in a shortfall of Rs.
24.76 lakhs.
13 Previous year''s figures have been regrouped where necessary to
conform to the current year''s classification.
Mar 31, 2014
1. Corporate information
Fortis Malar Hospitals Limited (''the Company'') was incorporated in the
year 1989 to set up, manage and operate a multi specialty hospital and
it commenced its commercial operations in the year 1992. The Company is
a subsidiary of Fortis Hospitals Limited.
2. Basis of preparation,
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(''Indian GAAP''). The Financial Statements of the Company have been
prepared in accordance with generally accepted accounting principles in
India, mandatory accounting standards notified under the Companies
(Accounting Standards) Rules,2006, (as amended) and the relevant
provisions of the Companies Act, 1956 read with General Circular 8/2014
dated 4 April 2014, issued by the Ministry of Corporate Affairs, in
respect of Section 133 of the Companies Act, 2013. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those used in the previous year.
3. Interest Income
During the year ended March 31, 2013, Interest income aggregating Rs.
35,327,891, earned on Inter Corporate Deposit placed out of advance
money received from Fortis Health Management Limited (''FHML'') towards
sale of the ''Clinical Establishment Business'' (''CEB'') upto October 16,
2012, being the effective date of transfer of the CEB has been
disclosed as an exceptional item and the related interest income
aggregating Rs.26,537,424 pertaining to the period subsequent to
October 16, 2012 has been included as part of other income.
4. Sale of Clinical Establishment Business
The Shareholders of the Company had approved vide resolution dated July
18, 2011, the transfer / sale / disposal of Hospital Infrastructure
Undertaking including Out Patient Department business and radio
diagnosis equipments (''Hospital Infrastructure Undertaking'') on a Going
Concern Basis through slump sale to any one of the Affiliates / Group
Company / Companies under the same management for a consideration of an
amount not less than Rs. 600,000,000. Accordingly, the net assets of
Rs. 2,308.93 lakhs of the clinical establishment business have been
transferred as a going concern on a slump sale basis effective October
17, 2012 for an aggregate consideration of Rs. 7,000 lakhs. The net
profit aggregating Rs. 3,132.59 lakhs (net of tax expense of Rs.
1,007.47 lakhs) arising from the sale of the said business has been
disclosed as an ''extraordinary item''.
The Company has entered into a Hospital and Medical Services Agreement
(HMSA) with Fortis Health Management Limited (FHML), whereby, the
Company has engaged FHML to provide the clinical establishment services
including the radiology and the out-patient consultation services on
behalf of the Company.
5. Segment reporting
Primary Segment
The Company is engaged in providing health care services, which in the
context of Accounting Standard 17 (Segmental Information) is considered
as the only business segment. Accordingly, no separate segmental
information has been provided herein.
Secondary Segment - Geographical Segment
The Company operates in India and therefore mainly caters to the needs
of the domestic market. Therefore, there are no reportable geographical
segments.
6. Capital and other commitments
At March 31, 2014, the Company has capital commitments of Rs 517,500
(Previous year Rs. 2,139,502) towards purchase of assets.
7. Contingent liabilities
31 March 2014 31 March 2013
Rs . Rs .
Claims against the Company not
acknowledged as debts (in respect of
compensation demanded by the patients 81,892,872 72,323,252
/ their relatives for negligence).
The cases are pending with various Consumer Disputes Redressal
Commissions. The Company has been advised by its legal counsel that it
is possible, but not probable, the action will succeed and accordingly
no provision for liability has been recognized in the financial
statements.
8. Employee stock option plans
The Company provides share-based payment schemes to its employees.
During the year ended March 31, 2014, an employee stock option plan
(ESOP) was in existence. The relevant details of the scheme and the
grant are as below.
Malar Employee Stock Option Plan 2008 (Scheme) was approved by the
board of directors of the Company on 31st July 2008/28th May 2009 and
by shareholders in the annual general meeting held on 29th September,
2008 /21st August 2009. The following are some of the important
conditions to the scheme:
Vesting Plan
* 25% of the option shall vest on the completion of 12 months from the
grant date.
* 25% of the option shall vest on the completion of 24 months from the
grant date.
* 25% of the option shall vest on the completion of 36 months from the
grant date.
* 25% of the option shall vest on the completion of 48 months from the
grant date.
Exercise Plan
There shall be no lock in period after the options have vested. The
vested options will be eligible to be exercised on the vesting date
itself. Notwithstanding any provisions to the contrary in this plan the
options must be exercised before the end of the tenure of the plan.
Effective Date
The plan shall be deemed to have come to in force on the 21 August 2009
or on such other date as may be prescribed by the board of directors of
the Company subject to the approval of shareholders of the company in
general meeting.
9. Details of dues to micro and small enterprises as defined under the
MSMED Act, 2006 There is no overdue amount payable to Micro, Small and
Medium Enterprises as defined under The Micro, Small and Medium
Enterprises Development Act, 2006. Further, the Company has not paid
any interest to any Micro, Small and Medium Enterprises during the
current year and previous year.
