Healthcare Global Enterprises Ltd.
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ISIN No INE075I01017 52Wk High (Rs.) 323 BV (Rs.) 55.29 FV (Rs.) 10.00
Bookclosure 26/09/2018 52Wk Low (Rs.) 177 EPS (Rs.) 2.33 P/E (X) 83.16
Mkt Cap. (Rs. Cr.) 1,706.51 P/BV (X) 3.51 Div Yield (%) 0.00 Mkt Lot 1
2018-03

Dear Members,

The Directors are pleased to present the Twentieth Annual Report of your Company together with the Audited Standalone and Consolidated Financial Statements and the Auditors’ Report thereon for the financial year ended March 31, 2018.

1. Financial Results:

The highlights of Standalone and Consolidated financial results of your Company and its subsidiaries are as follows:

Consolidated

2017-18 (Rs. in millions)

2016-17 (Rs. in millions)

Income from operations

8,306.9

7,001.1

Total Expenditure excluding Depreciation, Interest cost, tax and exceptional items

7,118.6

5,951.2

Profit before other income, Depreciation, Interest cost, tax and exceptional items

1,188.2

1,049.9

Other income

128.0

96.7

Depreciation, Finance Charges and exceptional items

1,030.4

798.2

Share of (loss) of equity accounted investees

(14.0)

-

Profit before tax

271.8

348.4

Profit after tax before share of profit of minority interest

169.4

230.4

Standalone

Income from operations

5,868.7

5,450.4

Total Expenditure excluding Depreciation, Interest cost, tax and exceptional items

4,981.4

4,623.6

Profit before other income, Depreciation, Interest cost, tax and exceptional items

887.3

826.7

Other income

159.3

67.2

Depreciation, Finance Charges and exceptional items

677.8

600.9

Profit/(Loss) before tax

368.6

293.0

Profit/(Loss) after tax

248.8

194.8

2. Performance Overview Consolidated Operations:

The consolidated income from operations for FY 2017 - 18 was Rs.8,306.9 million as compared to Rs.7,001.1 million in the previous fiscal year, reflecting a growth of 18.7%. EBITDA in FY 2017-18 was Rs.1,188.2 million as compared to Rs.1,049.9 million in FY 2016-17, reflecting a year-on-year increase of 13.2%. EBITDA margin for the year was 14.3% as compared to 15.0% in FY 2016-17, reflecting a decrease of 70 basis points primarily due to the losses incurred by new centres. PAT in the fiscal year was Rs.169.4 million as compared to Rs.230.4 million in FY 2016-17.

The revenue growth was driven by 19.1% growth from HCG Centres (including the multi-specialty hospitals) while the Milann centres contributed growth of 13.5%. HCG Centres constituted 92% of the consolidated revenues for the Company and the remaining 8% of the consolidated revenue was contributed by Milann Centres.

Standalone Operations:

The Company ended the year FY 2017-18 with income from operations of Rs.5,868.7 million as compared to Rs.5,450.4 million for the previous financial year, reflecting an increase of 7.7%. Our EBITDA before exceptional items for FY 2017-18 was Rs.887.3 million with EBITDA margin of 15.1%.

3. Indian Accounting Standards

The Ministry of Corporate Affairs (MCA), vide its notification in the Official Gazette dated February 16, 2015, notified the Indian Accounting Standards (“Ind AS”) applicable to certain class of companies. Ind AS has replaced the existing GAAP prescribed under Section 133 of Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. For HCG Group, Ind AS is applicable from April 01, 2016.

4. Business and Strategy:

4.1 Business:

The Company is a provider of speciality healthcare in India focused on cancer and fertility. Under the “HCG” brand, we operate the largest cancer care network in India in terms of the total number of private cancer treatment centres licensed by the AERB. Each of our comprehensive cancer centres offers, at a single location, comprehensive cancer diagnosis and treatment services (including radiation, medical oncology and surgical treatments).

In our HCG network, our specialist physicians adopt a technology-focused approach to diagnosis and treatment. For instance, we use advanced technologies, including molecular pathology and molecular imaging for accurate diagnosis and staging of cancer, which enable us to decide upon the appropriate course of treatment for each patient. We also utilise targeted nuclear medicine therapies as well as advanced radiation treatments to minimise side effects and improve the outcome of treatments. By ensuring that we adopt these diagnostic and treatment technologies throughout our HCG network, we are able to provide consistent quality of care to all patients.

Given the large number of patient cases treated across our HCG network, we believe that we are able to efficiently utilise our equipment, technologies and human resources, thereby deriving economies of scale. Furthermore, through the adoption of a centralised drug and consumables formulary, we are able to lower the overall cost of drugs and consumables. We believe that our business model is scalable and when combined with efficient utilisation of resources, it enables us to operate within a competitive cost structure.

As a group, we continue to deliver the highest standards of clinical outcomes across all our centres. Our standardised clinical protocols for diagnosis and treatment of cancer patients have allowed us to manage the large volume of patient cases across our HCG network with successful clinical outcomes. Mapping our own clinical outcomes and constantly evolving HCG treatment guidelines has paved way for standardization of clinical pathways and improvement in the functioning of the clinical departments. We believe that we are able to attract and retain highly skilled specialist physicians due to our reputation for clinical excellence, our technology-focused approach, the exposure and experience we provide in relation to clinical best practices and the training programmes we offer for their ongoing development. We believe that the abilities and expertise of our team of specialist physicians differentiate us relative to our competitors.

We also provide fertility treatment under our “Milann” brand. Our Milann fertility centres provide comprehensive reproductive medicine services, including assisted reproduction, gynaecological endoscopy and fertility preservation; and follow a multidisciplinary and technology-focused approach to diagnosis and treatment. Our Milann network also operates on a model similar to our HCG network, wherein the various Milann fertility centres aim to provide medical services following established protocols with a focus on quality medical care across diagnosis and treatment.

