Directors Report of Max Financial Services Ltd.
Mar 31, 2023
Your directors have the pleasure of presenting the 35th (Thirty-fifth) Board''s Report of Max Financial Services Limited ("MFSL" or "the Company") along with the audited Financial Statements for the financial year ended March 31, 2023.
The highlights of the standalone financial results of your Company along with the previous year''s figures are as under:
|
('' in crore) |
||
|
Year ended |
Year ended |
|
|
31.03.2023 |
31.03.2022 |
|
|
Dividend income |
Nil |
144.46 |
|
Treasury Income |
30.24 |
34.18 |
|
Sale of services |
20.32 |
20.64 |
|
Rental Income |
0.56 |
0.42 |
|
Gain on sale of investment property |
6.69 |
- |
|
Revenue from operations |
57.81 |
199.70 |
|
Other income |
0.42 |
2.36 |
|
Total income |
58.23 |
202.06 |
|
Expenses |
||
|
Employee benefits expenses |
9.22 |
21.62 |
|
Legal and professional expenses |
15.63 |
13.85 |
|
Other expenses |
10.92 |
15.89 |
|
Depreciation and amortization expense |
3.10 |
3.48 |
|
Finance costs |
0.11 |
0.14 |
|
Total expenses |
38.98 |
54.98 |
|
Profit before tax |
19.25 |
147.08 |
|
Tax expense |
5.37 |
44.46 |
|
Profit after tax for the year |
13.88 |
102.62 |
|
Other comprehensive income for the year |
(0.07) |
0.36 |
|
Total comprehensive income |
13.81 |
102.98 |
Your Company is primarily engaged in the business of making and holding investments in its subsidiary, Max Life Insurance Company Limited ("Max Life") and providing management consultancy services to group companies and accordingly, in terms of extant RBI guidelines, your Company is an Unregistered Core Investment Company (unregistered CIC) as it does not meet the criteria stipulated by RBI for registration as a Systematically important CIC. Further, there is no change in the nature of Business during the FY 2022-23.
The net worth of your Company on a standalone basis grew marginally by 0.2% to ''6,763 crore as of March 31, 2023 as against ''6750 crore as of March 31, 2022. The increase in the net worth was mainly on account of profits.
In accordance with the Companies Act, 2013 ("the Act") and applicable accounting standards, the audited consolidated financial statements are enclosed as part of this Annual Report.
In FY 2022-23, MFSL reported consolidated revenues of ''31,431 crore, which grew by 1%, due to lower investment income. Excluding Investment Income, consolidated revenues grew 13%. The Gross Premiums at ''25,432 crore, grew by 13% compared to the previous year. The Company reported a consolidated profit after Tax of ''452 crore, which grew 42% compared to the previous year.
Max Life AUM as of March 31, 2023, stood at ''1,22,857 crore, a rise of 14% over the previous year, owing to the increased scale of business. The Market Consistent Embedded value of Max Life as of March 31, 2023, was ''16,263 crore, with an Operating Return on Embedded Value (RoEV) of 22.1% and the value of a new business at ''1,949 crore has grown 28%, achieved the highest ever VNB margins of 31.2%, 380 bps improvement year on year.
The highlights of the consolidated financial results of your Company, and its subsidiaries, viz., Max Life Insurance Company limited, Max life pension Fund Management limited, and Max Financial Employees Welfare trust are as under:
('' in crore) I Year ended Year ended 31.03.2023 31.03.2022
policyholders'' Income 31,050.62 30,849.16
from life Insurance
operations
Interest Income 302.12 226.52
Net gain on fair value 39.34 95.95
changes
investment property
Revenue from 31,412.67 31,181.21
operations
Total income 31,431.06 31,187.58
Expenses
policyholders'' expenses 30,788.75 30,687.55
of life Insurance
operations
expenses
legal and professional 15.78 13.85
expenses
Impairment on financial (0.59) (1.73)
instruments
amortization expense
Total expenses 30,903.86 30,798.93
Profit before tax 527.20 388.65
Profit after tax for the 451.89 318.40
year (including noncontrolling interests)
other comprehensive (7.97) (11.91)
income for the year
Total comprehensive 443.92 306.49
income (after tax)
Total comprehensive income attributable to
owners of the company 372.12 243.66
non-controlling interests 71.80 62.83
MATERIAL CHANGES AFFECTING FINANCIAL POSITION
there are no material changes and commitments
affecting the financial position of the Company, which occurred between the end of the financial year of the Company i.e., March 31, 2023, and the date of the Directors'' report i.e., May 12, 2023.
SUBSIDIARIES, ASSOCIATES & JOINT VENTURE COMPANIES
As of March 31, 2023, your Company had two operating subsidiaries viz., Max life Insurance Company limited and Max life pension Fund Management Limited. Further, the Company has also incorporated one special purpose entity, Max Financial employees Welfare trust in April 2022. there were no other associate or joint venture companies.
the report containing salient features of the financial statement of Max life, included in the consolidated financial statements, presented in Form AoC-1 is attached to this report as Annexure 1, as per Rule 5 of the Companies (Accounts) Rules, 2014.
Further, a detailed update on the business achievements of Max Life, is furnished as part of the Management Discussion and Analysis section which forms part of this Annual Report.
As provided in Section 136 of the Act, the financial statements and other documents of the subsidiaries of the Company are not attached to the financial statements of the Company. The complete set of financial statements, including financial statements of the subsidiaries of the Company is available on the website of the Company at www.maxfinancialservices.com. These documents will also be available for inspection during business hours at the registered office of the Company.
In terms of the provisions of the SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015 (''SEBI Listing Regulations''), your Company has a policy for determining ''Material Subsidiary'' and the said policy is available on the Company''s website at https://www. maxfinancialservices.com/corporate-policies
Your Company has one material subsidiary, viz., Max Life Insurance Company Limited.
Your Directors have not recommended any dividend for the financial year 2022-23.
The Board of Directors of your Company has approved a Dividend Distribution policy in line with Regulation 43A of SEBI Listing Regulations. the said policy is available on the website of the Company at https://www.maxfinancialservices.com/corporate-policies
the Company has not transferred any amount to reserve during the year under review.
the Company did not issue any fresh issue of shares during the current year under review. the paid-up share capital of the Company as of March 31, 2023, stood at ''69,02,29,542/-(Rupees Sixty-nine crore two lakhs twenty-nine thousand five hundred forty-two only) comprising 34,51,14,771 equity shares of ''2/-each.
Your Company has two employee stock option plans viz. Max employee Stock plan (''the 2003 plan'') and Max Financial Employees Stock Option Plan - 2022 (''2022 Plan''). the 2003 Plan provides for the grant of stock options aggregating not more than 5% of the number of issued equity shares of the Company to eligible employees and Directors of the Company.
Max Financial Employees Stock Option Plan - 2022 was approved by the Shareholders of the Company on May 9, 2022. this 2022 Plan does not contemplate the issue of any fresh shares. the Company established a separate trust, viz., Max Financial Employees Welfare trust (''trust''). the trust shall acquire shares of the Company in the secondary market, hold and transfer to option holders upon exercise of vested options. the Company granted 15,04,623 options on June 22, 2022, to the employees of Max Life, which would entitle the
option-holders to acquire one equity share of ''2/-each for cash from Max Financial Employees Welfare trust at an Exercise Price of ''808.97 per option payable to ESOP trust and that the aforesaid options shall be vested in a graded manner. the 2003 & 2022 Plans are administered by the Nomination and Remuneration Committee constituted by the Board of Directors of the Company. Disclosures as required under SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed in this report as Annexure-2.
the 2003 Plan came into effect on October 1, 2003, and is valid for a period of 20 years up to September 30, 2023. the Board of Directors of the Company in its meeting held on May 12, 2023, decided not to extend the validity of the 2003 plan. there is no outstanding option in terms of the 2003 Plan. 2003 Plan shall automatically expire on September 30, 2023.
A certificate from the Secretarial Auditors confirming that the ESOP plans of the Company, viz., (i) the 2003 Plan and (ii) 2022 Plan of the Company have been implemented in accordance with the applicable SEBI Regulations shall be placed before the members at the ensuing Annual General Meeting.
directors and key managerial personnel
As of the date of this report, the Board of Directors of your Company comprises of 10 (ten) members with all being Non-Executive Directors of which 6 (Six) are Independent Directors. Mr. Analjit Singh (DIN: 00029641), Chairman of the Company is a NonExecutive, Non-Independent Promoter Director.
Further, in terms of Section 152 of the Act and the Articles of Association of the Company, Mr. Mitsuru Yasuda is liable to retire by rotation at the ensuing Annual General Meeting. Mr. Mitsuru Yasuda, being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting.
Brief profiles of the directors are given in the Annual Report.
The Board met five times during the financial year 2022-23 as detailed below:
|
S. Date Board No. of No. Strength Directors present |
|||
|
1 |
April 6, 2022 |
11 |
11 |
|
2 |
May 10, 2022 |
11 |
11 |
|
3 |
August 1, 2022 |
10 |
9 |
|
4 |
october 19, 2022 |
11 |
9 |
|
5 |
January 31, 2023 |
10 |
9 |
The details regarding the number of meetings attended by each Director during the year under review have been furnished in the Corporate Governance Report attached as part of this Annual Report.
During the year under review, the following changes in the Board composition/Key Managerial personnel have taken place:
⢠Mrs. Naina Lal Kidwai resigned from the Board from the closure of business hours on May 31, 2022, as part of her planned transition and to fulfill her several other responsibilities and professional commitments.
⢠Mrs. Gauri padmanabhan was appointed as a woman Independent Director on August 25, 2022.
⢠Mr. Mohit talwar retired as the Managing Director of the Company w.e.f from the closure of business hours on January 14, 2023;
⢠Mr. Mandeep Mehta resigned as Chief Financial officer of the Company w.e.f. from the closure of business hours on April 30, 2022; and
⢠Mr. Amrit pal Singh was appointed as Chief Financial officer of the Company w.e.f. May 01, 2022.
As of the date of this Report, Mr. Amrit pal Singh, Chief Financial officer, and Mr. V. Krishnan, Company Secretary are the Key Managerial personnel of the Company.
At the Board meeting of the Company held on May 12, 2023, the Board considered and approved the following:
(i) Acceptance of resignation of Mr. V Krishnan as the Company Secretary of the Company on the close of business hours on June 30, 2023;
(ii) Appointment of Mr. piyush Soni as the Company Secretary of the Company effective July 1, 2023; and
(iii) Appointment of Mr. V Krishnan as the Manager of the Company in terms of the provisions of the Companies Act, 2013 read with applicable provisions of SEBI listing Regulations effective July 1, 2023 for a period of three years subject to the approval of the Shareholders of the Company.
there are no outstanding options in terms of Max employee Stock plan-2003 as of date. All options that were granted and vested with the option-holders have all been exercised during the year ended March 31, 2022.
STATEMENT OF DECLARATION BY INDEPENDENT DIRECTORS:
In terms of Section 149(6) of the Act and Regulation 25 of SEBI listing Regulations, the following non-executive Directors are categorized as Independent Directors of the Company: Mr. Aman Mehta (Din: 00009364), Mr. Dinesh Kumar Mittal (Din: 00040000), Mr. Jai Arya (DIN: 08270093), Sir Richard Stagg (DIN: 07176980), Mr. K. Narasimha Murthy (DIN: 00023046) and Mrs. Gauri padmanabhan (DIN: 01550668).
the Company has received confirmation of independence from all the above-mentioned Independent Directors as per Section 149(7) of the Act and applicable SEBI listing Regulations confirming that they continue to meet the criteria of independence. Further, pursuant to Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, all Independent Directors of the Company have confirmed their registration with the Indian Institute of Corporate Affairs (IICA) database.
COMMITTEES OF THE BOARD OF DIRECTORS:
The Company has the following committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. A detailed note on the same is provided under the Corporate Governance Report forming part of this Annual Report.
the Audit Committee met five times during the financial year 2022-23, viz. on April 27, 2022, May 10, 2022, August 1, 2022, october 19, 2022, and January 31, 2023. As of the date of this report, the Committee comprises Mr. Dinesh Kumar Mittal (Chairman), Mr. Aman Mehta, Mr. Mitsuru Yasuda, and Mr. K Narasimha Murthy. All the recommendations by the Audit Committee were accepted by the Board.
2. Nomination and Remuneration Committee:
the nomination and Remuneration Committee met three times during the financial year 2022-23, viz. on April 6, 2022, May 10, 2022, and January 31, 2023. As of the date of this report, the Committee comprises Mr. Aman Mehta (Chairman), Mr. Analjit Singh, Mr. Dinesh Kumar Mittal, Mr. Hideaki Nomura Mr. Jai Arya and Sir Richard Stagg.
3. Stakeholders'' Relationship Committee:
the Committee met twice during the financial year 2022-23, viz. on May 10, 2022, and January 31, 2023. As of the date of this report, the Committee comprises of Mr. Sahil Vachani (Chairman), Mr. Dinesh Kumar Mittal, and Mr. Mitsuru Yasuda.
As of the date of this report, the Committee comprises Mr. Aman Mehta (Chairman), Mr. Dinesh Kumar Mittal, Mr. Jai Arya, and Mr. Mitsuru Yasuda. this Committee met twice during the year under review on April 27, 2022 and October 19, 2022.
5. Corporate Social Responsibility Committee:
the provision under section 135 of the Act, w.r.t. constitution of CSR Committee, is not applicable to the Company and that CSR functions for the Company are discharged directly by its Board of Directors as and when required.
the Board of Directors includes six Independent Directors as of March 31, 2023, viz. Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mr. Jai Arya, Sir Richard Stagg, Mr. K. Narasimha Murthy, and Mrs. Gauri Padmanabhan.
the Independent Directors had separate meetings on May 10, 2022, and May 12, 2023. the meetings were conducted to:
a) Review the performance of Non-Independent Directors and the Board as a whole;
b) Review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors; and
c) Assess the quality, quantity, and timeliness of the flow of information between the Company management and the Board that is necessary for the Board to perform their duties effectively and reasonably.
PERFORMANCE EVALUATION OF THE BOARD
As per the requirements of the Act and SEBI Listing Regulations, a formal Annual Evaluation process has been carried out to evaluate the performance of the Board, the Committees of the Board, and the Individual Directors including the Chairperson.
the Board of Directors has evaluated the performance of Independent Directors during the year 2022-23 and opined that the integrity, expertise, and experience (including proficiency) of the Independent Directors are satisfactory.
the performance evaluation was carried out by obtaining feedback from all Directors through an
online survey mechanism through Diligent Boards, a secure electronic medium through which the Company interfaces with its Directors. The outcome of this performance evaluation was placed before the meetings of the Nomination and Remuneration Committee and Independent Directors and the Board meeting for the consideration of the members.
the review concluded by affirming that the Board as a whole as well as its Chairman, all of its members, individually, and the Committees of the Board continued to display a commitment to good governance by ensuring a constant improvement of processes and procedures and contributed their best in the overall growth of the organization.
Your Company is primarily engaged in growing and nurturing business investment as a holding company in the business of life insurance and providing management advisory services to group companies. the remuneration of employees is competitive with the market and rewards high performers across levels. the remuneration to Directors, Key Managerial personnel, and Senior Management is a balance between fixed, incentive pay, and a long-term equity program based on the performance objectives appropriate to the working of the Company and its goals and is reviewed periodically and approved by the nomination and Remuneration Committee of the Board.
Details pursuant to Section 197(12) of the Act, read with Rule 5(1) and Rule 5(2) of Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 are attached to this report as Annexure 3A and Annexure 3B.
As of March 31, 2023, there were 11 (Eleven) employees on the rolls of the Company.
NOMINATION AND REMUNERATION POLICY
In adherence to the provisions of Sections 134(3(e) and 178(1) & (3) of the Act, the Board of Directors on the recommendation of the nomination and
Remuneration Committee had approved a policy on Directors'' appointment and remuneration. the said policy includes terms of appointment, criteria for determining qualifications, performance evaluation, and other matters. A copy of the same is available on the website of the Company at https://www. maxfinancialservices.com/corporate-policies
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
the Company is not required to constitute a CSR Committee under section 135 of the Act, and a copy of the duly adopted CSR policy is available on the website of the Company at https://www. maxfinancialservices.com/corporate-policies
the CSR policy comprises a Vision and Mission Statement, philosophy, and objectives. It also explains the governance structure along with clarity on roles and responsibilities.
In terms of Section 135 of the Act read with Companies (Corporate Social Responsibility policy) Rules, 2014, all Companies meeting the prescribed threshold criteria, i.e., a net worth of ''500 crore or more or a turnover of ''1,000 crore or more or net profits of ''5 crore or more during the immediately preceding financial year are required to spend at least 2% of the average net profits of the Company for the immediately preceding three financial years.
As per rule 2(h) of the Companies (Corporate Social Responsibility policy) Rules, 2014, any dividend received from other companies in India, which are already covered and comply with the provisions of the CSR, shall not be included for the purposes of computation of ''net profits'' for a company.
Accordingly, dividend income received by MFSL from Max Life for FY 2021-22 is not included in computing the limits for CSR contribution to be made by the MFSL as Max Life already contributes to CSR. Based on the average net profits of the 3 preceding FYs, MFSL has incurred an average net loss in the last 3 years. MFSL is therefore not required to make any CSR contribution.
POLICY FOR PREVENTION OF SEXUAL HARASSMENT
Your Company has a requisite policy for the Prevention of Sexual Harassment, which is available on the website of the Company at https://www.maxfinancialservices.com/corporate-policies. The comprehensive policy ensures gender equality and the right to work with dignity for all employees (permanent, contractual, temporary, and trainees) of the Company. Your company has complied with provisions relating to the constitution of the Internal Complaints Committee under the Sexual Harassment of Women at Workplace (prevention, prohibition and Redressal) Act, 2013. No case was reported to the Committee during the year under review.
LOANS, GUARANTEES, OR INVESTMENTS IN SECURITIES
The details of loans given, and investments made by the company pursuant to the provisions of Section 186 of the Act are provided in note No. 29 to the standalone financial statements of the Company for FY 2022-23.
MANAGEMENT DISCUSSION & ANALYSIS
In terms of Regulation 34 of SEBI Listing Regulations, a review of the performance of the Company, including those of your Company''s subsidiaries, viz., Max life and Max life pension Fund Management limited, is provided in the Management Discussion & Analysis section, which forms part of this Annual Report.
REPORT ON CORPORATE GOVERNANCE
the Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and exchange Board of India through part C of Schedule V of listing Regulations. As required by the said Clause, a separate report on Corporate Governance forms part of the Annual Report of the Company.
A certificate from the non-executive Director and Chief Financial officer on compliance with part B of Schedule II of SEBI listing Regulations forms part of the Corporate Governance Report as Annexure-2.
Further, a certificate from M/s Chandrasekaran Associates, practicing Company Secretaries regarding compliance with the conditions of Corporate Governance pursuant to part E of Schedule V of SEBI listing Regulations is Annexed to the Corporate Governance Report as Annexure-3.
Copies of various policies adopted by the Company are available on the website of the Company at https://www.maxfinancialservices.com/corporate-policies
STATUTORY Auditors And Auditors'' REPORT
pursuant to Sections 139 & 142 of the Act, M/s Deloitte Haskins and Sells, LLp, Chartered Accountants (Firm Registration number: 117366W/W-100018), were appointed as the Statutory Auditors of the Company at the 32nd Annual General Meeting ("AGM") held on December 30, 2020, for a period of five years. They continue as the Statutory Auditors of the Company.
There are no audit qualifications, reservations, disclaimers or adverse remarks, or reporting of fraud in the Statutory Auditors Report given by M/s Deloitte Haskins and Sells, LLp, Statutory Auditors of the Company for the financial year 2022-23 annexed in this Annual Report.
M/s Deloitte Haskins & Sells LLp, after carrying out the audit for the financial year ended March 31, 2023, had resigned on May 12, 2023, to enable the Company to align its statutory auditors with the successor statutory auditors of Max Life, viz., M/s S. R. Batliboi and Co. LLp. The Board, after placing on record its appreciation for the contribution made by M/s Deloitte Haskins & Sells LLp over the last seven years accepted their resignation as statutory auditors in the meeting held on May 12, 2023.
Further, the Board took note of requisite declarations, consent letters and eligibility certificates received from M/s S.R. Batliboi and Co. LLp, the proposed Statutory Auditors. They have confirmed that their appointment as Auditors, if made, shall be in accordance with the conditions laid down in the Companies Act, 2013 and rules made thereunder, including the criteria provided
in Section 141 and Section 144 of the Companies Act, 2013 and SEBI Listing Regulations. Basis the above, the Board recommended the following for consideration of the shareholders:
(i) For the appointment of M/s S. R. Batliboi and Co. LLp as the statutory auditors of the Company to fill the casual vacancy caused by the resignation of existing statutory auditors till the next date of the ensuing annual general meeting through a postal ballot process; and
(ii) For the appointment of M/s S. R. Batliboi and Co. LLp as the statutory auditors for a five-year term from the date of the forthcoming Annual General Meeting to be held in 2023 till the conclusion of the 40th Annual General Meeting to be held in the year 2028 on such remuneration as may be mutually agreed between the statutory auditors and the Board of Directors of the Company, from time to time.
SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT
pursuant to Section 204 of the Act, your Company had appointed M/s Chandrasekaran Associates practicing Company Secretaries, New Delhi as its Secretarial Auditors to conduct the secretarial audit of the Company for FY 2022-23. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. the Report of Secretarial Auditor for FY 2022-23 is annexed to this report as Annexure 4.
there are no audit qualifications, reservations, disclaimers, or adverse remarks in the said Secretarial Audit Report.
Your Company complies with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs.
Further, Max Life Insurance Company Limited, the material subsidiary of the Company has undergone a Secretarial Audit for the year ended March 31, 2023. the Secretarial Audit Report issued by
M/s Chandrasekaran Associates, practicing Company Secretaries, new Delhi is enclosed as Annexure-5. the Secretarial Auditors have mentioned the details of the penalty/fine levied by the Insurance Regulatory and Development Authority of India (IRDAI)/national Stock exchange of India Limited (NSE) respectively for FY 2023 on Max Life Insurance Company Limited and that there were no other qualification, reservation, disclaimers or adverse remarks in the Secretarial Audit Report for FY 2023. the Board of Max Life Insurance Company Limited while noting the above, instructed the Management to be more cautious in meeting the timelines of compliance with applicable laws, adhere to the instructions of IRDAI and comply with the provisions of applicable laws in letter and spirit.
the Company follows a robust Internal Audit process and audits are conducted on a regular basis, throughout the year, as per the agreed audit plan. During the year under review, M/s MGC, Global Risk Advisory LLp was re-appointed as Internal Auditors for conducting the Internal Audit of key functions and assessment of Internal Financial Controls, etc.
the Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. the Management has reviewed the existence of various risk-based controls in the Company and also tested the key controls towards the assurance of compliance for the present fiscal.
In the opinion of the Board, the existing internal control framework is adequate and commensurate with the size and nature of the business of the Company. Further, the testing of the adequacy of internal financial controls over financial reporting has also been carried out independently by the Statutory Auditors as mandated under the provisions of the Act.
During the year under review, there were no instances
of fraud reported by the auditors to the Audit Committee or the Board of Directors.
Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Board has formed a Risk Management Committee to identify the risks impacting the business and formulate strategies/policies aimed at risk mitigation as part of risk management. Further, a core team of senior management has also been formed to identify and assess key risks, risk appetite, tolerance levels and formulate strategies for mitigation of risks identified in consultation with process owners.
the Company has adopted a Risk Management policy, whereby risks are broadly categorized into Strategic, operational, Compliance, and Financial & Reporting Risks. the policy outlines the parameters of identification, assessment, monitoring, and mitigation of various risks which are key to business performance.
there are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges/risks faced by its subsidiary have been dealt with in detail in the Management Discussion and Analysis section, forming part of this Annual Report.
the Company has a vigil mechanism pursuant to which a Whistle Blower policy has been adopted and is in place. the policy ensures that strict confidentiality is maintained whilst dealing with concerns raised and also that no discrimination will be meted out to any person for a genuinely raised concern in respect of any unethical and improper practices, fraud, or violation of the Company''s Code of Conduct.
the said policy, covering all employees, Directors, and other people having an association with the Company, is hosted on the Company''s website at https://www. maxfinancialservices.com/corporate-policies
A brief note on Vigil Mechanism/Whistle Blower
policy is also provided in the Report on Corporate Governance, which forms part of this Annual Report.
Your Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act.
During the year under review, the Company has not accepted or renewed any deposits from the public.
COMPLIANCE WITH SECRETARIAL STANDARDS
pursuant to the provisions of Section 118 of the Act, the Company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India.
DETAILS OF THE APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANkRUPTCY CODE, 2016
During the period under review, no application was made by or against the company, and accordingly, no proceeding is pending under the Insolvency and Bankruptcy Code, 2016.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis, except an ongoing transaction with Max Life Insurance Company limited for allowing usage of trademarks without any consideration for which approval has already been obtained from shareholders of the Company in 2016 for the said transaction.
Further, the members of the Company in their 34th Annual General Meeting held on August 25, 2022, had approved the material-related party transaction by Max life Insurance with its related party, viz., Axis Bank limited for payment of fees/commission for distribution of the life insurance products, display of publicity materials, procuring banking services, and other related business in terms of SEBI listing
Regulations effective April 1, 2022, till the date of ensuing annual general meeting.
Form AoC-2 furnishing particulars of contracts or arrangements entered by the Company with related parties referred to in Section 188(1) of the Companies Act, 2013, is annexed to this report as Annexure 6.
The details of all the Related party Transactions form part of Note No. 28 to the standalone financial statements attached to this Annual Report.
the policy on the materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at https://www. maxfinancialservices.com/corporate-policies
BUSINESS RESPONSIBILITY ANDSUSTAINABILITY REPORT
In terms of Clause 34(2)(f) of SEBI Regulations, a Business Responsibility and Sustainability Report, on various initiatives taken by the Company and its material subsidiary, Max Life, is enclosed in this report as Annexure-7.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION And Foreign ExCHANGE EARNINGS & OUTGO
The information on the conservation of energy, technology absorption and foreign exchange earnings & outgo as stipulated under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is as follows:
(i) the steps taken or impact on the conservation of energy: Regular efforts are made to conserve energy through various means such as the use of low energy-consuming lighting, etc.
(ii) the steps taken by the Company for using alternate sources of energy: Since your Company is not an energy-intensive unit, utilization of alternate sources of energy may not be feasible.
(iii) capital investment on energy conservation equipment: Nil
Your Company is not engaged in manufacturing activities, therefore there is no specific information to be furnished in this regard.
There was no expenditure incurred on Research and Development during the period under review.
c) foreign Exchange Earnings and Outgo
the foreign exchange earnings and outgo are given below:
total Foreign exchange earned nil
total Foreign exchange used ''639.77 lakhs
the Annual Return as of March 31, 2023, under Section 92(3) of the Act read with Companies (Management and Administration) Rules, 2014, can be accessed at the website of the Company at https://www. maxfinancialservices.com/static/uploads/financials/ pdf7b39741d007e8e46739bf90684b44ecb.pdf
DIRECTORS'' RESPONSIBILITY STATEMENT
pursuant to Section 134(5) of the Act, it is hereby confirmed that:
a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;
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 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 were operating effectively; and
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.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year under review, there were no such significant and material orders passed by the regulators or courts or tribunals which could impact the going concern status and the company''s operations in the future.
TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO THE INVESTOR EDUCATION AND PROTECTION FUND
the Company had paid a Final Dividend in FY 201415 and an Interim Dividend in FY 2015-16, and the unpaid dividend was transferred to two separate bank accounts in the same year for the aforesaid two dividends. After the completion of Seven years, the unpaid amounts still lying in the said accounts were transferred to the Investor Education and protection Fund, along with respective shares on which such dividend remained unpaid on october 23, 2022 and December 10, 2022, respectively.
Regulation 39(4) of the SEBI Listing Regulations inter alia requires every listed company to comply with a
certain procedure in respect of shares issued by it in physical form, pursuant to a public issue or any other issue and which remained unclaimed for any reason whatsoever.
the face value of the shares of the Company was split from ''10/- each to ''2/- each in the year 2007. Certain share certificates were returned undelivered and were lying unclaimed. The Company had sent necessary reminders to concerned shareholders, and subsequently, such shares were transferred to the Unclaimed Suspense Account.
The voting rights on the equity shares lying in the said Unclaimed Suspense Account shall remain frozen till the rightful owner claims such shares. Further, all corporate benefits in terms of securities accruing on the said unclaimed shares viz. bonus shares, split, etc., if any, shall also be credited to the said Unclaimed Suspense Account.
The concerned shareholder(s) are requested to write to the Registrar and Share Transfer Agent to claim the said equity shares. on receipt of such claim, additional documents may be called for and subject to its receipt and verification, the said shares lying in the said Unclaimed Suspense Account shall be transferred to the depository account provided by the concerned shareholder(s) or the physical share certificate shall be delivered to the registered address of the concerned shareholder(s).
The details of Equity Shares held in the Unclaimed Suspense Account are as follows:
|
S. No. |
Particulars |
No. of Shareholders |
No. of Equity Shares |
|
1. |
The Aggregate number of shareholders and the outstanding shares originally lying in the Unclaimed Suspense Account (as at the beginning of the financial year i.e., April 1, 2022) |
304 |
78,870 |
|
2. |
Number of shareholders who approached the listed entity for transfer of shares from the Unclaimed Suspense Account during the year |
*104 |
21,035 |
|
3. |
Number of shareholders to whom the shares were transferred from the Unclaimed Suspense Account, during the year |
*104 |
21,035 |
|
4. |
The aggregate number of shareholders and the outstanding shares in the Suspense Account (as of the end of the financial year i.e., March 31, 2023) |
200 |
57,835 |
|
*This includes 18,355 equity shares comprising 100 shareholders which were transferred to the Investor Education and Protection Fund |
|||
Till the date of this report, the Company had approved 2003 such claims from shareholders for 4,17,475 shares, for transfer of the shareholding back to the shareholders from the unclaimed Suspense Account in Demat form.
Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Company''s/subsidiary''s objectives, projections, estimates and expectations may constitute "forward-looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.
Your Directors would like to place on record their appreciation of the contribution made by its management and its employees, who through
their competence and commitment have enabled the Company to achieve impressive growth. Your Directors acknowledge with thanks the cooperation and assistance received from various agencies of the Central and State Governments, Financial Institutions and Banks, Shareholders, Joint Venture partners, and all other business associates.
On behalf of the Board of Directors Max Financial Services Limited
Chairman DIN:00029641
Place: South Africa Date: May 12, 2023
Mar 31, 2022
Your directors have the pleasure of presenting the 34th (Thirty-fourth) Board''s Report of Max Financial Services Limited ("MFSL" or "the Company") along with the audited Financial Statements for the financial year ended March 31,2022.
Standalone Results
The highlights of the standalone financial results of your Company along with the previous year''s figures are as under:
|
C in crore) |
||
|
Year ended 31.03.2022 |
Year ended 31.03.2021 |
|
|
Revenue from operations |
199.70 |
306.38 |
|
Other income |
2.36 |
1.43 |
|
Total income |
202.06 |
307.81 |
|
Expenses |
||
|
Finance costs |
0.14 |
0.22 |
|
Impairment loss on investment in subsidiary |
- |
88.16 |
|
Loss on sale of investment in subsidiary |
- |
32.89 |
|
Employee benefits expenses |
21.62 |
21.25 |
|
Depreciation and amortization expense |
3.48 |
3.80 |
|
Legal and professional expenses |
13.85 |
18.32 |
|
Other expenses |
15.89 |
13.70 |
|
Total expenses |
54.98 |
178.34 |
|
Profit before tax |
147.08 |
129.47 |
|
Tax expense |
44.46 |
30.24 |
|
Profit after tax for the year |
102.62 |
99.23 |
|
Other comprehensive income for the year |
0.36 |
0.01 |
|
Total comprehensive income= |
102.98 |
99.24 |
Your Company is primarily engaged in the business of making and holding investments in its subsidiary, Max Life Insurance Company Limited ("Max Life") and providing management consultancy services to group companies
and accordingly, in terms of extant RBI guidelines, your Company is an Unregistered Core Investment Company (Unregistered CIC) as it does not meet the criteria stipulated by RBI for Systematically important CIC.
The net worth of your Company on a standalone basis grew by around 2% to ''6,750 crore as of March 31, 2022 as against '' 6,645 crore as of March 31,2021. The increase in the net worth was mainly on account of profits.
In accordance with the Companies Act, 2013 ("the Act") and applicable accounting standards, the audited consolidated financial statements are enclosed as part of this Annual Report.
In FY 2021-22, MFSL reported consolidated revenues of '' 31,188 crore, marginally lower than the previous year, due to lower investment income. The Gross Premiums at '' 22,414 crore, grew at 18% compared to the previous year. The Company reported a consolidated Profit after Tax of '' 318 crore, 43% lower compared to the previous year. The decline in the Consolidated Profit after Tax was primarily due to COVID related provisions in the current year and one-off items in previous years.
Max Life AUM as of March 31, 2022 stood at '' 1,07,510 crore, growing 19% over the previous year, owing to mark-to-market gain on debt and equity portfolio and increased scale of business. Another benchmark set by Max Life was in the Claims Paid Ratio category. The claims paid ratio at 99.34% in FY22 similar to 99.35% in FY21, despite a significant increase in covid claims during FY22. The Market Consistent Embedded value of Max Life as of March 31, 2022 was '' 14,174 crore, with an Operating Return on Embedded Value (RoEV) of 19.2% and the value of a new business at '' 1,528 crore has grown 22%, achieved the highest ever VNB margins of 27.4%, 220 bps improvement year on year.
The highlights of the consolidated financial results of your Company and its subsidiary are as under:
|
(? in crore) |
||
|
Year ended |
Year ended |
|
|
31.03.2022 |
31.03.2021 |
|
|
Revenue from operations |
31,181.14 |
31,273.91 |
|
Other income |
6.44 |
14.11 |
|
Total income |
31,187.58 |
31,288.02 |
|
Expenses |
||
|
Finance costs |
24.74 |
0.27 |
|
Impairment on financial instruments |
(1.73) |
(55.24) |
|
Employee benefits expenses |
36.77 |
60.80 |
|
Depreciation and amortization expense |
5.00 |
5.32 |
|
Legal and professional expenses |
13.85 |
18.32 |
|
Policyholders'' Expenses of Life Insurance operations |
30,687.55 |
30,634.31 |
|
Other expenses |
32.75 |
31.34 |
|
Total expenses |
30,798.93 |
30,695.12 |
|
Profit before tax |
388.65 |
592.90 |
|
Tax expense |
70.25 |
33.15 |
|
Profit after tax for the year (including non-controlling interests) |
318.40 |
559.75 |
|
Other comprehensive income for the year |
(11.91) |
(4.37) |
|
Total comprehensive income (after tax) |
306.49 |
555.38 |
|
Total comprehensive income attributable to |
||
|
Owners of the company |
243.66 |
419.80 |
|
Non-controlling interests |
62.83 |
135.58 |
Material Changes affecting Financial Position
There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e., March 31, 2022 and the date of the Directors'' report i.e., May 10, 2022.
Estimation of uncertainties relating to COVID-19 global health pandemic
The Company has assessed the impact of COVID-19 on its operations as well as its financial statements, including carrying amounts of trade receivables, investments, property, plant and equipment and other assets, as of March 31,2022. In assessing the carrying value of these assets, the Company has used internal and external sources of information up to the date of approval of the financial statements for the year ended March 31, 2022 and based on current estimates, expects the net carrying
amount of these assets to be recovered. The Company will continue to closely monitor any material changes to the business and financial statements due to COVID-19.
The subsidiary company viz., Max Life had assessed the impact of COVID-19 on its operations as well as its financial statements, including but not limited to the areas of investments, valuation of policy liabilities and solvency, for the year ended March 31, 2022. The impact of COVID-19 in the future may be different from that estimated as at the date of approval of these financial statements and the subsidiary company will continue to closely monitor any material changes to future economic condition.
Subsidiaries, Associates & Joint Venture companies
As of March 31, 2022, your Company had only 1 (one) operating subsidiary vis., Max Life. In addition, Max Life incorporated Max Life Pension Fund Management Limited on February 28, 2022 as its wholly owned subsidiary which has not commercial operations as of date. There were no other associate or joint venture companies.
A report on the performance and financial position of Max Life, included in the consolidated financial statements, presented in Form AOC-1 is attached to this report as Annexure - 1, as per Rule 8(1) of the Companies (Accounts) Rules, 2014.
Further, a detailed update on the business achievements of Max Life, being an operating subsidiary, is furnished as part of the Management Discussion and Analysis section which forms part of this Annual Report.
As provided in Section 136 of the Act, the financial statements and other documents of Max Life are not attached with the financial statements of the Company. The complete set of financial statements including financial statements of the subsidiary of the Company is available on the website of the Company at www.maxfinancialservices.com. These documents will also be available for inspection during business hours at the registered office of the Company.
In terms of the provisions of the SEBI Listing Regulations, your Company has a policy for determining ''Material Subsidiary'' and the said policy is available on the
Company''s website at https://www.maxfinancialservices. com/wp-content/uploads/2022/07/Annual-Report-Doc-2021-22.zip
Your Company has one material subsidiary, viz., Max Life Insurance Company Limited.
Your Directors have not recommended any dividend for the financial year 2021-22.
The Board of Directors of your Company has approved a Dividend Distribution Policy in line with Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). The said policy is available on the website of the Company at https://www.maxfinancialservices.com/wp-content/ uploads/2022/07/Annual-Report-Doc-2021-22.zip
The Company has not transferred any amount to reserve during the year under review.
During the year under review, the Company allotted 24,469 equity shares of '' 2/- each to an option-holder on the exercise of ESOPs under the Max Employee Stock Plan 2003 ("2003 Plan");
The Paid-up Capital of the Company as of March 31, 2022 was '' 69,02,29,542/-(Rupees Sixty-nine crore two lakh twenty nine thousand five hundred forty two only) comprising of 34,51,14,771 equity shares of '' 2/- each.
Your Company has two employee stock option plans viz. The 2003 Plan and Max Financial Employees Stock Option Plan - 2022 (''2022 Plan''). The 2003 Plan provides for the grant of stock options aggregating not more than 5% of the number of issued equity shares of the Company to eligible employees and Directors of the Company. 2022 Plan was approved by the Shareholders of the Company on May 9, 2022. This 2022 Plan does not contemplate issue of any fresh shares. The Company established a separate Trust, viz., Max Financial Employees Welfare Trust (''Trust''). The Trust shall acquire shares of the Company in secondary market, hold and transfer to option holders
upon exercise of vested options. The Company is yet to grant any option under 2022 Plan. The 2003 & 2022 Plans are administered by the Nomination and Remuneration Committee constituted by the Board of Directors of the Company. Disclosures as required under SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed in this report as Annexure - 2.
A certificate confirming that the 2003 Plan of the Company has been implemented in accordance with the applicable SEBI Regulations and shall be placed before the members at the ensuing Annual General Meeting.
Directors and Key Managerial Personnel
As of the date of this report, the Board of Directors of your Company comprises 11 (Eleven) members with 1 (one) Executive Director and 10 (Ten) Non-Executive Directors of which 6 (Six) are Independent Directors. Mr. Analjit Singh (DIN: 00029641), Chairman of the Company is a Non-Executive, Non-Independent Promoter Director.
Further, in terms of Section 152 of the Act and the Articles of Association of the Company, Mr. Hideaki Nomura is liable to retire by rotation at the ensuing Annual General Meeting. Mr. Hideaki Nomura, being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting.