10. Previous year''s figures have been regrouped where necessary to
conform to the current year''s classification.
Mar 31, 2013
1. Corporate information
Fortis Malar Hospitals Limited (Âthe Company-) was incorporated in the
year 1989 to set up, manage and operate a multi specialty hospital and
it commenced its commercial operations in the year 1992. The Company
is a subsidiary of Fortis Hospitals Limited.
2. Basis of preparation,
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(ÂIndian GAAP-). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
3 Interest Income
Interest income aggregating Rs. 35,327,891, earned on Inter Corporate
Deposit placed out of advance money received from Fortis Health
Management Limited (''FHML'') towards sale of the ''Clinical Establishment
Business'' (''CEB'') upto October 16, 2012, being the effective date of
transfer of the CEB has been disclosed as an exceptional item and the
related interest income aggregating Rs.26,537,424 pertaining to the
period subsequent to October 16, 2012 has been included as part of
other income.
4 Sale of Clinical Establishment Business
The Shareholders of the Company had approved vide resolution dated July
18, 2011, the transfer / sale / disposal of Hospital Infrastructure
Undertaking including Out Patient Department business and radio
diagnosis equipments (''Hospital Infrastructure Undertaking'') on a Going
Concern Basis through slump sale to any one of the Affiliates / Group
Company / Companies under the same management for a consideration of an
amount not less than Rs. 600,000,000. Accordingly, the net assets of
Rs. 230,893,623 of the clinical establishment business have been
transferred as a going concern on a slump sale basis effective October
17, 2012 for an aggregate consideration of Rs. 700,000,000. The net
profit aggregating Rs. 313,258,461(net of tax expense of Rs.
100,746,916) arising from the sale of the said business has been
disclosed as an Âextraordinary item-.
The Company has entered into a Hospital and Medical Services Agreement
(HMSA) with Fortis Health Management Limited (FHML), whereby, the
Company has engaged FHML to provide the clinical establishment services
including the radiology and the out-patient consultation services on
behalf of the Company.
5 Segment reporting
Primary Segment
The Company is engaged in providing health care services, which in the
context of Accounting Standard 17 (Segmental Information) is considered
as the only business segment. Accordingly, no separate segmental
information has been provided herein.
Secondary Segment  Geographical Segment.
The Company operates in India and therefore mainly caters to the needs
of the domestic market.
Therefore, there are no reportable geographical segments.
6 Capital and other commitments
At March 31, 2013, the Company has capital commitments of Rs 2,139,502
(Previous year Rs. 1,075,617) towards purchase of assets.
The cases are pending with various Consumer Disputes Redressal
Commissions. The company has been advised by its legal counsel that it
is possible, but not probable, the action will succeed and accordingly
no provision for liability has been recognized in the financial
statements.
7 Gratuity
The Company has a defined benefit gratuity plan, whereby the employees
are entitled to gratuity benefit on the basis of last salary drawn and
completed number of years of service.
The Company also provides leave encashment benefit to employees, which
is unfunded. The Company also provides superannuation benefits to its
senior executives
The following table summarises the components of net benefit expense
recognised in the statement of profit and loss and the fund status and
amounts recognised in the balance sheet.
8 Employee stock option plans
The Company provides share-based payment schemes to its employees.
During the year ended March 31, 2013, an employee stock option plan
(ESOP) was in existence. The relevant details of the scheme and the
grant are as below.
Malar Employee Stock Option Plan 2008 (Scheme) was approved by the
board of directors of the company on 31st July 2008/28th May 2009 and
by shareholders in the annual general meeting held on 29th September,
2008 /21st August 2009. The following are some of the important
conditions to the scheme:
Vesting Plan
25% of the option shall vest on the completion of 12 months from the
grant date.
25% of the option shall vest on the completion of 24 months from the
grant date.
25% of the option shall vest on the completion of 36 months from the
grant date.
25% of the option shall vest on the completion of 48 months from the
grant date.
Exercise Plan
There shall be no lock in period after the options have vested. The
vested options will be eligible to be exercised on the vesting date
itself. Notwithstanding any provisions to the contrary in this plan the
options must be exercised before the end of the tenure of the plan.
Effective Date
The plan shall be deemed to have come to in force on the 21 August 2009
or on such other date as may be prescribed by the board of directors of
the Company subject to the approval of shareholders of the company in
general meeting.
The weighted average remaining contractual life for the stock options
outstanding as at 31 March 2013 is 3.75 years (31 March 2012: 4.75
years). The range of exercise prices for options outstanding at the end
of the year was Rs. 10. (31 March 2012: Rs. 10).
The weighted average fair value of stock options granted during the
year was Rs. 13.45 (31 March 2012: Rs 13.45). The Black Scholes
valuation model has been used for computing the weighted average fair
value considering the following inputs:
The expected life of the stock is based on historical data and current
expectations and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that
the historical volatility over a period similar to the life of the
options is indicative of future trends, which may also not necessarily
be the actual outcome.