4.2 New Cancer Care Centres:

4.2.1 Cancer Care Kenya, Nairobi: Despite the growing incidence of cancer, there is a shortage of cancer centres in many countries in Africa. We believe that this growing demand presents us with an opportunity to establish a network of speciality cancer centres in Africa. The Company through its subsidiary HCG Kenya, has acquired majority stake in Cancer Care Kenya (CCK) a leading cancer care centre in Nairobi, Kenya. CDC, the development finance institution of UK Government, which has partnered with the Company for Africa investments, has partnered through HCG Kenya an off-shore subsidiary for the acquisition. MP Shah Hospital, a leading tertiary care hospital in Kenya, has also participated in the transaction. HCG Kenya has received necessary approvals from Competition Authority of Kenya (CAK) in May 2017, for the acquisition. CCK, which started operations in 2010, is the first private comprehensive cancer centre in Kenya. CCK treats over a thousand patients annually including over two hundred patients from other African nations. CCK’s team includes internationally trained radiation, medical and surgical oncologists, physicists, radiation technicians and oncology nurses. CCK is the first private cancer care centre in Kenya. The Centre was launched in July 2017 in association with Cancer Care Kenya and MP Shah Hospital.

4.2.2 HCG APEX Cancer Centre, Borivali: The Company in order to significantly strengthen its presence in western India, has launched the first dedicated comprehensive cancer hospital in Mumbai, in May 2017, in collaboration with Apex Criticare LLP, founded with the aim of providing consistently high quality and result oriented cancer treatment by adopting global innovations. HCG APEX Cancer Centre is a state-of-the-art comprising of 69 beds along with oncology facilities. The hospital provides quality cancer care through surgical oncology, radiation oncology and medical oncology, all under one roof with a complete range of diagnostics. The cancer centre introduced the 1st Elekta Versa HD Radiation Machine in the state of Maharashtra, which is equipped with the Agility™ for high-speed, high precision beam shaping to support exceptionally accurate tumor targeting and improved healthy tissue preservation. HCG APEX Cancer Centre, Mumbai, has a clinical team comprising of highly qualified, trained and experienced surgical oncologists, radiation oncologists, medical oncologists, radiologists and nuclear medicine physicians, who are available round-the-clock for extensive patient service. All the facilities at the HCG APEX Cancer Centre are designed and executed as per the NABH Guidelines 2016. With the latest technology and expertise to treat cancer, HCG Apex Cancer Centre is emerging as one of the Best Cancer Hospital in Mumbai, India.

4.2.3 HCG NCHRI Cancer Centre, Nagpur: There has been a lack of dedicated advanced cancer care facilities in central India. With the inauguration of HCG NCHRI Cancer Centre in June 2017, we have now created access to the most advanced dedicated cancer centre in the region. HCG NCHRI Cancer Centre is a 115 bed dedicated comprehensive cancer hospital established in collaboration with the Nagpur Cancer Hospital and Research Institute Private Limited (“NCHRI”). HCG NCHRI Cancer Centre, Nagpur, is the first private, comprehensive cancer care hospital in central India with all oncology facilities under one roof. The hospital provides quality cancer care through surgical oncology, radiation oncology and medical oncology with a full range of diagnostics. The Centre introduced TrueBeam STX for the first time in central India. This revolutionizes the cancer care industry by providing expertise and hope to hundreds of patients. The hospital treats all types of cancer with latest advancement in radiotherapy system like image-guided radiotherapy and radio-surgery which is designed to treat tumors with speed and precision and has a clinical team comprising of highly qualified, trained and experienced surgical oncologists, radiation oncologists, medical oncologists, radiologists and nuclear medicine physicians, who are available round-the-clock for extensive patient service. All the facilities at the HCG NCHRI Cancer Centre are designed and executed as per the NABH guidelines, 2016, and are a perfect amalgamation of the latest technology available in the oncology space, with highly qualified clinicians.

4.2.4 HCG Manavata Cancer Centre, Nashik: The Company had established the first comprehensive cancer centre in Nashik in 2008. The centre has 65 beds offering advanced diagnostics, radiation, medical and surgical oncology. Last year, HCG has expanded its operations in Nashik and has upgraded the centre in a new building and has additional 90 beds featuring advanced radiation therapy, multidisciplinary team of oncologists including sub specialists, bone-marrow transplant unit. The new centre has commenced its operations in May 2018. Also, the centre which was operating under HCG, has been moved into a new legal entity, named HCG Manavata Oncology LLP, which is owned by HCG and Dr. Rajnish Nagarkar in the ratio of 51:49 respectively.

4.3 New Milann Centres:

We believe that there is significant potential for growth in the fertility segment of the Indian healthcare industry. Further, the fragmentation of the market presents us with an opportunity to leverage the expertise of building our HCG brand into a nationally recognised speciality healthcare brand and to build and establish our Milann brand across India. Milann, during the year, has launched IVF Centres at Mumbai, Ahmedabad and two additional centres at Bengaluru - Whitefield and Banaswadi. BACC, the subsidiary of HCG operates eight Milann fertility centers across Bengaluru, Delhi, Chandigarh, Mumbai and Ahmedabad as on March 31, 2018. Milann is the first to receive ICMR approval for Uterus Transplant and has been Ranked No. 1 in India and first in the South India region continuously for 3 years in the fertility segment in the Times Health All India Critical Care Hospital Ranking Survey.

4.4 Acquisition, Investment, Disinvestment, Mergers and Amalgamations:

4.4.1 Acquisition of City Cancer Centre, Vijayawada: The Company has been operating a cancer care centre in Vijayawada and Ongole and a PET CT centre in Vijayawada (“HCG Vijayawada”). In order to consolidate the existing business of HCG Vijayawada and that of City Cancer Centre under the Company, and for improving the performance, efficiency, brand visibility and leadership in Andhra Pradesh, the Company vide business transfer agreement entered into with Dr. M. Gopichand, one of the promoters of the Company, in February 2018, has acquired the business of City Cancer Centre, located at Vijayawada 520002, a sole proprietary concern, owned by Dr. M. Gopichand. He is a renowned Surgical Oncologist in Vijayawada, and has entered into a consultancy agreement with the Company to provide medical consultancy services on an exclusive basis. As per the business transfer agreement with Dr. Gopichand, the Company has to pay a consideration of Rs.52 Crores, payable partly by way of issuance of shares of the Company, and by way of cash consideration, in tranches, and certain cash tranche payments are linked to the performance of the combined business. The Company has issued and allotted shares in April 2018 to Dr. Gopichand, in fulfilment of the payment of consideration payable by way of shares.