Brief profiles of aforesaid directors are given in the Annual Report.
The Board met five times during the financial year 2021-22:
The details regarding the number of meetings attended by each Director during the year under review have been furnished in the Corporate Governance Report attached as part of this Annual Report.
During the year under review, Mr. Jatin Khanna, Chief Financial Officer (''CFO'') resigned from the services of the Company effective close of business hours on
|
S. No. |
Date |
Board Strength |
No. of Directors present |
|
1 |
June 08, 2021 |
11 |
10 |
|
2 |
August 10, 2021 |
11 |
10 |
|
3 |
September 08, 2021 |
11 |
11 |
|
4 |
November 09, 2021 |
11 |
10 |
|
5 |
January 28, 2022 |
11 |
10 |
September 30, 2021. Considering the synergy between the finance role at the Company and Max Life Insurance Company Limited (Max Life), the Board had approved the appointment of Mr. Mandeep Mehta, Deputy Chief Financial Officer of Max Life as the CFO of the Company effective October 1,2021.
Mr. Mandeep Mehta since resigned as the CFO of the Company to pursue other career options outside the group and in his place, Mr. Amrit Pal Singh, CFO of Max Life has been appointed as the CFO of the Company effective May 1,2022.
As of the date of this Report, Mr. Mohit Talwar, Managing Director, Mr. Amrit Pal Singh, Chief Financial Officer and Mr. V. Krishnan, Company Secretary are the Key Managerial Personnel of the Company.
Forfeiture of stock options:
Arising from the resignation of Mr. Jatin Khanna with effect from close of business hours on September 30, 2021, the following unvested options granted earlier to him elapsed with effect from close of business hours on September 30, 2021 in terms of Max Employee Stock Plan-2003:
(i) 16,004 options at an exercise price of '' 404.45 per option granted earlier on July 2, 2019; and
(ii) 25,392 options at an exercise price of '' 382.40 per option granted earlier on April 3, 2020.
There are no outstanding options in terms of Max Employee Stock Plan-2003 as of date.
Statement of Declaration by Independent Directors:
In terms of Section 149(6) of the Act and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (''SEBI LODR Regulations'') the following Non-Executive Directors are categorized as Independent Directors of the Company: Mrs. Naina Lal Kidwai (DIN: 00017806), Mr. Aman Mehta (DIN: 00009364) Mr. Dinesh Kumar Mittal (DIN: 00040000), Mr. Jai Arya (DIN: 08270093), Sir Charles Richard Vernon Stagg (DIN: 07176980) and Mr. K. Narasimha Murthy (DIN: 00023046).
The Company has received declaration of independence from all the above-mentioned Independent Directors as per Section 149(7) of the Act and applicable SEBI LODR
Regulations confirming that they continue to meet the criteria of independence. Further, pursuant to Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, all Independent Directors of the Company have confirmed their registration with the Indian Institute of Corporate Affairs (IICA) database.
Committees of the Board of Directors:
The Company has the following committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. A detailed note on the same is provided under the Corporate Governance Report forming part of this Annual Report.
1. Audit Committee:
The Audit Committee met four times during the financial year 2021-22, viz. on June 07, 2021, August 10, 2021, November 09, 2021 and January 28, 2022. As of the date of this report, the Committee comprises of Mr. Dinesh Kumar Mittal (Chairman), Mr. Aman Mehta, Mrs. Naina Lal Kidwai and Mr. Mitsuru Yasuda. All the recommendations by the Audit Committee were accepted by the Board.
2. Nomination and Remuneration Committee:
The Nomination and Remuneration Committee met twice during the financial year 2021-22, viz. on June 8, 2021 and November 09, 2021. As of the date of this report, the Committee comprises of Mrs. Naina Lal Kidwai (Chairman), Mr. Analjit Singh, Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mr. Hideaki Nomura and Mr. Jai Arya.
3. Corporate Social Responsibility Committee:
The provision under section 135 of the Act, w.r.t constitution of CSR Committee is not applicable to the Company and that CSR functions for the Company to be discharged directly by its Board of Directors as and when required.
4. Stakeholders'' Relationship Committee:
The Committee met one time during the financial year 2021-22, viz. on January 28, 2022. As of the date of this report, the Committee comprises of Mr. Sahil Vachani (Chairman), Mr. Dinesh Kumar Mittal, Mr. Mohit Talwar and Mr. Mitsuru Yasuda.
interfaces with its Directors. The outcome of this performance evaluation was placed before the meetings of the Nomination and Remuneration Committee and Independent Directors and the Board meeting for the consideration of the members.
The review concluded by affirming that the Board as a whole as well as its Chairman, all of its members, individually and the Committees of the Board continued to display a commitment to good governance by ensuring a constant improvement of processes and procedures and contributed their best in the overall growth of the organization.
Human Resources
Your Company is primarily engaged in growing and nurturing business investment as a holding company in the business of life insurance and providing management advisory services to group companies. The remuneration of employees is competitive with the market and rewards high performers across levels. The remuneration to Directors, Key Managerial Personnel and Senior Management is a balance between fixed, incentive pay, and a long-term equity program based on the performance objectives appropriate to the working of the Company and its goals and is reviewed periodically and approved by the Nomination and Remuneration Committee of the Board.
Details pursuant to Section 197(12) of the Act, read with the Rule 5(1) and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report as Annexure - 3A and Annexure - 3B.
As of March 31, 2022, there were 12 (Twelve) employees on the rolls of the Company.
Nomination and Remuneration Policy
In adherence to the provisions of Sections 134(3(e) and 178(1) & (3) of the Act, the Board of Directors on the recommendation of the Nomination and Remuneration Committee had approved a policy on Directors'' appointment and remuneration. The said policy includes terms of appointment, criteria for determining qualifications, performance evaluation and other matters. Copy of the same is available on the website of the Company at https://www.maxfinancialservices.com/wp-content/ uploads/2022/07/Annual-Report-Doc-2021-22.zip
As of the date of this report, the Committee comprises Mr. Aman Mehta (Chairman), Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya, Mr. Mohit Talwar and Mr. Mitsuru Yasuda. This Committee met twice during the year under review on June 07, 2021 and November 09, 2021.
The Board of Directors includes 6 Independent Directors as of March 31, 2022 viz. Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya, Sir Charles Richard Vernon Stagg and Mr. K. Narasimha Murthy.
The Independent Directors had separate meetings on June 7, 2021 and on May 10, 2022. The meetings were conducted to:
a) Review the performance of non-independent Directors and the Board as a whole;
b) Review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and non-executive Directors; and
c) Assess the quality, quantity and timeliness of the flow of information between the Company management and the Board that is necessary for the Board to perform their duties effectively and reasonably.
Performance Evaluation of the Board
As per the requirements of the Act and SEBI LODR Regulations, a formal Annual Evaluation process has been carried out for evaluating the performance of the Board, the Committees of the Board and the Individual Directors including Chairperson.
The Board of Directors has evaluated the performance of Independent Directors during the year 2021-22 and opined that the integrity, expertise, and experience (including proficiency) of the Independent Directors are satisfactory.
The performance evaluation was carried out by obtaining feedback from all Directors through a confidential online survey mechanism through Diligent Boards, a secured electronic medium through which the Company
Business Responsibility Report, on various initiatives taken by the Company, is enclosed in this report as Annexure - 4. In addition to the statutory disclosures made in the said Annexure, the significant ESG initiatives taken by the Company and its subsidiary, Max Life are available at https://www.maxfinancialservices.com/wp-content/uploads/2022/07/Annual-Report-Doc-2021-22. zip
Policy for Prevention of Sexual Harassment
Your Company has a requisite policy for Prevention of Sexual Harassment, which is available on the website of the Company at www.maxfinancialservices.com/ shareholder-information. The comprehensive policy ensures gender equality and the right to work with dignity to all employees (permanent, contractual, temporary and trainees) of the Company. Your company has complied with provisions relating to the constitution of the Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No case was reported to the Committee during the year under review.
Loans, Guarantees or Investments in Securities
The details of loans given, and investments made by the company pursuant to the provisions of Section 186 of the Act are provided in Note no. 30 to the standalone financial statements of the Company for the FY 2021-22.
Management Discussion & Analysis
In terms of Regulation 34 of SEBI LODR Regulations, a review of the performance of the Company, including those of your Company''s subsidiary, is provided in the Management Discussion & Analysis section, which forms part of this Annual Report.
Report on Corporate Governance
The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Part C of Schedule V of LODR Regulations. As required by the said Clause, a separate report on Corporate Governance forms part of the Annual Report of the Company.
A certificate from M/s Chandrasekaran Associates, Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance pursuant to Part E of Schedule V of SEBI LODR Regulations is Annexed
Corporate Social Responsibility ("CSR")
The Company is not required to constitute a CSR Committee under section 135 of the Act, and a copy of the duly adopted CSR policy is available on the website of the Company at https://www.maxfinancialservices. com/wp-content/uploads/2022/07/Annual-Report-Doc-2021-22.zip
The CSR Policy comprises a Vision and Mission Statement, philosophy and objectives. It also explains the governance structure along with clarity on roles and responsibilities.
In terms of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, all Companies meeting the prescribed threshold criteria, i.e., the net worth of '' 500 crore or more or a turnover of '' 1,000 crore or more or net profits of '' 5 crore or more during the immediately preceding financial year are required to spend at least 2% of the average net profits of the Company for the immediately preceding three financial years.
As per rule 2(h) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, any dividend received from other companies in India which are already covered and complying with the provisions of the CSR, shall not be included for the purposes of computation of ''net profits'' for a company.
As Max Life from whom the Company has been receiving dividends, from time to time, discharged its CSR responsibilities for the financial year 2021-22, the dividend income received by the Company will be excluded for the purposes of computation of its ''net profits'' After excluding the dividend income received from Max Life, the Company does not have net profits computed as per the CSR Rules. Therefore, the Company is not mandatorily required to spend on Corporate Social Responsibility for the financial year 2021-22 and therefore, the requirement for submission of the Corporate Social Responsibility Report, pursuant to Clause (o) of Sub-Section (3) of Section 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is not applicable on the Company. However, the Company has voluntarily made certain donations.
Business Responsibility Report
In terms of Clause 34(2)(f) of SEBI LODR Regulations, a
to this Report as Annexure - 5. Further, a certificate from the Managing Director and Chief Financial Officer on compliance with Part B of Schedule II of SEBI LODR Regulations, forms part of the Corporate Governance Report.
Copies of various policies adopted by the Company are available on the website of the Company at www.maxfinancialservices.com
Statutory Auditors and Auditors'' Report
Pursuant to Sections 139 & 142 of the Act, M/s Deloitte Haskins and Sells, LLP, Chartered Accountants (Firm Registration Number: 117366W/W-100018), were appointed as the Statutory Auditors of the Company at the 32nd Annual General Meeting ("AGM") held on December 30, 2020 for a period of five years. They continue as the Statutory Auditors of the Company.
There are no audit qualifications, reservations, disclaimers or adverse remarks or reporting of fraud in the Statutory Auditors Report given by M/s Deloitte Haskins and Sells, LLP, Statutory Auditors of the Company for the financial year 2021-22 annexed in this Annual Report.
Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Act, your Company had appointed M/s Chandrasekaran Associates practicing Company Secretaries, New Delhi as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2021-22. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2021-22 is annexed to this report as Annexure - 6.
There are no audit qualifications, reservations, disclaimers or adverse remarks in the said Secretarial Audit Report.
Your Company complies with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs.
Further, Max Life Insurance Company Limited, the material subsidiary of the Company has undergone Secretarial Audit for the year ended March 31, 2022. The Secretarial Audit Report issued by M/s Chandrasekaran Associates, Practicing Company Secretaries, New Delhi is enclosed as Annexure-7. The said report is self-explanatory and does not contain any qualifications, reservations, adverse remarks, or disclaimers.
The Company follows a robust Internal Audit process and audits are conducted on a regular basis, throughout the year, as per the agreed audit plan. During the year under review, M/s MGC, Global Risk Advisory LLP were re-appointed as Internal Auditors for conducting the Internal Audit of key functions and assessment of Internal Financial Controls, etc.
The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. The Management has reviewed the existence of various risk-based controls in the Company and also tested the key controls towards the assurance of compliance for the present fiscal.
In the opinion of the Board, the existing internal control framework is adequate and commensurate with the size and nature of the business of the Company. Further, the testing of the adequacy of internal financial controls over financial reporting has also been carried out independently by the Statutory Auditors as mandated under the provisions of the Act.
During the year under review, there were no instances of fraud reported by the auditors to the Audit Committee or the Board of Directors.
Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Board has formed a Risk Management Committee to identify the risks impacting the business and formulate strategies/policies aimed at risk mitigation as part of risk management. Further, a core team of senior management has also been formed to identify and assess key risks, risk appetite, tolerance levels and formulate strategies for mitigation of risks identified in consultation with process owners.
The Company has adopted a Risk Management policy, whereby risks are broadly categorized into Strategic, Operational, Compliance and Financial & Reporting Risks. The Policy outlines the parameters of identification,
assessment, monitoring and mitigation of various risks which are key to the business performance.
There are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges/risks faced by its subsidiary have been dealt with in detail in the Management Discussion and Analysis section, forming part of this Annual Report.
The Company has a vigil mechanism pursuant to which a Whistle Blower Policy has been adopted and is in place. The Policy ensures that strict confidentiality is maintained whilst dealing with concerns raised and also that no discrimination will be meted out to any person for a genuinely raised concern in respect of any unethical and improper practices, fraud or violation of the Company''s Code of Conduct.
The said Policy, covering all employees, Directors and other persons having association with the Company, is hosted on the Company''s website at https://www.maxfinancialservices.com/wp-content/ uploads/2022/07/Annual-Report-Doc-2021-22.zip
A brief note on Vigil Mechanism/Whistle Blower Policy is also provided in the Report on Corporate Governance, which forms part of this Annual Report.
Your Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act.
During the year under review, the Company has not accepted or renewed any deposits from the public.
Compliance with Secretarial Standards
Pursuant to the provisions of Section 118 of the Act, the Company has complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India.
Details of the application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016
During the period under review, no application was
made by or against the company and accordingly, no proceeding is pending under the Insolvency and Bankruptcy Code, 2016.
Contracts or Arrangements with Related Parties
All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis, except an ongoing transaction with Max Life Insurance Company Limited for allowing usage of trademarks without any consideration for which approval has already been obtained from shareholders of the Company in 2016 for the said transaction.
There is no material contract or arrangement in terms of SEBI LODR Regulations, 2015 for the year under review. Form AOC-2 furnishing particulars of contracts or arrangements entered by the Company with related parties referred in Section 188(1) of the Companies Act, 2013, is annexed to this report as Annexure - 8.
The details of all the Related Party Transactions form part of Note no. 29 to the standalone financial statements attached to this Annual Report.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at https://www.maxfinancialservices.com/wp-content/ uploads/2022/07/Annual-Report-Doc-2021-22.zip
Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings & outgo as stipulated under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is as follows:
a) Conservation of Energy
(i) the steps are taken or impact of the conservation of energy: Regular efforts are made to conserve the energy through various means such as the use of low energy-consuming lighting, etc.
(ii) the steps taken by the Company for using alternate sources of energy: Since your Company is not an energy-intensive unit, utilization of alternate sources of energy may not be feasible.
(iii) capital investment on energy conservation equipment: Nil
b) Technology Absorption
Your Company is not engaged in manufacturing activities, therefore there is no specific information to be furnished in this regard.
There was no expenditure incurred on Research and Development during the period under review.
c) Foreign Exchange Earnings and Outgo
The foreign exchange earnings and outgo are given below:
|
Total Foreign Exchange earned |
Nil |
|
Total Foreign Exchange used |
'' 536.49 |
The Annual Return as of March 31, 2022 under Section 92(3) of the Act read with Companies (Management and Administration) Rules, 2014, can be accessed at the website of the Company at https://www.maxfinancialservices.com/wp-content/ uploads/2022/07/Annual-Return-Max-Financial.pdf
Directors'' Responsibility Statement
Pursuant to Section 134(5) of the Act, it is hereby confirmed that:
a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;
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 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 were operating effectively; and
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.
Significant and material orders passed by the regulators or courts or tribunals
During the year under review, there were no such significant and material orders passed by the regulators or courts or tribunals which could impact the going concern status and company''s operations in the future.
Transfer of Unclaimed Dividend and Shares to the Investor Education and Protection Fund
The Company had paid a Final Dividend in FY 2013-14 and an Interim Dividend in FY 2014-15 and the unpaid dividend were transferred to two separate bank account in the same year for the aforesaid two dividends. After completion of Seven years, the unpaid amounts still lying in the said accounts were transferred to the Investor Education and Protection Fund, along with respective shares on which such dividend remained unpaid.
Unclaimed Shares
Regulation 39(4) of the SEBI LODR Regulations inter alia requires every listed company to comply with a certain procedure in respect of shares issued by it in physical form, pursuant to a public issue or any other issue and which remained unclaimed for any reason whatsoever.
The face value of the shares of the Company was split from '' 10/- each to '' 2/- each in the year 2007. Certain share certificates were returned undelivered and were lying unclaimed. The Company had sent necessary reminders to concerned shareholders, and subsequently, such shares were transferred to the Unclaimed Suspense Account.
The voting rights on the equity shares lying in the said Unclaimed Suspense Account shall remain frozen till the rightful owner claims such shares. Further, all corporate
benefits in terms of securities accruing on the said unclaimed shares viz. bonus shares, split, etc., if any, shall also be credited to the said Unclaimed Suspense Account.
The concerned shareholder(s) are requested to write to the Registrar and Share Transfer Agent to claim the said equity shares. On receipt of such claim, additional documents may be called for and subject to its receipt and verification, the said shares lying in the said Unclaimed Suspense Account shall be transferred to the depository account provided by the concerned shareholder(s) or the physical share certificate shall be delivered to the registered address of the concerned shareholder(s).
The details of Equity Shares held in the Unclaimed Suspense Account are as follows:
|
S. No. |
Particulars |
No. of Shareholders |
No. of Equity Shares |
|
1. |
The Aggregate number of shareholders and the outstanding shares originally lying in the Unclaimed Suspense Account (as at beginning of the financial year i.e., April 1,2021) |
388 |
95,705 |
|
2. |
Number of shareholders who approached listed entity for transfer of shares from the Unclaimed Suspense Account during the year |
*84 |
16,835 |
|
3. |
Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account, during the year |
*84 |
16,835 |
|
4. |
The aggregate number of shareholders and the outstanding shares in the Suspense Account (as at end of the financial year i.e., March 31, 2022) |
304 |
78,870 |
*This includes 16,235 equity shares comprising 81 shareholders which were transferred to the Investor Education and Protection Fund
Till the date of this report, the Company had approved 1899 such claims from shareholders for 3,96,440 shares, for transfer of the shareholding back to the shareholders from the Unclaimed Suspense Account in Demat form.
Statements in this Report, particularly those which relate to Management Discussion and Analysis describing the Company''s/subsidiary''s objectives, projections, estimates and expectations may constitute "forwardlooking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.
Your Directors would like to place on record their appreciation of the contribution made by its management and its employees who through their competence and commitment have enabled the Company to achieve impressive growth. Your Directors acknowledge with thanks the co-operation and assistance received from various agencies of the Central and State Governments, Financial Institutions and Banks, Shareholders, Joint Venture partners and all other business associates.
On behalf of the Board of Directors Max Financial Services Limited
Chairman DIN: 00029641
Place: New Delhi
Date: May 10, 2022
Mar 31, 2021
Your Directors have pleasure in presenting the Thirty-third Board''s Report of Max Financial Services Limited ("MFSL" or "the Company") along with the audited Financial Statements for the financial year ended March 31, 2021.
The highlights of the standalone financial results of your Company along with previous year''s figures are as under:
|
(Rs. in crore) |
||
|
Year ended 31.03.2021 |
Year ended 31.03.2020 |
|
|
Revenue from operations |
306.37 |
494.94 |
|
Other income |
1.43 |
0.08 |
|
Total income |
307.80 |
495.02 |
|
Expenses |
||
|
Finance costs |
0.21 |
0.20 |
|
Impairment loss on investment in subsidiary |
88.16 |
|
|
Loss on sale of investment in subsidiary |
32.89 |
|
|
Employee benefits expenses |
21.25 |
22.86 |
|
Depreciation and amortization expense |
3.80 |
9.89 |
|
Legal and professional expenses |
18.32 |
44.39 |
|
Other expenses |
13.70 |
21.36 |
|
Total expenses |
178.34 |
98.70 |
|
Profit before tax |
129.46 |
396.32 |
|
Tax expense |
30.24 |
123.78 |
|
Profit after tax for the year |
99.22 |
272.54 |
|
Other comprehensive income for the year |
0.02 |
(0.12) |
|
Total comprehensive income |
99.24 |
272.42 |
Your Company is primarily engaged in the business of making and holding investments in its subsidiary, Max Life Insurance Company Limited ("Max Life")
and providing management consultancy services to group companies and accordingly in terms of extant RBI guidelines, your Company is an Unregistered Core Investment Company (Unregistered CIC) as it does not meet the criteria stipulated by RBI for Systematically important CIC.
The net worth of your Company on a standalone basis grew by around 191% to Rs 6,645 crore as of March 31, 2021 as against Rs. 2,280 crore as of March 31, 2020. The increase in the net worth was on account of (i) issuance of Equity Shares to Mitsui Sumitomo Insurance Company Limited ("MSI") on a preferential basis with a face value of Rs. 15.09 crore and recognition of share premium of Rs 4,249 crore on swap transaction with MSI, (ii) recognition of share premium on allotment of shares on exercise of ESOPs and (iii) profits.
In accordance with the Companies Act, 2013 ("the Act") and applicable accounting standards, the audited consolidated financial statements are enclosed as part of this Annual Report.
In FY 2020-21, MFSL reported consolidated revenues of Rs. 31,288 crore, 72% higher compared to the previous year, due to mark-to-market gain on debt and equity portfolio. Excluding investment gains, consolidated revenues have grown by 18%. The Gross Premiums at Rs. 19,018 crore, grew at 18% compared to the previous year. The Company reported consolidated Profit after Tax of Rs. 560 crore, a jump of 105% compared to the previous year. The steep surge in the Consolidated Profit after Tax was aided by reversal of provision for impairment on financial assets, lower tax expense and a partial offset by new business strain due to shift in product mix towards Non-Par business
Max Life achieved a significant milestone this year with its Assets under Management (AUM) crossing the Rs. 90,000 crore mark in Q4FY21. The AUM as of March 31,2021 stood at Rs. 90,407 crore, growing 32% over the previous year, owing to mark-to-market gain
on debt and equity portfolio. Another benchmark set by Max Life was in the Claims Paid Ratio category. The claims paid ratio improved to 99.35% in FY21 from 99.22% in FY20, The Market Consistent Embedded value of Max Life as on March 31, 2021 was Rs.11,834 crore, with an Operating Return on Embedded Value (RoEV) of 18.5% and the value of a new business at Rs. 1,249 crore. has grown 39% with the margins at 25.2%, 360 bps improvement year-on-year.
The highlights of the consolidated financial results of your Company and its subsidiary are as under:
|
(Rs. in crore) |
||
|
Year ended 31.03.2021 |
Year ended 31.03.2020 |
|
|
Revenue from operations |
31,273.91 |
18,239.98 |
|
Other income |
14.11 |
1.78 |
|
Total income |
31,288.02 |
18,241.76 |
|
Expenses |
||
|
Finance costs |
0.27 |
0.28 |
|
Impairment on financial instruments |
(55.24) |
71.43 |
|
Employee benefits expenses |
60.80 |
35.95 |
|
Depreciation and amortization expense |
5.32 |
11.37 |
|
Legal and professional expenses |
18.32 |
44.39 |
|
Policyholders'' Expenses of Life Insurance operations |
30,634.31 |
17,595.24 |
|
Other expenses |
31.34 |
39.32 |
|
Total expenses |
30,695.12 |
17,799.28 |
|
Profit before tax |
592.90 |
442.48 |
|
Tax expense |
33.14 |
169.63 |
|
Profit after tax for the year (including non-controlling interests) |
559.75 |
272.85 |
|
Other comprehensive income for the year |
(4.37) |
12.99 |
|
Total comprehensive income (after tax) |
555.38 |
285.84 |
|
Total comprehensive income attributable to |
||
|
Owners of the company |
419.81 |
154.38 |
|
Non-controlling interests |
135.58 |
131.46 |
Material Changes affecting Financial Position
There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e., March 31, 2021 and the date of the Directors'' report i.e. June 8, 2021, other than divestment of a portion of shareholding in Max Life as detailed below:
Subsequent to the year end, the Company had transferred 172,731,531 equity shares of Rs. 10 each of Max Life to Axis Bank on April 6, 2021, fully paid up at a price of Rs. 32.12 per share for consideration aggregating to Rs. 554.81 crore. Post the Axis Bank stake sale transaction, Axis Bank together with its two subsidiaries hold 12.99% equity shares of Max Life and the Company''s investment in equity shares of MLIC has decreased to 81.83%.
Share Swap transaction involving MSI
On December 8, 2020, the Company allotted 7,54,58,088 equity shares of Rs. 2/- each at a price of Rs. 565.11 per equity share amounting to 21.87% of the paid-up share capital of Max Financial Services Limited ("MFSL" or "Company"), to MSI, on a preferential allotment basis in consideration for the transfer of equity shares constituting 20.57% of the paid up share capital of Max Life held by MSI to MFSL ("Share Swap Transaction").
With this allotment, the paid-up equity share capital of the Company stood increased to Rs.69,00,65,184/-as of December 8, 2020.
Post the Share Swap transaction, MSI holds 21.87% equity shares of the Company and the Company''s investment in equity shares of MLIC had increased from 72.52% to 93.10% as of December 8, 2020. Further, Mr. Hideaki Nomura and Mr. Mitsuru Yasuda, nominees of MSI, were appointed as non- executive non-independent additional directors of the Company.
Estimation of uncertainties relating to COVID-19 global health pandemic
The Company has assessed the impact of COVID-19 on its operations as well as its financial results, including carrying amounts of trade receivables,
investments, property, plant and equipment and other assets, as of March 31, 2021. In assessing the Carrying value of these assets, the Company has used internal and external sources of information up to the date of approval of the financial statements for the year ended March 31,2021 and based on current estimates, expects the net carrying amount of these assets to be recovered. The Company will continue to closely monitor any material changes to the business and financial statements due to COVID-19.
The subsidiary company viz., Max Life had assessed the impact of COVID-19 on its operations as well as its financial statements, including valuation of investments, valuation of policy liabilities and solvency, for the year ended March 31, 2021. To the best of information available, Max Life has maintained a sufficient amount in policyholders reserve on account of COVID-19 related contingencies over and above the policy level liabilities calculated based on prescribed IRDAI Regulations. Max Life will continue to closely monitor any material changes to the business and financial statements due to COVID-19.
Subsidiaries, Associates & Joint Venture companies
As on March 31, 2021, your Company had only 1 (one) subsidiary vis., Max Life. There were no other associate or joint venture companies.
A report on the performance and financial position of Max Life, included in the consolidated financial statements, presented in Form AOC-1 is attached to this report as Annexure - 1, as per Rule 8(1) of the Companies (Accounts) Rules, 2014.
Further, a detailed update on the business achievements of Max Life, being an operating subsidiary, is furnished as part of the Management Discussion and Analysis section which forms part of this Annual Report.
As provided in Section 136 of the Act, the financial statements and other documents of Max Life are not attached with the financial statements of the Company. The complete set of financial statements including financial statements of the subsidiary of the Company is available on the website of the Company at www.maxfinancialservices.com. These documents will also be available for inspection during business
hours at the registered office of the Company.
In terms of the provisions of the SEBI Listing Regulations, your Company has a policy for determining ''Material Subsidiary'' and the said policy is available on the Company''s website at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ Annual Reports-Docs-MaxFinancial.zip.
Your Company has one material subsidiary, viz., Max Life Insurance Company Limited.
Your Directors have not recommended any dividend for the financial year 2020-21.
The Board of Directors of your Company has approved a Dividend Distribution Policy in line with Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). The said policy is available on the website of the Company at https://www.maxfinancialservices.com/AnnualReport/ doc/2020-21/Annual Reports-Docs-MaxFinancial.zip.
The Company has not transferred any amount to reserves during the year under review.
During the year under review, the Company allotted the following Equity shares of Rs. 2/- each:
(i) 1,22,727 equity shares of Rs.2/- each was allotted to the option-holders on the exercise of ESOPs under the Max Employee Stock Plan 2003 ("2003 Plan"); and
(ii) 7,54,58,088 equity shares of Rs. 2/- each to MSI on a preferential basis through Share Swap Transaction.
The Paid up capital of the Company as on March 31, 2021 was Rs. 69,01,80,604/- (Rupees Sixty-nine crore one lakh eighty thousand six hundred four only) comprising of 34,50,90,302 equity shares of Rs. 2/-each.
Further, after the end of the financial year on March 31, 2021 and till the date of this report i.e. June 8, 2021, your Company had allotted 16,466 equity shares of Rs.2/- each under the aforesaid 2003 Plan.
Your Company has an employee stock option plan viz. The 2003 Plan in place. The 2003 Plan provides for the grant of stock options aggregating not more than 5% of the number of issued equity shares of the Company to eligible employees and Directors of the Company. The 2003 Plan is administered by the Nomination and Remuneration Committee constituted by the Board of Directors of the Company. Details of options granted up to March 31, 2 021 and other disclosures as required under SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed in this report as Annexure - 2.
A certificate confirming that the 2003 Plan Scheme of the Company has been implemented in accordance with the applicable SEBI Regulations and the resolutions passed by the Members in this regard shall be placed before the members at the ensuing Annual General Meeting.
During the year under review, the Nomination and Remuneration Committee of Directors of the Company ("NRC") granted 33,855 Stock Options to Mr. Jatin Khanna, Chief Financial Officer of the Company with effect from April 3, 2020 which will vest with him in a graded manner.
Directors and Key Managerial Personnel
As on date of this report, the Board of Directors of your Company comprises 11 (Eleven) members with 1 (one) Executive Director and 10 (Ten) Non-Executive Directors of which 6 (Six) are Independent Directors. Mr. Analjit Singh (DIN: 00029641), Chairman of the Company is a Non-Executive, Non Independent Promoter Director.
Mr. Hideaki Nomura (DIN: 05304525) and Mr. Mitsuru Yasuda (DIN: 08785791), nominees of MSI were appointed as Non-Executive Non-Independent directors effective December 8, 2020.
Mr. K. Narasimha Murthy was appointed as an Independent Director of the Company for a period
of five years with effect from March 30, 2021. Your directors recommend the appointment of Mr. K. Narasimha Murthy as an Independent Director on the Board of the Company for an aforesaid term of five years.
The Board of Directors have evaluated the Independent Directors appointed and re-appointed during the year 2020-21 and opined that the integrity, expertise and experience (including proficiency) of the Independent Directors is satisfactory.
Further, in terms of Section 152 of the Act and the Articles of Association of the Company, Mr. Sahil Vachani is liable to retire by rotation at the ensuing Annual General Meeting. Mr. Sahil Vachani, being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting.
Brief profiles of aforesaid directors are given in the Annual Report.
The Board met five times during the financial year 2020-21:
|
S.No. |
Date |
Board Strength |
No. of Directors present |
|
1 |
April 27, 2020 |
8 |
8 |
|
2 |
May 26, 2020 |
8 |
8 |
|
3 |
July 30, 2020 |
8 |
8 |
|
4 |
Oct 30, 2020 |
8 |
8 |
|
5 |
Feb 9, 2021 |
10 |
10 |
The details regarding the number of meetings attended by each Director during the year under review have been furnished in the Corporate Governance Report attached as part of this Annual Report.
As on the date of this Report, Mr. Mohit Talwar, Managing Director, Mr. Jatin Khanna, Chief Financial Officer and Mr. V. Krishnan, Company Secretary are the Key Managerial Personnel of the Company.
Statement of Declaration by Independent Directors
In terms of Section 149(6) of the Act and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the following NonExecutive Directors are categorized as Independent Directors of the Company: Mrs. Naina Lal Kidwai (DIN: 00017806), Mr. Aman Mehta (DIN: 00009364) Mr. Dinesh Kumar Mittal (DIN: 00040000), Mr. Jai Arya (DIN: 0008270093), Sir Charles Richard Vernon Stagg (DIN: 07176980) and Mr. K. Narasimha Murthy (DIN: 00023046).
The Company has received a declaration of independence from all the above-mentioned Independent Directors as per Section 149(7) of the Act, confirming that they continue to meet the criteria of independence. Further, pursuant to Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, all Independent Directors of the Company have confirmed their registration with the Indian Institute of Corporate Affairs (IICA) data base.
Committees of the Board of Directors
The Company has the following committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. A detailed note on the same is provided under the Corporate Governance Report forming part of this Annual Report.
1. Audit Committee:
The Audit Committee met four times during the financial year 2020-21, viz. on May 26, 2020, July 30, 2020, October 30, 2020 and February 9, 2021. As on the date of this report, the Committee comprises Mr. D.K. Mittal (Chairman), Mr. Aman Mehta, Mrs. Naina Lal Kidwai and Mr. Mitsuru Yasuda. All the recommendations by the Audit Committee were accepted by the Board.
2. Nomination and Remuneration Committee:
The Nomination and Remuneration Committee met thrice during the financial year 2020-21, viz. on May 26, 2020, October 30, 2020 and March 25, 2021. As on the date of this report, the
Committee comprises of Mrs. Naina Lal Kidwai (Chairman), Mr. Analjit Singh, Mr. Aman Mehta, Mr. D.K. Mittal and Mr. Hideaki Nomura.
3. Corporate Social Responsibility Committee:
As on March 31,2021, this Committee comprised of Mr. Aman Mehta, Mr. D.K. Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya and Mr. Mohit Talwar. The Committee met on May 26, 2020. This Committee has since been disbanded basis amendments brought into Section 135 of the Companies Act, 2013 as the CSR funding for the Company is not expected to exceed Rs. 50 Lakhs per financial year and that CSR functions for the Company shall be discharged directly by its Board of Directors as and when required.
4. Stakeholders'' Relationship Committee:
The Committee met one time during the financial year 2020-21, viz. on December 30, 2020. As on the date of this report the Committee comprises of Mr. Sahil Vachani (Chairman), Mr. D.K. Mittal, Mr. Mohit Talwar and Mr. Mitsuru Yasuda.
5. Risk Management Committee:
As on the date of this report, the Committee comprises Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya, Mr. Mohit Talwar and Mr. Mitsuru Yasuda. This Committee met twice during the year under review on May 26, 2020 and March 26, 2021.
6. Independent Directors:
The Board of Directors includes 6 Independent Directors as on March 31, 2021 viz. Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai, Mr. Jai Arya, Sir Charles Richard Vernon Stagg and Mr. K. Narasimha Murthy. Mr. K. Narasimha Murthy was appointed effective March 31, 2021. The Independent Directors had separate meetings on May 26, 2020 and on June 8, 2021. The meetings were conducted to:
a) Review the performance of non-independent Directors and the Board as a whole;
b) Review the performance of the Chairperson
of the Company, taking into account the views of executive Directors and nonexecutive Directors; and
c) Assess the quality, quantity and timeliness of the flow of information between the Company management and the Board that is necessary for the Board to perform their duties effectively and reasonably.
Performance Evaluation of the Board
As per the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a formal Annual Evaluation process has been carried out for evaluating the performance of the Board, the Committees of the Board and the Individual Directors including Chairperson.
The performance evaluation was carried out by obtaining feedback from all Directors through a confidential online survey mechanism through Diligent Boards, a secured electronic medium through which the Company interfaces with its Directors. The outcome of this performance evaluation was placed before the meetings of the Nomination and Remuneration Committee and Independent Directors'' and the Board meeting for the consideration of the members.
The review concluded by affirming that the Board as a whole as well as its Chairman, all of its members, individually and the Committees of the Board continued to display a commitment to good governance by ensuring a constant improvement of processes and procedures and contributed their best in the overall growth of the organization.
We are primarily engaged in growing and nurturing business investment as a holding company in the business of life insurance and providing management advisory services to group companies. The remuneration of our employees is competitive with the market and rewards high performers across levels. The remuneration to Directors, Key Managerial Personnel and Senior Management are a balance between fixed, incentive pay, and long-term equity program based
on the performance objectives appropriate to the working of the Company and its goals and is reviewed periodically and approved by the Nomination and Remuneration Committee of the Board.
Details pursuant to Section 197(12) of the Act, read with the Rule 5(1) and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report as Annexure - 3A and Annexure - 3B.
As on March 31, 2021, there were 15 employees on the rolls of the Company.
Nomination and Remuneration Policy
In adherence to the provisions of Sections 134(3)(e) and 178(1) & (3) of the Act, the Board of Directors on the recommendation of the Nomination and Remuneration Committee, had approved a policy on Directors'' appointment and remuneration. The said policy includes terms of appointment, criteria for determining qualifications, performance evaluation and other matters. Copy of the same is available on the website of the Company at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ Annual Reports-Docs-MaxFinancial.zip.
Corporate Social Responsibility ("CSR")
The Board of Directors of your Company had constituted a Corporate Social Responsibility Committee and adopted a CSR policy, as approved by the CSR Committee, copy of which is available on the website of the Company at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/AnnualReports-Docs-MaxFinancial.zip. The CSR Policy comprises Vision and Mission Statement, philosophy and objectives. It also explains the governance structure along with clarity on roles and responsibilities.
In terms of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, all Companies meeting the prescribed threshold criteria, i.e., net worth of Rs. 500 crore or more or turnover of Rs. 1,000 crore or more or net profits of Rs. 5 crore or more during the immediately preceding financial year are required to spend at least 2% of the average net profits of the Company
For immediately preceding 3 financial years.
As per rule 2(h) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, any dividend received from other companies in India which are already covered and complying with the provisions of the CSR, shall not be included for the purposes of computation of ''net profits'' For a company.
As Max Life from whom the Company has been receiving dividend, from time to time, discharged its CSR responsibilities for the financial year 2020-21, the dividend income received by the Company will be excluded for the purposes of computation of its ''net profits''. After excluding the dividend income received from Max Life, the Company does not have net profits computed as per the CSR rules. Therefore, the Company is not mandatorily required to spend on Corporate Social Responsibility for the financial year 2020-21. However, the Company has voluntarily made certain donations.
This Committee has since been disbanded basis amendments brought in to Section 135 of the Companies Act, 2013 as the CSR funding for the Company is not expected to exceed Rs. 50 Lakhs per financial year and that CSR functions for the Company shall be discharged directly by its Board of Directors as and when required.
Business Responsibility Report
In terms of Clause 34(2)(f) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Business Responsibility Report, on various initiatives taken by the Company, is enclosed to this report as Annexure - 4. In addition to the statutory disclosures made in the said Annexure, the significant ESG initiatives taken by the Company and its subsidiary, Max Life are available at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ Annual Reports-Docs-MaxFinancial.zip.
Policy for Prevention of Sexual Harassment
Your Company has a requisite policy for Prevention of Sexual Harassment, which is available on the website of the Company at www.maxfinancialservices.com/ shareholder-information. The comprehensive policy ensures gender equality and the right to work with
dignity to all employees (permanent, contractual, temporary and trainees) of the Company. Your company has complied with provisions relating to the constitution of the Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No case was reported to the Committee during the year under review.
Loans, Guarantees or Investments in Securities
The details of loans given and investments made by the company pursuant to the provisions of Section 186 of the Act are provided in Note nos. 6 and 7 respectively, to the standalone financial statements of the Company for the FY 2020-21.