The Company measures the cost of ESOP using the intrinsic value method.
Had the Company used the fair value model to determine compensation,
its profit after tax and earnings per share as reported would have
changed to the amounts indicated below:
9 Operating lease payments
Operating lease agreements have been entered in to by the Company with
respect to office premises and medical equipments. The total lease
payments made during the year are as follows:
10 Previous year''s figures have been regrouped where necessary to
conform to the current year''s classification.
Mar 31, 2012
1. Corporate information
Fortis Malar Hospitals Limited (the Company) was incorporated in the
year 1989 to set up, manage and operate a multi specialty hospital and
it commenced its commercial operations in the year 1992. The Company is
a subsidiary of Fortis Hospitals Limited.
2. Basis of preparation
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except as given
below.
Terms/ rights attached to equity shares
The Company has only one class of equity shares having par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
b - Security/ Guarantee against long term borrowings
The loan is secured by sole and exclusive charge on all fixed assets
and current assets both present and future, including land and
building, medical assets and plant and machinery.Further, the loan is
secured by corporate guarantee of International Hospitals Limited.
c - Repayment Terms of the long term borrowings
Repayment in respect of the loan outstanding of Rs. 23.60 million is 36
monthly instalments.
Repayment in respect of other loans is 60 monthly instalments to
commence after 12 months principal moratorium from disbursement of each
tranche. Interest to be serviced monthly.
2 Proposed sale of Hospital Infrastructure Undertaking
The Shareholders of the Company have approved vide resolution dated
July 18, 2011, the transfer / sale / disposal of Hospital
Infrastructure Undertaking including Out Patient Department business
and radio diagnosis equipments ('Hospital Infrastructure Undertaking')
on a Going Concern Basis through slump sale to any one of the
Affiliates / Group Company / Companies under the same management for a
consideration of an amount not less than Rs. 600,000,000. On February 7,
2012, the Company has signed a Term Sheet with Fortis Health Management
Limited ('FHML'), one of its group companies expressing intent to sell
the Hospital Infrastructure Undertaking and proposed to enter into an
exclusive and irrevocable Business Transfer Agreement effecting the
transfer at a later date not exceeding six months from the date of the
Term Sheet. The Company has also received an advance of Rs. 650,000,000
on February 7, 2012 towards the proposed transfer. The Company is in
the process of taking necessary steps to execute the transfer. The
Company has temporarily invested this amount as inter corporate deposit
and has earned an interest of Rs. 9,616,439. The Company is still in
discussion with FHML regarding finalizing the valuation for the
transaction and other terms and conditions including the arrangement to
lease back the infrastructure post the proposed transfer.
3 Management fee from Hospitals
During the current year, the Company has received management fee from
two hospitals with which the Company had entered into operation and
management agreements aggregating to Rs. 19,125,440. Of the above, one
agreement has been terminated during December 2011 and the other
agreement subsequent to the year end in April 2012.
4 Segment reporting
Primary Segment
The Company is engaged in providing health care services, which in the
context of Accounting Standard 17 (Segmental Information) is considered
as the only business segment. Accordingly, no separate segmental
information has been provided herein.
Secondary Segment - Geographical Segment.
The Company primarily operates in India and therefore mainly caters to
the needs of the domestic market. Therefore, there are no reportable
geographical segments.
5 Capital and other commitments
At March 31, 2012, the Company has capital commitments of Rs. 1,075,617
(Previous year Rs. Nil) towards purchase of assets.
6 Contigent Liabilities
March 31,
2012 March 31,
2011
Claims against the Company not
acknowledged as debts 72,323,252 3,223,252
(in respect of compensation demanded
by the patients / their relatives
for negligence). The cases are pending
with various Consumer Disputes
Redressal Commissions.
Based on expert opinion obtained, the management believes that the
Company has good chance of success in these cases.
7 Deferral/capitalization of exchange differences
The Ministry of Corporate Affairs (MCA) has issued the amendment dated
December 29, 2011 to AS 11 The Effects of Changes in Foreign Exchange
Rates, to allow companies deferral/ capitalization of exchange
differences arising on long-term foreign currency monetary items.
In accordance with the amendment/earlier amendment to AS 11, the
company has capitalized exchange loss, arising on long-term foreign
currency loan, amounting to Rs. 3,033,591 (March 31, 2011: Exchange gain
Rs. 151,025) to the cost of plant and equipments.
8 Gratuity
The Company has a defined benefit gratuity plan, whereby the employees
are entitled to gratuity benefit on the basis of last salary drawn and
completed number of years of service.
The Company also provides leave encashment benefit to employees, which
is unfunded. The Company also provides superannuation benefits to its
senior executives
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
related factors, such as supply and demand in the employment market.
The company expects to contribute Rs. 1,600,000 to gratuity in the next
year (March 31, 2011: Rs. 638,000).