4.4.2 Suchirayu HealthCare Solutions Private Limited, Hubli: The Company, with an aim to make healthcare more accessible and affordable to the people of Hubli and North Karnataka, has entered into an operations and management arrangement with Suchirayu in August 2017. The Company has also acquired equity shares of Suchirayu to an extent of 17.72%. Suchirayu owns and operates an advanced multispecialty hospital in Hubli, having a capacity of 225 beds with most advanced technology in cathlab, CT, MRI and has best in class physicians.

4.4.3 Disinvestment of shares in HCG Regency Oncology Healthcare Private Limited: The Company has entered into a Share Purchase Agreement (“SPA”) with Regency Hospital Limited (“RHL”) and HCG Regency Oncology Healthcare Private Limited (“HCG Regency”) on March 28, 2018, relating to the sale/ transfer of shareholding of the Company in HCG Regency to RHL. The Company pursuant to the SPA has transferred its entire shareholding in HCG Regency, representing 51% of the share capital of HCG Regency to RHL. In view of the sale/transfer of entire shareholding of the Company in HCG Regency to RHL, the Company has ceased to be a shareholder of HCG Regency, effective from the close of business hours of March 28, 2018; and accordingly, HCG Regency has ceased to be a subsidiary of the Company effective from March 29, 2018. This was a strategic decision driven by lower than estimated mix of cash patients, other priorities and business dynamics.

4.4.4 iCrest, Bengaluru: The developments in healthcare of late have established value of regenerative medicine, offering new found hope to patients. There is synergy with the Company in using adult stem cells in treating several conditions including cancer. The Company in April 2018 has acquired equity shares of International Stemcell Services Limited (“ISSL” or “iCrest”) to an extent of 12.00% (Twelve Percent) from its existing shareholders. ISSL is a knowledge-centric Company in the space of stem cells and regenerative medicine. The research activities with respect to stem cells and regenerative medicine carried out by ISSL would support the Company in the development of targeted therapies for cancer treatment

4.4.5 Merger of HCG Pinnacle Oncology Private Limited, subsidiary Company with the Company: During the year, HCG Pinnacle Oncology Private Limited the wholly owned subsidiary of the Company (Transferor Company), has been merged with the Company (Transferee Company) in accordance with the terms of a Scheme of Amalgamation (the Scheme) as approved by the Regional Director, Ministry of Corporate Affairs, Hyderabad with an appointed date of April 01, 2016. The Scheme was approved by the Regional Director, MCA, Hyderabad on January 30, 2018. The consolidation of operations of HCG Pinnacle and the Company has led to a more efficient utilisation of capital and superior deployment of brand promotion, sales and distribution strategies and created a consolidated and diversified base for future growth of oncology segment.

4.4.6 Amalgamation of DKR with BACC: During the year, DKR HealthCare Private Limited (Transferor Company), the wholly owned subsidiary of BACC HealthCare Private Limited (Transferee Company) has been merged with the Transferee Company in accordance with the terms of a Scheme of Amalgamation (the Scheme) as approved by the Regional Director, Ministry of Corporate affairs, Hyderabad with an appointed date of 01st April 2017.The scheme was approved by Regional Director, MCA, Hyderabad on January 29, 2018. This amalgamation has led to administrative and operational rationalization and has promoted organisational efficiencies.

4.4.7 Business combination of Triesta Sciences with Strand Life Sciences: The Company has entered into a business transfer agreement, with Strand Life Sciences in January 2018, providing for a business combination of its Triesta Sciences business unit (“Triesta Sciences”), with Strand Life Sciences Private Limited, a Company incorporated under the Companies Act, 1956 and having its registered office at 5th Floor, Kirloskar Business Park, Bellary Road, Hebbal, Bengaluru 560024 (“Strand Life Sciences”). Pursuant to the business transfer agreement, the Company has transferred its Triesta unit on slump sale basis for a consideration aggregating to 38.2 % stake in Strand Life Sciences. Strand Life Sciences is renowned in the field of bioinformatics and genomics research and is engaged in the business of developing, implementing and deploying technology for data, image and text analysis, and for diagnostic testing in the fields of genomics, research, pharmaceutical research and development, biotechnology and healthcare. Triesta Sciences has strong capabilities in molecular diagnostics and clinical research. The business combination of Triesta Business and Strand Life Sciences creates an entity which will have a leadership position in specialized diagnostics and genomics research.

4.5 Strategy:

a) Expand the reach of our cancer care network in India:

We plan to expand its network in India by establishing new cancer centres across India and by expanding the capacity and service offering of the existing HCG cancer centres. We carry out a competitive assessment of the markets in which HCG plans to expand the network based on a number of factors, including the estimated incidence of cancer in the primary and secondary catchment population, the number of comprehensive cancer centres, if any, in the catchment; the average distance patients have to travel to avail of such comprehensive cancer care; affordability of healthcare generally and cancer care in particular; and the available third party payer options, whether corporate, government or private insurance. HCG will continue to expand its network through green field projects, partnership arrangements and acquisitions; and that the past experiences will aid the Management in identifying potential opportunities in the future and assist HCG in integrating new cancer centres into the existing HCG network. We believe that our planned network will cater to the increasing unmet demand for cancer care in India.

b) Strengthen our HCG brand to reach more cancer patients

We believe that our HCG brand distinguishes us from our competitors. As we establish new comprehensive cancer centres across India, we plan to invest in building our brand, enhancing our market presence, brand image and visibility. We intend to strengthen our patient support groups comprising cancer survivors to further spread awareness of cancer screening and to educate patients regarding cancer treatment options and their relative outcomes and benefits. Through these initiatives, we seek to further strengthen our brand and our commitment to the community, cancer patients and their families.