Management Discussion & Analysis
In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a review of the performance of the Company, including those of your Company''s subsidiary, is provided in the Management Discussion & Analysis section, which forms part of this Annual Report.
Report on Corporate Governance
The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Part C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As required by the said Clause, a separate report on Corporate Governance forms part of the Annual Report of the Company.
A certificate from M/s Chandrasekaran Associates, Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance pursuant to Part E of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is Annexed to this Report as Annexure - 5. Further, a certificate from the Managing Director and Chief Financial Officer on compliance of Part B of Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Corporate Governance Report.
Copies of various policies adopted by the Company are available on the website of the Company at
Statutory Auditors and Auditors'' Report
Pursuant to Sections 139 & 142 of the Act, M/s Deloitte Haskins and Sells, LLP, Chartered Accountants (Firm Registration Number: 117366W/W-100018), were appointed as the Statutory Auditors of the Company at the 32nd Annual General Meeting ("AGM") held on December 30, 2020 for a period of five years. They continue as the Statutory Auditors of the Company.
There are no audit qualifications, reservations, disclaimers or adverse remarks or reporting of fraud in the Statutory Auditors Report given by M/s Deloitte Haskins and Sells, LLP, Statutory Auditors of the Company for the financial year 2021-21 annexed in this Annual Report.
Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Act, your Company had appointed M/s Chandrasekaran Associates, Practicing Company Secretaries, New Delhi as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2020-21. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2020-21 is annexed to this report as Annexure - 6.
There are no audit qualifications, reservations, disclaimers or adverse remarks in the said Secretarial Audit Report.
Your Company complies with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs.
Further, Max Life Insurance Company Limited, the material subsidiary of the Company has undergone Secretarial Audit for the year ended March 31, 2021. The Secretarial Audit report issued by M/s Chandrasekaran Associates, Practicing Company Secretaries, New Delhi is enclosed as Annexure-7. The said report is self-explanatory and does not contain any qualifications, reservations, adverse remarks or disclaimers.
line I lldl MUUIIUI a
The Company follows a robust Internal Audit process and audits are conducted on a regular basis, throughout the year, as per the agreed audit plan. During the year under review, M/s MGC, Global Risk Advisory LLP were re-appointed as Internal Auditors for conducting the Internal Audit of key functions and assessment of Internal Financial Controls etc.
The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. The Management has reviewed the existence of various risk-based controls in the Company and also tested the key controls towards assurance for compliance for the present fiscal.
In the opinion of the Board, the existing internal control framework is adequate and commensurate with the size and nature of the business of the Company. Further, the testing of the adequacy of internal financial controls over financial reporting has also been carried out independently by the Statutory Auditors as mandated under the provisions of the Act.
During the year under review, there were no instances of fraud reported by the auditors to the Audit Committee or the Board of Directors.
Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Board has formed a Risk Management Committee to identify the risks impacting the business, formulate strategies/ policies aimed at risk mitigation as part of risk management. Further, a core team of senior management has also been formed to identify and assess key risks, risk appetite, tolerance levels and formulate strategies for mitigation of risks identified in consultation with process owners.
The Company has adopted a Risk Management policy, whereby risks are broadly categorized into Strategic, Operational, Compliance and Financial &
Reporting Risks. The Policy outlines the parameters of identification, assessment, monitoring and mitigation of various risks which are key to the business performance.
There are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges / risks faced by its subsidiary have been dealt with in detail in the Management Discussion and Analysis section, forming part of this Annual Report.
The Company has a vigil mechanism pursuant to which a Whistle Blower Policy has been adopted and is in place. The Policy ensures that strict confidentiality is maintained whilst dealing with concerns raised and also that no discrimination will be meted out to any person for a genuinely raised concern in respect of any unethical and improper practices, fraud or violation of the Company''s Code of Conduct.
The said Policy, covering all employees, Directors and other persons having association with the Company, is hosted on the Company''s website at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ Annual Reports-Docs-MaxFinancial.zip. A brief note on Vigil Mechanism / Whistle Blower Policy is also provided in the Report on Corporate Governance, which forms part of this Annual Report.
Your Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act.
During the year under review, the Company has not accepted or renewed any deposits from the public.
Contracts or Arrangements with Related Parties
All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis, except an ongoing transaction with Max Life Insurance Company Limited for allowing usage of trademarks without any consideration
and an approval has already been obtained from shareholders of the Company in 2016 for the said transaction.
There is no material contract or arrangement in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Form AOC-2 furnishing particulars of contracts or arrangements entered by the Company with related parties referred in Section 188(1) of the Companies Act, 2013, is annexed to this report as Annexure - 8.
The details of all the Related Party Transactions form part of Note no. 31 to the standalone financial statements attached to this Annual Report.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at https://www. maxfinancialservices.com/AnnualReport/doc/2020-21/ AnnualReports-Docs-MaxFinancial.zip.
Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings & outgo as stipulated under Section 134(3) (m) of the Act read with Companies (Accounts) Rules, 2014 is as follows:
a) Conservation of Energy
(i) the steps are taken or impact on the conservation of energy: Regular efforts are made to conserve the energy through various means such as the use of low energy consuming lightings, etc.
(ii) the steps taken by the Company for using alternate sources of energy: Since your Company is not an energy-intensive unit, utilization of alternate sources of energy may not be feasible.
(iii) capital investment on energy conservation equipment: Nil
b) Technology Absorption
Your Company is not engaged in manufacturing
Annual Return
The extract of Annual Return as at March 31,2021 under Section 92(3) of the Act read with Companies (Management and Administration) Rules, 2014, is available at https://www.maxfinancialservices.com/ AnnualReport/doc/2020-21/AnnualReports-Docs-MaxFinancial.zip.
Directors'' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:
a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;
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 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;
activities, therefore there is no specific information to be furnished in this regard.
There was no expenditure incurred on Research and Development during the period under review.
c) Foreign Exchange Earnings and Outgo
The foreign exchange earnings and outgo are given below:
|
Total Foreign Exchange earned |
Nil |
|
Total Foreign Exchange used |
Rs. 437.23 Lacs |
e) The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
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.
Significant and material orders passed by the regulators or courts or tribunals
During the year under review, there were no such significant and material orders passed by the regulators or courts or tribunals which could impact the going concern status and company''s operations in the future.
Transfer of Unclaimed Dividend and Shares to the Investor Education and Protection Fund
The Company had paid Final Dividend in FY 2012-13 and Interim Dividend in FY 2013-14 and the unpaid dividend were transferred to a separate account in the same year for the aforesaid two dividends. After completion of 7 years, the unpaid amounts still lying in the said account were transferred to the Investor Education and Protection Fund, along with respective shares on which such dividend remained unpaid.
Regulation 39(4) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 inter alia requires every listed company to comply with certain procedure in respect of shares issued by it in physical form, pursuant to a public issue or any other issue and which remained unclaimed for any reason whatsoever.
The face value of the shares of the Company was split from Rs. 10/- each to Rs. 2/- each in the year 2007. Certain share certificates were returned undelivered and were lying unclaimed. The Company had sent necessary reminders to concerned shareholders, and subsequently such shares were transferred to the Unclaimed Suspense Account.
The voting rights on the equity shares lying in the said Unclaimed Suspense Account shall remain frozen
till the rightful owner claims such shares. Further, all corporate benefits in terms of securities accruing on the said unclaimed shares viz. bonus shares, split, etc., if any, shall also be credited to the said Unclaimed Suspense Account.
The concerned shareholder(s) are requested to write to the Registrar and Share Transfer Agent to claim the said equity shares. On receipt of such claim, additional documents may be called for and
subject to its receipt and verification, the said shares lying in the said Unclaimed Suspense Account shall be transferred to the depository account provided by the concerned shareholder(s) or the physical share certificate shall be delivered to the registered address of the concerned shareholder(s).
The details of Equity Shares held in the Unclaimed Suspense Account are as follows:
|
S. No. |
Particulars |
No. of Shareholders |
No. of Equity Shares |
|
1. |
Aggregate number of shareholders and the outstanding shares originally lying in the Unclaimed Suspense Account (as at beginning of the financial year i.e. April 1, 2020) |
496 |
1,19,510 |
|
2. |
Number of shareholders who approached listed entity for transfer of shares from the Unclaimed Suspense Account during the year |
*108 |
*23,805 |
|
3. |
Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account, during the year |
*108 |
*23,805 |
|
4. |
Aggregate number of shareholders and the outstanding shares in the Suspense Account (as at end of the financial year i e March 31 9091) |
388 |
95,705 |
*This includes 23,755 equity shares which were transferred to 107 shareholders from Investor Education and Protection Fund
Till the date of this report, the Company had approved an overall 1,815 - such claims from shareholders, comprising 3,79,605 shares, for transfer back of their shareholding from the Unclaimed Suspense Account in demat / physical form.
Statements in this Report, particularly those which relate to Management Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.
Your Directors would like to place on record their appreciation of the contribution made by its management and its employees who through their competence and commitment have enabled the Company to achieve impressive growth. Your Directors acknowledge with thanks the co-operation and assistance received from various agencies of the Central and State Governments, Financial Institutions and Banks, Shareholders, Joint Venture partner and all other business associates.
On behalf of the Board of Directors Max Financial Services Limited
Place: Dubai Analjit Singh
Date: June 8, 2021 Chairman
DIN:00029641
Mar 31, 2018
BOARD''S REPORT
Dear Members,
The Directors have pleasure in presenting the Thirtieth Board''s Report of Max Financial Services Limited ("MFSL" or "the Company") along with the audited Statement of Accounts for the financial year ended March 31, 2018.
Standalone Results
The highlights of the standalone financial results of your Company along with previous year''s figures are as under:
|
(Rs. Crore) |
||
|
Year ended March 31, 2018 |
Year ended March 31, 2017 |
|
|
Income |
||
|
Revenue from Services operations |
21.24 |
21.22 |
|
Revenue from Investment Activities |
207.50 |
233.70 |
|
Other income |
0.68 |
1.36 |
|
total Revenue (I) |
229.42 |
256.28 |
|
expenditure |
||
|
Employee benefits expenses |
39.84 |
37.20 |
|
Depreciation and amortization |
1.92 |
1.96 |
|
Other expenses |
64.62 |
63.12 |
|
total expenses (II) |
106.38 |
102.28 |
|
Profit/(Loss) Before tax (I-II) |
123.04 |
154.00 |
|
Tax Expense |
- |
- |
|
Profit/(Loss) After Tax |
123.04 |
154.00 |
Your Company is primarily engaged in business of making and holding investments in its subsidiary, Max Life Insurance Company Limited and accordingly in terms of extant RBI guidelines, your Company is a Core Investment Company ("CIC") with its financial income exceeding 50% of its total income and financial assets (investment in securities etc.) exceeding 50% of the total assets. However, it does not meet the criteria stipulated by RBI for Systemically Important CIC and hence registration under Section 45-IA of RBI Act, 1934 is not required.
Net worth of your Company on a standalone basis grew by around 8.4% to Rs 1981 crore as at March 31, 2018 as against Rs.1828 crore as at March 31, 2017.
Consolidated Results
In accordance with the Companies Act, 2013 ("the Act") and Accounting Standard ("AS") - 21 on Consolidated Financial Statements read with AS - 27 on Financial
Reporting of Interests in Joint Ventures/ subsidiaries/ step - down subsidiaries, the audited consolidated financial statements are enclosed as part of this Annual Report.
The subsidiary of your Company, Max Life Insurance Company Limited ("Max Life"), delivered another year of strong performance like last year, in line with Indian Life Insurance industry which witnessed high growth in new business for second year in a row. This growth strengthens the belief that consumer confidence in financial savings is sustainable and life insurance industry is well placed to leverage that.
During the year 2017-18, renewal premium income of Max Life grew by 15% to Rs. 8,152 crore taking gross written premium to Rs. 12,501 crore, an increase of 16% over previous year. The Market Consistent Embedded value as on March 31, 2018 was Rs.7,706 crore up 14% from previous year''s Rs 6,739 crore and the individual adjusted first year premium for the year was Rs. 3,215 crore, up 22% from Rs. 2,639 crore for the immediate previous year. The Assets Under Management (AUM) of Max Life as at end of the year were Rs 52,237 crore, registering a growth of around 18% over Rs 44,370 crore as at end of the previous year.
The highlights of the consolidated financial results of your Company and its subsidiary are as under:
|
(Rs. Crore) |
||
|
2018 |
Year ended March 31, 2017 |
|
|
Income |
||
|
Revenue from operations |
16,577.35 |
15,227.89 |
|
Other Income |
28.77 |
20.81 |
|
total Revenue (I) |
16,606.12 |
15,248.70 |
|
expenses |
||
|
Change in policy reserves |
8,213.33 |
7,969.51 |
|
Claims and other benefits payout |
4,946.65 |
3,776.81 |
|
Employee benefits expense |
776.28 |
918.13 |
|
Finance Costs |
11.03 |
8.93 |
|
Depreciation and Amortization |
62.77 |
62.53 |
|
Legal and professional expenses |
70.08 |
64.63 |
|
Other expenses |
1,987.93 |
1,746.60 |
|
total expenses (II) |
16,068.07 |
14,547.14 |
|
Profit / (Loss) Before Tax (I-II) |
538.05 |
701.56 |
|
Tax Expense |
87.54 |
108.29 |
|
Profit / (Loss) After Tax |
450.51 |
593.27 |
|
Share of profit attributable to Minority Interest |
(154.34) |
(197.91) |
|
Profit / (Loss) After tax (after adjusting Minority Interest) |
296.17 |
395.36 |
Material Changes affecting Financial Position
There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. March 31, 2018 and the date of the Directors'' report i.e. August 6, 2018.
Your Company was contemplating raising of funds by way of equity or debt or a mix thereof, subject to necessary approvals, for making further investments in Max Life to partially fund a potential acquisition opportunity. However, as Max Life decided not to pursue the said acquisition opportunity, no funds were raised by the Company. The Board of Directors of your Company further decided not to access public funds.
Subsidiaries, Associates & Joint Venture companies
As on March 31, 2018, your Company had only 1 (one) subsidiary i.e. Max Life Insurance Company Limited ("Max Life"). There were no other associate or joint venture companies. The basic details of subsidiary form part of Form MGT-9 attached to this report as Annexure - 1.
During the year under review, your Company acquired 1,41,70,817 equity shares of Rs. 10/- each in Max Life in March, 2018. Accordingly, the equity stake of the Company in Max Life increased to 70.75% as at March 31, 2018.
A report on the performance and financial position of Max Life, included in the consolidated financial statements, presented in Form AOC-1 is attached to this report as Annexure - 2, as per Rule 8(1) of the Companies (Accounts) Rules, 2014.
Further, a detailed update on the business achievements of Max Life, being the key operating subsidiary, is furnished as part of Management Discussion and Analysis section which forms part of this Annual Report.
As provided in Section 136 of the Companies Act, 2013, the financial statements and other documents of the subsidiary company Max Life Insurance Company Limited are not being attached with the financial statements of the Company. The complete set of financial statements including financial statements of the subsidiary of the Company is available on website of the Company at www.maxfinancialservices.com. These documents will also be available for inspection during business hours at the registered office of the Company and shall also be made available to the shareholders of the Company in hard copy, on demand.
Dividend
Your Directors have not recommended any dividend for the financial year 2017-18.
The Board of Directors of your Company has approved a Dividend Distribution Policy in line with Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and the said policy is attached to this report as Annexure - 3. The said policy is also available on website of the Company at www. maxfinancialservices.com/shareholder-information.
Transfer to Reserves
The Company has not transferred any amount to reserves during the year under review.
Share Capital
The Authorized share capital of the Company as on March 31, 2018 was Rs. 60,00,00,000/- (Rupees Sixty Crores only) comprising of 30,00,00,000 equity shares of Rs. 2/- each.
During the year under review, 11,13,978 equity shares of Rs.2/- each were allotted to the option-holders under the ''Max Employee Stock Plan 2003'' (''2003 Plan'').
The Paid up capital of the Company as on March 31, 2018 was Rs. 53,67,68,054/- (Rupees Fifty three crores sixty seven lakhs sixty eight thousand and fifty four only) comprising of 26,83,84,027 equity shares of Rs. 2/- each.
Further, after end of the financial year on March 31, 2018 till the date of this report i.e. August 6, 2018, your Company had allotted 31,710 equity shares of Rs.2/-each to the option-holders under the aforesaid 2003 Plan.
employee Stock Option Plan
Your Company has an employee stock option plan viz. ''Max Employee Stock Plan 2003'' (''2003 Plan'') in place. The 2003 Plan provides for grant of stock options aggregating not more than 5% of number of issued equity shares of the Company to eligible employees and Directors of the Company. The 2003 Plan is administered by the Nomination and Remuneration Committee constituted by the Board of Directors of the Company.
Details of options granted up to March 31, 2018 and other disclosures as required under SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed to this report as Annexure - 4.
The statutory auditors of your Company, M/s Deloitte Haskins & Sells LLP, Chartered Accountants have time-to-time certified that the Employee Stock Option Scheme of the Company has been implemented in accordance with the applicable SEBI Regulations and the resolutions passed by the Members in this regard. A certificate to this effect shall also be placed before the members at the ensuing Annual General Meeting.
Further during the year under review, the Nomination and Remuneration Committee of Directors of the Company granted 17,744 phantom stock units to Mr. Mohit Talwar (DIN: 02394694) - Managing Director of the Company and 97,445 phantom stock units to Mr. Rahul Khosla -Executive President of the Company, which vest over a period of 3 years and shall be settled in cash.
Directors
As on date of this report, the Board of Directors of your Company comprised of 9 (nine) members with 1 (one) Executive Director and 8 (eight) Non-Executive Directors of which 4 (four) are independent. Mr. Analjit Singh (DIN: 00029641), Chairman of the Company is a Non Executive Promoter Director.
Mr. Sanjeev Kishen Mehra (DIN: 02195545), a nonexecutive director of the Company, resigned from the Board of the Company effective May 19, 2017. Simultaneously, the position held by Ms. Lavanya Ashok (DIN: 03453279) as an Alternate Director to Mr. Sanjeev Kishen Mehra on the Board of the Company stood vacated with effect from that date.
Your Directors place their deep appreciation for the valuable contributions made by Mr. Sanjeev Kishen Mehra and Ms. Lavanya Ashok during their association with the Company.
Mr. Sahil Vachani (DIN: 00761695) has been appointed as an additional director in non-executive capacity with effect from May 25, 2018. Further, Mr. Analjit Singh (DIN: 00029641), Founder and Chairman Emeritus Max Group, has been appointed as an additional director in non-executive capacity and designated as Chairman of the Board of Directors of the Company, with effect from July 23, 2018.
In terms of Section 161 of the Act, Mr. Sahil Vachani and Mr. Analjit Singh hold their respective office up to the date of the next annual general meeting. The Company is in receipt of notices under Section 160 of the Act, proposing their appointment as Directors of the Company at the ensuing Annual General Meeting and accordingly the proposals for their appointment shall be placed before the shareholders of the Company for their approval.
Further, in terms of Section 152 of the Act and the Articles of Association of the Company, Mr. Ashwani Windlass (DIN: 00042686) and Mr. Sanjay Omprakash Nayar (DIN: 00002615) are liable to retire by rotation at the ensuing Annual General Meeting. Mr. Ashwani Windlass and Mr. Sanjay Omprakash Nayar being eligible have offered themselves for re-appointment at the ensuing Annual General Meeting. Brief profiles of these directors are annexed to the Notice convening the Annual General Meeting.
The Board met five times during the financial year 2017-18:
|
S.No. |
Date of the Meeting |
Board Strength |
No. of Directors Present |
|
1 |
May 30, 2017 |
7 |
4 |
|
2 |
August 9, 2017 |
7 |
6 |
|
3 |
November 13, 2017 |
7 |
7 |
|
4 |
ebruary 9, 2018 |
7 |
4 |
|
5 |
March 21, 2018 |
7 |
7 |
The details regarding number of meetings attended by each Director during the year under review have been furnished in the Corporate Governance Report attached as part of this Annual Report.
Statement of Declaration by Independent Directors
In terms of Section 149(6) of the Act and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the following NonExecutive Directors are categorized as Independent Directors of the Company: Mrs. Naina Lal Kidwai (DIN: 00017806), Mr. Rajesh Khanna (DIN: 00032562), Mr. Aman Mehta (DIN: 00009364) and Mr. Dinesh Kumar Mittal (DIN: 00040000).
The Company has received declaration of independence from all the above mentioned Independent Directors as per Section 149(7) of the Act, confirming that they continue to meet the criteria of independence.
Committees of the Board of Directors
The Company has the following committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. A detailed note on the same is provided under the Corporate Governance Report forming part of this Annual Report.
1. Audit Committee:
The Audit Committee met five times during the financial year 2017-18, viz. on May 30, 2017, August 9, 2017, November 13, 2017, February 9, 2018 and March 21, 2018. The Committee, as on March 31, 2018, comprised of Mr. D.K. Mittal (Chairman), Mr. Aman Mehta, Mr. Rajesh Khanna, Mrs. Naina Lal Kidwai and Mr. Mohit Talwar. All the recommendations by the Audit Committee were accepted by the Board.
2. Nomination and Remuneration Committee:
The Nomination and Remuneration Committee met twice during the financial year 2017-18, viz. on August 9, 2017 and March 21, 2018. The Committee, as on March 31, 2018, comprised of Mr. Rajesh Khanna (Chairman), Mr. Aman Mehta, Mr. Ashwani Windlass and Mrs. Naina Lal Kidwai.
3. Investment & Finance Committee:
The Committee met five times during the financial year 2017-18, viz. on May 30, 2017, August 9, 2017, November 13, 2017, February 9, 2018 and March 21, 2018. The Committee, as on March 31, 2018, comprised of Mr. Ashwani Windlass (Chairman), Mr. D.K. Mittal, Mr. Rajesh Khanna and Mr. Mohit Talwar.
4. Corporate Social Responsibility Committee:
The Committee met once during the financial year 2017-18, viz. on March 21, 2018. The Committee, as on March 31, 2018, comprised of Mr. Aman Mehta, Mr. Ashwani Windlass, Mr. D.K. Mittal and Mr. Rajesh Khanna.
5. Stakeholders'' Relationship Committee:
The Committee met six times during the financial year 2017-18, viz. on May 11, 2017, May 30, 2017, August 9, 2017, November 13, 2017, February 9, 2018 and March 21, 2018. The Committee, as on March 31, 2018, comprised of Mr. Ashwani Windlass (Chairman), Mr. D.K. Mittal and Mr. Mohit Talwar.
6. Risk & Compliance Review Committee:
The Committee met once during the financial year 2017-18, viz. on March 21, 2018. The Committee, as on March 31, 2018, comprised of Mr. Aman Mehta, Mr. Ashwani Windlass, Mr. D.K. Mittal and Mr. Rajesh Khanna.
7. Independent Directors:
The Board of Directors included 4 Independent Directors as on March 31, 2018 viz. Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai and Mr. Rajesh Khanna. The Independent Directors had a separate meeting on August 9, 2017 during the financial year 2017-18. The meeting was conducted to:
(a) Review the performance of non-independent Directors and the Board as a whole;
(b) Review the performance of the Chairperson of the Company, taking into account the views of executive Directors and non-executive Directors; and
(c) Assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
Performance Evaluation of the Board
As per the requirements of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, formal Annual Evaluation process has been carried out for evaluating the performance of the Board, the Committees of the Board and the Individual Directors including Chairperson.
The performance evaluation was carried out by obtaining feedback from all Directors through a confidential online survey mechanism through Diligent Boards, a secured electronic medium through which the Company interfaces with its Directors. The outcome of this performance evaluation was placed before the meetings of the Nomination and Remuneration Committee and Independent Directors'' and the Board meeting for the consideration of the members.
The review concluded by affirming that the Board as a whole as well as its Chairman, all of its members, individually and the Committees of the Board continued to display commitment to good governance by ensuring a constant improvement of processes and procedures and contributed their best in overall growth of the organization.
Key Managerial Personnel
As on the date of this Report, Mr. Mohit Talwar -Managing Director, Mrs. Sujatha Ratnam - Chief Financial Officer and Mr. Sandeep Pathak - Company Secretary are the Key Managerial Personnel ("KMP") of the Company, pursuant to the provisions of the Companies Act, 2013.
Human Resources
We are primarily engaged in growing and nurturing business investment as a holding Company in the business of life insurance and providing management advisory services to group companies. The remuneration of our employees is competitive with the market and rewards high performers across levels. The remuneration to Directors, Key Managerial Personnel and Senior Management are a balance between fixed, incentive pay and long-term equity program based on the performance objectives appropriate to the working of the Company and its goals and is reviewed periodically and approved by the Nomination and Remuneration Committee of the Board.
Details pursuant to Section 197(12) of the Act, read with the Rule 5(1) and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this report as Annexure - 5A and Annexure - 5B.
As on March 31, 2018, there were 13 employees on the rolls of the Company.
Nomination and Remuneration Policy
In adherence to the provisions of Sections 134(3)(e) and 178(1) & (3) of the Act, the Board of Directors on the recommendation of the Nomination and Remuneration Committee, had approved a policy on Directors'' appointment and remuneration. The said policy includes terms of appointment, criteria for determining qualifications, performance evaluation and other matters. Copy of the same is available on the website of the Company at www.maxfinancialservices. com/shareholder-information.
Corporate Social Responsibility ("CSR")
The Board of Directors of your Company has constituted a Corporate Social Responsibility Committee and adopted a CSR policy, as approved by the CSR Committee, copy of which is available on the website of the Company at www.maxfinancialservices.com/ shareholder-information. The CSR Policy comprises Vision and Mission Statement, philosophy and objectives. It also explains the governance structure along with clarity on roles and responsibilities.
In terms of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, all Companies meeting the prescribed threshold criteria, i.e., net worth of Rs. 500 crores or more or turnover of Rs. 1,000 crores or more or net profits of Rs. 5 crore or more in any financial year are required to spend at least 2% of the average net profits of the Company for immediately preceding 3 financial years.
As per rule 2(f) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, any dividend received from other companies in India which are already covered and complying with the provisions of the CSR, shall not be included for the purposes of computation of ''net profits'' for a company.
As Max Life Insurance Company Limited ("Max Life") from whom the Company has been receiving dividend, from time to time, discharged its CSR responsibilities for the financial year 2017-18, the dividend income received by the Company will be excluded for the purposes of computation of its ''net profits''. After excluding the dividend income received from Max Life, the Company does not have net profits computed as per the CSR rules. Therefore, it is not mandatorily required for the Company to spend on Corporate Social Responsibility for the financial year 2017-18. However, the Company has voluntarily given certain donations.
Business Responsibility Report
In terms of Clause 34(2)(f) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Business Responsibility Report, on various initiatives taken by the Company, is enclosed to this report as Annexure - 6.
Policy for Prevention of Sexual Harassment
Your Company has requisite policy for Prevention of Sexual Harassment, which is available on the website of the Company at www.maxfinancialservices.com/ shareholder-information. The comprehensive policy ensures gender equality and the right to work with dignity. Your company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No case was reported to the Committee during the year under review.
Loans, Guarantees or Investments in Securities
The details of loans given and investments made by the company pursuant to the provisions of Section 186 of the Act are provided in Note nos.12 and 11 respectively, to the standalone financial statements of the Company for the FY 2017-18.
Management Discussion & Analysis
In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a review of the performance of the Company, including those of your Company''s subsidiary, is provided in the Management Discussion & Analysis section, which forms part of this Annual Report.
Report on Corporate Governance
The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Part C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As required by the said Clause, a separate Report on Corporate Governance forms part of the Annual Report of the Company.
A certificate from M/s Chandrasekaran Associates, Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance pursuant to Part E of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and a certificate from the Managing Director and Chief Financial Officer on compliance of Part B of Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Corporate Governance Report.
Copies of various policies adopted by the Company are available on the website of the Company at www. maxfinancialservices.com/shareholder-information.
Statutory Auditors and Auditors'' Report
Pursuant to Sections 139 & 142 of the Act, M/s Deloitte Haskins and Sells, LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), were appointed as the Statutory Auditors of the Company at 27th Annual General Meeting ("AGM") held on September 23, 2015 for a period of five years i.e. till the conclusion of the 32nd AGM of the Company to be held in the year 2020. Pursuant to an amendment in Section 139 of the Companies Act, 2013 effective May 7, 2018, there is no requirement of annual ratification of such appointment and hence the same is not being put up for shareholders'' approval in the ensuing AGM.
There are no audit qualifications, reservations, disclaimers or adverse remarks or reporting of fraud in the Statutory Auditors Report given by M/s Deloitte Haskins and Sells, LLP, Statutory Auditors of the Company for the financial year 2017-18 as annexed in this Annual Report.
Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Act, your Company had appointed M/s Chandrasekaran Associates, Practicing Company Secretaries, New Delhi as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2017-18. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial
Auditor for the FY 2017-18 is annexed to this report as
Annexure - 7.
There are no audit qualifications, reservations, disclaimers or adverse remarks in the said Secretarial Audit Report.
Further, your Company complies with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and notified by Ministry of Corporate Affairs.
Internal Auditors
The Company follows a robust Internal Audit process and audits are conducted on a regular basis, throughout the year, as per agreed audit plan. During the year under review, M/s MGC and KNAV, Global Risk Advisory LLP were re-appointed as Internal Auditors for conducting the Internal Audit of key functions and assessment of Internal Financial Controls etc.
Internal Financial Controls
The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. The Management has reviewed the existence of various risk-based controls in the Company and also tested the key controls towards assurance for compliance for the present fiscal.
In the opinion of the Board, the existing internal control framework is adequate and commensurate with the size and nature of the business of the Company. Further, the testing of adequacy of internal financial controls over financial reporting has been also been carried out independently by the Statutory Auditors as mandated under the provisions of the Act.
During the year under review, there were no instances of fraud reported by the auditors to the Audit Committee or the Board of Directors.
Risk Management
Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Board has formed a Risk and Compliance Review Committee to identify the risks impacting the business, formulate strategies/ policies aimed at risk mitigation as part of risk management. Further, a core team comprising of senior management has also been formed to identify and assess key risks, risk appetite, tolerance levels and formulate strategies for mitigation of risks identified in consultation with process owners.
On the recommendation of the Committee, the Company has adopted a Risk Management policy, whereby, risks are broadly categorized into Strategic, Operational, Compliance and Financial & Reporting Risks. The Policy outlines the parameters of identification, assessment, monitoring and mitigation of various risks which are key to the business performance.
There are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges / risks faced by its subsidiary have been dealt in detail in the Management Discussion and Analysis section of said subsidiary, forming part of this Annual Report.
Vigil Mechanism
The Company has a vigil mechanism pursuant to which a Whistle Blower Policy has been adopted and is in place. The Policy ensures that strict confidentiality is maintained whilst dealing with concerns raised and also that no discrimination will be meted out to any person for a genuinely raised concern in respect of any unethical and improper practices, fraud or violation of Company''s Code of Conduct.
The said Policy, covering all employees, Directors and other persons having association with the Company, is hosted on the Company''s website at www. maxfinancialservices.com/ shareholder-information. A brief note on Vigil Mechanism / Whistle Blower Policy is also provided in the Report on Corporate Governance, which forms part of this Annual Report.
Cost Records
Your Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act.
Public Deposits
During the year under review, the Company has not accepted or renewed any deposits from the public.
Contracts or Arrangements with Related Parties
All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis, except one transaction with Max Life Insurance Company Limited for allowing usage of trademarks without any consideration and an approval was obtained from shareholders for the Company for the said transaction.
There is no material contract or arrangement in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Form AOC-2 furnishing particulars of contracts or arrangements entered into by the Company with related parties referred in Section 188(1) of the Companies Act, 2013, is annexed to this report as
Annexure - 8.
The details of all the Related Party Transactions form part of Note no. 30 to the standalone financial statements attached to this Annual Report.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at www.maxfinancialservices.com/shareholder-information.
Particulars of Conservation Of Energy, technology Absorption and Foreign exchange earnings & Outgo
The information on conservation of energy, technology absorption and foreign exchange earnings & outgo as stipulated under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is as follows:
a) Conservation of Energy
(i) the steps taken or impact on conservation of energy: Regular efforts are made to conserve the energy through various means such as use of low energy consuming lightings, etc.
(ii) the steps taken by the Company for using alternate sources of energy: Since your Company is not an energy intensive unit, utilization of alternate source of energy may not be feasible.
(iii) capital investment on energy conservation equipment : Nil
b) technology Absorption
Your Company is not engaged in manufacturing activities, therefore there is no specific information to be furnished in this regard.
There was no expenditure incurred on Research and Development during the period under review.
c) Foreign exchange earnings and Outgo
The foreign exchange earnings and outgo are given below:
Total Foreign Exchange earned |: Nil
Total Foreign Exchange used ; Rs. 605.58 Lacs ;
Extracts of Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of the Annual Return as at March 31, 2018 forms part of this report as Annexure - 1.
Directors'' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:
(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;
(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 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 were operating effectively; and
(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.
Significant and material orders passed by the regulators or courts or tribunals
During the year under review, there were no such significant and material orders passed by the regulators or courts or tribunals which could impact the going concern status and company''s operations in future.
Unclaimed Shares
Regulation 39(4) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 inter alia requires every listed company to comply with certain procedure in respect of shares issued by it in physical form, pursuant to a public issue or any other issue and which remained unclaimed for any reason whatsoever.
The face value of the shares of the Company was split from Rs. 10/- each to Rs. 2/- each in the year 2007. Certain share certificates were returned undelivered and were lying unclaimed. The Company had sent 3 reminders to concerned shareholders, and subsequently such shares (2203 folios comprising 475310 equity shares) were transferred to the Unclaimed Suspense Account during the year under review. A separate Demat account has been opened by the Company for this purpose.
The voting rights on the equity shares lying in the said Unclaimed Suspense Account shall remain frozen till the rightful owner claims such shares. Further, all corporate benefits in terms of securities accruing on the said unclaimed shares viz. bonus shares, split, etc., if any, shall also be credited to the said Unclaimed Suspense Account.
The concerned shareholder(s) are requested to write to the Registrar and Share Transfer Agent to claim the said equity shares. On receipt of such claim, additional documents may be called for and subject to its receipt and verification, the said shares lying in the said Unclaimed Suspense Account shall be transferred to the depository account provided by the concerned shareholder(s) or the physical share certificate shall be delivered to the registered address of the concerned shareholder(s).
The details of Equity Shares held in the Unclaimed Suspense Account are as follows:
|
S. |
Particulars |
No. of |
No. of |
|
No. |
Shareholders |
equity Shares |
|
|
1. |
Aggregate number of shareholders and the outstanding shares originally lying in the Unclaimed Suspense Account (at the time of transfer & dematerialization) |
2,203 |
4,75,310 |
|
2. |
Number of shareholders who approached listed entity for transfer of shares from the Unclaimed Suspense Account during the year |
* 4 1 |
5,150 |
|
S. |
Particulars |
No. of |
No. of |
|
No. |
Shareholders |
equity Shares |
|
|
3. |
Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account, during the year |
12 |
4,250 |
|
4. |
Aggregate number of shareholders and the outstanding shares in the Suspense Account (as at end of the financial year i.e. March 31, 2018) |
2,191 |
4,71,060 |
* In remaining two cases, 900 shares were transferred from the Unclaimed Suspense Account in physical form in April, 2018.
Till date of this report, the Company has approved overall 20 such claims from shareholders, comprising 7280 shares, for transfer back of their shareholding from the Unclaimed Suspense Account in demat / physical form.
Cautionary Statement
Statements in this Report, particularly those which relate to Management Discussion and Analysis describing the Company''s objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.
Acknowledgements
Your Directors would like to place on record their appreciation of the contribution made by its management and its employees who through their competence and commitment have enabled the Company to achieve impressive growth. Your Directors acknowledge with thanks the co-operation and assistance received from various agencies of the Central and State Governments, Financial Institutions and Banks, Shareholders, Joint Venture partners and all other business associates.
On behalf of the Board of Directors
Max Financial Services Limited
(Formerly Max India Limited)
New Delhi Naina Lal Kidwai Mohit Talwar
August 6, 2018 Independent Director Managing Director
DIN: 00017806 DIN: 02394694
Mar 31, 2017
Dear Members,
The Directors have pleasure in presenting the twenty ninth Boardâs Report of Max Financial Services Limited (âMFSLâ or âthe Companyâ) along with the audited Statement of Accounts for the financial year ended March 31, 2017.
Standalone Results
The highlights of the standalone financial results of your Company along with previous yearâs figures are as under:
(Rs. Crore)
|
Year ended March 31, 2017 |
Year ended March 31, 2016 |
|
|
Income |
||
|
Revenue from Services |
21.22 |
16.24 |
|
operations |
||
|
Revenue from Investment |
233.70 |
184.47 |
|
Activities |
||
|
Other income |
1.36 |
0.51 |
|
Total Revenue (I) |
256.28 |
201.22 |
|
Expenditure |
||
|
Employee benefits expenses |
37.20 |
32.66 |
|
Depreciation and |
1.96 |
2.22 |
|
amortization |
||
|
Other expenses |
63.12 |
51.14 |
|
Total Expenses (II) |
102.28 |
86.02 |
|
Profit/(Loss) Before tax (I-II) |
154.00 |
115.20 |
|
Tax Expense |
- |
- |
|
Profit/(Loss) After Tax |
154.00 |
115.20 |
Your Company is primarily engaged in business of making investment in its subsidiary and accordingly in terms of extant RBI guidelines, your Company is a Core Investment Company (âCICâ) with its financial income exceeding 50% of its total income and financial assets (investment in securities etc.) exceeding 50% of the total assets. However, it does not meet the criteria stipulated by RBI for Systemically Important CIC and hence registration under Section 45-IA of RBI Act, 1934 is not required.
Net worth of your Company on a standalone basis grew by around 9.5% to Rs 1828 crore as at March 31, 2017 as against Rs.1670 crore as at March 31, 2016.
Consolidated Results
In accordance with the Companies Act, 2013 (âthe Actâ) and Accounting Standard (âASâ) - 21 on Consolidated Financial Statements read with AS - 27 on Financial Reporting of Interests in Joint Ventures/ subsidiaries/ step - down subsidiaries, the audited consolidated financial statements are enclosed as part of this Annual Report.
The subsidiary of your Company, Max Life Insurance Company Limited, delivered its strongest performance of the decade in financial year 2016-17 with total revenue of Rs. 12,936 crore and renewal premium of Rs. 7,114 crore, registering growth of 19% and 13% respectively over previous year, resulting in shareholdersâ profit of Rs. 768 crore i.e. growth of around 50% over previous year. The Market Consistent Embedded value as on March 31, 2017 was Rs 6,739 crore up 20% from previous yearâs Rs 5,617 crore and the individual adjusted premium for the year was Rs 2,639 crore, up 25% from Rs 2,103 crore for immediate previous year.