The fund is 100% administered by Life Insurance Corporation of India
("LIC"). The overall expected rate of return on assets is
determined based on the market prices prevailing on that date,
applicable to the period over which the obligation is to be settled.
Amounts for the current and previous four periods are as follows:
4 Employee stock option plans
The Company provides share-based payment schemes to its employees.
During the year ended March 31, 2012, an employee stock option plan
(ESOP) was in existence. The relevant details of the scheme and the
grant are as below.
Malar Employee Stock Option Plan 2008 (Scheme) was approved by the
board of directors of the company on 31st July 2008/28th May 2009 and
by shareholders in the annual general meeting held on 29th September,
2008 /21st August 2009. The following are some of the important
conditions to the scheme:
Vesting Plan
- 25% of the option shall vest on the completion of 12 months from
the grant date.
- 25% of the option shall vest on the completion of 24 months from
the grant date.
- 25% of the option shall vest on the completion of 36 months from
the grant date.
- 25% of the option shall vest on the completion of 48 months from
the grant date.
Exercise Plan
There shall be no lock in period after the options have vested. The
vested options will be eligible to be exercised on the vesting date
itself. Notwithstanding any provisions to the contrary in this plan the
options must be exercised before the end of the tenure of the plan.
Effective Date
The plan shall be deemed to have come to in force on the 21 August 2009
or on such other date as may be prescribed by the board of directors of
the company subject to the approval of shareholders of the company in
general meeting.
The weighted average remaining contractual life for the stock options
outstanding as at 31 March 2012 is 4.75 years (31 March 2011: 5.75
years). The range of exercise prices for options outstanding at the end
of the year was Rs. 10. (31 March 2011: Rs. 10.)
The weighted average fair value of stock options granted during the
year was Rs. 13.45 (31 March 2011: Rs. 13.45). The Black Scholes valuation
model has been used for computing the weighted average fair value
considering the following inputs:
The expected life of the stock is based on historical data and current
expectations and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that
the historical volatility over a period similar to the life of the
options is indicative of future trends, which may also not necessarily
be the actual outcome.
9 Operating lease payments
Operating lease agreements have been entered in to by the Company with
respect to office premises and medical equipments. The total lease
payments made during the year are as follows:
10 There are no overdue amounts payable to Micro and Small Enterprises
as defined under the Micro, Small and Medium Enterprises Development
Act, 2006 based on information available with the Company. Further, the
Company has not paid any interest to any Micro and Small Enterprises
during the year ended March 31, 2012 and year ended March 31, 2011.
11 The figures of previous year were audited by a firm of Chartered
accountants other than S R B C & Co. Previous year's figures have been
regrouped where necessary to conform to the current year's
classification.
Mar 31, 2011
1. Segment Reporting:
As the Companys business activity primarily falls within a single
business and geographical segment, there are no additional disclosures
to be provided in terms of Accounting Standard 17 "Segment Reporting"
2. Fixed asset include, medical equipment, purchased through HDFC bank
Ltd, under confirmed irrevocable foreign deferred letter of credit
payable in US Dollars, after 36 months from 3rdOctober 2008. Liability
has been adjusted on value of the Dollar at the close of the year.
3. Details of Directors Remuneration
(a) In view of the approval from Ministry of Company Affairs, the
previous year figure has been reworked. Provision for incentives has
been scaled down, to bring down the total remuneration paid to the
Director to the limit approved by Ministry of Company Affairs Rs.
7,208,211 and excess remuneration paid Rs. 176,569 is being recovered.
The figure for the current year is exclusive of Rs. 1,823,431 included
in the provision for incentives for the financial year 2010-2011
(b) As the future liability for Gratuity and leave encashment is
provided on an actuarial basis for the company as a whole, the amount
pertaining to the Directors is not ascertainable and, not included
above.
4. The balances outstanding in Hospital Sundry Debtors and Creditors
are subject to confirmation.
5. Figures are regrouped and reclassified wherever necessary. The
figures are rounded off to nearest Rupees
6. Provision for incentives include Rs.1,823,436 provision created for
the whole time director(Previous year Rs. 25 lacs, (scaled down to Rs.
5 lacs during the current financial year)).
7. Assets, having original cost Rs. 59,331,032, which have become
obsolete and irrepairable having, very little scrap value were removed
from the gross block consequently written down value of Rs. 2,108,549
has been written off in the books of accounts.