c) Expand our cancer care network overseas

We believe that despite the growing incidence of cancer, there is a shortage of cancer centres in many countries in Africa. As a result, patients suffering from cancer often travel outside the region at a significant cost for availing quality cancer care, including to our comprehensive cancer centres in India. In the past, we have experienced an increase in the number of patients travelling from Africa and other regions to our centre of excellence in Bengaluru, as well as to our other comprehensive cancer centres in India for cancer treatment. We believe that this growing demand presents us with an opportunity to establish a network of speciality cancer centres in Africa. In addition, we periodically and selectively evaluate partnering opportunities in countries in the Middle East and South and Southeast Asia.

d) Upgrade and strengthen our information technology infrastructure

We are in the process of significantly upgrading our information technology infrastructure in order to enhance the quality of care delivered to patients and to further enhance our clinical best practices and research capabilities. Our planned information technology infrastructure will be based on a private cloud-computing system and will encompass a centralised EMR system seamlessly integrated with various other centralised systems including HIS and ERP system. We believe that the implementation of these information systems will maximise efficiencies through the greater integration of our network and help us fine tune protocols through knowledge sharing and collaboration. Further, we believe that these initiatives will enhance our ability to conduct longitudinal research studies (which are longterm observational research studies), and associate clinical outcomes with mutation and other genomic findings in cancer patient tissues maintained at our biorepository. We believe that this will position us as a partner of choice for cancer researchers and academia.

e) Expand our Milann network of fertility centres across India and strengthen Milann brand

We believe that in expanding our Milann network, we are well-positioned to leverage HCG’s successful track record of growing through partnerships with specialist physicians and hospitals, as well as our relationship base within the medical community.

We intend to invest in building our Milann brand through targeted media campaigns focusing on building patient awareness of fertility treatment primarily through patient testimonials and socially relevant messages. We also intend to undertake community outreach programmes, strengthen our patient support groups and undertake other awareness building activities among corporate entities. In addition, we intend to undertake various direct consumer marketing activities, including advertising in print, television, outdoor and digital media.

5. Management Discussion and Analysis Report

In terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), the Management Discussion and Analysis Report on the Company’s financial and operational performance, industry trends, business outlook and Initiatives and other material changes with respect to the Company and its subsidiaries, wherever applicable, are presented in separate section which forms part of the Annual Report.

6. Transfer to reserves

There are no appropriations to/from the general reserves of the Company during the year under review.

7. Dividend

The Company continues to look at growth prospects through new investment opportunities. Considering that consolidation is taking place in the Healthcare Industry in India, it presents us with more challenges in terms of growth and it is imperative that the Company looks at available options for organic as well as in-organic growth. Achieving a consistent sustainable growth over the next few years and consolidating Company’s position competitively would be a key objective.

Keeping in view the growth strategy of the Company, the Board of Directors of your Company have decided to plough back the profits and thus do not recommended any dividend for the financial year under review.

In terms of Regulation 43A of the Listing Regulations, the Company has adopted Dividend Distribution Policy setting out the parameters and circumstances that will be taken into account by the Board in determining the distribution of Dividend to the Shareholders and/or retaining profits earned by the Company. The said policy is hosted on the website of the Company at https://hcgel.com/policies-and-guidelines/.

8. Transfer of unpaid and unclaimed amount to IEPF

Pursuant to the provisions of Section 124(5) of the Companies Act, 2013, dividend and refund of share application money due for refund which remains unpaid or unclaimed for a period of seven years from the date of its transfer to unpaid dividend/ unclaimed account is required to be transferred by the Company to Investor Education and Protection Fund (IEPF), established by the Central Government under the provisions of Section 125 of the Companies Act, 2013. During the year, no amount was due for transfer to IEPF.

9. Consolidated financial statements

In accordance with the Companies (Indian Accounting Standards), Rules, 2015, the Company has started following the Indian Accounting Standards (Ind AS) for preparation of its financial statements from April 1, 2016.

10. Subsidiaries and Associates

We, along with our subsidiaries and Associates, provide speciality healthcare focused on cancer and fertility. As on March 31, 2018, the Subsidiaries and Associate Companies of the Company are as under:

Sl. No.

Name of the entity

Country of Incorporation

% of ownership held by the Company as at March 31, 2018

1

Name of the entity

India

74.00%

2

Malnad Hospital & Institute of Oncology Private Limited

India

70.25%

3

HealthCare Global Senthil Multi Specialty Hospitals Private Limited

India

100.00%

4

Niruja Product Development and Healthcare Research Private Limited (name changed with effect from November 10, 2016 from MIMS HCG Oncology Private Limited)

India

100.00%

5

BACC Health Care Private Limited

India

50.10%


6

HealthCare Diwan Chand Imaging LLP

India

75.00%

7

APEX HCG Oncology Hospitals LLP

India

50.10%

8

HCG NCHRI Oncology LLP

India

76.00%

9

HCG Oncology LLP

India

74.00%

10

Strand-Triesta Cancer Genomics LLP

India

30.00%

11

HCG EKO Oncology LLP

India

50.50%

12

HCG Manavata Oncology LLP

India

51.00%

13

HCG (Mauritius) Pvt. Ltd.

Mauritius

100.00%

14

Healthcare Global (Africa) Pvt. Ltd.

Mauritius

76.73%

15

HealthCare Global (Uganda) Private Limited (Wholly Owned Subsidiary of Healthcare Global (Africa) Pvt. Ltd)

Uganda

76.73%

16

HealthCare Global (Kenya) Private Limited (Wholly Owned Subsidiary of Healthcare Global (Africa) Pvt. Ltd)

Kenya

76.73%

17

HealthCare Global (Tanzania) Private Limited (Wholly Owned Subsidiary of Healthcare Global (Africa) Pvt. Ltd)

Tanzania

76.73%

18

HCG SUN Hospitals LLP

India

74.00%

19

Cancer Care Kenya Limited (Subsidiary of HealthCare Global (Kenya) Private Limited)

Kenya

59.47%

20

Strand Life Sciences Private Limited

India

38.20%


During the year, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013 read with Regulation 33 of the Listing Regulations, and applicable accounting standards, the consolidated financial statements of the Company, prepared in accordance with the relevant accounting standards specified under Section 133 of the Companies Act, 2013 read with the rules made there under, forms part of this Annual Report.

