AFFLUENCE

To,

The Members,

Your Directors have pleasure in presenting their 14th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31, 2016.

1.Financial summary or highlights/Performance of the Company

2.    Brief description of the Company’s working during the year/State of Company’s affair

KIMS Stand Alone: You will be glad to note that your Company has achieved total revenue of Rs.489.67 crores. The total income grew by 23% as compared to the previous year. The PBDIT increased by 36.29% to Rs. 105.95 crores. The Profit After Tax recorded at Rs. 20.03 crores as compared to the previous year profit of Rs.7.56 crores.

KIMS Consolidated: You will be glad to note that your Company along with it Subsidiaries has achieved total revenue of Rs. 517 crores. The total income grew by 21% as compared to the previous year. The PBDIT increased by 29.12% to Rs.110.66 Crores. The profit before tax has increased to Rs. 38.12 Crores, compared to the previous year PBT of Rs.18.37 Crores. Consequently the Profit after tax was recorded as Rs.22.54 Crores with a growth of 97.55%  as compared to the previous year profit of Rs.11.41 Crores.

Arunodaya Hospitals Pvt Ltd (Subsidiary Company): a 150 bedded multi-specialty hospital which is a subsidiary to KIMS Ltd has recorded the total revenue of Rs. 27.30 Crores during the financial year 2015-16.

KIMS Hospital Enterprises Pvt Ltd (Associated Company): a 150 bedded multi-specialty hospital which is an Associate Company to KIMS Ltd has recorded the total revenue of Rs. 51.16 Crores during the financial year 2015-16.

KIMS Hospitals Pvt Ltd (Wholly owned Subsidiary Company): a newly incorporated company in the State of Andhra Pradesh, Rajahmundry, which is still under the process of setting up of its infrastructure to run the hospital. 

KIMS Swastha Private Limited (Wholly owned Subsidiary Company): a newly incorporated company in the state of Madhya Pradesh, Indore, which is still under the process of setting up of its infrastructure to run the hospital.

3.    Change in the nature of business, if any

There was no change in the nature of Business during the year.

4.    Dividend

Keeping in view the expansion plans of the Company and upgrading the available facilities at the Hospital, the Board has not recommended any dividend this year.

5.    Transfer of Reserves

The Company has recorded the Net Profit of Rs.20.03 Crores (Standalone) for the period 2015-16 and the same was transferred to the head of Reserves & Surplus.

6.    Share Capital

The Company has increased its Authorized Capital from Rs.15 Crore to Rs. 20 Crore on 19.08.2015 and subsequently increased from Rs.20 crore to Rs.71 Crore on 20.01.2016 during the financial year 2015-16. The Company has issued Bonus Issues during the financial year, which is as follows:

Bonus Shares

(A) Pursuant to provisions of Section 63 of the Companies Act, 2013, The company has issued and allotted 88,00,482 Equity shares on 19thAugust,2015 by way of Bonus Shares  in the ratio of 1:1, i.e. One Equity share for every one Equity shares held by  the members of the company whose names appear on the Register of members of the company as on record date fixed by the board i.e. 24.06.2015.

(B) Pursuant to provisions of Section 63 of the Companies Act, 2013, The company has issued and allotted 5,28,02,892 Equity shares on 20th January, 2016 by way of Bonus Shares  in the ratio of 3:1, i.e.  Three Equity share for every one Equity shares held by  the members of the company whose names appear on the Register of members of the company as on record date fixed by the board i.e. 23.12.2015

.

The company has not issued shares with differential voting rights nor granted stock option or sweat equity shares.

7.    Directors and Key Managerial Personnel

Composition of the Board: The Board of Directors (“the Board”) of the Company consists of an optimal combination of Executive, Non-Executive and Independent Directors which represent a mix of professionalism through knowledge and experience.

The Directors have in depth knowledge of business in addition to the expertise in their respective areas of specialization. The Board brings in strategic guidance, leadership and an independent view to the Company’s management while discharging its fiduciary responsibilities, thereby ensuring that management adheres to high standards of ethics, transparency and disclosure.