8. Provision for gratuity includes additional provision Rs. Nil
assessed by the independent actuary for the liability existed at the
beginning of the year. (Previous year Rs. 1,691,197)
9. The company has been regularly remitting the service tax due for
the payments received from all TPAs including M/s. Star Health and
Allied Insurance Co. Ltd, except for the payments received under TNCM
Insurance Scheme. There has been a certain delay in realization and
remittance of Service Tax due on amount due from M/s. Star Health and
Allied Insurance Co. Ltd., TPA for TNCM Insurance Scheme. For the
payments received under the said scheme an amount of Rs. 41.32 lacs
(more than six months Rs. 10.95 lacs) was not remitted to the
authorities
10. Disclosure under AS-18 - Related Parties as on 31st March, 2011
(I). LIST OF RELATED PARTIES (AS CERTIFIED BYTHE MANAGEMENT):
A. Enterprises under control (whether directly or indirectly) of
reporting enterprise
Malar Stars Medicare Limited
Enterprises which contol (directly or indirectly) reporting enterprise
Fortis Healthcare Holdings Limited
Fortis Healthcare (India) Limited
RHC Holding Private Limited (Holding Co. of FHHL) (w.e.f. December
22,2010)
International Hospital Limited
Enterprises which are under common control with reporting enterprise
(a) Subsidiaries of Fortis Healthcare (India) Limited
Fortis Hospotel Ltd.
International Hospital Limited
Escorts Heart Institute And Research Centre Limited
Escorts HeartAnd Super Speciality Institute Limited
Escorts HeartAnd Super Speciality Hospital Limited
Fortis Health Management Limited
Fortis Healthcare International Limited
Lalitha Healthcare Private Limited
Fortis Hospitals Limited
Fortis Emergency Services Limited
Escorts Hospital & Research Centre Limited
Fortis Global Healthcare (Mauritius) Limited
Fortis C-Doc Healthcare Limited (w.e.f. September 17,2010)
Fortis Asia Healthcare Pte. Limited, Singapore (w.e.f. January 7,2011)
Fortis Global Healthcare Infrastructure Pte. Limited, Singapore (w.e.f.
March 31,2011)
Kanishka Housing Development Company Limited
(b) Subsidiaries of Fortis Healthcare Holdings Limited
Hiranandani Healthcare Private Limited
Fortis HealthStaff Ltd.
Fortis Hospital Management Ltd.
Religare Wellness Ltd.
Hospitalia Eastern Private Limited
Medsource Healthcare Pvt. Ltd.
(Subsidiary of Religare Wellness Ltd.)
(c) Subsidiaries of RHC Holding Private Limited (Holding Company of
FHHL)
Fortis Healthcare Holdings Limited
Fortis Global Healthcare Ltd
A-1 Book Company Private Limited
RHC Finance Private Limited
Maple Leaf Buildcon Private Limited
Todays Holdings Private Limited
Religare Infotech Private Limited
RHC Financial Services (Mauritius) Ltd
Fortis Global Healthcare Holdings Pte. Ltd (Singapore)
Religare Infotech Pty Limited
Altai Investments Limited
Quality Healthcare Limited
Quality Healthcare Medical Services Limited
Quality Healthcare Medical Holdings Limited
Portex Limited
Quality Healthcare Services Limited
Green Apple Associates Limited
Quality Healthcare Hongkong Limited
Quality HealthCare Medical Services (Macau)Limited
Berkshire Group Limited
Healthcare Opportunities Limited
GlobalRX Limited
SmartLab Limited
Quality HealthCare Medical Centre Limited
Universal Lane Limited
Quality HealthCare Chinese Medicine Limited
Quality HealthCare Psychological Services Limited
Quality HealthCare Dental Services Limited
Quality HealthCare Nursing Agency Limited
Quality HealthCare Physiotherapy Services Limited
Dynamic People Group Limited
Normandy (Hongkong) Limited
Quality EAP (Macau) Limited
TCM Prodicts Limited
Great Option Limited
Marvellous Way Limited
Poltallock Limited
Summerset Green Limited
Allied Medical Practices Guild Limited
Quality HealthCare Professional Services Limited
D3 Health Services Limited
GHC Holding Limited
CASE Specialist Limited
Jadeast Limited
Jadefairs International Limited
Jadison Investment Limited
Jadway International Limited
Megafaith International Limited
Fortis Healthcare Singapore Pte. Limited
B. Associate or JV of reporting enterprise Investing party of which
reporting enterprises is an associate NIL
C. individuals (directly or indirectly) having control or significant
influence over reporting enterprise
Mr Malvinder Mohan Singh
Mr Shivinder Mohan Singh
Relatives of such individuals
Mrs. Nimmi Singh
Mrs. Japna Malvinder Singh
Mrs. Aditi Shivinder Singh
Ms. Nimrita Parvinder Singh )
Ms. Nanki Parvinder Singh )
Ms. Nandini Parvinder Singh )
Master Anhad Parvinder Singh ) MINOR
Master Udayveer Parvinder Singh )
Master Vivan Parvinder Singh )
Master Kabir Parvinder Singh )
D. Key managerial personnel(s)
Mr. Krish Ramesh
Relatives of Key managerial personnel(s)
Ms.R.Uthra.Wife
Mr. R. Krishnamachari, Father
Late Smt. K. Kalyani, Mother
Mr. R. Praveen Kumar, Son
Ms. R. Prashanthi
Mr. K. Ramkumar, Brother
Mr. K. Ravichandaran, Brother
Mrs. R. Shamala, Brothers Wife
Mrs. R. Sumathi, Brothers Wife
E. Enterprises over which any person mentioned at (c) and (d) have
significant influence
Religare Enterprises Limited (REL)
Religare Securities Limited
Religare Finvest Limited
Religare Commodities Limited
REL Infrafacilities Limited (formerly known as Religare
Realty Limited)
Religare Venture Capital Ltd.