Further, pursuant to the provisions of Section 136 (1) of the Companies Act, 2013:

a) The Annual Report of the Company, containing therein its standalone and consolidated financial statements, is placed on the website of the Company, being www.hcgel.com.

b) The audited financial statements of subsidiary companies are posted on the website of the Company, being www.hcgel.com.

None of the above Companies is a Material Subsidiary within the meaning of Material Subsidiary as defined under the Listing Regulations.

Pursuant to Section 129 of the Companies Act, 2013, a statement containing the salient features of the financial statements of the subsidiary companies in Form AOC-1 is annexed herewith as Annexure 5 and forms part of the Report.

10.1 Subsidiaries incorporated during the Financial Year

HCG SUN Hospitals LLP: HCG SUN Hospitals LLP was incorporated on September 22, 2017, under the Limited Liability Partnership Act, 2008. The Partners of the LLP are HCG and SHIV-SUN Medical Services LLP, in the capital contribution ratio of 74:26, respectively. HCG and SHIV-SUN have agreed to join hands to set up a multispecialty hospital with high end infrastructure in Rajkot, under the name “HCG Hospitals.

11. Public deposits

Your Company has not accepted any deposits from public in terms of Section 73 of the Companies Act, 2013 and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

12. Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013

Pursuant to Section 186 of the Companies Act, 2013 and Schedule V of the Listing Regulations, disclosure on particulars relating to Loans/advances given, guarantees provided and investments made are provided as part of the financial statements.

13. Related party transactions

In line with the requirements of the Companies Act, 2013 and Listing Regulations, your Company has formulated a Policy on Related Party Transactions which is also available on the Company’s website at https://hcgel.com/policies-and-guidelines/. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on yearly basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arm’s length.

All Related Party Transactions entered during the year were in ordinary course of the business and at arm’s length basis. No Material Related Party Transactions, i.e. transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statements, were entered into by your Company during the year.

A statement giving details of all related party transactions, entered pursuant to the omnibus approval so granted, is placed before the Audit Committee for their review, on a quarterly basis. The policy on Related Party Transactions has been hosted on the Company’s website https://hcgel.com/policies-and-guidelines/ in terms of the Listing Regulations relating to Corporate Governance.

Disclosures as required under Section 134(3) (h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, are given in Form AOC 2 as specified under Companies Act, 2013, which is annexed herewith as Annexure 6 and forms part of the report.

14. Initial Public Offer

During the year 2015-16, the Company had completed its Initial Public Offering of 29,800,000 equity shares of Rs.10 each, comprising of Fresh Issue of 11,600,000 equity shares and Offer for Sale of 18,200,000 equity shares at a premium of Rs.208 per equity share. The total issue size was Rs.6496.4 million. The shares got listed on the National Stock Exchange of India Limited and BSE Limited on March 30, 2016.

The proceeds of the initial public offer are proposed to be utilized for the following purposes:

1. Purchase of medical equipment

2. Investment in IT software, services and hardware

3. Pre-payment of debt; and

4. General Corporate Purposes

During the year under review, the Company has not deviated in utilizing the proceeds of issue.

15. Share capital

a) Authorized Share Capital: HCG Pinnacle Oncology Private Limited, one of the wholly owned subsidiaries of the Company has been merged with the Company, vide order dated January 30, 2018 of the Regional Director, South East Region, Hyderabad, Ministry of Corporate Affairs. As a result of the said merger, the Authorized Share Capital of HCG Pinnacle Oncology Private Limited amounting to Rs.50.000.000 has been added to the Authorized Share Capital of the Company. As on the date of this report, the authorized share capital of the Company is Rs.1,320,000,000 consisting of 132,000,000 equity shares of Rs.10 each. Prior to the order approving the said merger, the authorized capital was Rs. 1.270.000.000.

b) Issued, Subscribed and Paid-up Share Capital: The Issued, Subscribed and Paid-up Share Capital of the Company has been increased from Rs.857,129,860 consisting of 85,712,986 equity shares of Rs.10 each to Rs.869,044,730 consisting of 86,904,473 equity shares of Rs.10 each during the year.

The increase in the Issued, Subscribed and Paid-up Share Capital was on account of allotment of shares as under:

Name of allottee

No. of shares allotted

Issue price (Rs.)

Date of allotment

Indgrowth Capital Fund I

1,166,667

300

28.12.2017

Employees (On exercise of ESOP)

24,820

10

08.02.2008

16. Number of meetings of the Board

The Board met five times during the financial year 2017-18 viz., on, May 24, 2017, August 11, 2017, November 7, 2017, November 22, 2017 and February 8, 2018.

Detailed information regarding the meetings of the Board and meetings of the Committees of the Board is included in the report on Corporate Governance which forms a part of Directors’ Report.

17. Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director, in accordance with Section 149(7) of the Companies Act, 2013, that he/she met the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and the Regulation 16(1)(B) of the Listing Regulations, The Company has received and taken on record, the necessary declaration from each of the independent directors under Section 149 of the Companies Act, 2013 that they meet with the criteria of their independence.

18. Extract of Annual Return

The extract of the Annual Return of your Company as on March 31, 2018 as provided under sub-section (3) of Section 92 in the Form MGT 9 is annexed herewith as Annexure 1.

19. Director’s Responsibility Statement

Pursuant to Section 134 (3) (C) and 134 (5) of the Companies Act, 2013, the Board of Directors of the Company hereby state and confirm that:

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

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

20. Appointment of Directors

During the year under review, there has been no change in the Directors of the Company. Dr. Amit Varma and Dr. Ramesh S. Bilimagga who were appointed as Additional Directors with effect from November 10, 2016, liable to retire by rotation, have been reappointed by the shareholders at the Annual General Meeting held on August 10, 2017.

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company, on May 22, 2018, subject to the approval of the shareholders of the Company at the ensuing Annual General Meeting, has appointed Dr. B.S. Ramesh as a Whole Time Director, designated as “Executive Director”.

The Notice of twentieth Annual General Meeting of the Company contains the above proposal for the approval of the Members.