As on date of this report, the Board comprises of 8 (Eight) Directors, of whom, 2(two) are Executive Director and 6 (Six) are Non-Executive Directors. Amongst the Non-Executive Directors, 2 (Two) are Independent Directors and 1 (One) is Nominee Director. The Non-Executive Directors bring an external and wider perspective in Board’s deliberations and decisions. The size and composition of the Board conforms to the requirements of the Companies Act, 2013. Other details relating to the Directors are as follows:

Composition of the Board of Directors, Shareholding in the company and details of external directorships of boards

* Ms. D. Anitha was appointed as Wholetime Director in the Board Meeting held on 6th May, 2016.

Independent Directors

Independent Directors fulfill all the conditions for being Independent to the Company, as stipulated under the Companies Act, 2013. All Independent Directors have given declaration that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013.

The tenure of Independent Directors is determined in accordance with the Companies Act, 2013. Independent Directors were re-appointed for the further term of two years in the Board meeting held on 23.12.2015 and are not liable to retire by rotation.

Retirement by Rotation

Pursuant to section 161(1) of the Companies Act, 2013 Mr. B. Krishnaiah, Director & Chairman (Non-Executive), retires by rotation in ensuing Annual General meeting and being eligible offers himself for re-appointment.

None of the Directors of the Company are disqualified from being appointed as Directors as specified under Section 164 of the Companies Act, 2013.

Key Managerial personnel

In the Board Meeting held on 23.12.2015 following people were designated as key Managerial Personnel.

8.    Board Functioning & Meetings

At Krishna Institute of Medical Sciences Limited, Board plays a pivotal role in ensuring good governance. In accordance with Companies Act, 2013, the Board meets at least once in every quarter to review the quarterly results and other items of agenda and if necessary, additional meetings are held.

During the year ended March 31, 2016, 6 Board Meetings were held on:

(i) June 24, 2015 (ii) June 29, 2015 (iii) September 29, 2015 (iv) November 30, 2015 (v) December 23, 2015 (vi) January 20, 2016.

The last Annual General Meeting of the Company was held on 19th August, 2015.

The attendance of each Director at the Board Meetings held during the year ended March 31, 2016 and at the last Annual General Meeting (AGM) is as under: -

9.    Annual General Body Meeting

The location and time of the Annual General Meetings held during the preceding three years are as under: -

10.  Committees Of The Board

In terms of Companies Act, 2013, the Board has formed four Committees viz. Audit Committee, Share Transfers & Allotment Committee, Nomination & Remuneration Committee, and Corporate Social Responsibility Committee.

Keeping in view the requirements of the Companies Act, 2013, the Board decides the terms of reference of these Committees and the assignment of members to various Committees. The recommendations, if any, of these Committees are submitted to the Board for approval.

11.  Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee approved a policy for selection and appointment of Directors, Senior Management and for determining their remuneration.

12.  Extract of annual return

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report  as ANNEXURE I.

13.  Details of Subsidiary/Joint Ventures/Associate Companies

The information on subsidiaries/Joint Ventures/Associate Companies pursuant to Section 129(3) of the Act read with rule 5 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure - II in Form AOC - 1.

14.  Particulars of contracts or arrangements with related parties

The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto shall be disclosed in Form No. AOC-2 as Annexure III

15.  Auditors

The Auditors, M/s. B S R & Associates LLP, Chartered Accountants, having Registration No.- (116231W/W-100024) were appointed for 5 years at the 12th  AGM dt. 30.12.2014, subject to the ratification in every annual general meeting, till the 17th Annual meeting by way of passing of an ordinary resolution.

Hence, It is proposed with the recommendation of Audit Committee to ratify the resolution for appointment of M/s. B S R & Associates LLP, Chartered Accountants, having Registration No.- (116231W/W-100024) as Auditors of the Company in the ensuing coming annual general meeting be held in the financial year 2016-17.