Religare Insurance Broking Ltd.
Religare Finance Limited
Religare Capital Markets Limited
Religare Macquarie Wealth Management Limited
Religare Health Insurance Company Limited
RELIGARE ARTS INITIATIVE LIMITED
Religare United Soccer Limited
Religare Arts Investment Management Limited
AEGON Religare Life Insurance Company Limited
Vistaar Religare Capital Advisors Limited
Religare Asset Management Company Limited
Religare Trustee Company Ltd,.
Mausam Films Limited
Vistaar Religare Films Limited
Vistaar Religare Media Limited
Vistaar Religare Pictures Limited
Vistaar Religare Entertainment Limited
Milestone Religare Investment Advisors Private Limited
Religare Housing Development Finance Corporation
Limited (Formerly known as Maharishi Housing
Development Finance Corporation Limited)
Religare Advisory Services Limited
Religare Capital Markets Plc.
Hichens, Harrison (Middle East) Limited
Hichens, Harrison (Ventures) Limited
Religare Capital Markets (UK) Limited
Religare Hichens Harrison Consultoria Internacional
Ltd
Religare Capital Markets Pty Limited
Religare Capital Markets Inc
London Wall Nominees Limited
HH1803.Com Limited
Tobler (Mauritius) Limited
Tobler (UK) Limited
Religare Global Asset Management Japan Co. Ltd.
Religare Investment Advisory (Mauritius)
Religare Investment Holdings (UK) Ltd.
Charterpace Limited
Blamire Limited
Hichens, Harrison (Far East) Pte Limited
Dion Global Solutions Limited
Religare Technologies Limited
Regius Overseas Holding Co. Ltd.
Dion Global Solutions Pty Ltd.
Dion Global Solutions (Australia) Pty Ltd.
Dion Global Solutions (Development) Pty Ltd.
Dion Global Solutions (Asia Pacific) Pty Ltd.
Dion Global Solutions (NZ) Ltd.
Dion Global Solutions (HK) Ltd.
Dion Global Solutions (UK) Ltd.
Dion Global Solutions (MY) Sdn Bhd
Dion Global Solutions (Singapore) Pte. Ltd.
Religare Technova Global Solutions Vietnam Company Ltd.
Super Religare Laboratories Limited
MENA Healthcare Investment Company Limited
Medical Management Company Limited
Super Religare Laboratories International Limited
Super Religare Laboratories International FZ-LLC
Super Religare Reference Laboratories (Nepal) Pvt. Ltd.
RHC Holding Private Ltd
Oscar Investments Ltd.
A-1 Book Company (P) Ltd
Malav Holdings (P) Limited
Luxury Farms (P) Ltd.
Vistas Realtors Private Limited
Shivi Holdings (P) Ltd
Greenview Buildtech Private Limited
RC Nursery (P) Ltd.
Shimal Research Laboratories Ltd
Hospitalia Informations Systems (P) Ltd
ANR Securities Limited.
Bindas Realtors Private Limited
Vistas Complexes Private Ltd
Meadows Buildtech Private Limited
Fortis Clinical Research Ltd
Green Biofuels Farms Private Ltd
Malsh Healthcare (Partnership Firm)
OscarTraders (Partnership Firm)
Religare Voyages Limited
ReligareAviation Limited
Religare Aviation Training Academy Limited
Religare Travels (India) Limited
Religare Bullion Limited
ReligareAviation Engineering Limited
Religare Flysims Limited
Religare Share Brokers Limited
Piramal Diagnostic Services P Limited
DDRC Piramal Diagnostic Services P Limited
Religare Global Asset Management (HK) Ltd.
Religare Capital Markets (EMEA) Limited
Kyte Management Limited
Religare Capital Markets (USA) LLC
Religare Capital Markets (Hongkong) Limited
Religare Capital Markets (Singapore) Pte Limited
Religare Voyages Business Services Private Limited
Notes:
1. Entities in which person mentioned in (c) and (d) have significant
influence whether directly or indiretly, singly or jointly, are also
included in the list.
11 Disclosures Under Accounting Standard -15 (Revised) On "Employee
Benefits":
B. Defined Benefit Fund
The company has a defined benefit gratuity plan, whereby the employees
are entitled to gratuity benefit on the basis of last salary drawn and
completed number of years of services.
The company also provides Leave Encashment benefit to its employees,
which is unfunded. The company also provides Super Annuation benefits
to its senior executives.