21. Reappointment of Directors

As per the provisions of the Companies Act, 2013, Dr. Amit Varma and Dr. B. S. Ramesh, Directors of the Company, retire at the forthcoming Annual General Meeting and have sought for reappointment.

22. Key Managerial personnel

The Key Managerial Personnel of the Company are:

a) Dr. B.S.Ajaikumar - Chairman & CEO

b) Mr. Yogesh Patel - Chief Financial Officer

c) Ms. Sunu Manuel - Company Secretary

During the year, there were no changes in Key Managerial Personnel of the Company.

23. Board of Directors and Committees of the Board and their constitution

Your Company’s Board of Directors comprises of Executive Directors, Non-Executive Directors and Independent Directors. The Composition of the Board along with relevant information pertaining to Directors are detailed in the Corporate Governance Report which forms a part of this Report.

The Board has formed the following five Committees:

1. Audit and Risk Management Committee

2. Nomination and Remuneration Committee

3. Stakeholders’ Relationship Committee

4. Corporate Social Responsibility Committee and

5. Strategy Committee.

Details of terms of reference of the Committees, attendance at meetings of the Committees are provided in the Corporate Governance report. The Company Secretary acts as the Secretary of all the Committees of the Board.

(a) Audit and Risk Management Committee

Pursuant to the requirements of Section 177 of the Companies Act, 2013 and Rule 6 of the Companies (Meetings of Board and its Powers), Rules 2014, the Company has an Audit and Risk Management Committee and the composition of the committee is as under:

1. Mr. Suresh Chandra Senapaty, Chairman

2. Dr. Sudhakar Rao

3. Mr. Shanker Annaswamy

The Audit committee was reconstituted and renamed as the “Audit and Risk Management Committee” by a meeting of the Board of Directors held on May 29, 2015.

(b) Nomination and Remuneration Committee

Pusuant to the requirements of Section 178 of the Companies Act, 2013 and Rule 6 of the Companies (Meetings of Board and its Powers), Rules 2014, the Board of Directors have reconstituted the Nomination and Remuneration Committee.

The members of the Nomination and Remuneration Committee are:

1. Mr. Shanker Annaswamy, Chairman

2. Dr. Sampath Thattai Ramesh

3. Mr. Gangadhara Ganapati

(c) Stakeholders’ Relationship Committee

The Stakeholders’ Relationship Committee was constituted by our Board of Directors at their meeting held on May 29, 2015. The scope and function of the Stakeholders’ Relationship Committee is in accordance with Section 178 of the Companies Act, 2013.

The members of the Stakeholders’ Relationship Committee are:

1. Mr. Gangadhara Ganapati, Chairman

2. Dr. B.S Ajaikumar

(d) Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee was constituted by our Board of Directors at their meeting held on May 29, 2015. The terms of reference of the Corporate Social Responsibility Committee of our Company are as per Section 135 of the Companies Act, 2013 and the applicable rules thereunder.

The members of the Corporate Social Responsibility Committee are:

1. Mr. Sudhakar Rao, Chairman

2. Dr. Sampath Thattai Ramesh

3. Ms. Bhushani Kumar

4. Dr. B.S Ajaikumar

(e) Strategy Committee

The Committee was constituted by our Board of Directors at their Meeting held on May 26, 2016 with the scope of reviewing strategic initiatives; and for having an ooversight of the strategic direction of the Company.

The members of the Committee are:

1. Dr. B. S. Ajaikumar, Chairman

2. Mr. Gangadhara Ganapati

3. Mr. Suresh Senapaty

4. Mr. Shanker Annaswamy

5. Dr. Amit Varma

24. Board Evaluation

In terms of the requirement of the Companies Act, 201 3 and the Listing Regulations, an annual performance evaluation of the Board was undertaken. The Board evaluation framework has been designed in compliance with the requirements under the Companies Act, 2013 and the Listing Regulations, and in consonance with Guidance Note on Board Evaluation issued by SEBI in January 2017. The Board evaluation was conducted through questionnaire having qualitative parameters and feedback based on rating.

Evaluation of the Board was based on criteria such as composition and role of the Board, Board communication and relationships, functioning of Board Committees, review of performance and compensation to Executive Directors, succession planning, strategic planning, etc

Evaluation of Directors was based on criteria such as participation and contribution in Board and Committee meetings, representation of shareholder interest and enhancing shareholder value, experience and expertise to provide feedback and guidance to top management on business strategy, governance and risk, understanding of the organization’s strategy, risk and environment, etc. The process also covered separate evaluation of Chairperson of the Board, Executive Directors, Non- Executive Directors and Independent Directors

Evaluation of Committees was based on criteria such as adequate independence of each Committee, frequency of meetings and time allocated for discussions at meetings, functioning of Board Committees and effectiveness of its advice/recommendation to the Board, etc.

The Board had, during the year, opportunities to interact and make an assessment of its functioning as a collective body. In addition, there were opportunities for Committees to interact, for Independent Directors to interact amongst themselves and for each Independent Director to interact with the Chairman. The Board found that, there was considerable value and richness in such discussions and deliberations.

The Board Evaluation discussion was focused around how to make the Board and its Committees more effective as a collective body in the context of the business and the external environment in which the Company functions. From time to time during the year, the Board was appraised of the business issues and the related opportunities and risks. The Board discussed various aspects of the functioning of the Board and its Committees such as structure, composition, meetings, functions and interaction with Management and what needs to be done to further improve the effectiveness of the Board’s functioning.

Additionally, during the evaluation discussion, the Board also focused on the contribution being made by the Board as a whole, through its Committees and discussions on a one on one basis with the Chairman.

The process of Board Evaluation was led by the Chairman of the Nomination and Remuneration Committee. The overall assessment of the Board was that it was functioning as a cohesive body including the Committees of the Board that were functioning well with periodic reporting by the Committees to the Board on the work done and progress made during the period. The Board acknowledged the efforts and contributions made by the Chairperson, Executive and Non- Executive Directors and Independent Directors towards the Company’s performance.

The Board also noted that the actions identified in the past evaluation had been acted upon. Subsequent to the evaluation done in the financial year 2017-18, given the changing external environment, some areas have been identified for the Board to engage itself with and these will be acted upon.