The highlights of the consolidated financial results of your Company and its subsidiary are as under:
(Rs. Crore)
|
Year ended March 31, 2017 |
Year ended March 31, 2016 |
|
|
Income |
||
|
Income from Services |
10,692.45 |
9,150.14 |
|
Other operating revenue and investment income |
4,535.44 |
2,546.00 |
|
Other Income |
20.81 |
15.73 |
|
Total Revenue (I) Expenses |
15,248.70 |
11,711.87 |
|
Employee benefits expense |
918.13 |
650.34 |
|
Change in policy reserves |
7,969.51 |
4,816.93 |
|
Claims and other benefits payout |
3,776.81 |
3,146.43 |
|
Depreciation and Amortisation |
62.53 |
60.47 |
|
Finance Costs |
8.93 |
7.66 |
|
Other expenses |
1,811.23 |
2,565.02 |
|
Total Expenses (II) |
14,547.14 |
11,246.85 |
|
Profit / (Loss) Before Tax (I-II) |
701.56 |
465.02 |
|
Tax Expense |
108.29 |
71.83 |
|
Profit / (Loss) After Tax |
593.27 |
393.19 |
|
Profit attributable to Minority Interest |
(197.91) |
(140.45) |
|
Profit / (Loss) After tax (after adjusting Minority Interest) |
395.36 |
252.74 |
Material Changes affecting Financial Position
There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e. March 31, 2017 and the date of the Directorsâ report i.e. August 9, 2017; except the annulment of the proposal of a composite scheme of amalgamation and arrangement amongst the Company, Max Life Insurance Company Limited (âMax Lifeâ), HDFC Standard Life Insurance Company Limited (âHDFC Lifeâ) and Max India Limited (âMax Indiaâ), and their respective shareholders and creditors (âSchemeâ).
The Scheme, as approved by the Board of Directors of the Company in August 2016, inter alia contemplated consolidation of the life insurance business of Max Life into HDFC Life. The parties to the proposed Scheme had applied for various regulatory approvals. However, Insurance Regulatory and Development Authority of India (âIRDAIâ) expressed reservations on the structure as contemplated under the Scheme. The proposed Scheme and the applications filed in this regard with the Stock exchanges were subsequently withdrawn on July 31, 2017.
Subsidiaries, Associates & Joint Venture companies
As on March 31, 2017, your Company had only 1 (one) subsidiary i.e. Max Life Insurance Company Limited (âMUCâ). There were no other associate or joint venture companies. The basic details of subsidiary form part of Form MGT-9 attached as Annexure-1.
During the year under review, your Company acquired 3,83,00,000 equity shares of Rs. 10/- each in MLIC (being 2% of its equity capital) viz. 1,91,50,000 equity shares in June, 2016 and another 1,91,50,000 equity shares in November, 2016. Accordingly, the equity stake of the Company in MLIC was 70.01% as at March 31, 2017.
A report on the performance and financial position of MLIC, included in the consolidated financial statements, presented in Form AOC-1 is attached as Annexure-2 to this Report as per Rule 8(1) of the Companies (Accounts) Rules, 2014.
Further, a detailed update on the business achievements of MLIC, being the key operating subsidiary, is furnished as part of Management Discussion and Analysis section which forms part of this Annual Report.
As provided in Section 136 of the Companies Act, 2013, the financial statements and other documents of the subsidiary company Max Life Insurance Company Limited are not being attached with the financial statements of the Company. The complete set of financial statements including financial statements of the subsidiary of the Company is available on our website www.maxfinancialservices. com. These documents will also be available for inspection during business hours at the registered office of the Company and shall also be made available to the shareholders of the Company in hard copy, on demand.
Dividend
Your Directors have not recommended any dividend for the financial year 2016-17.
Transfer to Reserves
The Company has not transferred any amount to reserves during the year under review.
Share Capital
The Authorized share capital of the Company as on March 31, 2017 was Rs. 60,00,00,000/- (Rupees Sixty Crores only) comprising of 30,00,00,000 equity shares of Rs. 2/- each.
During the year under review, 2,86,050 equity shares of Rs.2/-each were allotted to the option-holders under the âMax Employee Stock Plan 2003â (â2003 Planâ).
The Paid up capital of the Company as on March 31, 2017 was Rs. 53,45,40,098/- (Rupees Fifty three crores forty five lacs forty thousand and ninety eight only) comprising of 26,72,70,049 equity shares of Rs. 2/- each.
Further, after end of the financial year on March 31, 2017 till the date of this report i.e. August 9, 2017, your Company had allotted 41,210 equity shares of Rs.2/- each to the option-holders under the aforesaid 2003 Plan.
Employee stock option Plan
Your Company has an employee stock option plan viz. âMax Employee Stock Plan 2003â (â2003 Planâ) in place. The 2003 Plan provides for grant of stock options aggregating not more than 5% of number of issued equity shares of the Company to eligible employees and Directors of the Company. The 2003 Plan is administered by the Nomination and Remuneration Committee constituted by the Board of Directors of the Company.
Details of options granted up to March 31, 2017 and other disclosures as required under SEBI (Share Based Employee Benefits) Regulations, 2014 are enclosed as Annexure-3 to this Report.
Further during the year under review, the Nomination and Remuneration Committee of Directors of the Company granted 143,052 phantom stock units to Mr. Rahul Khosla - Executive President of the Company, which vest over a period of 4 years and shall be settled in cash.
Directors
As on date of this report, the Board of Directors of your Company comprised of 7 (seven) members with 1 (one) Executive Director and 6 (six) Non-Executive Directors of which 4 (four) are independent. Mrs. Naina Lal Kidwai, Chairman of the Company is a Non Executive Independent Director.
Mr. Sanjeev Kishen Mehra resigned from the Board of the Company effective May 19, 2017. Simultaneously, the position held by Ms. Lavanya Ashok as an Alternate Director to Mr. Sanjeev Kishen Mehra on the Board of the Company stood vacated with effect from that date.
Your Directors place their deep appreciation for the valuable contributions made by Mr. Sanjeev Kishen Mehra and Ms. Lavanya Ashok during their association with the Company.
In terms of Section 152 of the Act and the Articles of Association of the Company, Mr. Ashwani Windlass and Mr. Sanjay Omprakash Nayar are liable to retire by rotation at the ensuing Annual General Meeting. Mr. Ashwani Windlass and Mr. Sanjay Omprakash Nayar being eligible have offered themselves for re-appointment at the ensuing Annual General Meeting. Brief profiles of these directors are annexed to the Notice convening the Annual General Meeting.
The Board met six times during the financial year 2016-17:
|
S.No. |
Date of the Meeting |
Board Strength |
No. of Directors Present |
|
1 |
May 30, 2016 |
8 |
6 |
|
2 |
June 17, 2016 |
8 |
4 |
|
3 |
August 8, 2016 |
8 |
7 |
|
4 |
November 4, 2016 |
8 |
7 |
|
5 |
February 10, 2017 |
8 |
7 |
|
6 |
March 27, 2017 |
8 |
4 |
The details regarding number of meetings attended by each Director during the year under review have been furnished in the Corporate Governance Report attached as part of this Annual Report.
Statement of Declaration by Independent Directors
In terms of Section 149(6) of the Act and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the following Non-Executive Directors are categorized as Independent Directors of the Company: Mrs. Naina Lal Kidwai, Mr. Rajesh Khanna, Mr. Aman Mehta and Mr. Dinesh Kumar Mittal.
The Company has received declaration of independence from all the above mentioned Independent Directors as per Section 149(7) of the Act, confirming that they continue to meet the criteria of independence.
Committees of the Board of Directors
The Company has the following committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. A detailed note on the same is provided under the Corporate Governance Report forming part of this Annual Report.
1. Audit Committee:
The Audit Committee met four times during the financial year 2016-17, viz. on May 30, 2016, August 8, 2016, November 4, 2016 and February 10, 2017. The Committee as on March 31, 2017 comprised of Mr. D.K. Mittal (Chairman), Mr. Aman Mehta, Mr. Rajesh Khanna and Mr. Mohit Talwar. Further, Mrs. Naina Lal Kidwai has been inducted as a member of the Committee with effect from May 30, 2017. All the recommendations by the Audit Committee were accepted by the Board.
2. Nomination and Remuneration Committee:
The Nomination and Remuneration Committee met three times during the financial year 2016-17, viz. on August 8, 2016, November 4, 2016 and March 27, 2017. The Committee as on March 31, 2017 comprised of Mr. Rajesh Khanna (Chairman), Mr. Aman Mehta, Mr. Ashwani Windlass and Mrs. Naina Lal Kidwai.
3. Investment & Finance Committee:
The Committee met four times during the financial year 2016-17, viz. on May 30, 2016, August 8, 2016, November 4, 2016 and February 10, 2017. The Committee as on March 31, 2017 comprised of Mr. Ashwani Windlass (Chairman), Mr. D.K. Mittal, Mr. Rajesh Khanna, Mr. Sanjeev Kishen Mehra and Mr. Mohit Talwar. Mr. Sanjeev Mehra ceased to be a member of the Committee effective May 19, 2017 consequent to his resignation from the Board.
4. Corporate Social Responsibility Committee:
The Committee met once during the financial year 2016-17, viz. on February 10, 2017. The Committee as on March 31, 2017 comprised of Mr. Aman Mehta, Mr. Ashwani Windlass, Mr. D.K. Mittal and Mr. Rajesh Khanna.
5. Stakeholdersâ Relationship Committee:
The Committee met five times during the financial year 2016-17, viz. on May 30, 2016, August 8, 2016, September 22, 2016, November 4, 2016 and February 10, 2017. The Committee as on March 31, 2017 comprised of Mr. Ashwani Windlass (Chairman), Mr. D.K. Mittal and Mr. Mohit Talwar.
6. Risk & Compliance Review Committee:
The Committee met once during the financial year 2016-17, viz. on February 10, 2017. The Committee as on March 31, 2017 comprised of Mr. Aman Mehta, Mr. Ashwani Windlass, Mr. D.K. Mittal and Mr. Rajesh Khanna.
7. Independent Directors:
The Board of Directors included 4 Independent Directors as on March 31, 2017 viz. Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai and Mr. Rajesh Khanna. The Independent Directors had a separate meeting on August 8, 2016 during the financial year 2016-17.
Later, the Independent Directors also had another separate meeting on August 9, 2017. The meeting was conducted to:
(a) Review the performance of non-independent Directors and the Board as a whole;
(b) Review the performance of the Chairperson of the Company, taking into account the views of executive Directors and non-executive Directors; and
(c) Assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
Performance Evaluation of the Board
As per the requirements of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, formal Annual Evaluation process has been carried out for evaluating the performance of the Board, the Committees of the Board and the Individual Directors including Chairperson.
The performance evaluation was carried out by obtaining feedback from all Directors through a confidential online survey mechanism through Diligent, a secured electronic medium through which the Company interfaces with its Directors. The outcome of this performance evaluation was placed before the meetings of the Nomination and Remuneration Committee and Independent Directorsâ and the Board meeting for the consideration of the members.
The review concluded by affirming that the Board as a whole as well as its Chairman, all of its members, individually and the Committees of the Board continued to display commitment to good governance by ensuring a constant improvement of processes and procedures and contributed their best in overall growth of the organization.
Key Managerial Personnel
As on the date of this Report, Mr. Mohit Talwar - Managing Director, Mrs. Sujatha Ratnam - Chief Financial Officer and Mr. Sandeep Pathak - Company Secretary are the Key Managerial Personnel (KMP) of the Company, pursuant to the provisions of the Companies Act, 2013.
Mr. Sandeep Pathak was appointed as the Company Secretary with effect from July 5, 2016.
Human Resources
We are primarily engaged in growing and nurturing business investment as a holding Company in the business of life insurance and providing management advisory services to group companies. The remuneration of our employees is competitive with the market and rewards high performers across levels. The remuneration to Directors, Key Managerial Personnel and Senior Management are a balance between fixed, incentive pay and long-term equity program based on the performance objectives appropriate to the working of the Company and its goals and is reviewed periodically and approved by the Nomination and Remuneration Committee of the Board.
Details pursuant to Section 197 (12) of the Act, read with the Rule 5(1) and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as Annexure-4a and Annexure-4b.
As on March 31, 2017, there were 13 employees on the rolls of the Company.
Nomination and Remuneration Policy
In adherence to the provisions of Sections 134(3)(e) and 178(1) & (3) of the Act, the Board of Directors on the recommendation of the Nomination and Remuneration Committee, had approved a policy on Directorsâ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided and the same is available on the website of the Company at www.maxfinancialservices.com.
Corporate Social Responsibility (âCSRâ)
The Board of Directors of your Company has constituted a Corporate Social Responsibility Committee and adopted a CSR policy, as approved by the CSR Committee, copy of which is available on the website of the Company at www.maxfinancialservices.com. The CSR Policy comprises Vision and Mission Statement, philosophy and objectives. It also explains the governance structure along with clarity on roles and responsibilities.
In terms of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, all Companies meeting the prescribed threshold criteria, i.e., net worth of Rs. 500 crores or more or turnover of Rs. 1,000 crores or more or net profits of Rs. 5 crore or more in any financial year are required to spend 2% of the average net profits of the Company for immediately preceding 3 financial years.
As per rule 2(f) of the Companies (Corporate Social Responsibility Policy) Rules, 2014, any dividend received from other companies in India which are already covered and complying with the provisions of the CSR, shall not be included for the purposes of computation of ânet profitsâ for a company.
As Max Life Insurance Company Limited (âMax Lifeâ) from whom the Company has been receiving dividend, from time to time, discharged its CSR responsibilities for the financial year 2016-17, the dividend income received by the Company will be excluded for the purposes of computation of its ânet profitsâ. After excluding the dividend income received from Max Life, the Company does not have net profits computed as per the CSR rules. Therefore, it is not mandatorily required for the Company to spend on Corporate Social Responsibility for the financial year 2016-17. However, the Company has voluntarily given donations to various charitable institutions.
Business Responsibility Report
In terms of Clause 34(2)(f) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a Business Responsibility Report, on various initiatives taken by the Company, is enclosed as Annexure -5.
Policy for Prevention of sexual Harassment
Your Company has requisite policy for Prevention of Sexual Harassment, which is available on the website of the Company at www.maxfinancialservices.com.The comprehensive policy ensures gender equality and the right to work with dignity. An Internal Complaints Committee has been constituted as per provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No case was reported to the Committee during the year under review.
Loans, Guarantees or Investments in securities
The details of loans given and investments made by the company pursuant to the provisions of Section 186 of the Act are provided in Notes 12 and 13 to the standalone financial statements of the Company for the FY 2016-17.
Management Discussion & Analysis
In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a review of the performance of the Company, including those of your Companyâs subsidiary, is provided in the Management Discussion & Analysis section, which forms part of this Annual Report.
Report on Corporate Governance
The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Part C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As required by the said Clause, a separate Report on Corporate Governance forms part of the Annual Report of the Company.
A certificate from M/s Chandrasekaran Associates, Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance pursuant to Part E of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and a certificate from the Managing Director and Chief Financial Officer on compliance of Part B of Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 form part of the Corporate Governance Report.
Public Deposits
During the year under review, the Company has not accepted or renewed any deposits from the public.
Statutory Auditors and Auditorsâ report.
Pursuant to Sections 139 & 142 of the Act, M/s Deloitte Haskins and Sells, LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company at Annual General Meeting held on September 23, 2015 for a period of five years, subject to ratification of their appointment in every Annual General Meeting held during their tenure.
M/s Deloitte Haskins and Sells, LLP, Statutory Auditors, have provided a certificate that their appointment, if ratified, will be in conformity with the provisions of Section 141 of Companies Act, 2013. The Board recommends the ratification of the appointment of M/s Deloitte Haskins and Sells, LLP, Chartered Accountants as the Statutory Auditors of the Company for financial year 2017-18.
There are no audit qualifications, reservations, disclaimers or adverse remarks or reporting of fraud in the Statutory Auditors Report given by M/s Deloitte Haskins and Sells, LLP, Statutory Auditors of the Company for the financial year 2016-17 as annexed elsewhere in this Annual Report.
Secretarial Auditors and secretarial Audit report
Pursuant to Section 204 of the Act, your Company had appointed M/s Chandrasekaran Associates, Practicing Company Secretaries, New Delhi as its Secretarial Auditors to conduct the secretarial audit of the Company for the FY 2016-17. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2016-17 is annexed to this report as Annexure-6.
There are no audit qualifications, reservations, disclaimers or adverse remarks in the said Secretarial Audit Report.
Internal Auditors
The Company follows a robust Internal Audit process and audits are conducted on a regular basis, throughout the year, as per agreed audit plan. During the year under review, M/s MGC and KNAV, Global Risk Advisory LLP were appointed as Internal Auditors for conducting the Internal Audit of key functions and assessment of Internal Financial Controls etc. They were also engaged for conducting Cyber Security Audit for the Company.
Internal Financial Controls
The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. The Management has reviewed the existence of various risk-based controls in the Company and also tested the key controls towards assurance for compliance for the present fiscal. In the opinion of the Board, the existing internal control framework is adequate and commensurate with the size and nature of the business of the Company. Further, the testing of adequacy of internal financial controls over financial reporting has been also been carried out independently by the Statutory Auditors as mandated under the provisions of the Act. During the year under review, there were no instances of fraud reported by the auditors to the Audit Committee or the Board of Directors.
Risk Management
Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Board has formed a Risk and Compliance Review Committee to identify the risks impacting the business, formulate strategies/ policies aimed at risk mitigation as part of risk management. Further, a core team comprising of senior management has also been formed to identify and assess key risks, risk appetite, tolerance levels and formulate strategies for mitigation of risks identified in consultation with process owners.
On the recommendation of the Committee, the Company has adopted a Risk Management policy, whereby, risks are broadly categorized into Strategic, Operational, Compliance and Financial & Reporting Risks. The Policy outlines the parameters of identification, assessment, monitoring and mitigation of various risks which are key to the business performance.
Vigil Mechanism
The Company has a vigil mechanism pursuant to which a Whistle Blower Policy has been adopted and is in place. The Policy ensures that strict confidentiality is maintained whilst dealing with concerns raised and also that no discrimination will be meted out to any person for a genuinely raised concern in respect of any unethical and improper practices, fraud or violation of Companyâs Code of Conduct.
The said Policy covering all employees, Directors and other persons having association with the Company is hosted on the Companyâs website www.maxfinancialservices.com.
A brief note on Vigil Mechanism / Whistle Blower Policy is also provided in the Report on Corporate Governance, which forms part of this Annual Report.
Contracts or Arrangements with Related Parties
All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis, except one transaction with Max Life Insurance Company Limited for allowing usage of trademarks without any consideration and an approval was obtained from shareholders for the Company for the said transaction. There is no material contract or arrangement in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Form AOC-2 furnishing particulars of contracts or arrangements entered into by the Company with related parties referred in Section 188(1) of the Companies Act, 2013, is annexed to this report as Annexure 7.
The details of all the Related Party Transactions form part of Note no. 31 to the standalone financial statements attached to this Annual Report.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companyâs website www.maxfinancialservices.com.
Particulars of Conservation of energy, Technology Absorption and Foreign exchange earnings & outgo
The information on conservation of energy, technology absorption and foreign exchange earnings & outgo as stipulated under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is as follows:
a) Conservation of energy
(i) the steps taken or impact on conservation of energy: Regular efforts are made to conserve the energy through various means such as use of low energy consuming lightings, etc.
(ii) the steps taken by the Company for using alternate sources of energy: Since your Company is not an energy intensive unit, utilization of alternate source of energy may not be feasible.
(iii) capital investment on energy conservation equipment : Nil
b) Technology Absorption
Your Company is not engaged in manufacturing activities, therefore there is no specific information to be furnished in this regard.
There was no expenditure incurred on Research and Development during the period under review.
Extracts of Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of the Annual Return as at March 31, 2017 forms part of this report as Annexure 1.
Directorsâ responsibility statement
Pursuant to Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:
(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;
(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 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 were operating effectively; and
(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.
Significant and material orders passed by the regulators or courts or tribunals
During the year under review, there were no such significant and material orders passed by the regulators or courts or tribunals which could impact the going concern status and companyâs operations in future.
Unclaimed Shares
Regulation 39(4) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 inter alia requires every listed company to comply with certain procedure in respect of shares issued by it in physical form, pursuant to a public issue or any other issue and which remained unclaimed for any reason whatsoever.
The face value of the shares of the Company was split from Rs. 10/- each to Rs. 2/- each in the year 2007. Certain share certificates were returned undelivered and were lying unclaimed. The Company had sent 3 reminders to concerned shareholders, and subsequently such shares (2203 folios comprising 475310 equity shares) have been transferred to the Unclaimed Suspense Account.
The voting rights on the equity shares lying in the said Unclaimed Suspense Account shall remain frozen till the rightful owner claims such shares. Further, all corporate benefits in terms of securities accruing on the said unclaimed shares viz. bonus shares, split, etc., if any, shall also be credited to the said Unclaimed Suspense Account. The concerned shareholder(s) are requested to write to the Registrar and Share Transfer Agent to claim the said equity shares. On receipt of such claim, additional documents may be called for and subject to its receipt and verification, the said shares lying in the said Unclaimed Suspense Account shall be transferred to the depository account provided by the concerned shareholder(s) or the physical share certificate shall be delivered to the registered address of the concerned shareholder(s).
Cautionary Statement
Statements in this Report, particularly those which relate to Management Discussion and Analysis describing the Companyâs objectives, projections, estimates and expectations may constitute âforward looking statementsâ within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.
Acknowledgements
Your Directors would like to place on record their appreciation of the contribution made by its management and its employees who through their competence and commitment have enabled the Company to achieve impressive growth. Your Directors acknowledge with thanks the co-operation and assistance received from various agencies of the Central and State Governments, Financial Institutions and Banks, Shareholders, Joint Venture partners and all other business associates.
On behalf of the Board of Directors
Max Financial services Limited
(Formerly Max India Limited)
New Delhi Naina Lal Kidwai
August 9, 2017 Chairman
DIN: 00017806
Mar 31, 2016
Dear Members,
The Directors have pleasure in presenting the twenty-eighth Board''s
Report of Max Financial Services Limited (''MFSL") (''the Company/
formerly Max India Limited") along with the audited Statement of
Accounts for the financial year ended March 31, 2016. This Board''s
report is prepared on the basis of standalone financial statements of
the Company for the year ended March 31, 2016.
As you are aware, the Company was in the midst of a corporate
restructuring with an aim to vertically split the Company into three
separate listed entities, through a Composite Scheme of Arrangement
between the Company, Max India Limited ("Max India/ Erstwhile Taurus
Ventures Limited") and Max Ventures & Industries Limited ("MVIL/
Erstwhile Capricorn Ventures Limited") and their respective
shareholders and creditors (''Composite Scheme of Arrangement"),
enabling the investors in the Company to have a choice, to be
associated with specific underlying businesses through separate listed
entities, facilitating sharper focus on underlying businesses and
unlocking value for shareholders. The said Composite Scheme of
Arrangement was approved by the Board of Directors of the Company on
January 27, 2015 and subsequently by the members of the Company in a
Court convened General Meeting held on July 4, 2015. The Hon''ble High
Court of Punjab and Haryana vide its order dated December 14, 2015
("Order"), sanctioned the said Composite Scheme of Arrangement for
transfer of all the assets and liabilities pertaining to each of the
demerged undertakings (i.e. Max India and MVIL) with effect from April
1, 2015 (Appointed date) and the said Scheme became effective from
January 15, 2016 i.e. the date of filing of the certified copy of the
order of the Hon''ble High Court of Punjab and Haryana with the
Registrar of Companies, Chandigarh.
Accordingly, the name of the Company was changed from "Max India
Limited" to "Max Financial Services Limited" and the Company received a
fresh certificate of incorporation dated February 1, 2016 from
Registrar of Companies, Chandigarh. Further details regarding the
demerger and its financial implications are explained in detail in the
Order of the Hon''ble High Court having jurisdiction at Chandigarh
available on the website of the Company and the Audited financial
statements of the Company for the year ended March 31, 2016. Necessary
references to the same are made in this Report wherever necessary.
In terms of the said Composite Scheme of Arrangement, the shares held
by the Company in MVIL and Max India were cancelled as of March 7, 2016
and May 14, 2016 respectively, and the said entities ceased to be the
subsidiaries of your Company. The new Equity Shares of both MVIL and
Max India, which were allotted to shareholders of the Company as part
of the scheme, have since listed on the BSE and NSE.
Standalone Results
The highlights of the stand-alone financial results of your Company
along with previous year''s figures are as under:
(Rs. Crore)
Year ended Year ended
March 31, 2016 March 31, 2015
Income
Revenue from Services
operations 16.24 -
Revenue from Investment
Activities 184.47 581.78
Other income 0.51 2.88
Total Revenue (I) 201.22 584.66
Expenditure
Employee benefits expenses 32.66 53.02
Other expenses 51.14 58.61
Depreciation and amortization 2.22 4.38
Total Expenses (II) 86.02 116.01
Profit/(Loss) Before tax (I-II) 115.20 468.65
Tax Expense - 77.71
Profit/(Loss) After Tax 115.20 390.94
*The results for FY ended March 31, 2016 include the effect of the
Composite Scheme of Arrangement. These results are not strictly
comparable with the results for FY ended March 31, 2015 as they include
the results of the demerged undertakings i.e. Max and MVIL. Your
Company is primarily engaged in business of making investments in its
subsidiary and accordingly in terms of extant RBI guidelines, your
Company is a Core Investment Company ("CIC") with financial income
(dividend income) exceeding 50% of its total income and financial
assets (investments in securities etc.) exceeding 50% of the total
assets. However, it does not meet the criteria for Systemically
Important CIC as laid down in the CIC master circular dated July 1,
2015 and hence registration under Section 45-IA of RBI Act, 1934 is not
required.
Consolidated Results
In accordance with the Companies Act, 2013 ("the Act") and Accounting
Standard (AS) - 21 on Consolidated Financial Statements read with AS -
27 on Financial Reporting of Interests in Joint Ventures/ subsidiaries/
step  down subsidiaries, the audited consolidated financial statements
are provided as part of this Annual Report. The highlights of the
consolidated financial results of your Company and its subsidiary(ies)
are as under:
(Rs. Crore)
Year ended Year ended
March 31, 2016 March 31, 2015
Income
Net Sales - 838.54
Service Income 9,150.14 9,183.77
Other operating revenue and 2,546.00 4,793.04
investment income
Other Income 15.73 61.24
Total Revenue (I) 11,711.87 14,876.59
Expenses
Cost of materials consumed - 514.61
Purchase of stock-in-trade : - 269.38
pharmacy and pharmaceuticals
supplies
(Increase)/ decrease in - (3.54)
inventories of work- In-progress,
finished goods and traded goods
Employee benefits expense 650.34 1,009.92
Change in policy reserves 4,816.93 6,457.43
Claims and other benefits payout 3,146.43 3,644.89
Depreciation and Amortisation 60.47 153.80
Other expenses 2,565.02 2,235.51
Finance Costs 7.66 82.13
Total Expenses (II) 11,246.85 14,364.13
Profit /(Loss) Before Tax (I-II) 465.02 512.46
Tax Expense 71.83 147.55
Profit / (Loss) After Tax 393.19 364.91
Minority Interest 140.45 85.29
Profit/(Loss) After tax
(after adjusting Minority Interest) 252.74 279.62
* The consolidated results for FY ended March 31, 2016 include the
effect of the Composite Scheme of Arrangement. These results are not
strictly comparable with the consolidated results for FY ended March
31, 2015 as they include the results of the demerged undertakings i.e.
Max and MVIL.
The Company had a healthy treasury corpus of Rs 271 crore as at March
31, 2016, after taking effect of the Scheme. Net worth of the Company
on standalone basis fell down by around 52% to around Rs.1670 crore
owing to effect of the Composite Scheme of Arrangement.
Subsidiaries & Associates
As on March 31, 2016, your Company had only 1 (one) subsidiary i.e.
Max Life Insurance Company Limited ("MLIC").
Pursuant to sale of the clinical research business, 2 (two) of the
wholly-owned subsidiaries ceased to be subsidiaries of the Company
effective May 1, 2015. Further, pursuant to the Scheme of demerger
becoming effective from April 1, 2015 (i.e. Appointed date), 12
(twelve) subsidiaries, out of which 9 (nine) were wholly owned
subsidiaries of the Company, and 5 (five) Associate companies ceased to
be the subsidiaries / associate companies.
Pursuant to Sec 134(3)(q) of the Companies Act, 2013 ("Act") and Rule
8(5)(iv) of the Companies (Accounts) Rules, 2014, the list of
subsidiaries/ associates and the proportionate ownership of the Company
in them along with names of Companies which have ceased to be
subsidiaries and / or associates in them is part of Form MGTÂ9 attached
as Annexure-1.
During the year under review, your Company sold 76,560,635 Equity
shares of Rs. 10/- each held in MLIC (being 3.99% of its equity) to
Axis Bank Limited, thereby reducing the equity stake of the Company in
MLIC to 68.01% as at March 31, 2016.
A report on the performance and financial position of MLIC, included in
the consolidated financial statements, presented in Form AOCÂ1 is
attached as Annexure-2 with the consolidated financial statements of
the Company and is part of the Annual Report as per Rule 8(1) of the
Companies (Accounts) Rules, 2014.
Further, a detailed update on the business achievements of MLIC, being
a key operating subsidiary, is furnished as part of Management
Discussion and Analysis section which forms part of the Annual Report.
As provided in Section 136 of the Companies Act, 2013, the financial
statements and other documents of the subsidiary company Max Life
Insurance Company Limited are not being attached with the financial
statements of the Company. The complete set of financial statements
including financial statements of the subsidiary of the Company is
available on our website www.maxfinancialservices.com. These documents
will also be available for inspection during business hours at the
registered office of the Company and shall also be made available to
the shareholders of the Company in hard copy, on demand.
Material Changes Affecting Financial Position
There are no material changes and commitments, affecting the financial
position of the Company which has occurred between the end of the
financial year of the Company i.e. March 31, 2016 and the date of the
Directors'' report i.e. August 8, 2016; except the proposal of a
composite scheme of amalgamation and arrangement detailed as under:
Proposed Composite Scheme of Amalgamation and Arrangement
The Board of Directors of your Company, on August 8, 2016, approved a
composite scheme of amalgamation and arrangement amongst the Company,
Max Life Insurance Company Limited ("Max Life"), HDFC Standard Life
Insurance Company Limited ("HDFC Life") and Max India Limited ("Max
India"), and their respective shareholders and creditors ("Scheme"),
which inter alia provides for:
(a) Amalgamation of Max Life into and with the Company and the issuance
of Equity Shares by the Company to the shareholders of Max Life
(excluding the Company itself), based on the share exchange ratio of 1
share of face value of Rs. 2/- each of the Company for every approx 5
shares of face value of Rs. 10/- each held in Max Life, on a Record
Date to be specified for this purpose in accordance with the Scheme;
(b) Demerger of the undertaking pertaining to the Life Insurance
Business of Max Life arising from the amalgamation referred to in
sub-clause (a), into HDFC Life and the issuance of Equity Shares by
HDFC Life to the shareholders of the Company (including the
shareholders to whom shares allotted pursuant to (a) above) based on
the share entitlement ratio of approx 7 shares of face value of Rs.
10/- each of HDFC Life for every 3 shares of face value of Rs. 2/- each
held in the Company, on a Record Date to be specified for this purpose
in accordance with the Scheme; and
(c) Amalgamation of the Company which remains after the demerger
referred to sub-clause (b) into and with Max India and the issuance of
Equity Shares by Max India to the shareholders of the Company
(including the shareholders to whom shares allotted pursuant to (a)
above), based on the share exchange ratio of 1 share of face value of
Rs. 2/- each of Max India for every 500 shares of face value of Rs. 2/-
each held in the Company, on a Record Date to be specified for this
purpose in accordance with the Scheme.
The aforesaid Scheme is contemplated to consolidate the Life Insurance
Business of Max Life into and with HDFC Life as both Max Life and HDFC
Life have strong margins and synergies and the product mix of their
combined businesses shall be well diversified. The combined entity
arising out of such an arrangement shall have better prospects of
growth. This Scheme shall lead to the eventual listing of HDFC Life on
the National Stock Exchange of India Limited and BSE Limited and ensure
that the shareholders of the Company including Public Shareholders,
hold Equity Shares in two listed entities, namely HDFC Life and Max
India, thereby maximising shareholders value. This Scheme is expected
to provide greater financial strength and flexibility and better access
to funds.
The implementation of the Scheme is subject to the receipt of all
necessary corporate, third party and regulatory approvals (including
approvals from the Insurance Regulatory Development Authority of India
and the Competition Commission of India).
HDFC Life will pay a non-compete fee of around Rs. 850 crore to the
promoter and promoter group of the Company, after this Scheme becomes
effective, as a consideration towards entering into certain non-compete
and non-solicit obligations and in this regard, approval of the
shareholders of the Company is being taken separately through postal
ballot process.
Dividend
Your Directors had approved payment of Interim Dividend of 90%, i.e.
Rs. 1.80/- per equity share of Rs. 2/- each for the financial year
2015- 16. Your Company made the payment of the aforesaid interim
dividend to shareholders on November 27, 2015.
The Board of Directors of your Company have further recommended a final
dividend of 90% amounting to Rs. 1.80 per equity share (on face value
of Rs. 2/- each) to the Shareholders for their approval at the ensuing
Annual General Meeting scheduled to be held on September 27, 2016 and
if approved, the same will be paid to the shareholders, in compliance
with the applicable legislations. For shares held in electronic form,
the dividend will be paid on the basis of beneficial ownership
furnished by Depositories, viz., NSDL and CDSL for this purpose.
Transfer to Reserves
The Company has not transferred any amount to reserves.
Share Capital
The Authorized share capital of the Company as on March 31, 2016 was
Rs. 60,00,00,000/- (Rupees Sixty Crores only) comprising of
30,00,00,000 equity shares of Rs. 2/- each.
During the year under review, pursuant to the provisions of the
Composite Scheme of Arrangement and the order of the Hon''ble High Court
of Punjab and Haryana dated December 14, 2015 (''Order") sanctioning the
Composite Scheme of Arrangement, the Authorized capital of the Company
was reduced from Rs. 100,00,00,000/- consisting of 46,00,00,000 equity
shares of Rs. 2/- each and 8,00,000 preference shares of Rs. 100/- each
to Rs. 60,00,00,000/- consisting of 30,00,00,000 equity shares of Rs.
2/- each. Such reduction was effected by transferring the reduced
authorized capital of the Company to Max India Limited (Erstwhile
Taurus Ventures Limited) amounting to Rs. 40,00,00,000/- comprising of
16,00,00,000 equity shares of Rs. 2/- each and 8,00,000 preference
shares of Rs. 100/- each, upon the Composite Scheme of Arrangement
becoming effective.
The Paid up capital of the Company as on March 31, 2016 was Rs.
53,39,67,998/- (Rupees Fifty three crores thirty nine lacs sixty seven
thousand nine hundred and ninety eight only) comprising of 26,69,83,999
equity shares of Rs. 2/- each.
During the year under review, 4,81,226 equity shares of Rs.2/- each
were allotted for cash under the ''Max Employee Stock Plan 2003'' (''2003
Plan'').
Employee Stock Option Plan
Your Company has an employee stock option plan viz. ''Max Employee Stock
Plan 2003'' (''2003 Plan'') in place. The 2003 Plan provides for grant of
stock options aggregating not more than 5% of number of issued equity
shares of the Company to eligible employees and Directors of the
Company. The 2003 Plan is administered by the Nomination and
Remuneration Committee constituted by the Board of Directors of the
Company.
Upon the Composite Scheme of arrangement coming into effect from the
Appointed Date i.e. April 1, 2015, some of the persons who were under
the Company''s employment became employees of Max/ MVIL.
Pursuant to the Composite Scheme of arrangement, the Stock options
granted by the Company under 2003 Plan would continue to be held by the
employees (irrespective of whether they continue to be employees of the
Company or become employees of Max or MVIL). Further, the Company was
required to modify the existing 2003 Plan in order to enable the
continuation of the same in hands of employees who become employees of
Max or MVIL.
Further during the year under review, another ''Employee Phantom Stock
Plan 2016'' (''2016 Plan'') was approved by the Board of Directors of the
Company upon recommendation of the Nomination and Remuneration
Committee, granting Phantom Stock Units to Mr. Rahul Khosla as part of
his compensation package in capacity of Executive President of the
Company.
Details of Options granted up to March 31, 2016 and other disclosures
as required under SEBI (Share based employee benefits) Regulations,
2014 are enclosed as Annexure-3 to this Report.
Directors
Consequent to the Composite Scheme of Arrangement sanctioned by Hon''ble
High Court of Punjab and Haryana, the Board of the Company was
reconstituted. As on March 31, 2016, your Board of Directors comprised
of 8 (eight) members with 1 (one) Executive Director and 7 (seven)
Non-Executive Directors of which 4 (four) are independent. Mrs. Naina
Lal Kidwai, Chairman of the Company is an Independent Director. Ms.
Lavanya Ashok has been appointed as an Alternate Director to Mr.
Sanjeev Kishen Mehra effective April 1, 2016 in place of Mr. Vishal
Bakshi owing to his resignation from the Board on February 19, 2016.
During the year under review, the following changes took place:
- Mr. Analjit Singh - Chairman, Mr. Rahul Khosla  Managing Director,
Mr. Anuroop Singh, Mr. N.C. Singhal, Dr. Ajit Singh, Prof.
Dipankar Gupta, Mr. Ashok Kacker and Mrs. Nirupama Rao ceased to be
Directors of the Company w.e.f. January 15, 2016.
- Further, with effect from same date i.e. January 15, 2016, Dr. S.S.
Baijal ceased to be Chairman Emeritus of the Company and conferred
''Mentor'' position in Max India Limited (erstwhile Taurus Ventures
Limited"), Mr. Analjit Singh was conferred the title of ''Founder &
Chairman Emeritus, Max Group''. Mr. Rahul Khosla was appointed as the
Executive President of the Company effective January 15, 2016.
- Mr. Mohit Talwar (erstwhile Deputy Managing Director) was elevated to
the position of Managing Director of the Company effective from January
15, 2016. His appointment is subject to approval of members, proposed
to be taken in the ensuing Annual General Meeting of the Company.
- Mrs. Naina Lal Kidwai (as a non-executive independent director) and
Mr. Sanjay Omprakash Nayar (as a non-executive non independent
director) were appointed as Additional Directors of the Company on
January 15, 2016 and March 28, 2016 respectively. Their term of office
expires on the date of ensuing Annual General Meeting.
The Company has received notices under Section 160 of the Act from
members proposing the candidature of Mrs. Naina Lal Kidwai (as a non-
executive independent director) and Mr. Sanjay Omprakash Nayar (as a
non-executive non-independent director) for being appointed as
Directors of the Company. The Board of Directors recommends their
appointment as Directors to the shareholders of the Company.
In terms of Section 152 of the Act and the Articles of Association of
the Company, Mr. Ashwani Windlass and Mr. Sanjeev Kishen Mehra are
liable to retire by rotation at the ensuing Annual General Meeting. Mr.
Ashwani Windlass and Mr. Sanjeev Kishen Mehra being eligible have
offered themselves for re-appointment at the ensuing Annual General
Meeting.
The Board met nine times during the financial year 2015-16:
S. No. of Directors
Date of the Meeting Board Strength
No. President
1 May 27, 2015 14 10
2 August 12, 2015 14 10
3 October 23, 2015 14 06
4 November 6, 2015 14 12
5 November 23, 2015 14 07
6 January 15, 2016 14 11
7 January 15, 2016 08 08
8 February 12, 2016 07 06
9 March 28, 2016 08 07
The details regarding number of meetings attended by each Director
during the year under review are part of the information furnished in
the Corporate Governance Report attached as part of this Annual Report.
Statement of Declaration by Independent Directors
In terms of Section 149(6) of the Act and Regulation 25 of SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015,
the following Non-Executive Directors are categorized as Independent
Directors of the Company: Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs.
Naina Lal Kidwai and Mr. Rajesh Khanna.
The Company is in receipt of declaration of independence from all the
above mentioned Independent Directors as per Section 149(7) of the Act.
Committees of the Board of Directors
The Company has the following committees which have been established as
a part of the best corporate governance practices and are in compliance
with the requirements of the relevant provisions of applicable laws and
statutes. Consequent to changes in the composition of the Board of
Directors of the Company effective January 15, 2016, the Committees of
the Board were also reconstituted. A detailed note on the same is
provided under the Corporate Governance Report forming part of this
Annual Report.