The following table summaries the components of net benefit expenses
recognised in the profit and loss account and the amounts recognised in
the balance sheet.
Notes:
a) The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
b) The Companys expected contribution to the fund in the next year is
not presently ascertainable and hence, the contributions expected to be
paid to the plan during the annual period beginning after the balance
sheet date as required by Para 120 (o) of the Accounting Standard 15
(Revised) on Employee Benefits are not disclosed.
12. CONTINGENT LIABILITY
a) Estimated amount of contracts to be executed on capital account and
not provided for Rs. 31.87 lacs
Mar 31, 2010
1) Nature of Operations:
The company was incorporated in the year 1989 to set up, manage and
operate a multi specialty hospital and it commenced its commercial
operations in year 1992. The Company has become subsidiary of
International Hospital Limited from 1st October 2009.
2. Segment Reporting:
As the Companys business activity primarily falls within a single
business and geographical segment, there are no additional disclosures
to be provided in terms of Accounting Standard 17 "Segment Reporting"
3. Fixed asset include, medical equipment, purchased through HDFC bank
Ltd, under confrmed irrevocable foreign deferred letter of credit
payable in US dollars, after 36 months from 3rd October 2008. Liability
has been adted on value of dollar at the close of the year.
4. In respect of Rs 200 lakhs outstanding from two Companies included
in the register maintained u/s 301 of the Companies Act, 1956, in terms
of the Arbitration award, the Company has since realised Rs 200 lakhs
from the said two companies.
5. Details of Directors Remuneration
(a) This is exclusive of Rs. 25.00 lakhs provision made underthe head
provision for incentives. The said Rs. 7,562,380 includes earlier year
provision for incentive approved and paid in the current year.
(b) As the future liability for Gratuity and leave encashment is
provided on an actuarial basis for the company as a whole, the amount
pertaining to the directors is not ascertainable and therefore not
included above.
6. CIF value of imports in respect of:
a. Consumables stores & Repairs & Maintenance NIL NIL
b. Capital Goods 19,571,854 29,066,229
7. The balances outstanding in Hospital Sundry Debtors and Creditors
are subject to confrmation.
8. Figures are regrouped and reclassifed wherever necessary. The
fgures are rounded off to nearest Rupees.
9. Provision for incentives include Rs. 25 lakhs provision created
for the whole time director(LY 25.00 lakhs)
10. Depreciation for the current year includes Rs. 974,363, additional
depreciation for the section of assets. At the rates higher then rate
described in the Schedule XIV of the Companies Act..
11. Provision for gratuity includes additional provision Rs.1,691,197
assessed by the independent actuary for the liability existed at the
beginning of the year.
12. RELATED PARTY DISCLOSURES
A. LIST OF RELATED PARTIES (AS CERTIFIED BY THE MANAGEMENT):
(a) Enterprises which control (directly or indirectly) reporting
enterprise
International Hospital Limited
Enterprises under control (whether directly or indirectly) of reporting
enterprise
Malar Stars Medicare Limited
Enterprises which are under common control with reporting enterprise
Escorts Hospital And Research Centre Limited Escorts Heart and Super
Speciality Hospital Limited Fortis Healthcare International Limited
Lalitha Healthcare Private Limited Fortis Emergency Services Limited
(b) Associate or JV of reporting enterprise
Investing party of which reporting enterprises is an associate
"Nil"
(c) Individuals (directly or indirectly) having control or signifcant
infuence over reporting enterprise
Mr. Shivinder Mohan Singh - Chairman and Director (Till 30th March,
2010) Mr. Malvinder Mohan Singh
(d) Key managerial personnel(s)
Mr Shivinder Mohan Singh - Chairman and Director (Till 30th March,
2010)
Mr. Krish Ramesh-Whole Time Director
Mr. Bhavdeep Singh à Chairman and Director (from 30th March, 2010)
(e) Enterprises over which any person mentioned at (c) and (d) have
signifcant infuence*
Enterprises under control (whether directly or indirectly) of reporting
enterprise
Religare Enterprises Limited (REL)
Religare Securities Limited
Religare Finvest Limited
Religare Commodities Limited
Religare Realty Limited
Religare Venture Capital Ltd.
Religare Insurance Broking Ltd.
Religare Finance Limited
Religare Capital Markets Limited
Religare Macquarie Wealth Management Limited
Religare Health Insurance Company Limited
Religare Arts Initiative Limited
Religare United Soccer Limited
Religare Arts Investment Management Limited
AEGON Religare Life Insurance Company Limited
Vistaar Religare Capital Advisors Limited
Religare Asset Management Company Limited
Religare Trustee Company Ltd,.