16.  Disclosure about Cost Audit

As per the Cost Audit Orders, Cost Audit is applicable to your Company for the FY 2016-17. In view of the same and in terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, M/s. Sagar & Associates, Cost Accountants have been appointed as Cost Auditors to conduct the audit of cost records of your company for the financial year 2016-17 and submitted their report for board approval.

Your Company submits its Cost Audit Report with the Ministry of Corporate Affairs within the stipulated time period.

17.  Internal Audit & Controls

The Company continues to engage M/s. PKF Sridhar & Santhanam as its Internal Auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the operational departments and suitable corrective actions taken as per their directions on an ongoing basis to improve efficiency in operations.

18.  Statutory Auditors and Secretarial Auditors  Report

The Directors hereby confirm that there is no qualification, reservation or adverse remark made by the statutory auditors of the company or in the secretarial audit report by the practicing company secretary for the year ended 31st March, 2016.

19.  Secretarial Audit Report 

In terms of Section 204 of the Act and Rules made there under, M/s IKR & AssociatesPracticing Company Secretary has been appointed Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure IV to this report. The report is self-explanatory and do not call for any further comments.

20.  Vigil Mechanism

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns is being proposed to establish during the financial 2016-17. After establishment of such mechanism, the Vigil Mechanism Policy will be uploaded on the website of the Company at www.kimshospitals.com.

21.  Risk management policy

Krishna Institute of Medical Sciences Ltd being a holding company to all sister concerns, an enterprise risk management frame work is being developed at the group level which will be implemented in your company. The Risk frame work will identify key & critical difficulties and mitigate plans and review of the same at regular intervals to bring it to a state level of acceptable risks from critical risks.

22.  Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report

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

23.  Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companies operations in future.

24.  Deposits

Your Company has not accepted any deposits from the public covered under Chapter V of the Act,during the year under review.

25.  Particulars of loans, guarantees or investments under section 186

Details of Loans: NIL

Details of Investments:-

Details of Guarantee / Security Provided: NIL

26.  PARTICULARS OF EMPLOYEES

There are no employees in the Company who falls under the purview of Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

27.  MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis forms part of this Annual Report for the year ended 31st December, 2015. Annexure V

28.  Conservation of energy, technology absorption and foreign exchange earnings and outgo

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

a)        Conservation of energy

Particulars required under section 134(3) of the Companies Act, 2013 read with Companies (accounts) Rules, 2014 is not applicable as the Company is not energy conservative; however your company is taking necessary steps save the energy.

b)       Foreign exchange earnings and Outgo

During the year, the total foreign exchange  earned was Rs.  1.07 Crores.

29.  Corporate Social Responsibility (CSR) 

As per the Provisions of Section 135 of the Companies Act, 2013 read with Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014, the Corporate Social Responsibility (CSR) committee has been formed by the company. The areas for CSR activities are promoting health care including preventive health care, promoting education and enhancing vocation skills to enhance employment opportunities. The Company is required to spend a minimum of Rs 40.29 lakhs for the purpose of CSR for the year 2015-16. Details of CSR expenditure incurred for the year is Rs. 41 lakhs. The amounts were spent by way of contribution to KIMS Foundation and Research Centre, a registered trust where one of the KMP have significant influence.

30.  Human Resources

Your Company treats its “human resources” as one of its most important assets.

Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement.

31.  Obligation of company under the Sexual Harassment of Women at Workplace (prevention, prohibition and redressal) Act, 2013

In order to prevent sexual harassment of women at work place a new act The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified on 9th December, 2013. Under the said Act every company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee.

Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has received 3 complaints of and the same have been resolved.

32.  Directors’ Responsibility Statement

The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that—

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

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

(c)   the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of 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; and

(e)  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.

33.  Transfer of Amounts to Investor Education and Protection Fund

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

34.  Acknowledgment

Your Directors place on record their gratitude to the Central Government, State Governments and all other Government agencies for the assistance, co-operation and encouragement they have extended to the Company.