1. Audit Committee:
The Audit Committee met seven times during the financial year 2015-16,
viz. on May 26, 2015, August 11, 2015, November 6, 2015, November 23,
2015, January 15, 2016, February 11, 2016 and March 28, 2016. The
Committee as on March 31, 2016 consists of Mr. D.K. Mittal (Chairman),
Mr. Aman Mehta, Mr. Rajesh Khanna and Mr. Mohit Talwar.
2. Nomination and Remuneration Committee:
The Nomination and Remuneration Committee met four times during the
financial year 2015-16, viz. on May 27, 2015, August 12, 2015, January
15, 2016 and March 28, 2016. The Committee as on March 31, 2016
consists of Mr. Rajesh Khanna (Chairman), Mr. Aman Mehta, Mr. Ashwani
Windlass and Mrs. Naina Lal Kidwai.
3. Investment & Finance Committee:
The Committee met six times during the financial year 2015-16, viz. on
April 30, 2015, May 26, 2015, August 11, 2015, November 6, 2015,
November 23, 2015 and March 28, 2016. The Committee as on March 31,
2016 consists of Mr. Ashwani Windlass (Chairman), Mr. D.K. Mittal, Mr.
Rajesh Khanna, Mr. Sanjeev Kishen Mehra and Mr. Mohit Talwar.
4. Corporate Social Responsibility Committee:
The Committee met two times during the financial year 2015-16, viz. on
May 27, 2015 and August 12, 2015. The Committee as on March 31, 2016
consists of Mr. Aman Mehta, Mr. Ashwani Windlass, Mr. D.K. Mittal and
Mr. Rajesh Khanna.
5. Stakeholders Relationship Committee:
The Committee met four times during the financial year 2015-16, viz. on
May 26, 2015, August 11, 2015, November 6, 2015 and March 28, 2016. The
committee as on March 31, 2016 consists of Mr. Ashwani Windlass
(Chairman), Mr. D.K. Mittal and Mr. Mohit Talwar.
6. Risk & Compliance Review Committee:
The Committee met twice during the financial year 2015-16, viz. on May
27, 2015 and August 12, 2015. The Committee as on March 31, 2016
consists of Mr. Aman Mehta, Mr. Ashwani Windlass, Mr. D.K. Mittal and
Mr. Rajesh Khanna.
7. Committee of Independent Directors:
The Committee of Independent Directors as on March 31, 2016 consists of
Mr. Aman Mehta, Mr. Dinesh Kumar Mittal, Mrs. Naina Lal Kidwai and Mr.
Rajesh Khanna. The Independent Directors had a separate meeting on
August 12, 2015 during the financial year 2015-16. Later, the
Independent Directors also had another separate meeting on August 8,
2016. The meeting was conducted to:
(a) Review the performance of non-independent Directors and the Board
as a whole;
(b) Review the performance of the Chairperson of the Company, taking
into account the views of executive Directors and non-executive
Directors;
(c) Assess the quality, quantity and timeliness of flow of information
between the Company management and the Board that is necessary for the
Board to effectively and reasonably perform their duties.
Performance Evaluation of the Board
As per the requirements of the Act and SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, formal Annual Evaluation
process has been carried out for evaluating the performance of the
Board, the Committees of the Board and the Individual Directors
including Chairperson.
The performance evaluation was carried out by obtaining feedback from
all Directors through a confidential online survey mechanism through
Board Link, a secured electronic medium through which the Company
interfaces with its Directors. The outcome of this performance
evaluation was placed before the Nomination and Remuneration Committee
and Independent Directors'' Committee meetings and the Board meeting for
the consideration of the members.
The review concluded by affirming that the Board as a whole as well as
its Chairman, all of its members, individually and the Committees of
the Board continued to display commitment to good governance by
ensuring a constant improvement of processes and procedures and
contributed their best in overall growth of the organization.
Key Managerial Personnel
During the financial year 2015-16, the following persons ceased to be
Key Managerial Personnel of the Company in terms of Section 203 of the
Act:
(a) Mr. Rahul Ahuja, Chief Financial Officer w.e.f. May 31, 2015
(b) Mr. Rahul Khosla, Managing Director w.e.f. January 15, 2016
(c) Mr. V. Krishnan, Company Secretary w.e.f. February 29, 2016
Further, Mrs. Sujatha Ratnam was appointed as Chief Financial Officer
of the Company effective June 1, 2015 and was designated as Key
Managerial Personnel. Mr. Mohit Talwar, Deputy Managing Director was
elevated to the position of Managing Director effective January 15,
2016.
Subsequently, the Company has appointed Mr. Sandeep Pathak as Company
Secretary, designated as Key Managerial Personnel of the Company,
effective July 5, 2016.
Nomination and Remuneration Policy
In adherence to the provisions of Sections 134(3)(e) and 178(1) & (3)
of the Act, the Board of Directors on the recommendation of the
Nomination and Remuneration Committee, approved a policy on Directors''
appointment and remuneration including criteria for determining
qualifications, positive attributes, independence of a Director and
other matters provided and the same is available on the website of the
Company at www.maxfinancialservices.com.
Corporate Social Responsibility
Corporate Social Responsibility has been an area of focus for your
Company since inception. Being in the "Business of Life", there has
been a conscious effort to make a difference in the lives of the less
privileged. The Company has its vision to become the most admired
company through service excellence and Sevabhav. The Company''s mission
is to bring about strong social relevance, and aims to be committed to
social causes and relevance for its inclusive growth and to contribute
to society by supporting causes on the health and well being platform.
The Board of Directors has adopted a CSR policy as approved by the
Corporate Social Responsibility committee which is available on the
website of the Company at www.maxfinancialservices.com. The CSR Policy
comprises Vision and Mission Statement, philosophy and objectives. It
also explains the governance structure along with clarity on each one''s
roles and responsibilities.
In terms of Section 135 of the Act read with Companies (Corporate
Social Responsibility Policy) Rules, 2014, all Companies meeting the
prescribed threshold criteria, i.e., net worth of Rs. 500 crores or
more or turnover of Rs. 1,000 crores or more or net profits of Rs. 5
crore or more in any financial year are required to spend 2% of the
average net profits of the Company for immediately preceding 3
financial years.
As per rule 2(f) of the Companies (Corporate Social Responsibility
Policy) Rules, 2014, any dividend received from other companies in
India which are already covered and complying with the provisions of
the CSR, shall not be included for the purposes of computation of ''net
profits'' for a company.
As Max Life Insurance Company Limited ("Max Life") from whom the
Company has been receiving dividend, from time to time, discharged its
CSR responsibilities for the financial year 2015Â16, the dividend
income received by the Company will be excluded for the purposes of
computation of its ''net profits''. After excluding the dividend income
received from Max Life, the Company does not have net profits computed
as per the CSR rules. Therefore, it is not mandatorily required for the
Company to spend on Corporate Social Responsibility for the financial
year 2015-16.
Human Resources
Post the Scheme of demerger becoming effective, we are primarily
engaged in growing and nurturing business investments as a holding
Company in the ''Businesses of Life'' focusing on life insurance and
providing management advisory services to group companies. We endeavor
to be the most preferred solution provider in life''s many moments of
truth for the millions of lives that we aspire to positively impact and
are driven by our core values - Sevabhav, Excellence and Credibility.
The health and performance of the group has improved steadily over last
few years and is reflected in our results. The remuneration of our
employees is competitive with the market and rewards high performers
across levels. The remuneration to Directors, Key Managerial Personnel
and Senior Management are a balance between fixed, incentive pay and
long-term equity program based on the performance objectives
appropriate to the working of the Company and its goals and is reviewed
periodically and approved by the Nomination and Remuneration Committee
of the Board.
The revised remuneration of Mr. Mohit Talwar, Managing Director w.e.f.
January 15, 2016 shall be placed for approval of the shareholders of
the Company at the ensuing Annual General Meeting.
Details pursuant to Section 197 (12) of the Act, read with the Rule
5(1) and Rule 5(2) of Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are attached as Annexure-4a and
Annexure-4b. Subsequent to the Scheme becoming effective, the
employees associated with demerged businesses were transferred to the
resultant companies. As on March 31, 2016, there were 13 employees on
the rolls of the Company.
Prevention of Sexual Harassment of Women at workplace Your Company has
requisite policy for prevention of Sexual Harassment of Women at
workplace. The comprehensive policy ensures gender equality and the
right to work with dignity. An Internal Complaints Committee has been
constituted as per provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013. No case
under the said Act was reported to the Committee during the year under
review.
Loans, Guarantees or Investments in Securities
The Company has pursuant to the provisions of Section 186 of the Act
given loans, made guarantees and investments during the year under
review and the details of such loans, guarantees and investments are
provided in Notes 11, 14, 16 and 22 to the financial statements of the
Company for the FY 2015-16.
Management Discussion & Analysis
In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, a review of the performance of the
Company, including those of your Company''s subsidiary, is provided in
the Management Discussion & Analysis section, which forms part of this
Annual Report.
Report on Corporate Governance
The Company has complied with all the mandatory requirements of
Corporate Governance specified by the Securities and Exchange Board of
India through Part C of Schedule V of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015. As required by the said
Clause, a separate Report on Corporate Governance forms part of the
Annual Report of the Company.
A certificate from M/s Sanjay Grover & Associates, Practicing Company
Secretaries regarding compliance with the regulations of Corporate
Governance pursuant to Part E of Schedule V of SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 and a
certificate from the Managing Director and Chief Financial Officer on
compliance of Part B of Schedule II of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 form part of the Corporate
Governance Report.
Public Deposits
During the year under review, the Company has not accepted or renewed
any deposits from the public.
Contracts or Arrangements with Related Parties
All transactions entered by the Company during the financial year with
related parties were in the ordinary course of business and on an arm''s
length basis. There is no material contract or arrangement in terms of
SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015. Hence requirement of furnishing particulars of contracts or
arrangements entered into by the Company with related parties referred
in Section 188(1) of the Companies Act, 2013, in Form AOC-2 is
considered to be not applicable to the Company.
The details of all the Related Party Transactions form part of notes to
the financial statements attached to this Annual Report.
The Policy on materiality of related party transactions and dealing
with related party transactions as approved by the Board may be
accessed on the Company''s website www.maxfinancialservices.com As per
the requirement of Section 188 of Companies Act, 2013 read with Listing
Regulations, 2015, appropriate resolution for the approval of the
shareholders with respect to entering into an agreement with one of the
related parties is being placed for your approval at the ensuing Annual
General Meeting.
Statutory Auditors and Auditors'' Report
Pursuant to Sections 139 & 142 of the Act, M/s Deloitte Haskins and
Sells, LLP, Chartered Accountants, were appointed as the Statutory
Auditors of the Company at Annual General Meeting held on September 23,
2015 for a period of five years, subject to ratification of their
appointment in every Annual General Meeting held during their tenure.
M/s Deloitte Haskins and Sells, LLP, Statutory Auditors, have provided
a certificate that their appointment, if ratified, will be in
conformity with the provisions of Section 141 of Companies Act, 2013.
There are no audit qualifications or reporting of fraud in the
Statutory Auditors Report given by M/s Deloitte Haskins and Sells, LLP,
Statutory Auditors of the Company for the FY 2015-16 as annexed
elsewhere in this Annual Report.
Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Act, your Company had appointed M/s
Chandrasekaran Associates, Practicing Company Secretaries, New Delhi as
its Secretarial Auditors to conduct the secretarial audit of the
Company for the FY 2015-16. The Company provided all assistance and
facilities to the Secretarial Auditor for conducting their audit. The
Report of Secretarial Auditor for the FY 2015-16 is annexed to this
report as Annexure-5.
There are no audit qualifications in the said Secretarial Audit Report.
Internal Auditors
During the year under review, M/s MGC and KNAV, Global Risk Advisory
LLP were appointed as Internal Auditors for conducting the Internal
Audit of key functions and assessment of Internal Financial Controls
etc.
Risk Management
Your Company considers that risk is an integral part of its business
and therefore, it takes proper steps to manage all risks in a proactive
and efficient manner. The Board has formed a Risk and Compliance Review
Committee to identify the risks impacting the business, formulate
strategies/ policies aimed at risk mitigation as part of risk
management. Further, a core team comprising of senior management has
also been formed to identify and assess key risks, risk appetite,
tolerance levels and formulate strategies for mitigation of risks
identified in consultation with process owners.
On the recommendation of the Committee, the Company has adopted a Risk
Management policy, whereby, risks are broadly categorized into
Strategic, Operational, Compliance and Financial & Reporting Risks.
The Policy outlines the parameters of identification, assessment,
monitoring and mitigation of various risks which are key to the
business performance.
Internal Financial Controls
The Company has in place adequate internal financial controls with
reference to financial statements. During the year, such controls were
tested and no reportable material weaknesses in the design or operation
were observed. The Control Assurance & Risk Management Department of
the Company have reviewed the existence of various risk-based controls
in the Company and also tested the key controls towards assurance for
compliance for the present fiscal. Further, the testing of such
controls shall also be carried out independently by the Statutory
Auditors from the financial year 2015-16 onwards as mandated under the
provisions of the Act.
In the opinion of the Board, the existing internal control framework is
adequate and commensurate with the size and nature of the business of
the Company.
Vigil Mechanism
The Company has a vigil mechanism pursuant to which a Whistle Blower
Policy has been adopted and is in place. The Policy ensures that strict
confidentiality is maintained whilst dealing with concerns raised and
also that no discrimination will be meted out to any person for a
genuinely raised concern in respect of any unethical and improper
practices, fraud or violation of Company''s Code of Conduct.
The said Policy covering all employees, Directors and other persons
having association with the Company is hosted on the Company''s website
www.maxfinancialservices.com. Particulars of Conservation Of Energy,
Technology Absorption and Foreign Exchange Earnings & Outgo The
information on conservation of energy, technology absorption and
foreign exchange earnings & outgo as stipulated under Section 134(3)(m)
of the Act read with Companies (Accounts) Rules, 2014 is as follows:
a) Conservation of Energy
(i) the steps taken or impact on conservation of energy: Regular
efforts are made to conserve the energy through various means such as
use of low energy consuming lightings, etc.
(ii) the steps taken by the Company for using alternate sources of
energy: Since your Company is not an energy intensive unit, utilization
of alternate source of energy may not be feasible.
(iii)Capital investment on energy conservation equipment : Nil
b) Technology Absorption
Your Company is not engaged in manufacturing activities, therefore
there is no specific information to be furnished in this regard.
There was no expenditure incurred on Research and Development during
the period under review.
c) Foreign Exchange Earnings and Outgo
The foreign exchange earnings and outgo are given below:
Total Foreign Exchange earned : Nil
Total Foreign Exchange used : Rs. 418.82 Lacs
Extracts of Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Act read with
Rule 12 of the Companies (Management and Administration) Rules, 2014,
the extracts of the Annual Return as at March 31, 2016 forms part of
this report as Annexure 1.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Companies Act,
2013, it is hereby confirmed 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 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 were operating effectively; and
(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. Significant and material orders
passed by the regulators or courts or tribunals During the year under
review, there were no such significant and material orders passed by
the regulators or courts or tribunals which could impact the going
concern status and company''s operations in future.
Cautionary Statement
Statements in this Report, particularly those which relate to
Management Discussion and Analysis describing the Company''s objectives,
projections, estimates and expectations may constitute "forward looking
statements" within the meaning of applicable laws and regulations.
Actual results might differ materially from those either expressed or
implied in the statement depending on the circumstances.
Acknowledgements
Your Directors would like to place on record their appreciation of the
contribution made by its management and its employees who through their
competence and commitment have enabled the Company to achieve
impressive growth. Your Directors acknowledge with thanks the
co-operation and assistance received from various agencies of the
Central and State Governments, Financial Institutions and Banks,
Shareholders, Joint Venture partners and all other business associates.
On behalf of the Board of Directors Max Financial Services Limited
(Formerly Max India Limited)
Mumbai Naina Lal Kidwai
August 8, 2016 Chairman
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the twenty-seventh Board's
Report of your Company along with the audited Statement of Accounts for
the financial year ended March 31, 2015. This Board's report is
prepared on the basis of standalone financial statements of the Company
for the year ended March 31, 2015.
Standalone Results
The highlights of the stand-alone financial results of your Company
along with previous year's figures are as under:
(Rs. Crore)
Year ended Year ended
March 31,2015 March 31,2014
Income
Net sales - 733.3
Revenue from Investment Activities 581.8 262.6
Other income 2.9 12.5
Total revenue (I) 584.7 1008.4
Expenditure
Manufacturing expenses - 528.5
(Increase)/decrease in inventories of - (4.9)
finished goods and work-in-progress
Employee benefits expenses 52.6 79.4
Other expenses 58.5 180.0
Depreciation and amortization 4.4 23.6
Financial expenses 0.5 21.8
Total expenses (II) 116.0 828.4
Profit/(loss)beforetax 468.7 180.0
Tax expense 77.7 (5.2)
Profit/(Loss)AfterTax 391.0 185.2
Significant improvement in operating performance: FY15* vs. FY14**
* Revenue - 10%
* Profit Before Tax-5%
* FY15 adjusted for one off exceptional gain from equalization of
shareholding in Max Healthcare.
** FY14 adjusted for MSF numbers
The Company has a healthy treasury corpus of Rs 572 crore as at March
31, 2015. Net worth rose 8% to Rs 3,454 crore during the year, on a
standalone basis.
Max Speciality Films (MSF), a division of the Company till FY 2013- 14,
became its subsidiary effective April 1, 2014. MSF manufactures
specialty BOPP (Bi-axially Oriented polypropylene) films for flexible
packaging of food, confectionery, and fast moving consumer goods (FMCG)
as well as for industrial packaging. Thus, the results of
currentyearare not strictly comparable with last year.
Consolidated Results
In accordance with the Companies Act, 2013 ("the Act") and Accounting
Standard (AS) -21 on Consolidated Financial Statements read with AS -
27 on Financial Reporting of Interests in Joint Ventures, the audited
consolidated financial statement is provided as part of this Annual
Report.
The high lights of the consolidated financial results of your Company
and its subsidiaries are as under:
(Rs. Crore)
Year ended Year ended
March 31, 2015 March 31,2014
Income
Net Sales 838.5 890.5
Service Income 9,183.8 8,221.3
Other operating revenue and 4,793.1 2,514.6
investment income
Other Income 61.2 56.9
Total Revenue (I) 14,876.6 11,683.3
Expenses
Cost of raw material consumed 514.6 528.5
Purchase of pharmacy and 269.4 327.2
pharmaceuticals supplies
(Increase)/ decrease in inventories of (3.5) (3.7)
work-ln-progress, finished goods and
traded goods
Employee benefits expense 1,009.5 956.8
Change in policy reserves 6,443.1 4,228.9
Other expenses 5,894.6 5,140.0
Depreciation & Amortisation 153.8 137.9
Financial Expenses 82.6 93.2
Total Expenses (II) 14,364.1 11,408.8
Profit /(Loss) Before Tax (l-ll) 512.5 274.5
Tax Expense 147.6 65.0
Profit / (Loss) After Tax 364.9 209.5
Minority Interest 85.3 70.0
Profit/(Loss) after tax (after adjusting 279.6 139.5
Minority Interest)
Significant improvement in operating performance: FY15 vs. FY14
* Revenue - 27%
* ProfitBeforeTax-87%
* Profit After Tax - 74%
Net worth rose 11% to Rs 3,302 crore during the year, on a consolidated
basis.
The Board of Directors has by a resolution passed in its meeting held
on August 12, 2015 given consent for not attaching the balance sheets
of the subsidiaries concerned. The full balance sheet including balance
sheets of subsidiaries of the Company is available on our website
www.maxindia.com . These documents will also be available for
inspection during business hours at the registered office of the
Company.
Subsidiaries & Associates
During the year, Life Healthcare (Pty) Limited and International
Finance Corporation have further invested in equity share capital of
one of the subsidiaries of the Company, namely Max Healthcare Institute
Limited (MHIL) resulting in dilution of the Company's holding from
65.86% to 45.95%. As a result of these transactions, MHIL ceased to be
a subsidiary of the Company w.e.f. November 10, 2014 and became an
associate Company w.e.f. November 10, 2014.
As on March 31, 2015, your Company had 15 subsidiaries and 5 Associate
companies, out of which 11 are wholly owned subsidiaries of the Company.
Pursuant to Sec 134(3)(q) ofthe Act, and Rule 8(5) (iv) of the Companies
(Accounts) Rules, 2014, the list of subsidiaries/ associates and the
proportionate ownership of the Company in them along with names of
Companies which have ceased to be subsidiaries, JVs and associates is
part of Form MGT-9 attached as Annexure-1.
A report on the performance and financial position of each of the
subsidiaries, associates and joint venture companies included in the
consolidated financial statement presented in Form AOC - 1 is attached
as Annexure-2 and is part of the Annual Report as per Rule 8(1) of the
Companies (Accounts) Rules, 2014.
Further, a detailed update on the business achievements of your
Company's key operating subsidiaries is furnished as part of Management
Discussion and Analysis section which forms part of the Report.
Material Changes Affecting Financial Position
There are no material changes and commitments, affecting the financial
position of the Company which has occurred between the end of the
financial year of the Company i.e. March 31, 2015 and the date of the
Directors' report i.e. August 12, 2015.
Corporate Restructuring plan in the form of Scheme of Demerger of the
Company
The Board of Max India Limited ('the Company') in its meeting held on
January 27, 2015 approved a Corporate Restructuring plan to vertically
split the Company through a demerger to three companies, the existing
company and the two resulting companies to be listed on demerger
becoming effective. This would enable the investors in the Company to
have a choice, to be associated with the underlying businesses through
separate listed entities, or specifically with the relatively matured
business of life insurance, and/or have a separate access to the mature
manufacturing business of speciality films, and/or in the health and
allied businesses which are in their relative growth phase or nascent
stage of development and have higher capital requirements. In addition,
the restructuring would also result in a sharper focus on underlying
businesses and unlock value for shareholders. The salient details of
the Scheme of Demergerare as follows:
(i) The existing company, Max India Limited, is proposed to be renamed
'Max Financial Services Limited' upon demerger and will focus solely on
the group's flagship life insurance activity, through its 72%
shareholding in Max Life Insurance Company Limited ("Max Life"), making
it the first Indian listed company exclusively focused on life
insurance. The Insurance Laws (Amendment) Ordinance, 2014, recently
promulgated by the President of India, and widely expected to be
approved as an Act, has created renewed investor interest in the life
insurance sector.
(ii) Upon completion of the demerger, it is proposed to name the second
vertical as Max India Limited ("Resulting Company 1"), which will
continue to manage investments in the high potential health and allied
businesses including in: - Max Healthcare Institute Limited, Max Bupa
Health Insurance Company Limited, Antara Senior Living Limited and
supported by a corporate management services team. The demerger will
provide these businesses, which are currently in their growth and
development phases, sharpened focus to fulfill their tremendous
potential. The corporate management services team will manage shared
services facilities and provide functional support to all 3 verticals.
(iii) The third vertical will house the investment activity in the
group's manufacturing subsidiary, Max Speciality Films Limited - an
innovation leader in the speciality packaging films business - and will
be named Max Ventures and Industries Limited ("ResultingCompany2").
(iv) The Company's shareholders whose name will appear in the register
of members on a 'Record Date', to be specified for the said purpose
once the demerger scheme is effective, will retain one equity share of
Rs. 2/- in Max Financial Services Limited (existing Max India, as
renamed). In addition, the shareholders will get shares in the new
companies as detailed below:
1. one equity share of Rs. 2/- each of Resulting Company 1 for every one
equity share of Rs. 2/- each held in the Company; and
2. one equity share of Rs. 10/- each of Resulting Company 2 for every 5
equity shares of Rs. 2/- each held in the Company.
(v) The Company has a Treasury Corpus of Rs. 572 Cr. as at March 31,
2015 It is proposed to split the cash reserves as on Appointed Date of
April 1, 2015 between the 3 listed companies such that the Company will
hold Rs. 150 Cr., Resulting Company 2 will hold Rs. 10 Cr. and the
balance, Rs. 412 Cr., will be held by Resulting Company 1.
(vi) The Appointed Date for the demerger is April 1, 2015.
Current status on the Scheme of Demerger
The Company has received approvals from SEBI and CCI for the proposed
scheme of demerger. Pursuant to the order of Hon'ble High Court of
Punjab and Haryana at Chandigarh, the court convened meeting of
shareholders of the Company was held on July 4, 2015 at 11:00 A.M. at
the Registered Office of the Company at Bhai Mohan Singh Nagar,
Railmajra, Tehsil Balachaur, District Nawanshahr, Punjab - 144 533 and
the report of the Court appointed Chairman was filed with the Hon'ble
High Court. 99.99% of the total voting of the shareholders of the
Company at the meeting and by e-voting, voted in favour of the Scheme
of Demerger.
The Company has filed the second petition before the Hon'ble High Court
seeking its approval for the Scheme of Demerger.
Dividend
Your Directors had approved payment of Interim Dividend of 200%, i.e.,
Rs.4.00/- per equity share of Rs.2/- each for the financial year
2014-15. Your Company made the payment of the aforesaid interim
dividend to shareholders on December 4, 2014.
The Board of Directors of your Company have further recommended a Anal
dividend of 50% amounting to Re.1.00 per equity share (on face value of
Rs.2/- each) to the Shareholders for their approval at the ensuing
Annual General Meeting scheduled to be held on September 23, 2015 and
if approved, the same will be paid to the shareholders, in compliance
with the applicable legislations. For shares held in electronic form,
the dividend will be paid on the basis of beneficial ownership
furnished by Depositories, viz., NSDL and CDSL for this purpose.
Transfer to Reserves
The company has not transferred any amount to reserves.
Share Capital
The Authorized share capital of the Company as on March 31, 2015 was
Rs. 100,00,00,000/- (Rupees One Hundred crores only) comprising of
46,00,00,000 equity shares of Rs. 2/- each and 8,00,000 preference
shares of Rs. 100/- each.
The Paid up capital of the Company as on March 31, 2015 was Rs.
53,30,05,546/- (Rupees Fifty three crores thirty lacs five thousand
five hundred and forty six only) comprising of 26,65,02,773 equity
shares of Rs. 2/- each.
During the year under review; 2,75,516 equity shares were allotted
under 'Employee Stock Plan 2003' ('2003 Plan') as Employee Stock
Options.
Employee Stock Option Plan
Your Company has an employee stock option plan viz., 'Max India
Employee Stock Plan 2003' ('2003 Plan'). The 2003 Plan provides for
grant of stock options aggregating not more than 5% of number of issued
equity shares of the Company to eligible employees and directors of the
Company. The 2003 Plan is administered by the Nomination and
Remuneration Committee appointed by the Board of Directors. During the
year under review, upon exercise of options, 2,75,516 equity shares of
Rs. 2/- each for cash at par were allotted.
Details of Options granted up to March 31, 2015 and other disclosures
as required under SEBI Regulations are enclosed as Annexure-3 to this
Report. The Company is seeking the approval of the shareholders in the
ensuing Annual General Meeting for amendment to the '2003 Plan' to
align with the provision of SEBI (Share Based Employee Benefits),
Regulations, 2014 and for certain administrative convenience.
Directors
Your Company has fourteen (14) Directors consisting of eight (8)
Independent Directors, (2) Executive Directors and four (4) Non-
executive Directors as on March 31, 2015.
During the year under review, the following changes took place.
* Dr. Subash Bijlani, who did not offer him self for re-appointment as
a Director at the Annual General Meeting held on September 30, 2014
ceased to be a Director of the Company w.e.f. September30, 2014.
* Mr. Dinesh Kumar Mittal and Mrs. Nirupama Rao were appointed as
Additional Directors to act as Independent Directors of the Company on
January 1, 2015. Their term of office expires on the date of ensuing
Annual General Meeting.
The Company has received notices under Section 160 of the Act from
members proposing the candidature of Mr. Dinesh Kumar Mittal and Mrs.
Nirupama Rao for being appointed as Directors of the Company. The Board
of Directors recommend to the shareholders for their appointment as
Independent Directors of the Company.
In terms of Section 152 of the Act and the Articles of Association of
the Company, Mr. Ashwani Windlass, Mr. Sanjeev Mehra and Mr. Mohit
Talwar are liable to retire by rotation at the ensuing Annual General
Meeting. Mr. Ashwani Windlass, Mr. Sanjeev Mehra and Mr. Mohit Talwar
being eligible, offer themselves for re-appointment at the ensuing
Annual General Meeting.
The Board met six times during the financial year 2014-15, viz., on May
28, 2014, July 22, 2014, August 13, 2014, November 12, 2014 January 27,
2015 and February 12, 2015. The details regarding the number of
meetings attended by each Director during the period under review are
part of the information furnished in the Corporate Governance Report
attached as part of this Annual Report.
Statement of Declaration by Independent Directors
In terms of Section 149(6) of the Act and Clause 49 of the Listing
agreement and based on the confirmation/ disclosures received from the
Directors, the following Non-Executive Directors are Independent
Directors of the Company: Mr. N.C. Singhal, Mr. Rajesh Khanna, Mr. Aman
Mehta, Prof. Dipankar Gupta, Dr. Ajit Singh, Mr. Ashok Kacker, Mrs.
Nirupama Raoand Mr. Dinesh Kumar Mittal.
The Company is in receipt of declaration of independence from all the
above mentioned Independent Directors as per Section 149(7) of the Act.
Committee of Board of Directors
The Company has the following committees which have been established as
a part of the best corporate governance practices and are in compliance
with the requirements of the relevant provisions of applicable laws and
statutes. A detailed note on the same is provided under the Corporate
Governance Report attached elsewhere in this Annual Report.
1. Audit Committee:
The Audit Committee consists of Mr. N.C. Singhal, Mr. Ashwani Windlass,
Mr. Rajesh Khanna and Mr. Ashok Kacker. The Committee met six times
during the financial year 2014-15, viz., on May 28, 2014, August 12,
2014, October 6, 2014, November 11, 2014, January 27, 2015 and February
12, 2015.
2. Nomination and Remuneration Committee:
The Nomination and Remuneration consists of Mr. Rajesh Khanna, Mr. N.C.
Singhal, Mr. Aman Mehta and Mr. Ashwani Windlass. This Committee met
eight times duringthe financial year 2014-15, viz., on August 4, 2014,
August 13, 2014, November 11, 2014, November 20, 2014, December 12,
2014, January 27, 2015, February 12, 2015 and March 27, 2015.
3. Investment & Finance Committee:
This Committee consists of Mr. Ashwani Windlass, Mr. N.C. Singhal, Mr.
Sanjeev Mehra, Mr. Rahul Khosla and Mr. Mohit Talwar. The Committee met
eight times during the financial year 2014-15, viz., on May 28, 2014,
July 22, 2014, August 12, 2014, October 6, 2014, November 11, 2014,
January 27, 2015, February 12, 2015 and March 25, 2015.
4. Corporate Social Responsibility Committee:
In compliance with Section 135 of the Companies Act, 2013 read with the
Companies (Corporate Social Responsibility Policy) Rules, 2014, the
Corporate Social Responsibility Committee was formed w.e.f. August 13,
2014. The Committee consists of Mr. N.C. Singhal, Mr. Ashwani Windlass,
Mr. Rajesh Khanna, Mr. Aman Mehta, Dr. Ajit Singh, Mr. Dipankar Gupta
and Mr. Ashok Kacker. This Committee met two times during the financial
year 2014-15, viz., on November 12, 2014 and February 12, 2015.
5. Committee of Independent Directors:
The Committee of Independent Directors consists of Mr. N.C. Singhal,
Mr. Rajesh Khanna, Mr. Aman Mehta, Prof. Dipankar Gupta, Dr. Ajit
Singh, Mr. Ashok Kacker, Mrs. Nirupama Rao and Mr. Dinesh Kumar Mittal.
The Committee met once on February 12, 2015 during the financial year
2014-15. Later the Committee met on August 12, 2015. The meeting was
conducted to:
(a) Review the performance of non-independent directors and the Board
as a whole;
(b) Review the performance of the Chairperson of the Company, taking
into account the views of executive directors and non-executive
directors;
(c) Assess the quality, quantity and timeliness of flow of information
between the Company management and the Board that is necessary for the
Board to effectively and reasonably perform their duties.
6. Stakeholders' Relationship Committee:
The Committee consists of Mr. Ashwani Windlass, Mr. N.C. Singhal, Mr.
Rahul Khosla and Mr. Mohit Talwar. The Committee met five times during
the financial year 2014-15, viz., May 28, 2014, August 12, 2014,
September 29, 2014, February 12, 2015 and March 25, 2015.
7. Risk & Compliance Review Committee:
The Committee was formed on August 13, 2014. The Committee consists of
Mr. N.C. Singhal, Mr. Ashwani Windlass, Mr. Rajesh Khanna, Mr. Aman
Mehta, Dr. Ajit Singh, Prof. Dipankar Gupta and Mr. Ashok Kacker. The
Committee met twice during the financial year 2014-15, viz., November
12, 2014 and February 12, 2015.
Performance Evaluation of the Board
As per the requirements of the Act, formal Annual Evaluation process
has been carried out for evaluating the performance of the Board, the
Committees of the Board and the Individual Directors.
The performance evaluation was carried out by obtaining feedback from
all directors through a confidential online survey mechanism through
Board Link, a secured electronic medium through which the Company
interfaces with its Directors. The outcome of this performance
evaluation was placed before the Nomination and Remuneration Committee
and Independent Directors' Committee meetings and the Board meeting for
the consideration of the members.
The review concluded by affirming that the Board as a whole as well as
its Chairman, all of its members, individually and the Committees of
the Board continued to display commitment to good governance by
ensuring a constant improvement of processes and procedures.
It was further acknowledged that every individual member and Committee
of the Board contribute their best in the overall growth of the
organization.
Key Managerial Personnel
During the financial year 2014-15, Mr. Rahul Khosla, Managing Director,
Mr. Mohit Talwar, Dy. Managing Director, Mr. Rahul Ahuja, Chief
Financial Officer and Mr. V. Krishnan, Company Secretary were
designated as Key Managerial Personnel of the Company pursuant to
Section 203 of the Act.
Arising from the transition in the roles, Mrs. Sujatha Ratnam, Senior
Director - Corporate Finance was appointed as a Key Managerial
Personnel designated as Chief Financial Officer of the Company
effective June 1, 2015, in place of Mr. Rahul Ahuja. Mr. Rahul Ahuja
has assumed the role of Chief Financial Officer of Max Bupa Health
Insurance Company Limited, a subsidiary of the Company effective June
1, 2015.
Nomination & Remuneration Committee Policy
In adherence to the provisions of Section 134 (3)(e) and 178 (1) & (3)
of the Act, the Board of Directors on the recommendation of the
Nomination and Remuneration Committee, approved a policy on Director's
appointment and remuneration including criteria for determining
qualifications, positive attributes, independence of a Director and
other matters provided and the same is attached as Annexure-4.
Corporate Social Responsibility
The Board of Directors has adopted a CSR policy as approved by the
Corporate Social Responsibility Committee which is available on the
website of the Company at www.maxindia.com. The Annual Report on CSR as
per the Companies (Corporate Social Responsibility Policy) Rules, 2014
is attached as Annexure-5.
Human resources
We are a multi-business corporate in the 'Businesses of Life' focusing
on life insurance, healthcare, health insurance and other related
businesses. We endeavor to be the most preferred solution provider in
life's many moments of truth for the millions of lives that we aspire
to positively impact and are driven by our core values - Sevabhav,
Excellence and Credibility. The health and performance of the group has
improved steadily over the last three years and is reflected in our
results. The remuneration of our employees is competitive with the
market and rewards high performers across levels. The remuneration to
Directors, Key Managerial Personnel and Senior Management are a balance
between Axed, incentive pay and long-term equity program based on the
performance objectives appropriate to the working of the Company and
its goals and is reviewed periodically and approved by the Nomination
and Remuneration Committee of the Board. The remuneration of the
Whole-time directors is within the limits approved by the shareholders
of the Company at the Extra Ordinary General Meeting of Max India
Limited held on December 5, 2013.
Details pursuant to Section 197 (12) of the Act, read with the Rule 5(1)
and Rule 5(2) of Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are attached as Annexure-6 (a)&(b).
Prevention of Sexual Harassment of women at workplace
Max India Limited has requisite policy for prevention of Sexual
Harassment of Women at workplace. The comprehensive policy ensures
gender equality and the right to work with dignity. The Internal
Complaints Committee has been constituted as per provisions of the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013. No case under the said Act has been reported to
the Committee during the year under review.
Loans, Guarantees or Investments in Securities
The Company has pursuant to the provisions of Section 186 of the Act,
given loans, made guarantees and investments during the year under
review.
The details of Loans, guarantees and investments are provided in Notes
11, 14, 15, 39 and 40 to the financial statements of the Company for
the FY 2014-15.
Management Discussion & Analysis
In terms of Clause 49 of the Listing Agreement, a review of the
performance of businesses, including those of your Company's joint
ventures and subsidiaries, is provided in the Management Discussion &
Analysis section which is attached elsewhere in this Annual Report.
Report on Corporate Governance
The Company has complied with all the mandatory requirements of
Corporate Governance specified by the Securities and Exchange Board of
India through clause 49 of the Listing Agreement. As required by the
said Clause, a separate Report on Corporate Governance forms part of
the Annual Report of the Company.
A certificate from M/s Sanjay Grover & Associates, Practicing Company
Secretaries regarding compliance with the conditions of Corporate
Governance and a certificate from the Managing Director and Chief
Financial Officer on compliance of Clause 49 of the Listing Agreement
form part of the Corporate Governance Report.
Public Deposits
During the year under review, the Company has not accepted or renewed
any deposits from the public.
Contracts or Arrangements with Related Parties
All Related Party Transactions (RPTs) as per the provisions of the Act,
that were entered during the financial year were in the ordinary course
of the business of the Company and were on arm's length basis. There
was no materially significant related party transaction entered by the
Company with Promoters, Directors, Key Managerial Personnel or other
persons which may have a potential conflict with the interest of the
Company.
Since all RPTs entered into by the Company were in the ordinary course
of business and were on an arm's length basis, form AOC-2 is not
applicable to the Company. However, the details of all the RPTs have
been elaborately disclosed in the Notes to the Accounts of the Company
for the financial year ended March 31, 2015 attached to this Annual
Report.
Auditor & Auditors' Report
Pursuant to Section 139 & 142 of the Act, M/sSR Batliboi &Co. LLP,
Chartered Accountants, were appointed as the Statutory Auditors of the
Company at the Annual General Meeting held on September 30, 2014 for a
period upto the date of the next annual general meeting of the Company.
There are no audit qualifications or reporting of fraud in the
Statutory Auditors Report given by M/s. S R Batliboi & Co. LLP,
Statutory Auditors of the Company for the financial year 2014-15 as
annexed elsewhere in this Annual Report.
M/s. S R Batliboi & Co. LLP, have expressed their unwillingness to be
reappointed as Statutory Auditors of the Company. It is proposed to
appoint M/s. Deloitte Haskins & Sells, LLP, in place of M/s SR Batliboi
& Co.LLP as Statutory Auditors of the Company, till conclusion of
Annual General Meeting to be held in financial year 2020.
Your Company received a written consent from M/s. Deloitte Haskins &
Sells, LLP, Chartered Accountants, as required under Section 139 of the
Act and a certificate to the effect that their appointment, if may,
would be in accordance with the limits prescribed under Section 141 of
the Act.
Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Act, your Company had appointed M/s
Chandrasekaran Associates, Company Secretaries, New Delhi as its
Secretarial Auditors to conduct the secretarial audit of the Company for
the FY 2014-15. The Company provided all assistance and facilities to
the Secretarial Auditor for conducting the audit. The Report of
Secretarial Auditor for the FY 2014-15 is annexed to this report as
Annexure-7. There is no Audit Qualifications in the said Secretarial
Audit Report.
Risk Management Policy
The Board has formed a Risk Management Committee to identify the risks
impacting the business, formulate strategies/ policies aimed at risk
mitigation as part of risk management. Further, a core team comprising
of senior management has also been formed to identify and assess key
risks, risk appetite, tolerance levels and formulate strategies for
mitigation of risks identified in consultation with process owners.
On the recommendation of the Risk and Compliance Review Committee in
its meeting held on February 12, 2015, the Board of Directors, in its
meeting held on May 27, 2015 has adopted a Risk Management policy for
the Company, whereby, risks are broadly categorized into Strategic,
Operational, Compliance, and Financial & Reporting Risks. The Policy
outlines the parameters of identification, assessment, monitoring and
mitigation of various risks which are key to business performance.
Internal Financial Control
The Company has in place adequate internal financial controls with
reference to financial statements. During the year, such controls were
tested and no reportable material weaknesses in the design or operation
were observed. The Control Assurance & Risk Management Department of
the Company have reviewed the existence of various risk-based controls
in the Company and also tested the key controls towards assurance for
compliance for the present fiscal. Further, the testing of such
controls shall also be carried out independently by the Statutory
Auditors from the financial year 2015-16 onwards as mandated under the
provisions of the Act.
In the opinion of the Board, the existing internal control framework is
adequate and commensurate with the size and nature of the business of
the Company.
Vigil Mechanism
The Company has a vigil mechanism pursuant to which a Whistle Blower
Policy is in place. The Policy ensures that strict confidentiality is
maintained whilst dealing with concerns and also that no discrimination
will be meted out to any person for a genuinely raised concern. The
said Policy is hosted on the Company's website at www.maxindia.com.
Particulars of Conservation Of Energy, Technology Absorption & Foreign
Exchange Earning and Outgo
As your Company does not carry on any manufacturing operations,
information in accordance with the provisions of Section 134 (3)(m) of
the Act read with Rule (8) (3) of the Companies (Accounts) Rules, 2014
is not furnished herewith.
Extracts of Annual Return
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of
Section 92 of the Act read with Rule 12 of the Companies (Management
and Administration) Rules, 2014 the extracts of the Annual Return as at
March 31, 2015 forms part of this report as Annexure 1.
Directors' Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Act, it is
hereby confirmed 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 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 were operating effectively; and
(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.
Cautionary Statement
Statements in this Report, particularly those which relate to
Management Discussion and Analysis describing the Company's objectives,
projections, estimates and expectations may constitute "forward looking
statements" with in the meaning of applicable laws and regulations.
Actual results might differ materially from those either expressed or
implied in the statement depending on the circumstances.
Acknowledgements
Your Directors would like to place on record their appreciation of the
contribution made by its management and its employees who through their
competence and commitment have enabled the Company to achieve
impressive growth. Your Directors acknowledge with thanks the
co-operation and assistance received from various agencies of the
Central and State Governments, the Regulatory Authorities, Financial
Institutions and Banks, Shareholders, Joint Venture partners and all
other business associates.
For and on behalf of the Board of Directors
Max India Limited
New Delhi Analjit Singh
August 12, 2015 Chairman
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the twenty-sixth Annual
Report of your Company with the audited Statement of Accounts for the
fnancial year ended March 31, 2014.
Consolidated Results
The highlights of the consolidated fnancial results of your Company and
its subsidiaries are as under:
(Rs. Crore)
Year ended Year ended
March 31, 2014 March 31, 2013
Income
Net Sales 896.2 888.3
Service Income 8,242.6 7,292.1
Other operating revenue
and investment income 2,487.6 2,381.6
Other Income 56.9 61.6
Total Income (I) 11,683.3 10,623.6
Expenses
Cost of raw
material consumed 528.5 515.7
Purchase of pharmacy and
pharmaceuticals supplies 327.2 288.9
(Increase)/ decrease in
inventories of work- (3.7) (0.6)
In-progress,
fnished goods and
traded goods
Employee benefts expense 956.8 880.0
Change in policy reserves 4,228.9 3,050.7
Other expenses 5,140.0 4,676.3
Depreciation & Amortisation 137.9 136.8
Financial Expenses 93.2 84.4
Total Expenses (II) 11,408.8 9,632.2
Proft /(Loss) Before Tax (I-II) 274.5 991.4
Tax Expense 65.0 141.9
Proft / (Loss) After Tax 209.5 849.5
Minority Interest 70.0 65.4
Proft/(Loss) after tax,
(after adjusting
Minority Interest) 139.5 784.1
Signifcant improvement in operating performance: FY14 vs FY13*
- Net Revenue - 19%
- Proft Before Tax - 39%
- Proft After Tax - 44%
*FY13 adjusted for one off exceptional gain
The Company recommended a fnal dividend of 90%, taking the annual
dividend to 180%. The Company has a healthy treasury corpus of Rs 235
crore as at March 31, 2014. Net worth rose 3% to Rs 2,984 crore during
the year, on a consolidated basis.
A detailed update on the business achievements of your Company''s key
operating subsidiaries is furnished as part of Management Discussions
and Analysis section which forms part of the Report.
Standalone Results
The highlights of the stand-alone fnancial results of your Company are
as under:
(Rs. Crore)
Year ended Year ended
March 31,2014 March 31,2013
Income
Net sales 732.3 713.4
Revenue from Investment Activities 263.6 801.7
Other income 12.5 12.6
Total revenue (I) 1008.4 1,527.7
Expenditure
Manufacturing expenses 528.5 515.7
(Increase)/decrease
in inventories of (4.9) 0.8
fnished goods and work-in-progress
Employee benefts expenses 79.4 81.7
Other expenses 180.0 238.8
Depreciation and amortization 23.6 23.8
Financial expenses 21.8 17.4
Total expenses (II) 828.4 878.2
Proft/(loss) before tax 180.0 649.5
Tax expense (5.2) 88.0
Proft/(Loss) After Tax 185.2 561.5
Signifcant improvement in operating performance: FY14 vs FY13*
- Revenue - 21%
- Proft Before Tax - 29 times
- Investment Income - 142% *FY13 adjusted for one off exceptional gains
Max Speciality Films (MSF), a division of Max India Limited till
FY2014, became a subsidiary of the Company effective April 1, 2014. MSF
manufactures specialty BOPP (Bi-axially Oriented Polypropylene) flms
for fexible packaging of food, confectionery, and fast moving consumer
goods (FMCG) as well as for industrial packaging. The company also
produces a line of leather coating flms. Over the years MSF has
established a reputation for product innovation and customer service.
In FY2013-14, MSF delivered signifcantly improved performance as
compared to FY2012-13, MSF''s sales grew by 3% whereas EBIDTA grew 32%
from Rs 43 crore in FY2012-13 to Rs 57 crore in FY2013-14. Export
business accounted for 37% of net sales in FY2013-14 and registered a
growth of 9%.
Dividend
Your Directors had approved payment of Interim Dividend of 90%, i.e.,
Rs.1.80/- per equity share of Rs.2/- each for the fnancial year
2013-14. Your Company made the payment of the aforesaid interim
dividend to shareholders in the month of November 2013.
The Board of Directors of your Company further recommended a fnal
dividend of 90% amounting to Rs.1.80 per equity share (on face value of
Rs.2/- each) to the Shareholders for their approval at the ensuing
Annual General Meeting scheduled to be held on September 30, 2014 and
if approved, the same will be paid to the shareholders, in compliance
with the applicable legislations. For shares held in electronic form,
the dividend will be paid on the basis of benefcial ownership furnished
by Depositories, viz., NSDL and CDSL for this purpose.
Transfer to Reserves
The Company proposes to transfer Rs. 18.5 crores to the general reserve
out of the amount available for appropriation and an amount of Rs. 167
crores is proposed to be retained in the proft and loss account.
Directors
Your Directors approved the transition in the role of Mr. Analjit Singh
to become the Non Executive Chairman of the Company effective April 1,
2014. Mr. Analjit Singh will now focus as the Non Executive Chairman of
the Company on: (a) Medium and long term strategy (b) Review of
talent/human capital related subjects (c) Board management and
governance processes (d) Focus on service excellence and (e) Government
relations.
As per the provisions of the Companies Act, 2013 (''the Act''),
Independent Directors are required to be appointed for a term of fve
consecutive years and shall not be liable to retire by rotation.
Accordingly, resolutions proposing appointment of Mr. Rajesh Khanna,
Mr. Aman Mehta, Dr. Dipankar Gupta and Mr. Ashok Kacker for a fve year
term and Mr. N.C. Singhal for a two year term as he will be retiring on
August 10, 2016, i.e., on completion of the age of 80 years, form part
of the Notice of the Annual General Meeting. Dr. Subash Bijlani did not
offer himself for re-appointment as an Independent Director of the
Company at the ensuing Annual General Meeting. He will cease to be a
director on the Board on September 30, 2014.
In accordance with the provisions of the Act, Mr. Ashwani Windlass, Mr.
Sajeev Mehra and Mr. Mohit Talwar retire by rotation at the ensuing
Annual General Meeting. Mr. Ashwani Windlass, Mr. Sanjeev Mehra and Mr.
Mohit Talwar have offered themselves for re-election at the ensuing
Annual General Meeting.
Increase in paid up share capital of the Company
The paid up equity share capital of the Company increased from Rs.
53,10,40,578/- as of March 31, 2013 to Rs. 53,25,91,514/- as of the
date of this report arising from the allotment of 7,75,468 equity
shares under "Employee Stock Plan 2003"
Business Investments
During the year under review,your Company made investment of Rs. 92.20
Crore in the share capital of Antara Senior Living. With this, the
total capital contribution by the Company in Antara Senior Living stood
increased to Rs.147.06 Crore as of March 31, 2014. Further, share
application money of Rs. 5.65 Crores paid by your Company is pending
for allotment.
During the year under review, your Company also made further investment
of Rs. 122.10 Crore in Max Bupa. With this, the total equity
contribution by the Company in Max Bupa increased to Rs.495.06 Crore as
of March 31, 2014.
The total investment in Max Healthcare stood at Rs. 431.09 Crores as at
March 31, 2014.
The total investment in Max Life stood at Rs. 1490.87 Crores as at
March 31, 2014.
The total investment in Max Neeman Medical International stood at Rs
4.17 Crore as at March 31, 2014
Management Discussion & Analysis
A review of the performance of businesses, including those of your
Company''s joint ventures and subsidiaries, is provided in the
Management Discussion & Analysis section which forms part of this
report.
Particulars of Deposits
During the year under review, your Company has not accepted or renewed
any deposit from the public.
Employee Stock Option Plan
Your Company had instituted an ''Employee Stock Plan 2003'' (''2003
Plan''), which was approved by the Board of Directors in August 2003 and
by the shareholders in September 2003. The 2003 Plan provides for grant
of stock options aggregating not more than 5% of number of issued
equity shares of the Company to eligible employees and directors of the
Company. The 2003 Plan is administered by the Remuneration Committee
appointed by the Board of Directors. During the year under review,
upon exercise of options, 7,06,968 equity shares of Rs. 2/- each for
cash at par were allotted.
Details of Options granted up to March 31, 2014 and other disclosures
as required under Clause 12 of the Securities and Exchange Board of
India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are given below:
Sl. Description 2003 Plan
No.
(a) Total number of options granted till March 31, 43,38,398
2014
(b) The pricing formula Rs. 2/- per share
(c) Number of options vested till March 31, 2014 29,44,861
(d) Number of options exercised till March 31, 2014 28,85,861
(e) Total number of shares arising as a result of 28,85,861
exercise of options
(f) Number of options lapsed/forfeited till March 31, 3,80,255
2014
(g) Variation in terms of options Â
(h) Money realized by exercise of options (Rs. 0.14
Crore)
(i) Total number of options in force as on March 10,72,282
31, 2014
(j) Details of options granted to senior management
including directors in FY 2013-14:
- Mr. Mohit Talwar, Dy. Managing Director 38,000
- Mr. Rahul Khosla, Managing Director 3,13,000
- Mr. Anuroop Singh, Vice Chairman 1,62,000
(i) Any other employees who receives a grant in any None
one year of option amounting to 5% or more of
option granted during the year.
(ii) Identifed employees who were granted options None
during any one year equal to or exceeding 1%
of the issued capital (excluding outstanding
warrants and conversions) of the Company at
the time of grant.
(k) Diluted Earnings Per Share (EPS) pursuant to Rs.6.93
issue of shares on exercise of option calculated
in accordance with [Accounting Standard (AS)
20 Earnings Per Share]
(l) (i) The employee compensation cost has been calculated using the
intrinsic value method of accounting for Options granted under the 2003
Plan. The employee compensation cost as per the intrinsic value method
for the fnancial year 2013 Â 14 is Rs.10.98 Crore.
(ii) The employee compensation cost based on fair value of stock
options granted during the fnancial year 2013 Â 14 is Rs. 11.04 Crore.
This would have been recognized as compensation cost, if the Company
had used fair value basis instead of adopting intrinsic value basis of
accounting for these stock options.
(iii) On fair value basis of recognizing the employee compensation
cost, proft after tax for the current fnancial year would have been Rs.
185.11 Crore instead of Rs. 185.16 Crore reported in the Proft and Loss
account.
(iv) Basic earnings per share would have remained unchanged at Rs. 6.96
and diluted earnings per share would have remained unchanged at Rs.
6.93, had the Company adopted fair value basis of recognizing the
employee compensation cost due to insignifcant amount of difference in
the recognized expense and fair value of the ESOP expense.
(m) The exercise price of the stock options on the grant date is Rs.
2/- per existing equity share of Rs. 2/- each and the fair value for
April 1, 2013 grant is Rs.222.54, for August 13, 2013 grant is
Rs.186.02 and for August 19, 2013 grant is Rs.180.12.
(n) The computation of fair value of stock options granted under the
2003 Plan has been done using Black Scholes Option Pricing Model. The
following assumptions have been used in applying this options pricing
model:
(i) Risk free interest rate of 8.08% for April 1,2013 grant, 8.68% for
August 13, 2013 grant and 9.99% for August 19, 2013 grant.
(ii) Expected life for the options granted during the FY 2013-14 i.e.,
April 2013 grant and August 2013 grant is 10 years.
(iii) Expected volatility of 31.36% for all options granted during the
fnancial year 2013-14 based on historical volatility of the Company''s
share.
(iv) Price of Rs. 223.40 for April 1, 2013 grant, Rs. 186.85 for August
13, 2013 grant and Rs. 180.85 for August 19, 2013 grant, being the
available closing price of the Company''s share on the National/Bombay
Stock Exchanges prior to the date of grant.
Statutory Disclosures
Information in accordance with the provisions of Section 217(1) (e) of
the Companies Act, 1956 (''the Previous Act'') read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules,
1988 are given in the prescribed format annexed to this Report as
AnnexureÂA. A statement giving particulars of employees under Section
217(2A) of the Previous Act read with the Companies (Particulars of
Employees) Rules, 1975 for the fnancial year ended March 31, 2014 is
annexed to this Report as
Annexure-B. Statement pursuant to Section 212 of the Previous Act
relating to the subsidiaries of your Company is annexed to this Report.
Central Government vide its circular No. 5/12/2007-CL-III dated
February 8, 2011 has granted a general exemption under Section 212(8)
of the provisions Act to companies provided certain conditions are
fulflled. Based on the aforesaid circular, the Board of Directors of
the Company passed a resolution giving consent for not attaching the
Balance Sheet, Proft & Loss Account, Report of the Board of Directors
and the Report of the Auditors of its subsidiaries. Your Company will
make available these documents/ details upon request by any member of
the Company and its subsidiaries interested in obtaining the same. The
annual accounts of the subsidiary companies will also be kept open for
inspection by members at the respective registered offces of the
Company and its subsidiary companies. However, pursuant to Accounting
Standard 21 issued by the Institute of Chartered Accountants of India,
Consolidated Financial Statements are presented by the Company as part
of the annual report which includes the fnancial information of the
subsidiaries.
Auditors
S.R. Batliboi & Co. LLP, Statutory Auditors of your Company hold offce
till the conclusion of the ensuing Annual General Meeting (AGM) and are
eligible for re-appointment. Pursuant to the provisions of Section 139
of the Companies Act, 2013 (''the Act'') and the Rules framed thereunder,
it is proposed to appoint S.R. Batliboi & Co. LLP as statutory
auditors of the Company from the conclusion of ensuing AGM till the
conclusion of the twenty seventh AGM to be held in the year 2015. Your
Company has received from them, a written consent required under
Section 139 of the Act and a certifcate under Section 141 of the Act to
the effect that their re- appointment, if made, would be in accordance
with the conditions as may be prescribed in the Act.
The Auditors'' Report read alongwith notes to accounts is self
explanatory and therefore does not call for any comments.
Cost Audit Report
The Board appointed M/s. Balwinder and Associates, Cost Accountants, as
Cost Auditors to carry out cost audit for the Max Speciality Films
division, for the fnancial year 2013-14. The cost audit report will be
fled with the Central Government within the statutory timelines.
Directors'' Responsibility Statement
The Board of Directors of the Company confrms for the year ended March
31, 2014 that:
(i) In the preparation of annual accounts, the applicable accounting
standards have been followed, along with proper explanation relating to
material departures.
(ii) The Directors have 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 fnancial year and of the proft or loss
of the Company for that period.
(iii) The Directors have taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Previous Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities.
(iv) The Directors have prepared the annual accounts on a going concern
basis.
Cautionary Statement
Statements in this Report, particularly those which relate to
Management Discussion and Analysis describing the Company''s objectives,
projections, estimates and expectations may constitute "forward looking
statements" within the meaning of applicable laws and regulations.
Actual results might differ materially from those either expressed or
implied in the statement depending on the circumstances.
Acknowledgements
Your Directors would like to place on record their appreciation of the
contribution made by its management and its employees who through their
competence and commitment have enabled the Company to achieve
impressive growth. Your Directors acknowledge with thanks the
co-operation and assistance received from various agencies of the
Central and State Governments, Financial Institutions and Banks,
Shareholders, Joint Venture partners and all other business associates.
On behalf of the Board of Directors
New Delhi Analjit Singh
August 13, 2014 Chairman
Mar 31, 2013
The Directors have pleasure in presenting the twenty-fifth Annual
Report of your Company with the audited Statement of Accounts for the
financial year ended March 31, 2013.
Consolidated Results
The highlights of the consolidated financial results of your Company
and its subsidiaries are as under:
(Rs. Crore)
Year ended Year ended
March 31, 2013 March 31, 2012
Income
Net Sales 888.3 832.1
Service Income 7,292.1 6,810.9
Other operating revenue and investment
income 2,381.6 893.9
Other Income 61.6 41.3
Total Income (I) 10,623.6 8,578.2
Expenses
Cost of raw material consumed 515.7 482.5
Purchase of pharmacy and pharmaceuticals
supplies 288.9 219.5
(lncrease)/decreasein (0.6) (8.1)
inventories of work- ln-progress,
finished goods and traded goods
Employee benefits expense 879.6 796.2
Change in policy reserves 3,050.7 2,659.4
Other expenses 4,676.7 3,998.8
Depreciation & Amortisation 136.8 102.0
Financial Expenses 84.4 86.0
Total Expenses (II) 9,632.2 8,336.3
Profit /(Loss) Before Tax (I-II) 991.4 241.9
Tax Expense 141.9 4.0
Profit / (Loss) After Tax 849.5 237.9
Minority Interest 65.4 82.9
Profit/(Loss) after tax, (after
adjusting Minority Interest) 784.1 155.0
During the financial year 2012-13, the consolidated group revenue was
Rs 10,624 Crore, representing a growth of 24% over the previous year.
The group recorded a net profit of Rs. 784 Crore against Rs. 155 Crore
in 2011-12, representing a significant increase of 406%. The growth in
revenue and profit was primarily on account of gain made from stake
sale in Max Life due to change in joint venture partner. A brief update
on the business achievements of your Company''s key operating
subsidiaries is as below:
(i) Max Life Insurance Company Limited
Max Life Insurance Company Limited (''Max Life''), a joint venture (JV)
where Max India holds 71%stake while MS&AD Insurance Group Holdings,
Japan has 26%, provides financial security across life''s various
stages. Max Life has a prominent presence in the Indian life insurance
space and is driven by the objective of providing life insurance and
retirement solutions to meet ''Long Term Savings and Protection'' needs
of Indians.
The year 2012 witnessed, MS&AD Insurance Group Holdings of Japan
acquire the founding partner New York Life''s stake in Max Life at an
enterprise valuation of Rs. 10,500 Crore. New York Life exited the
joint venture in line with its strategy offocusing on its core markets.
MS&AD is world''s seventh largest general insurance group and brings
with it, a rich experience of Life Insurance.
The salient features of Max Life''s results for the year 2013 are:
- Gross Written Premium increased by 4% to Rs.6,639 Crore with a 6%
increase in renewal premium to Rs.4,739 Crore. AUM increased by 19% to
Rs.20,458 Crore
- Sum assured stood at Rs.1,69,167 Crore-an increase of 11% over the
previous financial year.
- A maiden dividend of Rs.259 Crore to shareholders was approved
bythe Board of Directors
- Bonus of approximately Rs.297 Crore to participating policyholders
will be distributed during 12 months starting 1 July 2013. In addition,
a one-time special bonus of Rs.130 Crore will be distributed to
participating policyholders with active policies bought before 31
December 2006.
- Solvency ratio of 521%, more than thrice the mandatory 150%,
indicates the Company''s strong and stable financial position.
- Conservation ratio, an indicatorof customer retention, at 78% is
one ofthe best among private life insurers.
- Cost ratio, an indicator of operational cost and expenses on
commission, improved by 190 basis points to 28% in FY2013.
- Consequently, Max Life recorded an Enterprise Level Profit Before
Tax of Rs.860 Crore - up by 17% over the previous financial year, while
the Shareholder Profit Before Tax increased to Rs.475 Crore.
In a year where the new business premium ofthe life insurance industry
declined, Max Life maintained its market share and retained its fourth
rank among the private life insurers with a market share of 8.5% of
adjusted first year premium. It continues to be the largest non-bank
promoted private life insurer in India.
(ii) Max Healthcare Institute Limited
Max Healthcare Institute Limited (''Max Healthcare'') is a leading
provider of standard, seamless, integrated and international class
healthcare in India, especially focused on tertiary and quaternary
care. It is committed to the highest standards of medical and service
excellence, patient care, scientific research and medical education.
With a network of 12 hospitals in Delhi-NCR, Punjab and Uttarakhand,
the most advanced technology and state of the art infrastructure; it is
rated as one ofthe best hospital chains in India.
There has been a significant capital infusion in the company in recent
past primarily for setting up of new hospitals. While the new hospitals
will take some time to scale up and become profitable, Max Healthcare
has managed to maintain a decent topline and bottomline. The key
numbers for 2012-13 are as follows:
- Total revenues increased by 39% to Rs.1149 Crore in FY2013 helped
bya 23% growth in existing hospitals.
- EBIDTA increased by 545% from Rs.12 Crore in FY2012 to Rs.72 Crore
in FY2013.
Max Healthcare has always endeavored to create a benchmark in India for
Clinical & Service Excellence supported by best in class
Infrastructure. While providing best in class services, the company is
conscious of its commitments towards the weaker sections of society.
Max Healthcare continues to strive to deliver its social obligations -
expenditure on treatment for the economically weaker sections (EWS) has
doubled over the course of FY2013.
To continue to generate financial returns while maintaining relative
affordability, there is a constant effort to optimize costs and improve
efficiencies. Given that much of the fixed assets are sunk costs,
optimising the utilisation of these assets has been a majorfocus area.
(iii) Max Bupa Health Insurance Company Limited
Max India''s foray in the health insurance space is through Max Bupa
Health Insurance Company Limited (''Max Bupa'') a JV with BUPA (British
United Provident Association) Pic, UK. With a vision of becoming
India''s most admired health insurance company, Max Bupa focuses on
building long-term partnerships to enable people to live healthier and
more successful lives. It is guided by its six core values acronymed
CREATE - Caring, Respectful, Ethical, Accountable, Trustworthyand
Enabling.
Health Insurance continues to be one of the most dynamic and fast
evolving sectors of the Indian insurance industry. Gross written
premiums for health insurance increased by 16% from Rs.13,212 Crore in
FY2012 to Rs.15,341 Crore in FY2013.
The industry is dominated by public sector entities that together have
60% market share. The rest of the share is with 17 private sector
players, of which 4 are standalone health insurance players including
Max Bupa. Growth in this industry is fraught with numerous challenges
including efficiency, affordability and accessibility of health
insurance.
In the above backdrop, Max Bupa completed three years of operations in
March 2013. During this short span, it has made significant progress in
developing its customer base, people strength, processes and
distribution base. Today, Max Bupa offers quality health insurance
services through a dedicated team of over 1,050 employees and a network
of 21 offices across 13 cities including Delhi, Mumbai, Chennai,
Bangalore, Kolkata. Through its direct and indirect presence in 300
plus cities, Max Bupa insures over 1.2 million lives. It continues to
focus on growingscale of operations while developing market leading
productand service innovations.
Max Bupa has been rapidly expanding on most business and financial
parameters though some of these superlative growth statistics are aided
by the benefit of a relatively small base.
The key performance highlights for year have been:
- Starting the year with 2.15 lakh customers, Max Bupa closed the
year with over 12 lakh customers, aided by the addition ofa large rural
customer base.
- Gross Written Premium (GWP) increased 109% from Rs.99 Crore in
FY2012 to Rs. 207 Crore in FY2013.
- The provider network grew from 1,200 to 1,800 hospitals, spanning
over 300 cities in India.
- A new product Health Assurance, guaranteed cash benefit offering
and an improved version of flagship product Heartbeat were launched
during the year.
(iv) Antara Senior Living Limited
In line with itsstrategyof growinginsymbioticbusinesses, Max India
recently entered the senior living business through a fully owned
subsidiary - Antara Senior Living Limited (''Antara''). Antara is
committed to its vision of ''influencing positive change and improving
the quality of life of seniors in this country''. In order to fulfil
this, Antara is focusing on creating vibrant residential communities
with comprehensive services that enrich the lives of the residents by
providing lifestyle with life-care. Max India is investing Rs.240 Crore
in the business in the initial stage.
Though prevalent and matured in developed economies, senior housing in
India is at a nascent stage. Estimates by real estate consulting major
Jones Lang LaSalle suggests the demand for senior housing in Antara''s
target market of high income category customers is around 21,000
dwellings.
Since the concept is new to India, Antara has given considerable
emphasis to research. This has included primary surveys and research of
market insights, extensive site visits to the benchmarkable senior
living communities across the world and involvement of top global
consultants specialising in senior living.
Given the needs of the sector, Max India, with its strong foundation in
healthcare and service excellence, is well suited to create a
comprehensive offering in this segment.
Antara is developing its first community in Dehradun. This is a
premium segment offering, which aims to become a benchmark for quality
of product and service. The endeavour is not only to develop a
best-in-class facility created by world renowned architects to meet the
requirements of seniors, but to construct integrated communities which
will offer an aspirational way of life. To successfully deliver on
this objective, there is a great deal of focus on the softer aspects of
life at Antara. This includes the facilitating bonding and friendship
among residents, well rounded health and wellness, utmost sense of
security and safety, and above all a sense of social satisfaction.
The premium senior living industry has usually been attractive in terms
of profitability with stability in returns in most parts of the world
where it has been operational. The fact that this is a fairly untapped
segment in India also provides an early mover advantage for Antara.
(v) Max Neeman Medical International Limited
Max Neeman Medical International Limited (''Max Neeman'') focuses on the
business of clinical research. It is a value added contract research
organisation (CRO) that provides support to the pharmaceutical,
biotechnology, and medical device industries in the form of research
services outsourced on a contract basis.
Today, the market in India is estimated at approximately US$1.5 bn,
which is around 5% of the global business. Though the market is
crowded with large Multi-National Players, Max Neeman has, since its
inception, consciously positioned itself as a local player with
expertise in the Indian market. It continues to grow the business with
a focus of developing internal capabilities and establishing the brand
as a trusted partnerfor its clients.
It has positioned itselfas a CRO that:
- Provides full range of Clinical research services
- Meets timelines with assured qualitystandards
- Has operations spread all over India
- Operates with medically qualified staff
Max Neeman targets medium size customers across USA, Europe and South
East Asia. It also has a local customer base in India. Max Neeman has
been successful in getting repeat business from its existing clients
who have a pipeline of new drugs. This bears testimony to the
company''s service capabilities.
In site management operations, it has the largest team in India and at
the moment, Max Neeman is actively executing 315 studies in 540 sites
across 43 cities with accessto 900 ICH-GCPtrained Investigators.
Standalone Results
The highlights of the stand-alone financial results of your Company are
as under:
(Rs. Crore)
Year ended Year ended
March 31,2013 March 31,2012
Income
Net sales 713.4 694.9
Revenue from Investment Activities 801.7 52.1
Other income 12.6 7.9
Total revenue (I) 1,527.7 754.9
Expenditure
Manufacturing expenses 515.7 482.5
(lncrease)/decrease in inventories of 0.8 (0.5)
finished goods and work-in-progress
Employee benefits expenses 81.7 61.8
Other expenses 238.8 170.5
Depreciation and amortization 23.8 22.8
Financial expenses 17.4 31.0
Total expenses (II) 878.2 768.1
Profit/(loss) before tax 649.5 (13.2)
Tax expense 88.0 2.2
Profit/(Loss) After Tax 561.5 (15.4)
MSF, a division of Max India Limited, has a state of the art
manufacturing facility at Railmajra, near Chandigarh where it
manufactures ''Speciality'' BOPP (Bi-axially Oriented Polypropylene)
films for niche applications in flexible packaging, food,
confectionery, chocolates, FMCG, non-food and industrial packaging,
leathercoatingfilms.
Over the years, MSF has emerged as a strong speciality and value added
BOPP player with a steady and established customer base driven by
service quality excellence and innovation. With its focus on
innovation, MSF has established marketshare in the higher margin
specialtysegment.
India is witnessing a robust demand for packaging driven by the growing
population size, rapid urbanisation, changing life styles, increasing
need for convenience and growth in organized retail. As per estimates
of the commerce ministry of India, the $24.6bn Indian packaging
industry is expected to grow at 12.3% CAGR during next 4-5 years to
become the fourth largest global market, with sales of $42.7bn. In this
backdrop strong growth annually of 12-13% is expected forthe BOPP
during this period.
In the tight market environment during FY2013, Max Speciality Films
division (''MSF'') successfully maintained its top-line with revenues
increasing by 3% to Rs.713 Crore. Given the pricing pressures during
2012-13, even after massive efforts to operate at full capacity and
maintain sales levels, the Profit Before Tax reduced significantly to
Rs.4 Crore. On a positive note, MSF has established successful presence
in diverse international markets. In FY2013 it exported around 30% of
its production to South Africa, Middle East and Europe
Deep customer relations and strong product portfolio are few of its
strengths which have enabled it to sail through even during turbulent
times. MSF was the only player in the industry that operated at 100%
capacity utilisation during 2012-13. This is a reflection of its high
operating skills and strong customer support.
As informed earlier, the entire MSF division shall be transferred into
newly incorporated Max Speciality Films Limited (''MSF Limited'') in
which the shareholding of Max India Limited shall be 99% while 1%shall
be held by Pharmax Corporation Limited, another subsidiary of Max India
Limited. The shareholders of the Company had accorded their approval to
transfer of MSF division as above, by way of a postal ballot process,
the results of which were declared on July 24, 2013.
Dividend
Your Directors had approved payment of Interim Dividend of 500%, i.e.,
Rs.10/- per equity share of Rs.2/- each for the financial year 2012-13.
Your Company made the payment of the aforesaid interim dividend to
shareholders in the month of November 2012.
The Board of Directors of your Company further recommended a final
dividend of 110% amounting to Rs.2.20 per equityshare (on face value of
Rs.2/- each) to the Shareholders for their approval at the ensuing
Annual General Meeting scheduled to be held on September 24, 2013 and
ifapproved, the same will be paid to the shareholders, in compliance
with the applicable legislations. For shares held in electronic form,
the dividend will be paid on the basis of beneficial ownership
furnished by Depositories, viz., NSDL and CDSL for this purpose.
Directors
Dr. Dipankar Gupta, Dr. Ajit Singh and Mr. Ashok Kacker have been
co-opted as additional directors on the Board of Directors of the
Company effective December 24, 2012, Februaryl, 2013 and August 13,
2013, respectively. The Company has received notices under Section 257
of the Companies Act, 1956 (''the Act'') proposing their candidature
for being appointed as Directors of the Company at the ensuing Annual
General Meeting.
In accordance with the provisions of the Act and the Articles of
Association ofthe Company, Mr. Anuroop Singh, Mr. N.C. Singhal, Dr.
Subash Bijlani and Mr. Aman Mehta retire by rotation at the ensuing
Annual General Meeting. Mr. Anuroop Singh, Mr. N.C. Singhal, Dr.
Subash Bijlani and Mr. Aman Mehta have offered themselves for
re-election at the ensuing Annual General Meeting.
Mr. Piyush Mankad, Dr. Omkar Goswami and Mr. K. Narasimha Murthy
retired by rotation in the last Annual General Meeting held on
September 6, 2012. Your Directors place on record, their appreciation
for the valuable contributions made by Mr. Piyush Mankad, Dr. Omkar
Goswami and Mr. Narasimha Murthy during their association with the
Company.
Increase in paid up share capital of the Company
The paid up equity share capital of the Company further increased from
Rs. 52,91,38,220/- as of March 31, 2012 to Rs.53,18,72,078/- as ofthe
date of this report arising from the allotment of 13,66,929 equity
shares under "Employee Stock Plan 2003"
Business Investments
During the year under review, your Company made investment of Rs. 54.86
Crore in the share capital of Antara, the new business initiative of
the Company. Further, share application money of Rs. 36 Crores paid
byyour Company is pendingforallotment.
During the year under review, your Company also made a further
investment of Rs. 112.48 Crore in Max Bupa. With this, the total equity
contribution by the Company in Max Bupa stood increased to Rs. 372.96
Crore as of March 31, 2013.
Your Company acquired 71,42,857 equity shares of Max Healthcare from an
overseas body corporate for an aggregate amount of Rs. 35.71 Crore.
With this acquisition, your Company''s stake in Max Healthcare stood
increased to 71.17% as of March 31, 2013.
The total investment in Max Life stood at Rs. 1490.87 Crores as at
March 31, 2013, the details of which were reported in the previous
Directors'' Report.
Management Discussion & Analysis
A review ofthe performance of businesses, including those of your
Company''s joint ventures and subsidiaries, is provided in the
Management Discussion & Analysis section which forms part ofthis
report.
Particulars of Deposits
During the year under review, your Company has not accepted or renewed
any deposit from the public.
Employee Stock Option Plan
(i) Your Company had instituted an ''Employee Stock Plan 2003''
(''2003 Plan''), which was approved by the Board of Directors in August
2003 and by the shareholders in September 2003. The 2003 Plan provides
for grant of stock options aggregating not more than 5% of number of
issued equity shares of the Company to eligible employees and directors
ofthe Company. The 2003 Plan is administered by the Remuneration
Committee appointed by the Board of Directors. During the year under
review, upon exercise of options, 9,51,179 equity shares of Rs. 2/-
each for cash at par were allotted. Your Company also granted 7,31,648
Options duringthe year under review.
(ii) The particulars of options granted, as on the date of this report,
under the aforesaid stock option plan as required under SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 are given below:
SI. Description 2003 Plan
No.
(a) Total number of options granted till March 38,25,398
31, 2013
(b) The pricing formula Rs.2/-pershare
(c) Number of options vested till March 31,2013 25,78,893
(d) Number of options exercised till March 31,2013 21,78,893
(e) Total number of shares arising from exercise 21,78,893
of options
(f) Number of options lapsed/forfeited till March 3,48,005
31, 2013
(g) Variation in terms of options -
(h) Money realized by exercise of options (Rs. 0.44
Crore)
(i) Total number of options in force as on March 12,98,500
31, 2013
(j) Number of options granted to senior 7,31,648
management including directors in FY 2012-13
(k) Employees holding 5% ormoreof the total None
number of options granted during the year
(I) Employees granted options equal to or None
exceeding 1% or more of the issued capital
during the year
The diluted earning per share was Rs. 21.03 for the financial year
ended March 31, 2013. The diluted earning per share for the previous
year was Rs. (0.60)
(iii) In respect of stock options granted till March 31, 2013 under the
2003 Plan, the Company has calculated employee compensation cost using
intrinsic value of the stock options. Accordingly, an amount of Rs.
62.69 Crore has been recognized as total compensation charge for grants
made in October 2003, March 2005, December 2005, June 2006, November
2008, January 2009, September 2009, January 2010, June 2010, October
2011, May 2012, June 2012, August 2012, November 2012, December 2012
and February 2013, out of which, in the current financial year, Rs.
8.19 Crore has been taken to the Profit and Loss account as expense.
The additional details required to be disclosed in accordance with SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 relatingto the 2003 Plan are given below:
(a) The employee compensation cost based on fair value of stock options
granted in October 2003, March 2005, December 2005, June 2006, November
2008, January 2009, September 2009, January 2010, June 2010, October
2011, May 2012, June 2012, August 2012, November 2012, December 2012
and February 2013, under the 2003 Plan is Rs. 63.29 Crore, out of
which, in the current financial year, Rs. 8.21 Crore would have been
recognized as compensation cost if the Company had used fair value
basis instead of adopting intrinsic value basis of accounting for these
stock options.
(b) On fair value basis of recognizing the employee compensation cost,
profit after tax for the current financial year would have been Rs.
561.46 Crore instead of Rs. 561.48 Crore reported in the Profit and
Loss account.
(c) Basic earnings per share would have remained unchanged at Rs. 21.16
and diluted earnings per share would have remained unchanged at Rs.
21.03, and the Company adopted fair value basis of recognizing the
employee compensation cost due to insignificant amount of difference in
the recognized expense andfairvalue of the ESOP expense.
(d) The exercise price of the stock options on the grant date is Rs.
2/- per existing equity share of Rs. 2/- each and the fair value for
October 2011 grant is Rs. 168.55.
(e) The computation of fair value of stock options granted under the
2003 Plan has been done using Black Scholes Option Pricing Model. The
following assumptions have been used in applying this options pricing
model:
(i) Risk free interest rate of 8.77% for May 2012 grant, 8.51% for June
2012 grant, 8.36% for August 2012 grant, 8.31% for November 2012 grant,
8.30% for December 2012 grant and 7.97% for February 2013 grant.
(ii) Expected life for the options granted duringthe FY 2012-13 i.e.
May 2012 grant, June 2012 grant, August 2012 grant, November 2012
grant, December 2012 grant and February 2013 grant is 11 years.
(iii) Expected volatility of 26.99% for all options granted during the
financial year 2012-13 based on historical volatility of the Company''s
share.
(iv) Price of Rs.197.95 for May 2012 grant, Rs.185.05 for June 2012
grant, Rs.183.95 for August 2012 grant, Rs.242.95 for November 2012
grant, Rs.240.7 for December 2012 grant and Rs.244.45 for February 2013
grant, being the latest available closing price of the Company''s share
on the National/Bombay Stock Exchanges prior to the date of grant.