Mausam Films Limited
Vistaar Religare Films Limited
Vistaar Religare Media Limited
Vistaar Religare Pictures Limited
Vistaar Religare Entertainment Limited
Milestone Religare Investment Advisors Private Limited
Maharishi Housing Development Finance Corporation Limited
Religare Advisory Services Limited
Religare Capital Markets International (Mauritius) Limited
Religare Capital Markets International (UK) Limited
Religare Capital Markets Plc. (formerly Religare Hichens, Harrison plc)
or
Hichens, Harrison (Middle East) Limited
Hichens, Harrison (Ventures) Limited
Hichens, Harrison (Derivatives) LLP
Religare Capital Markets (UK) Limited (Formerly Blomfeld Corporate
Finance Limited)
Religare Hichens, Harrison (Pty) Limited
Religare Hichens Harrison Consultoria Internacional Ltd
Religare Capital Markets Pte Limited
Religare Capital Markets Inc
London Wall Nominees Limited
HH1803.Com Limited
Tobler (Mauritius) Limited
Tobler (UK) Limited
Religare Global Asset Management Japan Co. Ltd.
Religare Investment Advisory (Mauritius)
Religare Investment Holdings (UK) Ltd.
Charterpace Limited
Blamire Limited
Blomfeld Street Securities Limited
African Communication Services (Proprietary) Limited
ARM Corporate Finance Limited
Claridge House Services Limited
Hichens, Harrison (Far East) Pte Limited
Religare Technova Limited
Religare Technova Business Intellect Limited
Religare Technova Global Solutions Limited
Olive Rays Innovations Limited (converted into Public Limited Company
w.e.f. 29.12.2009)
Religare Technologies Limited
Religare Technova IT Services Limited
Regius Overseas Holding Co. Ltd.
Religare Technova Global Solutions Pty Ltd.
Religare Technova Global Solutions (Australia) Pty Ltd. Religare
Technova Global Solutions (Development) Pty Ltd. Religare Technova
Global Solutions (Asia Pacifc) Pty Ltd. Religare Technova Global
Solutions (NZ) Ltd. Religare Technova Global Solutions (HK) Ltd.
Religare Technova Global Solutions (UK) Ltd. Religare Technova Global
Solutions (MY) Sdn Bhd Religare Technova Global Solutions (Singapore)
Pte. Ltd. Religare Technova Global Solutions Vietnam Company Ltd.
Super Religare Laboratories Limited MENA Healthcare Investment Company
Limited Medical Management Company Limited Super Religare Laboratories
International Limited Super Religare Laboratories International FZ-LLC
MENA Medical Supplies L.L.C.
Super Religare Reference Laboratories (Nepal) Pvt. Ltd. RHC Holding
Private Ltd
Oscar Investments Ltd.
A-1 Book Company (P) Ltd
Malav Holdings (P) Limited
Luxury Farms (P) Ltd.
Vistas Realtors Private Limited
Shivi Holdings (P) Ltd
Greenview Buildtech Private Limited
RC Nursery (P) Ltd.
Shimal Research Laboratories Ltd
Hospitalia Informations Systems (P) Ltd
ANR Securities Limited.
Whyteleaf Investments P. Ltd.
Trendy Exim Private Limited
Bindas Realtors Private Limited
Vistas Complexes Private Ltd
Meadows Buildtech Private Limited
Fortis Clinical Research Ltd
Green Biofuels Farms Private Ltd
13 Disclosures under Accounting Standard à 15 (Revised) on "Employee
benefits":
B. Defined benefit Fund
The company has a Defined benefit gratuity plan, whereby the employees
are entitled to gratuity benefit on the basis of last salary drawn and
completed number of years of services.
The company also provides Leave Encashment benefit to its employees,
which is unfunded. The company also provides Super Annuation benefits to
its senior executives.
The following table summaries the components of net benefit expenses
recognised in the proft and loss account and the amounts recognised in
the balance sheet.
Mar 31, 2000
1. CONTINGENT LIABILITIES
a. Estimated amount of capital contracts remaining to be executed and
not provided for, amounting to Rs.l3,00,000/-(previous period
Rs.30,00,000/-)
b. Bank guarantees were given in favour of MMDA and others amounting
to Rs.16,28,818/- (previous period Rs.75,000/-)
c. Loans and Advances include a sum of Rs.490.12 lacs paid to two
companies which are included in the Register maintained u/s.30i of the
Companies Act 1956, towards claim by the said companies which are yet
to be quantified and reconciled.
2. In the absence of demand notice from the Financial Institutions
interest has been provided as per the agreement and is subject to
reconciliation.
3. a. The balances outstanding in Hospital Sundry Debtors and
Creditors are subject to confirmation.
b. As per the Accounting policy 1(v) (c) 1/5th of the deferred revenue
expenditure is written off in the current period.
4. Figures for the current period is for 18 months and figures for the
previous period is for 12 months. Hence they are not comparable.
Figures of the current period and previous period are regrouped and
rearranged wherever necessary. The figures are rounded off to the
nearest rupee.
5. Travelling expenses include Directors travel, amounting to
Rs.7,29,622/- previous period Rs.2,72,582/-)
6. An amount of Rs. 1,38,418 has been contributed by the Company
towards Kargil Relief Fund
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