25. Risk Management

Pursuant to Regulation 21 of the Listing Regulations, your Company has developed and rolled out a comprehensive Enterprise Risk Management Policy. The policy aims at elimination or reduction of risk exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures. The Risk Management and Steering Committee (RMSC) reviews the Company’s portfolio of risks and considers it against the Company’s risk appetite and recommends changes to the Risk Management technique and / or associated frameworks, processes and practices of the Company. The enterprise risk management process of the Company is progressing satisfactorily, but the entire process is yet to reach a level of maturity. RMSC also advises and guides the Company for making the process more robust and to achieve prudent balance between risk and reward in both ongoing and new business activities. The Audit and Risk Management Committee quarterly reviews the risk management process.

For further details on the enterprise wide risk management framework, refer to Management and Discussion Analysis Report forming part of the Annual Report.

26. Corporate Social Responsibility

Your Company has been taking initiatives under Corporate Social Responsibility (CSR) for society at large, well before it has been prescribed thorough the Companies Act, 2013; and over the years, had been pursuing as a part of its corporate philosophy, an unwritten CSR policy voluntarily which goes much beyond mere philanthropic gestures and integrates interest, welfare and aspirations of the community with those of the Company itself and create an environment of partnership for inclusive development.

HCG has also been involved in a number of social initiatives to support the community and bring about a positive change in preventive healthcare, through education and awareness building activities. Free cancer detection and screening camps, Continuous Medical Education (CMEs) are now a regular feature in HCG’s community outreach program. We believe that organizational growth is impossible without the sharing and pooling of our knowledge and resources. Best practices are disseminated across our facilities through coordinated CMEs, Continuous Nursing Education (CNEs) and seminars. HCG organizes such continuous education programmes every year.

As per the provisions of Section 135 of the Companies Act, 2013, the Company has well defined policy on CSR which covers the activities as prescribed under Schedule VII of the Companies Act 2013.

Annual Report on Corporate Social Responsibility is annexed herewith as Annexure 7.

27. Internal Audit

Your Company has continued its engagement with M/s. Ernst & Young LLP, Chartered Accountants, to conduct internal audit across the organization. We have also strengthened the inhouse internal audit team to supplement and support the efforts of M/s. Ernst & Young LLP.

28. Internal Control system and their adequacy

The Management has laid down internal financial controls to be followed by the Company. We have adopted policies and procedures for ensuring the orderly and efficient conduct of the business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

The internal control system commensurate with the nature of business, size and complexity of operations and has been designed to provide reasonable assurance on the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations.

As part of the Corporate Governance Report, CEO/ CFO certification is provided, for assurance on the existence of effective internal control systems and procedures in the Company.

The internal control framework is supplemented with an internal audit program that provides an independent view of the efficacy and effectiveness of the process and control environment and supports a continuous improvement program. The internal audit program is managed by an Internal Audit function and the Audit and Risk Management Committee of the Board oversees the Internal Audit function.

The scope and authority of the Internal Audit Function is derived from the Audit Charter approved by the Audit and Risk Management Committee of the Board. The Internal Audit function develops an internal audit plan to assess control design and operating effectiveness, as per the risk assessment methodology. The Internal Audit function provides assurance to the Board and management that a system of internal control is designed and deployed to manage key business risks and is operating effectively.

29. Vigil Mechanism for Directors and employees

Section 177(9) of the Companies Act, 2013, mandates every listed Company or such class of companies as may be prescribed to establish a Vigil mechanism for its directors and employees which shall function as a channel for receiving and redressing their complaints. The Vigil Mechanism provides for (a) adequate safeguards against victimization of persons who use the Vigil Mechanism; and (b) direct access to the Chairperson of the Audit Committee of the Board of Directors of the Company in appropriate or exceptional cases.

Under this policy, we encourage our directors, employees and all other stakeholders to report their genuine concern of any conduct that results in violation of the ethical behaviour, or to report any act, if not conducted in a fair, transparent manner thereby compromising professionalism, honesty and integrity (on an anonymous basis, if stakeholders so desire).

Likewise, under this policy, we have prohibited discrimination, retaliation or harassment of any kind against any employees who, based on the employee’s reasonable belief that such conduct or practice have occurred or are occurring, reports that information or participates in the said investigation. No individual in the Company has been denied access to the Audit and Risk Management Committee or its Chairman.

This meets the requirement under Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of SEBI (LODR) Regulations.

Mechanism followed under the process is appropriately communicated within the Company across all levels and has been displayed on the Company’s intranet and website at https://hcgel.com/policies-and-guidelines/. The Audit and Risk Management Committee periodically reviews the functioning of this mechanism.

30. Company’s Policy on Appointment and Remuneration of Directors

As on the date of report, the Board consists of 9 members, of which there are 5 Independent Directors, 3 Non-Independent and Non-Executive Directors and 2 Executive Directors.

An appropriate mix of Executive and Independent Directors ensures greater independence of Board. The Company has a well laid down policy on appointment and remuneration of Directors, Key Managerial Personnel (KMPs) and Senior Management Personnel.

The remuneration of Executive Director comprises of fixed remuneration and variable pay, based on performance and adheres to the applicable provisions of the Companies Act, 2013 read with relevant rules as detailed in Corporate Governance Report which forms a part of this report.

The remuneration of Independent Directors comprises of sitting fees which is paid for attending the meetings of the Board and the Committees of the Board in accordance with the provisions of Companies Act, 2013.

The Policy of the Company on the Director’s appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under sub-section (3) of section 178 of the Companies Act, 2013, is available on our website https://hcgel. com/policies-and-guidelines/. We affirm that the remuneration paid to Directors is as per the terms laid out in the nomination and remuneration policy of the Company.

31. Particulars of employees

The information required in terms of Section 197 (12) of the Companies Act, 2013, read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 for the year ended March 31, 2017 is provided as Annexure 4 to this Report.

A statement containing, inter alia, names of employees employed throughout the financial year and in receipt of remuneration of Rs.12 million or more, employees employed for part of the year and in receipt of Rs.1 million or more per month, pursuant to Rule 5(2) the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is also provided in Annexure 4 to this report.