Statutory Disclosures
Information in accordance with the provisions of Section 217(l)(e) of
the Act read with the Companies (Disclosures of Particulars in the
Report of Board of Directors) Rules, 1988 are given in the prescribed
format annexed to this Report as Annexure-A. A statement giving
particulars of employees under Section 217(2A) ofthe Act read with the
Companies (Particulars of Employees) Rules, 1975 for the financial year
ended March 31, 2013 is annexed to this Report as Annexure-B. Statement
pursuant to Section 212 of the Act relating to the subsidiaries ofyour
Company is annexed to this Report.
Central Government vide its circular No. 5/12/2007-CL-lll dated
February 8,2011 has granted a general exemption underSection 212(8) of
the Act to companies provided certain conditions are fulfilled. Based
on the aforesaid circular, the Board of Directors of the Company passed
a resolution giving consent for not attaching the Balance Sheet, Profit
& Loss Account, Report of the Board of Directors and the Report ofthe
Auditors of its subsidiaries. Your Company will make available these
documents/details upon request by any member of the Company and its
subsidiaries interested in obtaining the same. The annual accounts of
the subsidiary companies will also be kept open for inspection by
members at the respective registered offices of the Company and its
subsidiary companies. However, pursuant to Accounting Standard 21
issued by the Institute of Chartered Accountants of India, Consolidated
Financial Statements are presented by the Company as part of the annual
report which includes the financial information ofthesubsidiaries.
Auditors
S.R. Batliboi & Co. LLP (Formerly S.R. Batliboi & Co.), Statutory
Auditors of your Company, retires and offers themselves for
re-appointment. Your Company has received from them, a certificate
required under Section 224(1-B) of the Act to the effect that their
re-appointment, if made, would be in conformity with the
limitsspecified in thatSection.
The Auditors'' Report read alongwith notes to accounts is self
explanatory and therefore does not call for any comments.
Cost Audit Report
The Board appointed M/s. Balwinder and Associates, Cost Accountants, as
Cost Auditors ofthe Company for the financial year 2012-13. The cost
audit report will be filed with the Central Government within the
statutorytimelines.
Directors'' Responsibility Statement
The Board of Directors ofthe Company confirms that:
(i) In the preparation of annual accounts, the applicable accounting
standards have been followed, along with properexplanation relatingto
material departures.
(ii) The Directors have 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 or
loss of the Companyforthat period.
(iii) The Directors have 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.
(iv) The Directors have prepared the annual accounts on a goingconcern
basis.
Cautionary Statement
Statements in this Report, particularly those which relate to
Management Discussion and Analysis describing the Company''s
objectives, projections, estimates and expectations may constitute
"forward looking statements" within the meaning of applicable laws
and regulations. Actual results might differ materially from those
either expressed or implied in the statement depending on the
circumstances.
Acknowledgements
Your Directors would like to place on record their appreciation of the
contribution made by its management and its employees who through their
competence and commitment have enabled the Company to achieve
impressive growth. Your Directors acknowledge with thanks the
co-operation and assistance received from various agencies of the
Central and State Governments, Financial Institutions and Banks,
Shareholders, Joint Venture partners and all other business associates.
On behalf ofthe Board of Directors
New Delhi Analjit Singh
August 13, 2013 Chairman
Mar 31, 2012
The Directors have pleasure in presenting the twenty-fourth Annual
Report of your Company with the audited Statement of Accounts for the
financial year ended March 31, 2012.
Consolidated Results
The highlights of the consolidated financial results of your Company
and its subsidiaries are as under:
(Rs. crore)
Year ended Year ended
March 31, 2012 March 31, 2011
Income
Net Sales 832.1 527.6
Service Income 6,816.3 6,139.9
Other operating revenue from
investment activities 898.0 1185.7
Other Income 15.9 38.1
Total Income (I) 8,562.3 7,891.3
Expenses
Cost of raw material consumed 482.5 281.9
Purchase of pharmacy and
pharmaceuticals supplies 219.5 175.0
(Increase)/ decrease in inventories
of work- in-progress, finished goods
and traded goods (8.1) (3.0)
Employee benefits expense 788.0 851.6
Change in policy reserves 2,659.4 3,191.1
Other expenses 3,991.2 3,046.6
Total Expenses (II) 8,132.5 7,543.2
Earnings before interest,
tax, depreciation
and amortisation (EBITDA) (I-II) 429.8 348.1
Depreciation & Amortisation 102.0 203.4
Financial Expenses 85.9 113.0
Profit /(Loss) Before Tax 241.9 31.7
Tax Expense 4.0 9.9
Profit / (Loss) After Tax 237.9 21.8
Minority Interest (82.9) (13.1)
Profit/(Loss) after tax, (after
adjusting Minority Interest) 155.0 8.7
The year 2011-12 proved to be yet another year of high performance for
your Company and its subsidiaries. During the financial year 2011-12,
the consolidated Group revenue was Rs 8,562 crore, representing a
growth of 9% over the previous year, while the operating revenue stood
at Rs.7,648 crore, an increase of 15% over the previous year. EBIDTA
grew by 24% to Rs. 430 crores and the group recorded a net profit of
Rs.155 crores against Rs. 9 crore in 2010-11, thereby recording a
significant jump of 1722%. The turnaround was primarily on account of
Max Life profitability, arising from higher renewal income and
stringent cost management initiatives. A brief update on the business
achievements of your Company's key operating subsidiaries is as below:
(i) Max Life Insurance Company Limited (formerly Max New York life
Insurance Company Limited) FY2012 was a challenging year for the life
insurance industry in India. With economic growth reducing from 8.4%
in FY2011 to 6.1% in FY2012, and the continuous presence of an
inflationary environment, there was fall in the rate of growth of
household savings. To curb inflation, the Reserve Bank of India (RBI)
adopted a tight monetary policy, which resulted in high interest rates.
The consequent high returns on debt instruments and volatility in stock
markets resulted in an adverse impact on the relative attractiveness of
life insurance products. The challenge was further increased by the
changes in ULIPs and ripple effect of the regulations announced in late
2010.
These factors together accounted for a decline of 9% in the first year
premium market size of life insurance sector in FY2012.
In spite of the significant challenges in the market, Max Life
responded extremely well and outperformed the industry in FY 2012 thus
demonstrating superior all round performance, financial strength and
stability.
- Total revenue, which is the sum of First Year Premium and Renewal
Premium, increased by 10% to Rs. 6,391 crore.
- Renewal Premium recorded a growth of 20% to Rs.4,489 crore; while
First Year Premium showed a marginal decline of 8% to Rs. 1,902 crore.
- Individual adjusted first year premium (adjusted for single pay), the
true indicator to measure new business success, was Rs. 1,506 crore a
decline of 13% over FY2011. This was, however, significantly less than
the 24% decline witnessed among private life insurance providers, in
the aggregate.
- Max Life's share among private players in the market on the basis of
individual adjusted first year premium went up by 110 basis points to
8.6%. This made Max Life the largest non-bank promoted and the 4th
largest private life insurance company in the country.
- Sum assured stood at Rs. 1,52,150 crore.
- The conservation ratio, an indicator of customer retention, at 81% is
one of the best among private life insurers for the fifth year in a
row.
- The cost ratio, which is an indicator of operational cost and
expenses on commission, improved by 8 percentage points to 30% in
FY2012.
- Shareholders profit went up 137% to Rs. 460 crore. Enterprise profit
increased by 159% to Rs. 733 crore.
- Assets under management (AUM) grew by 24% to Rs.17,215 crore.
- At 534%, Max Life maintained 3.5 times the stipulated solvency
margin, reflecting the financial strength and stability that is the
hallmark of all great life insurance companies.
With Mitsui Sumitomo Insurance Company Ltd. ( an Insurance power house
from Japan) buying New York Life's 26% equity stake in the Company, Max
New York Life Insurance Company Limited has been renamed as Max Life
Insurance Company Ltd. This transition is not just a change in
corporate identity, it is showcase of the company's strong endorsement
to the Indian life insurance market and highlights the opportunity for
Max Life, to reposition itself on the quality platform, set new
benchmarks in customer centricity and create an institution that will
establish life insurance as the ideal solution for long- term savings
and protection.
(ii) Max Healthcare Institute Ltd:
Max Healthcare Institute Ltd. (MHC) continues to provide comprehensive,
integrated and international class healthcare services with
state-of-art infrastructure designed in accordance with international
norms. MHC operates six super-specialty and multi-specialty hospitals
and two specialty medical centres located in New Delhi and the
surrounding NCR region offering services in over 30 medical
disciplines.
During the year under review, MHC emerged successful in implementing
its second phase of expansion which witnessed its operations spreading
beyond Delhi/NCR to other parts of North India in addition to expanding
the existing network in the NCR. MHC continued its growth journey by
expanding the infrastructure, and adding its service offerings at
various locations in the network.
During 2011-12, MHC started 3 new hospitals at Shalimar Bagh - New
Delhi and Mohali & Bathinda in Punjab. The hospitals offer high end
medical expertise with paramount patient centric services. The
hospitals house state-of-the-art Cath Lab, OTs with HEPA, EHR, Nuclear
Medicine and Gama Camera. They also encompass the most advanced key
medical equipment like LINAC for Radiotherapy, MRI and CT scan machines
which are one of the most advanced technologically.
Mohali Hospital: This is a 200 bed facility in Mohali targeting the
residents of tri-city of Chandigarh, Mohali, and Panchkula. The
hospital has been set up as Public Private Partnership with Govt. of
Punjab and was commissioned in September 2011. The facility offers
comprehensive treatment in
Cardiology, Oncology, Neurology, Orthopaedics, Mother and Child Care
and also offers Daycare surgeries.
Bathinda Hospital: This is a 200 bed facility in industrial town of
Bathinda, Punjab. The hospital has been set up as Public Private
Partnership with Govt. of Punjab, and was commissioned in September
2011. The facility is an advanced centre for Oncology, and also offers
comprehensive treatment in Cardiology, Orthopaedics, Neurosciences,
Urology, Mother and Child Care, ENT, Dialysis, and Day Care surgeries.
Shalimar Bagh Hospital: This 300 bed hospital is situated in North
Delhi, and is the second hospital in that region. It was commissioned
in November, 2011 and caters to offers services in Cardiology,
Orthopaedics, Neurosciences, Mother and Child Care, Urology, ENT,
Dialysis, Plastic / Reconstructive Surgery, Dentistry, and
Ophthalmology.
Taking above in its stride, the key performance indicators of MHC
during 2011-12 are:
- Gross revenues increased by 20% from Rs. 685 crore in 2010-11 to
Rs.823 crore in 2011-12.
- The gross contribution margin increased slightly to 59.7% in 2011-12.
While MHC was successful in increasing revenues significantly and
maintained gross contribution, there was a reduction in EBIDTA from
7.6% in 2010-11 to 1.5% in 2011-12. This is on expected lines as the
business is in a growth phase with focus on infrastructure development.
Many of the new projects incurred fixed costs for manpower,
administrative, and operating overheads, while the commensurate
revenues will take a period of time to stabilise. Once the phase of
this cost- revenue mismatch is surpassed by the new projects, EBIDTA of
MHC will improve.
All key operating parameters have shown significant improvements during
the year.
The operational Highlights are detailed as under :
- Average Revenue per Occupied Bed day is a measure of bed
productivity. It increased by 9.4% from Rs.21,588/- in 2010-11 to
Rs.23,860/- in 2011-12. This growth is primarily driven by MHC's effort
to upgrade its service portfolio and focus more on high-end surgeries.
- Bed Occupancy improved marginally from 67.8% in 2010-11 to 68.6% in
2011-12. This is a significant achievement in a year when more than 250
operational beds have been added to the existing network. For the
existing hospital, the bed occupancy increased from 67.8% in 2010-11 to
70.9% in 2011-12
- Average Length of Stay (ALOS) is a representation of patient
turnaround time. MHC is committed to reduce recovery time by employing
latest clinical techniques. The standard has been maintained at around
3.6 days in 2011- 12 in spite of upgrading the medical programmes and
taking complicated and high-risk cases. Faster turnaround in cases
results in lower cost of treatment for patients and additional capacity
for the hospital
- Surgical Medical Revenue ratio is an important measure of maturity of
clinical programmes and service offerings. MHC is focused on upgrading
its service offerings to handle tertiary level cases. The ratio of
surgical revenue in total In Patient revenue improved from 58% in 2010-
11 to 61% in 2011-12. Also, the ratio of surgical revenue as percentage
of total gross revenue increased from 42% in 2010-11 to 44% in 2011-12.
- Revenue from CoE Specialities also increased significantly during the
year. The share of CoE in total In Patient revenue increased by 400
basis points from 55% in 2010-11 to 59% in 2011-12.
By maximising resource utilisation in existing hospitals and adding new
facilities at various locations, the network bed capacity has increased
substantially during 2011-12. By the end of 2011-12, the network bed
capacity stands at around 1,900 beds of which 1,160 are operational.
In addition, MHC has recently commissioned a 204 bedded hospital in
Dehradun, Uttarakhand. This is the MHC's first hospital in the
Uttrakhand region and is also planned to cater to the growing needs of
medical tourism.
(iii) Max Bupa Health Insurance Company Limited :
Max Bupa Health Insurance Company Limited (MBHI) was formed in
September 2008. With a purpose to build long- term healthcare
partnerships and provide expertise for life, MBHI is working towards
helping people live longer, healthier and more successful lives.
During the fiscal 2011-12, total market for health insurance premium
was Rs.13,345 crore, a 19% growth over 2010-11. The share of health
insurance in overall general insurance in India has been 23% in
2011-12. The industry is expected to continue with rapid growth.
Analysts estimate growth at a CAGR of 25% - 30% till 2014-15, to become
a Rs.28,000 crore market. Max Bupa has grown from 700 to 850 employees
in 2011-12, as it enters into the next phase of accelerated growth.
The period for the financial year 2011 -12, was the second full year of
MBHI's business operations. It witnessed a fourfold growth with gross
written premium (GWP) recording at Rs.99 crore in 2011-12 as against
Rs.25 crore in fiscal 2010-11. The provider network grew to 1200 spread
in 250 cities.
MBHI has its flagship product Heartbeat for the retail customers,
offering comprehensive health insurance cover ranging from Rs. 2 Lacs
to Rs. 50 lacs, a first of its kind product designed especially for the
individuals and extended Indian Joint Family. It has created a niche
for itself after being awarded the'Best Product Innovation Award for
2011' from the India Insurance Review. Thriving on its success an
enhanced version of "Heartbeat" was launched in the market in February
2012 which carries a new feature of High Deductible Top Up option on an
annual aggregate basis and a two year policy tenure for the customer.
In addition to above, MBHI also launched three new products during the
year 2011-12 and four new products are in pipeline.
(iv) Max Neeman Medical International Limited:
In line with its Corporate objective of creating synergies across
various verticals of the Group, Max India is pursuing the business of
clinical research through its subsidiary Max Neeman Medical
International Limited (MNMI). It is a value added contract research
organization (CRO) that provides a broad range of clinical research
services to global pharmaceutical, device and biotechnology companies.
It also collaborates with other CROs in providing a variety of
services. With its base in USA and India, MNMI operates through a
dual-shoring model. From its global headquarter at Cary, North
Carolina, USA, MNMI focuses on business development and marketing
initiatives that services the large number of US customers by being in
close proximity to their operations. The actual clinical research
operations are based out of India. MNMI recorded a revenue of Rs 28
crore for the FY 2011-12 compared to Rs. 24 crore for the FY 2010-11.
Due to ongoing expansions, the PBT recorded a minor decline over that
of last year. MNMI continues to increase its client base. It added 20
new clients during 2011-12 taking the total client base to 97.
With operations having stabilized, MNMI now offers services across six
fields within the CRO industry. These are (i) Site Management (ii) Site
Monitoring (iii) Clinical Data Management (iv) Project Management (v)
Medical Writing and (vi) Supply Chain Management of Clinical Trial
Material. MNMI also operates in Phase IV trials.
Standalone Results
The highlights of the stand-alone financial results of your Company are
as under:
(Rs. crore)
Year ended Year ended
March 31, 2012 March 31, 2011
Income
Net sales 694.9 417.0
Other Operating Revenue 52.1 45.9
Other income 7.9 23.1
Total revenue (I) 754.9 486.0
Expenditure
Manufacturing expenses 482.0 277.5
Employee benefits expenses 61.8 55.5
Other expenses 170.5 106.0
Total expenses (II) 714.3 439.0
Earnings before interest, tax,
depreciation and amortisation
(EBITDA) (I-II) 40.6 47.0
Financial expenses* 31.0 67.2
Depreciation and amortization 22.8 14.6
Profit/(loss) before tax (13.2) (34.8)
Tax expense 2.2 7.3
Profit/(Loss) After Tax (15.4) (42.1)
* Includes Rs. 12.1 Cr (Previous Year Rs. 62.6 Crore) on account of
interest on 12% Compulsorily Convertible Debentures("CCDs") which has
been converted into equity shares on June 10, 2011. The interest on
CCDs is thus non recurring in nature.
The financial year 2012 witnessed 15% growth in installed capacity of
BoPP in India. The demand for packaging in medium to long term is
expected to sustain due to factors like growth in consumer spend,
growing rural demand, changing demographics, retail trade, increasing
demand for convenience and packed food. Estimates suggest that BOPP
consumption growth will be in the range of 17% to 20% per annum in the
short to medium term.
India continues to have lower per capita consumption of BoPP films
compared to other countries. In addition there is opportunity to supply
to international players who are looking to source their packaging
requirements from cost efficient locations.
Max Specialty Films (MSF), a division of Max India Limited, established
in 1990, manufactures flexible polymer films for several different
applications in food, non-food, and industrial packaging, leather
coating films. It has a state of the art manufacturing facility at
Railmajra, near Chandigarh for manufacturing niche and high barrier
BoPP films, thermal lamination films and leather finishing foils. MSF
has a work environment that reflects global best practices in safety
and environment protection. The manufacturing facilities are accredited
by BSI (British Standard Institution), and have the following
certifications: (i) ISO 9001 Ã 2008 Quality Management System; (ii) ISO
140001 Ã 2004 Environment Management System; (iii) OHSAS 18001 Ã 1999
Safety Management System; (iv) BRC / IOP (Food Safety) Ã British Retail
Consortium; (v) GMP- Certificate of Good Manufacturing Practices; and
(vi) HACCP - Hazard Analysis Critical Control Point.
With its focus on value added products and pursuit of quality, MSF
continues to increase its share of business with high-end and quality
conscious customers, both in India and overseas. It also continues to
improve its product mix by introducing new products every year and, in
doing so, has pioneered the introduction of many new products in India
in flexible packaging and leather finishing foils.
The Company's pursuit for quality and service excellence was
acknowledged through the 'Golden Peacock Innovative Product Award 2011'
by the Institute of Directors for creating a new Cadbury Gems pack that
is recyclable, lighter, as well as energy and emission efficient.
During the FY 2012, MSF achieved a gross sales turnover of Rs.742 crore
in FY2012. Net revenues grew by 66% to Rs.694 crore. In the process,
MSF achieved volume growth of 64%. The exports grew by 98% in volume
terms. The sale of thermal film increased by 28% while EBIDTA witnessed
an increase of 50% to Rs.77 crore in FY2012.
To add further feathers to its cap, MSF achieved full capacity
utilisation across all its metalliser and BoPP lines, including the new
BoPP line which became operational in April 2011.
Human resources retention and attracting the best available talent has
always been a focus area for MSF, which has the most experienced and
skilled team in the BoPP industry. The total number of employees as on
31 March, 2012 was 499 and relationships with employees remained
excellent. The Company's key focus is on training through skill
up-gradation and education programmes for its workmen.
Health, safety and environment have always been focus areas for MSF.
The goal continues to include no accidents, no harm to people and no
damage to the environment. MSF has adopted a Green Policy and has
signed the code for ecologically sustainable business growth of the
Confederation of Indian Industry (CII). MSF workmen have received
safety awards for the last six years from the Government of Punjab. It
also helps the community around the plant by adopting schools, holding
medical camps, running regular dispensary in close association with Max
India Foundation.
MSF is implementing the Max Performance Excellence Framework (MPEF),
which will further strengthen systems and processes and will lead to
accomplishment of tasks through focus on teamwork, improvement in
efficiency and quality systems, customer focus and satisfaction and
resultant better returns to business.
MSF has an adequate internal control system in place as well as
established management systems and procedures. These are periodically
audited by accrediting agencies. The management also regularly reviews
the actual performance vis-ÃÂ -vis the budget. Various internal audits
are conducted quarterly and reports are submitted for review to Audit
Committee of the Board of Max India. A new ERP system was installed in
July 2011 to further strengthen the internal control system and
adequacy. It is emerging as a decision making tool with improved
quality of reporting.
Flexible packaging which is expected to grow by 15% per annum will
continue to drive the growth of BoPP Industry. Rural demand, small
pack sizes, branded packaged food will result not only in improving
prospects of packaging but will also strengthen the concept of quality
packaging.High growth in BOPP will continue to attract new capacity
additions which will intensify competitive pressure.
Dividend
In view of the funding requirements of the underlying businesses, your
directors do not recommend any dividend.
Directors
Your Directors are pleased to inform the following:
The Board of Directors appointed Mr. Mohit Talwar as an Additional
Director of the Company w.e.f February 14, 2012. Simultaneously, Mr.
Mohit Talwar was appointed by the Board of Directors as the Dy.
Managing Director of the Company effective the said date. The term of
office of Mr. Mohit Talwar as an Additional Director expires at the
ensuing Annual General Meeting and his appointment as a Director is
being sought at the Annual General Meeting for which a notice has been
received from a shareholder under Section 257 of the Companies Act,
1956.
In accordance with the provisions of the Act and the Articles of
Association of the Company, Mr. Rajesh Khanna, Mr. Piyush Mankad, Mr.
Sanjeev Mehra, Mr. K. Narasimha Murthy and Dr. Omkar Goswami retire by
rotation at the ensuing Annual General Meeting. Mr. Rajesh Khanna and
Mr. Sanjeev Mehra have offered themselves for re-election. Mr. Piyush
Mankad, Dr. Omkar Goswami and Mr. K. Narasimha Murthy have not offered
themselves for re-election as Directors at the ensuing Annual General
Meeting.
Increase in paid up share capital of the Company
During the year under review, the paid up equity share capital of the
Company stood increased from Rs. 46.49 crore to Rs. 52.91 crore
arising from allotments of, (i) 80,00,000 equity shares of Rs. 2/- each
to Dynavest India Private Ltd upon conversion of warrants, (ii)
24,079,700 equity shares of Rs.2/ - each to Xenok Limited (a Goldman
Sach Company) upon conversion of Compulsorily Convertible
Debentures("CCDs") and (iii) 5,000 equity shares of Rs. 2/- each under
the 'Employee Stock Plan 2003'
As of the date of this Report, the paid up equity share capital of the
Company stood further increased to Rs. 53,07,62,324 arising from the
allotment of 8,12,052 equity shares under "Employee Stock Plan 2003"
Business Investments
The Company made an additional investment of Rs. 175.80 crore in the
equity share capital of Max Healthcare Institute Limited during year
under review, taking the total equity contribution in MHC to Rs. 395.29
crore as of March 31, 2012.
During the year under review, your Company also made a further
investment of Rs. 59.94 crore in Max Bupa Health Insurance Company
Limited(MBHI). With this, the total equity contribution by the Company
in MBHI stood increased to Rs. 260.48 crore as of March 31, 2012.
Your Company also made a further investment of Rs. 0.14 crore in Max
Life Insurance Company Limited (formerly Max New York Life Insurance
Company Limited) taking the total investment in Max Life to Rs. 1466.65
crore as of March 31, 2012.
On June 27, 2012, your Company acquired 9.37% equity stake in Max New
York Life Insurance Company Limited [since renamed as Max Life
Insurance Company Limited ('Max Life')] from New York Life
International Holdings Ltd., for a consideration of Rs.182.27 crore.
Further your Company acquired 5,656,500 equity shares of Max Life from
its ESOP shareholders for a consideration of Rs.30.55 crore. In
addition, your Company acquired 19,150,000 equity shares of Max Life
from Axis Bank for a consideration of Rs.103.43 crore. Simultaneously,
your Company sold 9.37% equity stake in Max Life to Mitsui Sumitomo
Insurance Company Limited, Japan (MSI) for a consideration of Rs.984.45
crore. Your Company has 71.1% equity stake in Max Life as of date.
Management Discussion & Analysis
A review of the performance of businesses, including those of your
Company's joint ventures and subsidiaries, is provided in the
Management Discussion & Analysis section.
Particulars of Deposits
During the year under review, your Company has not accepted/ renewed
any deposit from the public.
Employee Stock Option Plan
(i) Your Company had instituted an 'Employee Stock Plan 2003' ('2003
Plan'), which was approved by the Board of Directors in August 2003 and
by the shareholders in September 2003. The 2003 Plan provides for grant
of stock options aggregating not more than 5% of number of issued
equity shares of the Company to eligible employees and directors of the
Company. The 2003 Plan is administered by the Remuneration Committee
appointed by the Board of Directors. During the year under review, 5000
Options were vested and upon exercise 5000 equity shares of Rs. 2/-
each for cash at par were allotted. Your Company also granted 2,47,250
Options to Mr. Rahul Khosla, Managing Director of the Company during
the year under review.
(ii) The particulars of options granted, as on the date of this report,
under the aforesaid stock option plan as required under SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 are given below:
Sl. Description 2003 Plan
No.
(a) Total number of options granted till March
31, 2012 30,93,750
(b) The pricing formula Rs. 2/- per share
(c) Number of options vested till March 31, 2012 20,44,766
(d) Number of options exercised till March 31, 2012 12,27,714
(e) Total number of shares arising from
exercise of options 12,27,714
(f) Number of options lapsed/forfeited till
March 31, 2012 3,05,005
(g) Variation in terms of options -
(k) Money realized by exercise of options
(Rs. Crore) 0.25
(l) Total number of options in force as on date 15,61,031
(m) Number of options granted to senior management
including directors in FY 2011-12 2,47,250
(n) Employees holding 5% or more of the total
number of options granted during the year None
(o) Employees granted options equal to or exceeding
1% or more of the issued capital during the year None
The diluted earning per share was Rs. (0.60) for the financial year
ended March 31, 2012. The diluted earning per share for the previous
year was Rs. (1.81)
(iii) In respect of stock options granted till March 31, 2012 under the
2003 Plan, the Company has calculated employee compensation cost using
intrinsic value of the stock options. Accordingly, an amount of Rs.
48.39 crore has been recognized as total compensation charge for grants
made in October 2003, March 2005, December 2005, June 2006, November
2008, January 2009, September 2009, January 2010, June 2010 and October
2011, out of which, in the current financial year, Rs. 7.72 crore has
been taken to the Profit and Loss account as expense. The additional
details required to be disclosed in accordance with SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 relating to the 2003 Plan are given below:
a) The employee compensation cost based on fair value of stock options
granted in October 2003, March 2005, December 2005, June 2006, November
2008 January 2009, September 2009, January 2010, June 2010 and October
2011 under the 2003 Plan is Rs. 48.90 crore, out of which, in the
current financial year, Rs. 7.78 crore would have been recognized as
compensation cost if the Company had used fair value basis instead of
adopting intrinsic value basis of accounting for these stock options.
b) On fair value basis of recognizing the employee compensation cost,
loss after tax for the current financial year would have been Rs. 15.50
crore instead of Rs. 15.44 crore reported in the Profit and Loss
account.
c) Basic and diluted earnings per share would have remained unchanged
at Rs. (0.60), had the Company adopted fair value basis of recognizing
the employee compensation cost due to insignificant amount of
difference in the recognized expense and fair value of the ESOP
expense.
d) The exercise price of the stock options on the grant date is Rs. 2/-
per existing equity share of Rs. 2/- each and the fair value of for
October 2011 grant is Rs. 168.55.
e) The computation of fair value of stock options granted under the
2003 Plan has been done using Black Scholes Option Pricing Model. The
following assumptions have been used in applying this options pricing
model:
i) Risk free interest rate of 8.29% for October 2011 grant,
ii) Expected life of these stock options are : 3 year option for
September 2009 grant, 3 year option for January 2010 grant, 1 year
option for June 2010 grant and 2 year option for October 2011 grant.
iii) Expected volatility of 34.82% for January 2010 grant, 63.58% for
September 2009 grant, 34.82% for June 2010 grant and 36.12% for October
2011 grant, based on historical volatility of the Company's share,
iv) No dividend expectation based on current year's dividend
recommendation, and
v) Price of Rs.181.30 for September 2009 grant, Rs. 221.10 for January
2010 grant, Rs.160.05 for June 2010 grant and Rs. 170.55 for October
2011 grant being the latest available closing price of the Company's
share on the National/ Bombay Stock Exchange prior to the date of
grant.
Statutory Disclosures
Information in accordance with the provisions of Section 217(1)(e) of
the Act read with the Companies (Disclosures of Particulars in the
Report of Board of Directors) Rules, 1988 are given in the prescribed
format annexed to this Report as AnnexureÃA. A statement giving
particulars of employees under Section 217(2A) of the Act read with the
Companies (Particulars of Employees) Rules, 1975 for the financial year
ended March 31, 2012 is annexed to this Report as Annexure- B.
Statement pursuant to Section 212 of the Act relating to the
subsidiaries of your Company, is annexed to this Report.
Central Government vide its circular No. 5/12/2007-CL-III dated
February 8, 2011 has granted a general exemption under Section 212(8)
of the Act to companies provided certain conditions are fulfilled.
Based on the aforesaid circular, the Board of Directors of the Company
passed a resolution giving consent for not attaching the Balance Sheet,
Profit & Loss Account, Report of the Board of Directors and the Report
of the Auditors of its subsidiaries. Your Company will make available
these documents/details upon request by any member of the Company and
its subsidiaries interested in obtaining the same. The annual accounts
of the subsidiary companies will also be kept open for inspection by
members at the respective registered offices of the Company and its
subsidiary companies. However, pursuant to Accounting Standard 21
issued by the Institute of Chartered Accountants of India, Consolidated
Financial Statements are presented by the Company as part of the annual
report which includes the financial information of the subsidiaries.
Auditors
S.R. Batliboi & Co., Statutory Auditors of your Company, retires and
offers themselves for re-appointment. Your Company has received from
them, a certificate required under Section 224(1-B) of the Act to the
effect that their re-appointment, if made, would be in confirmity with
the limits specified in that Section.
The Auditors' Report read alongwith notes to accounts is self
explanatory and therefore does not call for any comments.
Constituents of Promoter Group
As required under Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2009 and Securities
and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011, persons constituting Promoter Group are
as follows:
(a) Mr. Analjit Singh, (b) Mrs. Neelu Analjit Singh, (c) Ms. Piya Singh
(d) Mr. Veer Singh, (e) Ms. Tara Singh, (f) Ms. Nira Singh (g) Neeman
Family Foundation, (h) Medicare Investments Limited, (i) Cheminvest
Limited, (j) Liquid Investment and Trading Co Pvt Ltd., (k) Maxopp
Investments Limited, (l) Mohair Investment & Trading Co. (P) Ltd., (m)
Boom Investments Private Limited, (n) PVT Investment Limited, (o) Pen
Investments Limited, (p) Pivet Finances Limited, (q) Dynavest India
Private Limited. (r) Maxpak Investment Limited (s) Trophy Holdings
Private Limited and (t) Moav Investment Limited.
Directors' Responsibility Statement
The Board of Directors of the Company confirms that:
(i) In the preparation of annual accounts, the applicable accounting
standards have been followed, along with proper explanation relating to
material departures.
(ii) The Directors have 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 or
loss of the Company for that period.
(iii) The Directors have 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.
(iv) The Directors have prepared the annual accounts on a going concern
basis.
Cautionary Statement
Statements in this Report, particularly those which relate to
Management Discussion and Analysis describing the Company's objectives,
projections, estimates and expectations may constitute "forward looking
statements" within the meaning of applicable laws and regulations.
Actual results might differ materially from those either expressed or
implied in the statement depending on the circumstances.
Acknowledgements
Your Directors would like to place on record their appreciation of the
contribution made by its management and its employees who through their
competence and commitment have enabled the Company to achieve
impressive growth. Your Directors acknowledge with thanks the
co-operation and assistance received from various agencies of the
Central and State Governments, Financial Institutions and Banks,
Shareholders, Joint Venture partners and all other business associates.
For and on the behalf of the Board of Directors
New Delhi Analjit Singh
August 9, 2012 Chairman
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the twenty-third Annual
Report of your Company with the audited Statement of Accounts for the
financial year ended March 31, 2011.
Consolidated Results
The highlights of the consolidated financial results of your Company
and its subsidiaries are as under:
(RS. CRORE)
Year ended Year ended
March 31, 2011 March 31, 2010
Income
Net Sales 527.6 423.9
Service Income 6140.7 5150.3
Income from investment activities 1184.9 2075.3
Other Income 38.0 11.6
7891.2 7661.1
Expenses
Manufacturing, Trading & Direct Expenses 5754.9 5857.7
Personnel Expenses 882.1 769.1
Administration & Other Expenses 817.5 874.7
Financial Expenses 112.9 59.1
Depreciation & Amortisation 203.0 141.1
Funds for Future Appropriations 89.1 45.3
7859.5 7747.0
Profit /(Loss) Before Tax 31.7 (85.9)
Tax Expense 9.9 3.4
Profit / (Loss) After Tax 21.8 (89.3)
Minority Interest (13.1) 17.7
Profit/(Loss) after tax, (after adjusting
Minority Interest) 8.7 (71.6)
The year 2010-11 proved to be another year of high performance for your
Company and its subsidiaries. During financial year 2010-11, the
consolidated Group revenue was Rs 7,891.2 crore, representing a growth
of 3% over the previous year, while the operating revenue stood at Rs.
6,668.3 crore, an increase of 20% over the previous year. The group
turned profitable on a consolidated basis, posting net profit after tax
(adjusting for minority interest) at Rs. 8.7 Crore in 2010-11, against
a net loss of Rs 71.6 crore in the previous year. The turnaround was
primarily on account of MNYL profitability, owing to higher renewal
income and stringent cost management initiatives. A brief update on the
business achievements of your Company's key operating subsidiaries is
as below:
(i) Max New York Life Insurance Company Limited
Financial Year 2010-11 was a year of continuing growth for Max New York
Life Insurance Company Limited (MNYL). During the year under review,
total revenue (first year premium renewal premium) increased by 20%
to Rs.5,813 crore; renewal premium recorded a growth of 25% to Rs.3,751
crore; first year premium recorded a growth of 11% to Rs.2,062 crore.
Individual adjusted first year premium (adjusted for single pay), which
MNYL believes is the true barometer of new business performance of a
life insurance company, was Rs.1,724 crore, recording a growth of 9%.
MNYL's market share among the private players based on adjusted first
year premium went up by 200 bps to 7.5%. Sum assured recorded a growth
of 26% to Rs.1,54,687 crore. At 81%, MNYL's conservation ratio remained
one of the best in the industry. Cost ratio improved from 42% to 38%
due to the impact of cost management initiatives taken during the year.
Profit after tax went up by more than 12 times to Rs.283 crore. Assets
under management recorded a growth of 37% to Rs.13,836 crore. MNYL
maintained more than double the stipulated solvency margin at 365%.
During the year under review, MNYL launched a range of ULIPs, designed
to meet specific needs of different customers like Shiksha Plus II,
Shubh Invest and Flexifortune. MNYL also launched 'College Plan' - a
traditional guaranteed money back plan, which helps customers create a
corpus for their child's higher education.
During 2010-11, MNYL took an important step towards evolving a more
comprehensive multi-channel distribution network with the corporate
agency agreement with Axis Bank à the third largest private sector bank
in the country. This channel became active in May 2010 and provided
MNYL with a strong national bancassurance relationship. With around
1,400 branches across more than 600 locations, it was expected that the
relationship with Axis Bank will provide MNYL access to a relatively
large number of new customers. This expectation has been achieved. By
March 2011, MNYL had sold more than 1 lakh policies through this new
relationship. It is the first and only Indian life insurance company to
have been awarded the CII- EXIM Bank Commendation Certificate for
'Strong Commitment to Excel' for three consecutive years from 2008 to
2010.
In terms of first year premiums, the regional distribution across India
has become more equitable. West contributed 29%, North 28%, South 25%
and East 18%.
During 2010-11, traditional products gained greater share in MNYL's
product mix. In fact, the share of traditional plans in total revenue
increased from 30% in 2009-10 to 39% in 2010-11, while that of ULIPs
decreased from 70% to 61% over the same period. MNYL's assets under
management grew by 37% to Rs.13,836 crore as on 31 March 2011, which
comprised roughly 60% debt and 40% equity.
During the period under review, MNYL has made significant progress.
Today, MNYL is not only one of the most recognised brands in the life
insurance segment, but also across the Indian corporate sector as a
whole. The brand awareness score touched an all time high of 98% in
March 2011. This is a significant 11 percentage point jump over March
2010. With this development, the brand is now ranked fourth among all
private insurance players.
(ii) Max Healthcare Institute Ltd:
Max Healthcare Institute Ltd. (MHC) provides comprehensive, integrated
and international class healthcare services with state-of-art
infrastructure designed in accordance with international norms. MHC
operates six super-specialty and multi-specialty hospitals and two
specialty medical centres located in New Delhi and the surrounding NCR
region offering services in over 30 medical disciplines. MHC is
implementing its second phase of expansion which widens operations
beyond Delhi/ NCR to other parts of North India in addition to
expanding the existing network in the NCR.
During the fiscal 2010-11, MHC continued to progress along its long
term growth roadmap. It also significantly expanded its infrastructure
and manpower, and expanded capabilities to capture the growing
opportunities in the high quality Indian healthcare space. Its new 200
bed Max Super Speciality Hospital, Shalimar Bagh, is stated to become
operational in October 2011. The 100 bed Max Super Speciality Hospital,
Dehradun will become operational in Q4, 2011-12. In addition, MHC has
been allotted land by Government of Punjab under Public Private
Partnership (PPP), to set up two 200 bed Super Speciality Hospitals at
Bhatinda and Mohali, to be launched in October, 2011.
During the year under review, revenue across the network of hospitals
grew by 28% to Rs.685 crore in 2010-11, average revenue per occupied
bed day increased by 6% to Rs. 21,558. EBIDTA margin rose from 4.4% in
2009-10 to 7.6% in 2010-11. Average operational beds increased by 23%
from 751 in 2009-10 to 926 in 2010-11, with the new blocks of
Patparganj and Saket getting fully operational. The incremental
capacity across all MHC's healthcare facilities reduced from 73% in
2009-10 to 68% in 2010-11 in a relative sense, although total beds
occupied continues to show an upward trend. Average length of stay was
3.56 days in 2010-11.
As on March 31, 2011, MHC has approximately 1,250 doctors, 1,725 nurses
and 1,840 para-medical and other staff across the network of hospitals.
There is a registered patient base of 11.42 lakh patients with an
average of approximately over 250,000 patient transactions per month.
(iii)Max Bupa Health Insurance Company Limited:
Max Bupa Health Insurance Company Limited (MBHI) was formed in
September 2008. With a purpose to build long- term healthcare
partnerships and provide expertise for life, MBHI is working towards
helping people live longer, healthier and more successful lives.
During the fiscal 2010-11, total market for health insurance premium in
India was Rs.11,137 crore - a 34% growth over 2009-10. The share of
health insurance in overall general insurance in India has increased
from 22% in 2009-10 to 26% in 2010-11. The industry is expected to
continue with rapid growth. Analysts estimate growth at a CAGR of 25% -
30% till 2014-15, to become a Rs. 28,000 crore market. MBHI has grown
from 400 to 700 employees in 2010-11, as it enters into the next phase
of accelerated growth.