Your Directors also take this opportunity to extend a special thanks to the medical fraternity and patients for their continued cooperation, patronage and trust reposed in the Company. Your Directors also greatly appreciate the commitment and dedication of all the employees at all levels, that has contributed to the growth and success of the Company.

Your Directors also thank all the strategic partners, business associates, Banks, financial institutions and other stakeholders including the shareholders for their assistance, co-operation and encouragement to the Company during the year. 

For and on behalf of the Board of Directors

Place: Hyderabad                             Mr. B. Krishnaiah                Dr. B. Bhaskar Rao

Date:   22.06.2016                  Chairman                              Managing Director                                                    (DIN No.00025094)    (DIN No.00008985)                                                    

ANNEXURE INDEX

Annexure I

FORM NO. MGT 9

EXTRACT OF ANNUAL RETURN

As on financial year ended on 31.03.2016

Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Company (Management & Administration) Rules, 2014.

I. REGISTRATION & OTHER DETAILS:

II.             PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (All the business activities contributing 10 % or more of the total turnover of the company shall be stated)

III.        SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

A.    Category-wise Share Holding

B) Shareholding of Promoter-

C) Change in Promoters’ Shareholding (please specify, if there is no change)

D) Shareholding Pattern of top ten Shareholders:

     (Other than Directors, Promoters and Holders of GDRs and ADRs):

E) Shareholding of Directors and Key Managerial Personnel:

F) INDEBTEDNESS -Indebtedness of the Company including interest outstanding/accrued but not due for payment.

XI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

B. Remuneration to other Directors

C. Remuneration to Key Managerial Personnel Other Than Md/Manager/Wtd

XII. Penalties / Punishment/ Compounding Of Offences:

For and on behalf of the Board of Directors

Place: Hyderabad                                                                 Mr. B. Krishnaiah                Dr. B. Bhaskar Rao

Date:   22.06.2016                                                                  Chairman                               Managing Director                                                                                                                            (DIN No.00025094)   (DIN No.00008985)           

Annexure - ii

Form No. AOC - 1

(Pursuant to the first provision to sub-section 3 of Section 129, read with Rule 5 of Companies (Accounts) Rules, 2014); Salient Features of Financial Statements of Subsidiary/associate companies/joint ventures as per Companies Act, 2013

Part “A”: Subsidiaries

                                                                                           Amount in Rs.

Additional Information:

Part “B”: Associates/Joint Ventures

Additional Information:

For and on behalf of the Board of Directors

Place: Hyderabad                             Mr. B. Krishnaiah                Dr. B. Bhaskar Rao

Date:   22.06.2016                  Chairman                              Managing Director                                                    (DIN No.00025094)    (DIN No.00008985)   
Annexure - III

FORM NO. AOC -2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section (1) of section 188 of the Companies Act, 2013 including certain arms length transaction under third proviso thereto.

1.   Details of contracts or arrangements or transactions not at Arm’s length basis.- NIL

2.   Details of contracts or arrangements or transactions at Arm’s length basis.

To,

The Members,

Krishna Institute of Medical Sciences Limited

My Report of even date is to be read with this letter and further that:

1.       Maintenance of Secretarial Records is the Responsibility of the Management of the Company and Our Responsibility is to express an opinion on these Secretarial Records based on our audit.

2.       I have followed the Audit Practices and Processes as were appropriate to obtain reasonable assurance about the correctness of contents of Secretarial Records and the Verification was done on test basis to ensure that correct facts are reflected in Secretarial Records and I believe that Practices and Processes followed by me provide a reasonable basis for my opinion.

3.       I have not verified correctness and appropriateness of financial records and books of accounts of the Company.

4.       Wherever required, I have obtained Representation from the Management of the Company about Compliance of Laws, rules and regulations and happening events.

5.     Compliance of the Provisions of Corporate and other Applicable Laws, rules, regulations and standards is responsibility of the Management of the Company and my examination was limited to verification of Procedures on test basis.

6.       The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor the efficacy or effectiveness with which the Management of the Company has conducted affairs of the Company.