32. Significant and Material orders

During the period under report, there have been no material or significant orders passed by the Regulators/Courts which would have an impact on the going concern status and operations of the Company in future.

33. Statutory Auditors

Under Section 139 of the Indian Companies Act, 2013 and Rules made thereunder, it is mandatory to rotate the Statutory Auditors on completion of the maximum term permitted under the said section.

The tenure of M/s. Deloitte Haskins & Sells, as Statutory Auditors has come to an end at the last Annual General Meeting held on August 10, 2017; and accordingly the shareholders on the Annual General Meeting have approved the appointment of M/s. B S R & Co. LLP (Firm Registration No. 101248W/W-100022) as Statutory Auditors for a term of 5 years commencing from the conclusion of the Annual General Meeting of the Company held on August 10, 2017, till the conclusion of the Annual General Meeting to be held in the year 2022.

34. Auditors’ Report

There are no qualifications, reservations or adverse remarks made by M/s B S R & Co. LLP, Statutory Auditors, in their report for the financial year ended March 31, 2018; and hence, do not call for any further comments under Section 134 of the Companies Act, 2013.

Pursuant to provisions of Section 143(12) of the Companies Act, 2013, the Statutory Auditors have not reported any incident of fraud to the Audit and Risk Management Committee during the year under review.

35. Material changes and commitments, if any, affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of the report:

There are no other material changes affecting the financial position of the Company between the end of the financial year to which this financial statements relate and the date of the report.

There has been no change in the nature of business of the Company during the last financial year.

36. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. V Sreedharan, Partner, M/s V Sreedharan & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year ended March, 31, 2018. The said Report of the Secretarial Audit in Form MR 3 is annexed herewith as Annexure 2 and forms part of the report.

There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor of the Company, in their Secretarial Audit Report.

37. Cost Auditor

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost records maintained by the Company in respect of its hospital activity is required to be audited. Your Directors had, on the recommendation of the Audit and Risk Management Committee, appointed M/s. M. Thimmarayaswamy & Co., Cost Accountants to audit the cost records of the Company for the Financial Year 2017-18.

Cost Audit Report for the financial year ended 31st March 2017 has been duly filed with the Registrar of Companies.

38. Particulars regarding Conservation of energy, Technology absorption and Foreign exchange earnings and outgo as per Section 134(3)(m) of the Companies Act, 2013.

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is detailed in Annexure 8.

39. Prevention of Sexual Harassment Policy

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

During the year 2017-2018, three complaints were received at a group level and the same were investigated, out of which two resolved as per the provisions of the Act. One complaint was pending as on the date of this report.

In order to build awareness in this area, the Company has been conducting programmes in the organization on a continuous basis.

40. Green initiative

As a green initiative in corporate governance, Ministry of Corporate affairs have permitted companies to send electronic copies of Annual Report, notices, etc., to the e-mail IDs of shareholders. We are accordingly arranging to send soft copies of these documents to the e-mail IDs of shareholders available with us.

In case any of the shareholders would like to receive physical copies of these documents, the same shall be forwarded on request to the Company by post or an e-mail.

We are also in the process of starting a sustainability initiative with the aim of being carbon neutral and minimize our impact on the environment. Sustainability practices will be implemented and tracked diligently to ensure that we comply with the goals we set for ourselves.

41. Employee Stock Option Schemes

As required under Securities and Exchange Board of India (Share Based Employee Benefits) Regulation 2014, the applicable disclosures as on March 31, 2018 are annexed to this Report as Annexure 3.

During the financial year under review, pursuant to regulation 12(1) of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulation 2014, the Company has obtained the approval of the members at the Annual General Meeting held on September 29, 2016, for ratifying Employee Stock Option Scheme of the Company (HCG ESOS 2014), the pre-IPO plan. HCG ESOS 2014 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulation 2014.

The Nomination and Remuneration Committee of the board evaluates the performance and other criteria of employees and approves the grant of options based on the recommendation of the Management. These options vest with employees over a specified period subject to fulfilment of certain conditions. Upon vesting, employees are eligible to apply and secure allotment of Company’s shares at a price determined on the date of grant of options.

The stock compensation cost is computed under fair value method and accounted in line with graded vesting of options over the total vesting period of four years. For the year ended March 31, 2018, the Company has recorded stock compensation expense of Rs.27,093,288 (2017: Rs.9,450,182).

For further details on the Scheme refer Annexure 3 of the Director’s report.

42. Corporate Governance

The Company is committed to observe good corporate governance practices. The report on Corporate Governance for the financial year ended March 31, 2018, as per regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms a part of this Annual Report.

Certificate from Mr. V Sreedharan, Partner, M/s V Sreedharan & Associates, a firm of Company Secretaries in Practice confirming the compliance with the conditions of Corporate Governance as stipulated by Regulation 34 (3) of Listing Regulations is attached to this report.

43. Declaration on Code of Conduct

The Company has adopted the Code of Conduct for all its Senior Management Personnel and Directors and the same is affirmed by all the Board Members and Senior Management Personnel as required under Regulation 34 read with Part D of Schedule V of the Listing Regulations. A declaration signed by Dr. B.S. Ajaikumar, Chairman & CEO of the Company affirming the compliance with the Code of Conduct of the Company for the financial year 2017-18 has been annexed as part of this Report.

44. Acknowledgements and Appreciations

We stay committed to partnering for value creation and take this opportunity to thank one and all who have participated in our journey this far. Your Directors desire to place on record, its sincere appreciation to all employees at all levels, who with sustained dedicated effort and hard work, enabled the Company to deliver a good all-round performance. Your Directors also wish to place on record their appreciation and acknowledge with gratitude the support and co-operation extended by the vendors, business associates, consultants, bankers, regulatory and government authorities, shareholders and investors at large and look forward to their continued support. We also take this opportunity to express sincere thanks to the medical fraternity and patients for their continued co-operation, patronage and trust reposed in the Company and its healthcare services.

For and on behalf of the Board of Directors

Date: May 22, 2018 Dr. B. S. Ajaikumar

Place: Bengaluru Chairman & CEO