The period for the financial year 2010 -11, was the first full year of
MBHI's business operations. It was a year of learning, development and
growth. MBHI completed 2010-11 with over 46,000 lives under cover.
Gross written premium (GWP) was Rs.25 crore. The provider network grew
to 750, spanning over 200 cities in India.
MBHI launched the Heartbeat Family First in 2010-11, a first of its
kind product designed especially for the extended Indian Joint Family
and it was later awarded the 'Best Product Innovation Award for 2011'
from the India Insurance Review.
(iv)Max Neeman Medical International Limited:
Max Neeman Medical International Limited (MNMI) is a value added
contract research organization (CRO) that provides a broad range of
clinical research services to global pharmaceutical, device and
biotechnology companies. It also collaborates with other CROs in
providing a variety of services. Estimates suggest that the Indian
clinical trials industry will reach US$ 1.3bn by 2012.
During the period under review, MNMI had a team of over 210 clinical
research coordinators and associates with a pan à India presence across
22 cities which gives MNMI access to patents and investigators sites
for various therapeutic areas. MNMI has conducted studies over 2,700
subjects in Phase-I and Phase-II studies and over 11,000 subjects in
Phase ÃIII Studies. For Phase-IV, which started recently MNMI has
enrolled more than 20,000 subjects in the first year alone. An
automated workflow process ensures efficient and accurate data
management. With its high quality operating standards, MNMI
successfully provided services to 32 clients over 64 new studies during
2010-11.
In fiscal 2010-11, revenues increased from Rs. 18.7 crore in 2009- 10
to Rs. 24.1 crore in 2010-11, while PBT grew to Rs. 4.5 crore in
2010-11 against Rs. 2.2 crore in 2009-10. MNMI continues to increase
its client base. It added 20 new clients during 2010-11 taking the
total client base to 77. The employee count increased from 270 at the
end of 2009-10 to over 320 at the end 2010-11.
Standalone Results
The highlights of the stand-alone financial results of your
Company are as under:
(RS. CRORE)
Year ended Year ended
March 31, 2011 March 31, 2010
Income
Gross sales 456.0 362.7
Less: Sales return (3.4) (2.4)
Discount (4.5) (3.8)
Excise Duty (31.1) (23.4)
Net sales 417.0 333.1
Income from Investment Activities 45.9 21.9
Other income 23.1 3.7
486.0 358.7
Expenditure
Manufacturing and other expenses 439.0 329.0
Financial expenses* 67.2 14.5
Depreciation and amortization 14.6 12.6
520.8 356.1
Profit/(loss) before tax (34.8) 2.6
Tax expense 7.3 3.2
Profit/(Loss) After Tax (42.1) (0.6)
* Includes Rs. 62.6 Crore (Previous Year Rs. 3.5 Crore) on account of
interest on 12% Compulsorily Convertible Debentures("CCDs") which has
been converted into equity shares on June 10, 2011. The said interest
has resulted in a cash loss of Rs 27.5 crore during the current year.
The interest on CCDs is thus non recurring in nature.
Fiscal 2010-11 was a year of consolidation for Max Speciality Films
(MSF), the Speciality Packaging Manufacturing division of Max India
Limited. Its plant at Railmajra, near Chandigarh, is accredited with
ISO 9001:2000 for quality standards, ISO 14001:2004 for environmental
standards and has also received OHSAS 18001: 1999 certification for
occupational health and safety. 2010-11 has been a year of transition
for MSF as it successfully commissioned a new state-of-the-art high
speed BOPP Film Production Line of 22,000 TPA in March 2011 with an
investment of Rs.145 crore. The new line was commissioned in record
time of 13 months. With this expansion, MSF's production capacity has
gone up from 30,000 TPA to 52,000 TPA, making it the third largest
producer of BOPP films in India. In addition, MSF commissioned its
fourth Metalliser in October 2010.
During the period under review, installed capacity of BOPP in India
grew by 22% due to attractiveness of the domestic market and export
opportunities. BOPP consumption continues to witness a robust growth
rate of 18% to 20% per annum in India and 6% to 7% globally. MSF's
sales turnover was Rs.456 crore in 2010-11 against Rs.363 crore in
2009-10. Net revenues increased by 25% from Rs.333 crore in 2009-10 to
Rs.417 crore in 2010-11. Despite a 22% increase in overall industry
capacity, MSF's operating margin (EBIDTA to net sales) was maintained
at 12.7% in 2010-11. Consequently, EBIDTA increased by 23% to Rs.53
crore in 2010-11. PBT increased by 76% to Rs.36 crore.
MSF maintained high production efficiencies and all its BOPP production
and metallisation lines achieved 100% capacity utilisation. It achieved
volume growth of 103% in thermal film sales. Exports registered growth
of 108%. The total number of employees as on 31 March 2011 was 455.
In the year 2010-11, MSF won the prestigious 'IndiaStar' awards for six
products for innovative design and development in packaging from Indian
Institute of Packaging. It also won the 'World Star' award from the
World Packaging Organisation for a new product.
Dividend
In view of the loss incurred by the Company and considering the funding
requirements of the underlying businesses, your directors do not
recommend any dividend.
Approval for increase in Directors
During the year under review, your Directors obtained the approval of
the Central Government to increase the number of Directors of the
Company from twelve to fifteen.
Directors
Your Directors are pleased to inform the following:
The Board of Directors in its endevour to address the growing needs of
the Max India Group, a complex business environment as also the growth
potential of our various businesses, appointed Mr. Rahul Khosla as the
Managing Director of the Company. He is expected to assume the office
on August 18, 2011. Mr. Analjit Singh would relinquish the position of
Managing Director effective August 18, 2011and shall continue as
Executive Chairman of the Company effective that date. Requisite
approval of the shareholders for the aforesaid appointment of Mr. Rahul
Khosla as Managing Director and payment of remuneration are being
sought at the ensuing Annual General Meeting.
Mr. Leo Puri, a Director nominated by Warburg Pincus group resigned
from the Directorship of the Company effective June 17, 2011. Your
Directors place on record, their appreciation for the valuable
contribution made by Mr. Leo Puri during his association with the
Company.
In accordance with the provisions of the Act and the Articles of
Association of the Company, Mr. Anuroop Singh, Mr. N.C. Singhal, Dr.
Subash Bijlani, Mr. Aman Mehta and Mr. Ashwani Windlass retire by
rotation at the ensuing Annual General Meeting and are eligible for
re-appointment. Mr. Vishal Bakshi was appointed as an Alternate
Director effective February 11, 2011 to Mr. Sanjeev Mehra, nominee
director of Xenok Limited, a wholly owned subsidiary of GS Capital
Partners VI Fund, LP, controlled by Goldman Sachs Group.
Increase in paid up share capital of the Company
During the year under review, the paid up equity share capital of the
Company stood increased from Rs. 46.50 crore to Rs. 46.48 crore
arising from allotment of 109,677 equity shares of Rs. 2/- each under
the 'Employee Stock Plan 2003'.
As of the date of this Report, the paid up equity share capital of the
Company stood further increased to Rs. 52.91 crore arising from
following:
(i) Allotment of equity shares on conversion of Compulsorily
Convertible Debentures to Xenok Limited
The Company allotted 24,079,700 equity shares of Rs.2/- each at a
premium of Rs. 214.75/- per equity share, on conversion of 6,019,925
Compulsorily Convertible Debentures of Rs. 867/- each ("CCDs") to Xenok
Limited, a wholly owned subsidiary of GS Capital Partners VI Fund,
L.P., on June 10, 2011. With the aforesaid allotment, the paid up share
capital of the Company stood increased to Rs. 51,31,28,220/-, effective
that date.
(ii) Conversion of Promoter Warrants
Dynavest India Private Limited ('Dynavest'), a company forming the
Promoter Group exercised its right to convert 2,000,000 Promoter
Warrants of Rs. 867/- each into 8,000,000 equity shares of Rs. 2/- each
at a premium of Rs. 214.75 per equity share by paying the full warrant
consideration of Rs. 173.4 crore. Your Board allotted 8,000,000 equity
shares of Rs. 2/- each on August 4, 2011 to Dynavest. With the
aforesaid allotment, the paid up share capital of the Company stood
increased to Rs. 52,91,28,220/-, effective that date.
Business Investments
The Company made an additional investment of Rs. 53.39 crore towards
equity contribution in MHC during year under review, taking the total
equity contribution in MHC to Rs. 219.49 crore as of March 31, 2011.
Further, the Company contributed an amount of Rs. 100 cores towards
subscription to Compulsorily Convertible Preference Shares (CCPS) of
MHC as of date.
Your Directors have already approved acquisition of 47,617,924 equity
shares of Rs. 10/- each of MHC constituting the entire shareholding of
16.37% held by the entities forming part of Warburg Pincus group at an
acquisition price of Rs. 29.40 per share for a total consideration of
Rs. 140 crore, subject to requisite approvals. The Company expects to
conclude aforesaid transaction on or before December 15, 2011. With
this acquisition, your Company's equity shareholding in MHC would stand
increased to 91.84%.
During the year under review, your Company also made a further
investment of Rs.88.80 crore in MBHI. With this, the total equity
contribution by the Company in MBHI stood increased to Rs.200.54 crore
as of March 31, 2011.
Your Company also made a further investment of Rs. 5.92 crore in MNYL
taking the total investment in MNYL to Rs.1466.51 crore as of March 31,
2011.
Management Discussion & Analysis
A review of the performance of businesses, including those of your
Company's joint ventures and subsidiaries, is provided in the
Management Discussion & Analysis.
Fixed Deposits
Your Company has not accepted/renewed any deposit up to the date of
this Report.
Employee Stock Option Plan
(i) Your Company had instituted an 'Employee Stock Plan 2003' ('2003
Plan'), which was approved by the Board of Directors in August 2003 and
by the shareholders in September 2003. The 2003 Plan provides for
grant of stock options aggregating not more than 5% of number of issued
equity shares of the Company to eligible employees and directors of the
Company. The 2003 Plan is administered by the Remuneration Committee
appointed by the Board of Directors. During the year under review,
1,09,677 Options were vested and upon exercise 1,09,677 equity shares
of Rs. 2/- each for cash at par were allotted. Your Company also
granted 10,000 Options to certain directors during the year under
review.
(ii) The particulars of options granted, as on the date of this report,
under the aforesaid stock option plan as required under SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 are given below:
Sl.
No. Description 2003 Plan
(a) Total number of options granted till
March 31, 2011 28,46,500
(b) The pricing formula Rs. 2/- per share
(c) Number of options vested till
March 31, 2011 12,27,714
(d) Number of options exercised till
March 31, 2011 12,27,714
(e) Total number of shares arising from
exercise of options 12,27,714
(f) Number of options lapsed/forfeited
till March 31, 2011 3,00,005
(g) Variation in terms of options -
(k) Money realized by exercise of options
(Rs. Crore) 0.25
(l) Total number of options in force as on date 13,18,781
(m) Number of options granted to senior
management including directors in FY 2010-11 10,000
(n) Employees holding 5% or more of the total
number of options granted during the year None
(o) Employees granted options equal to or
exceeding 1% or more of the issued capital
during the year None
The diluted earning per share was Rs. (1.81) for the financial year
ended March 31, 2011. The diluted earning per share for the previous
year was Rs. (0.03).
(iii) In respect of stock options granted till March 31, 2011 under the
2003 Plan, the Company has calculated employee compensation cost using
intrinsic value of the stock options. Accordingly, an amount of Rs.
44.22 crore has been recognized as total compensation charge for grants
made in October 2003, March 2005, December 2005, June 2006, November
2008, January 2009, September 2009, January 2010 and June 2010, out of
which, in the current financial year, Rs. 15.31 crore has been taken to
the Profit and Loss account as expense. The additional details required
to be disclosed in accordance with SEBI (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 relating to the
2003 Plan are given below:
a) The employee compensation cost based on fair value of stock options
granted in October 2003, March 2005, December 2005, June 2006, November
2008 January 2009, September 2009, January 2010 and June 2010 under the
2003 Plan is Rs. 44.28 crore, out of which, in the current financial
year. Rs. 15.38 crore would have been recognized as compensation cost
if the Company had used fair value basis instead of adopting intrinsic
value basis of accounting for these stock options.
b) On fair value basis of recognizing the employee compensation cost,
loss after tax for the current financial year would have been Rs. 42.17
crore instead of Rs. 42.10 crore reported in the Profit and Loss
account.
c) Basic and diluted earnings per share would have remained unchanged
at Rs. (1.81), had the Company adopted fair value basis of recognizing
the employee compensation cost due to insignificant amount of
difference in the recognized expense and fair value of the ESOP
expense.
d) The exercise price of the stock options on the grant date is Rs. 2/-
per existing equity share of Rs. 2/- each and the fair value of for
June 2010 grant Rs. 158.45.
e) The computation of fair value of stock options granted under the
2003 Plan has been done using Black Scholes Option Pricing Model. The
following assumptions have been used in applying this options pricing
model:
i) Risk free interest rate of 6.63% for June 2010 grant,
ii) Expected life of these stock options are: 3 year option for
September 2009 grant, 3 year option for January 2010 grant and 1 year
option for June 2010 grant.
iii) Expected volatility of 34.82% for January 2010 grant, 63.58% for
September 2009 grant and 34.82% for June 2010 grant, based on
historical volatility of the Company's share,
iv) No dividend expectation based on current year's dividend
recommendation, and
v) Price of Rs.181.30 for September 2009 grant, Rs. 221.10 for January
2010 and Rs. 160.05 for June 2010 grant being the latest available
closing price of the Company's share on the National Stock Exchange
prior to the date of grant.
Statutory Disclosures
Information in accordance with the provisions of Section 217(1)(e) of
the Act read with the Companies (Disclosures of Particulars in the
Report of Board of Directors) Rules, 1988 are given in the prescribed
format annexed to this Report as Annexure ÃA. A statement giving
particulars of employees under Section 217(2A) of the Act read with the
Companies (Particulars of Employees) Rules, 1975 for the financial year
ended March 31, 2011 is annexed to this Report as Annexure- B.
Statement pursuant to Section 212 of the Act relating to the
subsidiaries of your Company, is annexed to this Report.
Central Government vide its circular No. 5/12/2007-CL-III dated
February 8, 2011 has granted a general exemption under Section 212(8)
of the Act, to companies provided certain conditions are fulfilled.
Based on the aforesaid circular, the Board of Directors of the Company
passed a resolution giving consent for not attaching the Balance Sheet,
Profit & Loss Account, Report of the Board of Directors and the Report
of the Auditors of its subsidiaries. Your Company will make available
these documents/details upon request by any member of the Company and
its subsidiaries interested in obtaining the same. The annual accounts
of the subsidiary companies will also be kept open for inspection by
members at the respective registered offices of the Company and its
subsidiary companies. However, pursuant to Accounting Standard 21
issued by the Institute of Chartered Accountants of India, Consolidated
Financial Statements are presented by the Company as part of the annual
report which includes the financial information of the subsidiaries.
Ministry of Corporate Affairs (MCA) had issued "Corporate Governance
Voluntary Guidelines" in December 2009. These guidelines are
recommendatory in nature. The Company will examine the possibilities of
adopting the guidelines in an appropriate manner.
Auditors
S.R. Batliboi & Co., Statutory Auditors of your Company, retires and
offers themselves for re-appointment. Your Company has received from
them, a certificate required under Section 224(1B) of the Act to the
effect that their reappointment, if made, would be in conformity with
the limits specified in that Section.
The Auditors' Report read alongwith notes to accounts is self
explanatory and therefore does not call for any comments.
Group for interse transfer of shares
As required under Clause 3(e) of Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
persons constituting Group within the meaning as defined in the
Monopolies and Restrictive Trade Practices Act, 1969 for the purpose of
Regulation 10 to 12 of aforesaid SEBI Regulations are as follows:
(a) Mr. Analjit Singh, (b) Mrs. Neelu Analjit Singh, (c) Ms. Piya Singh
(d) Mr. Veer Singh, (e) Ms. Tara Singh, (f) Ms. Nira Singh (g) Neeman
Family Foundation, (h) Medicare Investments Limited, (i) Cheminvest
Limited, (j) Liquid Investment and Trading Co Pvt Ltd., (k) Maxopp
Investments Limited, (l) Mohair Investment & Trading Co. (P) Ltd., (m)
Boom Investments Private Limited, (n) PVT Investment Limited, (o) Pen
Investments Limited, (p) Pivet Finances Limited, (q) Dynavest India
Private Limited. (r) Maxpak Investment Limited (s) Trophy Holdings
Private Limited and (t) Moav Investment Limited.
Directors' Responsibility Statement
The Board of Directors of the Company confirms that:
(i) In the preparation of annual accounts, the applicable accounting
standards have been followed, along with proper explanation relating to
material departures.
(ii) The Directors have 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 or
loss of the Company for that period.
(iii) The Directors have 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.
(iv) The Directors have prepared the annual accounts on a going concern
basis.
Cautionary Statement
Statements in this Report, particularly those which relate to
Management Discussion and Analysis describing the Company's objectives,
projections, estimates and expectations may constitute "forward looking
statements" within the meaning of applicable laws and regulations.
Actual results might differ materially from those either expressed or
implied in the statement depending on the circumstances.
Acknowledgements
Your Directors would like to place on record their appreciation of the
contribution made by its Management and its employees who through their
competence and commitment have enabled the Company to achieve
impressive growth. Your Directors acknowledge with thanks the
co-operation and assistance received from various agencies of the
Central and State Governments, Financial Institutions and Banks,
Shareholders, Joint Venture partners and all other business associates.
For and on behalf of the Board of Directors
New Delhi ANALJIT SINGH
August 17, 2011 Chairman & Managing Director
Mar 31, 2010
The Directors have pleasure in presenting the twenty-second Annual
Report of your Company with the audited Statement of Accounts for the
financial year ended March 31, 2010.
CONSOLIDATED RESULTS
The highlights of the consolidated financial results of your Company
and its subsidiaries are as under:
(RS. CRORE)
Year ended Year ended
March March
31, 2010 31, 2009
Income
Net Sales 421.1 401.6
Service Income 5150.3 4106.1
Income from investment activities 2073.6 330.2
Other Income 83.8 53.5
7728.8 4891.4
Expenses
Manufacturing, Trading and Direct 5858.2 3415.1
Expenses
Personnel Expenses 769.1 843.8
General and Administration Expenses 941.9 841.9
Financial Expenses 59.1 50.6
Depreciation 141.1 97.0
7769.4 5248.4
(Loss) Before Tax (40.6) (357.0)
Tax Expense 3.4 (23.8)
(Loss) After Tax (44.0) (333.2)
Funds for Future Appropriations (45.3) 26.4
- Participating Policies
Minority Interest 17.7 88.4
Net (Loss) (71.6) (218.4)
The year 2009-10 proved to be a year of consolidation, our core
businesses continued to sustain strong growth in line with the economic
recovery, increase in customer base and improved service offerings.
During financial year 2009-10, the consolidated Group revenue was Rs.
7728.8 crore representing a growth of 58% over the previous year. Our
operating revenue stood at Rs. 5,571 crore, an increase of 24% over the
previous year. Net loss after tax for 2009-10 stood at Rs. 44.0 crore
against Rs. 333.2 Crore in the previous year. The losses were contained
on account of increase in revenues and cost rationalization efforts
undertaken across businesses. A brief update on the business
performance of your Companys key operating subsidiaries is as below:
(i) Max New York Life Insurance Company Limited:
Financial Year 2009-10 was a year of continued growth for Max New York
Life Insurance Company Limited (MNYL). During the year under review,
gross premium income stood at Rs.4,861 crore, recording a growth of 26%
over the previous financial year. First year premium income grew
marginally by 1% to Rs. 1,850 crore. With 50% increase over the
previous year, renewal premium stood at Rs.3,011 crore. MNYL sold
approx 10 lacs policies in 2009-10 compared to 12.1 lacs policies in
the previous year. MNYL achieved a cumulative sum assured of Rs.
123,000 crore. Assets under management (AUM) crossed Rs.10,000 crore
at the end of 2009-10, a growth of 82% over the previous year. With
additional capital infusion of Rs.181 crore in 2009-10, the business
stands capitalised at Rs.1,973 crore as on March 31, 2010.
During the financial year, the expenses of management to premium income
ratio were brought down from 52% in 2008-09 to 40% in 2009-10 owing to
cost rationalization efforts. MNYL reported a profit of Rs.24 crore in
2009-10, against a loss of Rs.419 crore in 2008-09 in the
policyholders and shareholders combined profit and loss statement.
MNYL entered a 10-year distribution alliance with Axis Bank, the third
largest private Indian bank with more than 1,000 branches, thereby
strengthening MNYLs focus on multi-channel distribution strategy.
Through this partnership, MNYL expects to garner an additional base of
20 lakh customers in the next five years. The share of agency in total
sales reduced from 65% in 2008-09 to 62% in 2009-10. After significant
expansion in 2008-09, the agency distribution channel focused on
consolidation and improvement in efficiency during 2009-10. The agency
base was rationalised and the total number of agents reduced by 14% in
2009-10. Average case size per agent increased by 8% from Rs.19,172 in
2008-09 to Rs.20,665 in 2009- 10. Average case rate per agent reduced
from 1.05 in 2008- 09 to 0.66 in 2009-10, still amongst the best in the
industry.
During the last 2 years, there has been a significant shift in product
preference by consumers towards lower equity market, risk based
products. At MNYL, the contribution of
Directors Report
ULIPs which have greater exposure to the equity market, in total new
sales reduced from 85% in 2007-08 to 74% in 2008-09 and then to 73% in
2009-10. During 2009-10, MNYL launched eight new products- First
Universal Life product (best of traditional as well as unit linked),
Secure Dreams, Shikha Plus, Magic Builder and Smart Invest pension
super, which will balance the portfolio between unit-linked and
non-unit-linked products.
(ii) Max Healthcare Institute Ltd.:
Max Healthcare Institute Ltd. (MHC) provides comprehensive, integrated
and world-class healthcare services with state-of-art infrastructure
designed in accordance with international norms. MHC operates six
super-specialty and multi-specialty hospitals and two specialty medical
centres located in New Delhi and the surrounding NCR region offering
services in over 30 medical disciplines.
During the fiscal 2009-10, MHC added 350 beds, thereby increasing the
total bed capacity to 1,100 beds. The new wing of Max Balaji Hospital
with 260 beds (at Patparganj) started operations in 2009 and 90 beds in
Saket became operational in last quarter of 2009-10. Revenue from all
hospitals in the MHC network grew nearly by 26% to Rs 534 crore in
2009-10 owing to expansion in bed capacity and new service profile such
as Oncology and Minimally Invasive Surgeries. During the year ended
March 31, 2010, MHCs network of hospitals performed over 740 open
heart surgeries, 1,900 angioplasties and 4,440 angiographies. In
addition, MHCs hospital network performed over 2,620 ortho-surgeries,
620 onco-surgeries,1,070 neuro-surgeries, 780 minimally invasive
surgeries and 12,170 other surgeries and procedures.
MHC managed 35 operation theatres and 325 critical care beds across a
completely integrated network. Average occupancy rate at MHC hospitals
was approximately 73%. Number of patient episodes (measured by number
of invoices issued to a patient during any period) increased from 1.9
million in 2008-09 to around 2.3 million in 2009- 10. In the last
quarter of 2009-10, MHC averaged over 200,000 patient episodes per
month.
As on March 31, 2010, MHC had around 1,250 physicians, including
several doctors of international repute; 1,900 nurses; and 1,700 other
support staff.
(iii) Max Bupa Health Insurance Company Limited:
Max Bupa Health Insurance Company Limited (MBHI) was formed in
September 2008. After utilising most of the initial phase in completing
regulatory work and building its team, systems, processes and products,
it began commercial operations on March 22, 2010.
In 2009-10, MBHI has opened offices in six key centres across India:
Delhi, Mumbai, Hyderabad, Bangalore, Pune and Chennai. MBHI is building
on its employee strength and has recruited 400 people in 2009-10.
MBHI launched its first comprehensive health insurance plan called
Heartbeat for both individuals and families. This product has
several additional features apart from regular health insurance
benefits that are tuned to address specific customer needs.
2009-10 has been a beginning. MBHI plans to continue developing newer
products, increasing its customer base and growing its footprint across
the country. It targets to grow and start generating profits in five
years.
(iv) Max Neeman Medical International Limited:
Max Neeman Medical International Limited (MNMI) is a value added
contract research organization (CRO) providing a broad range of
clinical research services to global pharmaceutical, device and
biotechnology companies.
MNMI also collaborates with other CROs in providing a variety of
clinical services. MNMI provides clinical research services in the
space of phase II & III studies and has access to over 1,200 ICH GCP
trained investigators. The team of over 210 clinical research
coordinators/clinical research associates in 22 cities across India
gives it access to patients and investigator sites for various
therapeutic areas. MNMI also started operations in Phase IV trials and
medical writing. It now offers services across five specialization
areas. An impressive operating standard enabled MNMI to provide
services to 27 clients over 59 contracts during fiscal 2009-10. As of
now, 92 studies are being conducted across 180 sites.
In fiscal 2009-10, MNMI registered revenue of Rs 18.5 crore
representing a growth of 26% over the previous year. MNMI generated a
profit of Rs. 2.2 crore in 2009-10, a growth of 137% over the previous
year. Its order book as of March
31, 2010 stood at Rs. 32 crore. There were new orders worth Rs.22 crore
during 2009-10. It added 6 new clients during the year, taking its
total client base to 57.
STANDALONE RESULTS
The highlights of the stand-alone financial results of your Company are
as under:
(RS. CRORE)
Year ended Year ended
March March
31, 2010 31, 2009
Income
Gross sales 355.5 393.5
Less: Sales returns (2.3) (3.7)
Excise duty (22.8) (36.0)
Net sales 330.3 353.8
Service and other income 32.7 66.2
363.0 420.0
Expenditure
Manufacturing and other expenses 333.2 358.6
Financial expenses 14.6 16.3
Depreciation and amortization 12.6 12.1
360.4 387.0
Profit from operations 2.6 33.0
Diminution in value of investment 0.1 22.6
and doubtful advances to
subsidiary
Profit Before Tax 2.5 10.4
Tax expense 3.1 (11.4)
Profit/(Loss) After Tax (0.6) 21.8
Fiscal 2009-10 was a year of consolidation for Max Speciality Films
(MSF), the Speciality Packaging Manufacturing division of Max India
Limited. All BOPP production lines at MSF operated at 100% capacity
utilization. During the year, sales volume of BOPP Films improved to
29.7 KTA compared to 28.5 KTA in 2008-09. In FY 2009-10, net sales
dropped by 7% year-on-year at Rs. 330 crore in 2009-10 against Rs. 354
crore for 2008-09 owing to lower sales realization which is directly
linked to crude prices.
Raw Material prices has also witnessed a down trend owing due to
decline in global crude prices. Further, the competitive landscape
became stiffer with enhanced production capacity in the domestic market
raising domestic supply to 325 KTA as on March 2010 relative to 235 KTA
in the previous year.
Your Company made a marginal loss after tax of Rs.0.6 crore in the
current year as compared with a profit of Rs. 21.8 crore in
the previous year. The reduction in profit was mainly on account of
lower investment income resulting from deployment of treasury funds to
support our businesses, interest expense incurred on compulsorily
convertible debentures and increase in employee stock option cost.
DIVIDEND
Your directors do not recommend any dividend in view of their decision
to deploy internal accruals towards the growth of the Life Insurance,
Healthcare and Health Insurance businesses.
DIRECTORS
Dr. S.S. Baijal retired from the directorship of the Company on
completion of the age of 80 years in terms of the Articles of
Association of the Company. Your Directors place on record, their
appreciation for the valuable contribution made by Dr. S.S. Baijal
during his association with the Company. In recognition of the deep and
valuable involvement in the Companys affairs over the last two decades
and the progress and success made by the Company during his
association, Dr. Baijal was conferred on the title of "Chairman
Emeritus" effective September 7, 2009.
Mr. K. Narasimha Murthy and Dr. Omkar Goswami have been co-opted as
additional directors on the Board of Directors of the Company effective
December 22, 2009. The Company has received notices under Section 257
of the Companies Act, 1956 (the Act) proposing their candidature for
being appointed as Directors of the Company at the ensuing Annual
General Meeting.
Mr. N. Rangachary resigned from the Board of Directors of the Company
effective July 26, 2010. Your Directors place on record, their
appreciation for the valuable contribution made by Mr. Rangachary
during his association with the Company. The Board appointed Mr.
Sanjeev Mehra, a director nominated by Xenok Ltd. a wholly owned
indirect subsidiary of GS Capital Partners VI Fund, L.P., controlled by
the Goldman Sachs Group as a director effective July 30, 2010 in the
casual vacancy caused by the resignation of Mr. Rangachary.
Your Directors propose the re-appointment of Mr. Analjit Singh as the
Chairman & Managing Director of the Company for a further period of 5
years effective October 30, 2010 at the ensuing Annual General Meeting.
In accordance with the provisions of the Act and the Articles of
Association of the Company, Mr. Ashwani Windlass, Mr. Rajesh Khanna,
Mr. Leo Puri, Mr. Piyush Mankad and Mr. Sanjeev Mehra retire by
rotation at the ensuing Annual General Meeting and are eligible for
re-appointment.
MANAGEMENT DISCUSSION & ANALYSIS
[A review of the performance of businesses, including those of your
Companys joint ventures and subsidiaries, is provided in the
Management Discussion & Analysis.
FUND RAISING PROGRAMMES OF THE COMPANY
(a) Allotment of Compulsorily Convertible Debentures to Xenok Limited,
on preferential basis
The Company allotted 6,019,925 Compulsorily Convertible Debentures
(CCDs) of Rs.867/- per CCD for an aggregate consideration of
Rs.5,219,274,975 [equivalent to US Dollar 115 million (approx.)] to
Xenok Ltd. a wholly owned indirect subsidiary of GS Capital Partners VI
Fund, L.P., controlled by the Goldman Sachs Group, on March 11, 2010.
The CCDs bearing a coupon of 12% per annum shall be compulsorily
convertible into four equity shares of Rs.2/- each at a premium of Rs.
214.75 per equity share on or before fifteen months from the date of
allotment.
(b) Allotment of Convertible warrants to Dynavest India Private
Limited, on preferential basis
The Company allotted 2,000,000 warrants of the face value of Rs.867/-
per warrant to Dynavest India Private Limited, one of the promoter
group companies of the Company on February 6, 2010. The Company
received a sum of Rs.433.50 per warrant, being 50% of the consideration
aggregating to Rs.86,70,00,000/- from Dynavest India Private Limited
for the allotment of said warrants. For each warrant, Dynavest India
Private Limited is entitled to subscribe to four equity shares of Rs.
2/- each in the Capital of the Company at a premium of Rs. 214.75 per
equity share.
BUSINESS INVESTMENTS
The Company made an investment of Rs. 111.74 crore, being its capital
contribution to MBHI, a 74:26 joint venture between the Company and
Bupa of UK for the Health Insurance Business towards its initial
capitalization. With the above investment, MBHI became a subsidiary of
the Company effective December 17, 2009.
The Company also made a further investment of Rs.147.08 crore in MNYL
during the year under review, taking the total equity contribution in
MNYL to Rs. 1,460.58 crore as of March 31, 2010.
Your directors would like to confirm that the Company has been
adequately funded to meet the financial requirements of the Company and
its subsidiaries till the financial year 2012.
FIXED DEPOSITS
Your Company has not accepted/renewed any deposit up to the date of
this Report.
EMPLOYEE STOCK OPTION PLAN
(i) Your Company had instituted an Employee Stock Plan 2003 (2003
Plan), which was approved by the Board of Directors in August 2003 and
by the shareholders in September 2003. The 2003 Plan provides for
grant of stock options aggregating not more than 5% of number of issued
equity shares of the Company to eligible employees and directors of the
Company. The 2003 Plan is administered by the Remuneration Committee
appointed by the Board of Directors. During the year under review,
18,112 Options were vested and upon exercise 18,112 equity shares of
Rs. 2/- each for cash at par were allotted. Your Company also granted
1,375,250 Options to certain employees/ directors during the year under
review.
(ii) The particulars of options granted, as on the date of this report,
under the aforesaid stock option plan as required under SEBI (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 are given below:
Sl. No. Description 2003 Plan
(a) Total number of options granted till 28,36,500
March 31, 2010
(b) The pricing formula Rs. 2/-
per share
(c) Number of options vested till 11,13,037
March 31, 2010
(d) Number of options exercised till 11,13,037
March 31, 2010
(e) Total number of shares arising from 11,13,037
exercise of options
(f) Number of options lapsed/forfeited till 3,00,005
March 31, 2010
(g) Variation in terms of options -
(k) Money realized by exercise of 0.22
options (Rs. Crore) (l) Total number of options
in force as on date 14,23,458
(m) Number of options granted to senior 13,75,250
management including directors
in FY 2009-10
(n) Employees holding 5% or more of the total None
number of options granted during the year
(o) Employees granted options
equal to or None
exceeding 1% or more of the issued capital
during the year
The diluted earning per share was Rs. (0.05) for the financial year
ended March 31, 2010. The diluted earning per share for the previous
year was Rs. 0.98
(iii) In respect of stock options granted till March 31, 2010 under the
2003 Plan, the Company has calculated employee compensation cost using
intrinsic value of the stock options. Accordingly, an amount of Rs.
44.06 crore has been recognized as total compensation charge for grants
made in October 2003, March 2005, December 2005, June 2006, November
2008, January 2009, September 4, 2009 and January 1, 2010 out of which,
in the current financial year, Rs. 5.58 crore has been taken to the
Profit and Loss account as expense. The additional details required to
be disclosed in accordance with SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 relating to the 2003
Plan are given below:
a) The employee compensation cost based on fair value of stock options
granted in October 2003, March 2005, December 2005, June 2006, November
2008 January 2009, September 4, 2009 and January 1, 2010 under the 2003
Plan is Rs. 44.12 crore, out of which, in the current financial year,
Rs. 5.59 crore would have been recognized as compensation cost if the
Company had used fair value basis instead of adopting intrinsic value
basis of accounting for these stock options.
b) On fair value basis of recognizing the employee compensation cost,
loss after tax for the current financial year would have been Rs. 0.60
crore instead of Rs. 0.59 crore reported in the Profit and Loss
account.
c) Basic and diluted earnings per share would have remained unchanged
at Rs. (0.03), had the Company adopted fair value basis of recognizing
the employee compensation cost due to insignificant amount of
difference in the recognized expense and fair value of the ESOP
expense.
d) The exercise price of the stock options on the grant date is Rs. 2/-
per existing equity share of Rs. 2/- each and the fair value of each
option works out to Rs. 111.55 for November 2008 and Rs. 105.38 for
January 2009 grant.
e) The computation of fair value of stock options granted under the
2003 Plan has been done using Black
Scholes Option Pricing Model. The following assumptions have been used
in applying this options pricing model:
i) Risk free interest rate of 5.78% for September 2009 grant, and 6.86%
for January 2010 grant,
ii) Expected life of 3 year of these stock options for, 3 year option
for September 4, 2009 grant and 3 year option for January 1, 2010
grant,
iii) Expected volatility of 54.97% for 3 year options January 2010
grant, 64.61% for 1 year options and 55.71% for 3 year September 2009
grant, based on historical volatility of the Companys share,
iv) No dividend expectation based on current years dividend
recommendation, and
v) Price of Rs.178.40 for September 4, 2009 grant and Rs. 221.45 for
January 1, 2010 grant being the latest available closing price of the
Companys share on the National Stock Exchange prior to the date of
grant.
STATUTORY DISCLOSURES
Information in accordance with the provisions of Section 217(1)(e) of
the Act read with the Companies (Disclosures of Particulars in the
Report of Board of Directors) Rules, 1988 are given in the prescribed
format annexed to this Report as Annexure -A. A statement giving
particulars of employees under Section 217(2A) of the Act read with the
Companies (Particulars of Employees) Rules, 1975 for the financial year
ended March 31, 2010 is annexed to this Report as Annexure-B. Statement
pursuant to Section 212 of the Act relating to the subsidiaries of your
Company, is annexed to this Report.
Your Company has been exempted by the Central Government vide their
letter No. 47/352/2010-CL-III dated June 7, 2010 under Section 212 (8)
of the Act from attaching a copy of the Balance Sheet, Profit & Loss
Account, Report of the Board of Directors and the Report of the
Auditors of the subsidiary companies. Your Company will make available
these documents/details upon request by any member of the Company and
its subsidiaries interested in obtaining the same. The annual accounts
of the subsidiary companies will also be kept open for inspection by
members at the respective registered offices of the Company and its
subsidiary companies. However, pursuant to Accounting Standard 21
issued by the Institute of Chartered Accountants of
India, Consolidated Financial Statements are presented by the Company
as part of annual report which includes the financial information of
the subsidiaries. Ministry of Corporate Affairs (MCA) had issued
"Corporate Governance Voluntary Guidelines" in December 2009. These
guidelines are recommendatory in nature. The Company will examine the
possibilities of adopting the guidelines in an appropriate manner.
AUDITORS
Price Waterhouse, Chartered Accountants, retiring auditors of the
Company at the ensuing Annual General Meeting expressed their
unwillingness to be re-appointed. The Directors place on record their
appreciation to the valuable contribution made by Price Waterhouse
during their association with Company as its statutory auditor. The
Company has received a letter from S.R. Batliboi & Co., Chartered
Accountants, expressing their willingness to be appointed as statutory
auditors of the Company and further confirmed that their appointment,
if made, will be in compliance with provisions of Section 224 (1B) of
the Act.
GROUP FOR INTERSE TRANSFER OF SHARES
As required under Clause 3(e) of Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
persons constituting Group within the meaning as defined in the
Monopolies and Restrictive Trade Practices Act, 1969 for the purpose of
Regulation 10 to 12 of aforesaid SEBI Regulations are as follows:
(a) Mr. Analjit Singh, (b) Mrs. Neelu Analjit Singh, (c) Ms. Piya Singh
(d) Mr. Veer Singh, (e) Ms. Tara Singh, (f) Neelu Family Trust, (g)
Medicare Investments Limited, (h) Cheminvest Limited, (i) Liquid
Investment and Trading Co., (j) Maxopp Investments Limited, (k) Mohair
Investment & Trading Co. (P) Ltd., (l) Boom Investments Private
Limited, (m) PVT Investment Limited, (n) Pen Investments Limited, (o)
Pivet Finances Limited, (p) Dynavest India Private Limited. (q) Maxpak
Investment Limited (r) Trophy Holdings Private Limited and (s) Moav
Investment Limited.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company confirms that:
(i) In the preparation of annual accounts, the applicable accounting
standards have been followed, along with proper explanation relating to
material departures.
(ii) The Directors have 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 or
loss of the Company for that period.
(iii) The Directors have 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.
(iv) The Directors have prepared the annual accounts on a going concern
basis.
CAUTIONARY STATEMENT
Statements in this Report, particularly those which relate to
Management Discussion and Analysis describing the Companys objectives,
projections, estimates and expectations may constitute "forward looking
statements" within the meaning of applicable laws and regulations.
Actual results might differ materially from those either expressed or
implied in the statement depending on the circumstances.
ACKNOWLEDGEMENTS
Your Directors would like to place on record their appreciation of the
contribution made by its Management and its employees who through their
competence and commitment have enabled the Company to achieve
impressive growth. Your Directors acknowledge with thanks the
co-operation and assistance received from various agencies of the
Central and State Governments, Financial Institutions and Banks,
Shareholders, Joint Venture partners and all other business associates.
For and on behalf of the Board of Director
New Delhi ANALIT SINGH
July30,2010 Chirman & Managing Director
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