For IKR & Associates

Company Secretaries

Krishna Rao Inturi

A23071 / CP10486          

Place: Hyderabad

Date: June 22, 2016

Annexure –IV

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE PERIOD ENDED 31ST MARCH, 2016

[Pursuant to section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration Personnel) Rules, 2014]

To,

The Members,

M/s. Krishna Institute of Medical Sciences Limited

1-8-31/1, Minister’s Road

Secunderabad, Telangana - 500003

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Krishna Institute of Medical Sciences Limited (CIN:U55101TG1973PLC040558) (hereinafter called the company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Krishna Institute of Medical Sciences Limited books, papers, minute books, forms and returns filed and other records maintained by the company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that in our opinion, the company has, during the audit period covering the financial year ended on 31st March, 2016 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by Krishna Institute of Medical Sciences Limited(“the Company”) for the period ended on 31stMarch, 2016, according to the provisions of:

(i)            The Companies Act, 2013 (the Act) and the rules made there under;

(ii)           The Depositories Act, 1996 and the Regulations and Bye-laws framed there under;

(iii)       The other applicable laws

(a)  The Payment of Wages Act, 1936

(b)  The Minimum Wages Act,1948

(c)  Employees Provident Funds and Miscellaneous Provisions Act, 1952

(d)  The Payment of Bonus Act, 1965

(e)  The Payment of Gratuity Act, 1972

(f)   The Contract Labour (Regulation & Abolition) Act, 1970

(g)  The Maternity Benefit Act,1961

(h)  The Child Labour(Prohibition & Regulation) Act, 1986

(i)    The Industrial Employment (Standing Order)Act, 1946

(j)    The Employee Compensation Act, 1923

(k)  The Apprentices Act, 1961

(l)    Equal Remuneration Act, 1976

(m) The Employment Exchange (Compulsory Notification of Vacancies) Act, 1956

(n)  Food Safety and Standards Act, 2006

(o)  Trade Marks Act, 1999

(p)  Customs Act, 1962

(q)  Shops and Establishment Act, 1988

(r)   The Environment Protection Act, 1986 and rules made there under

(s)   Indian Boilers Act, 1923

(t)    Atomic Energy Act, 1962

(u)  Fire Prevention and Protection Act 1997

(v)  Electricity Act, 1998

(w) The Pharmacy Act, 1961

(x)  The Indian Medical Council Act, 1956

(y)  Guardians and Wards Act, 1890

(z)   PNDT Act, 1994

(aa)  Transplantation of Human Organ Act, 1994

(bb)  Drugs and Cosmetics Act, 1940

(cc)         Air ( Prevention and control of Pollution) Act, 1981

(dd)  Water ( Prevention and control of Pollution) Act, 1974

(ee)  Biomedical Waste Management Handling Rules, 1998

(ff)   VAT Act/ Central Sale Tax Act, 1956

(gg)  Petroleum Act and Storage Rules, 2002

(hh)  Essential Service Maintenance Act, 1981

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above.

We further report that:

a.      The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

b.      Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

c.      Majority decision is carried through while the dissenting members’ views are captured and recorded as part of the minutes.

We further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

For IKR & Associates

Company Secretaries

Krishna Rao Inturi

A23071 / CP10486    

Place: Hyderabad

Date: June 22, 2016  

Annexure –V

Management Discussion and Analysis Report

Introduction

Healthcare has become one of India’s largest sectors - both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.

Indian healthcare delivery system is categorized into two major components - public and private. The Government, i.e. public healthcare system comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centers (PHCs) in rural areas. The private sector provides majority of secondary, tertiary and quaternary care institutions with a major concentration in metros, tier I and tier II cities.

India's competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe.

Market Size

The overall Indian healthcare market today is worth US$ 100 billion and is expected to grow to US$ 280 billion by 2020, a Compound Annual Growth Rate (CAGR) of 22.9 per cent. Healthcare delivery, which includes hospitals, nursing homes and diagnostics centers, and pharmaceuticals, constitutes 65 per cent of the overall market.

Deloitte Touche Tohmatsu India has predicted that with increased digital adoption, the Indian healthcare market, which is worth US$ 100 billion, will likely to grow at a CAGR of 23 per cent to US$ 280 billion by 2020.

There is a significant scope for enhancing healthcare services considering that healthcare spending as a percentage of Gross Domestic Product (GDP) is rising. Rural India, which accounts for over 70 per cent of the population, is set to emerge as a potential demand source.

India requires 600,000 to 700,000 additional beds over the next five to six years, indicative of an investment opportunity of US$ 25-30 billion. Given this demand for capital, the number of transactions in the healthcare space is expected to witness an increase in near future. The average investment size by private equity funds in healthcare chains has already increased to US$ 20-30 million from US$ 5-15 million, as per PriceWaterHouseCoopers.

A total of 3,598 hospitals and 25,723 dispensaries across the country offer AYUSH (Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy) treatment, thus ensuring availability of alternative medicine and treatment to the people.

The Indian medical tourism industry is pegged at US$ 3 billion per annum, with tourist arrivals estimated at 230,000. The Indian medical tourism industry is expected to reach US$ 6 billion by 2018, with the number of people arriving in the country for medical treatment set to double over the next four years. With greater number of hospitals getting accredited and receiving recognition, and greater awareness on the need to develop their quality to meet international standards, Kerala aims to become India's healthcare hub in five years.

Investments

The hospital and diagnostic centers attracted Foreign Direct Investment (FDI) worth US$ 3.41 billion between April 2000 and December 2015, according to data released by the Department of Industrial Policy and Promotion (DIPP).

Analysis (SWOT)

Strengths:Your Company has marked its niche presence in both states of Telangana & Andhra Pradesh. During the financial year your Company has made a significant mark in delivering healthcare services to the people especially in both the twin states more so your Company is well known as the first preferred brand in providing of healthcare services. The strength of your Company is having experienced Doctors, well training nursing staff and definitely on use of and introducing latest technology which includes performing Robotic Surgeries etc.,The medical colleges and training establishments within our group provide us with an abundant number of newlyqualified medical personnel the lack of which can otherwise be a serious constraint to growth and efficiency.

Our management team comprises of seniorprofessionals with abundant expertise and knowhow. They possess a proven track record in the healthcareservices industry and have been instrumental in driving strategy and growth. The blend of doctors as well asqualified professionals for key functions has enabled the company to repeatedly balance the multiple objectivesof delivering high standards of clinical excellence, best-in-class patient care, rapid technology adoption, valueoptimization and focus on key specialties while growing in a steady and calibrated manner.

Weaknesses: Definitely as each and every industry faces various challenges, the healthcare sector also faces challenges in terms of investments in set up a hospital which includes costs of building, construction costs, interiors and costs of plants & machines medical equipment, skilled manpower (includes doctors, nurses and paramedical staff comprising lab-technicians, radiographers and therapists) all of whom are in short supply in India.Average maturity time for a new facility to turn itself into net income would be approximately 4-5 years, which is a long gestation period.Apart from above other bottle necks for healthcare industry growth are lack of regulatory vision, scarcity of doctors and medical personnel, obsolescence of medical equipment, lack of standardization and complex business model, as hospital business is not a ‘plug and play’ business by any standards.

Opportunities: Keeping in view of overall Indian healthcare market today your company has a positive outlook on the opportunities, considering Indian population which is second largest populated country in the world. Further, with increased longevity the number of middle aged and elderly people is expected to increase,this will definitely result in increase in demand for all kinds of healthcare services manifold. Further India being diabetic capital and increase in cancer cases and rising burden of non-communicable disease is a sad reality and a challenge that Indian healthcare service providers will need to effectively address.

Penetration into semi-urban and urban and catchment areas where there are no measurable primary, tertiary care hospitals will give an opportunity to your company to explore the same. Your company also has good number of opportunities in tapping the third world countries such as Sudan, Nigeria, and other African countries, where the medical facilities are scarce. High number of underperforming hospitals gives a good opportunity to acquire such facilities as brown field projects and leverage its strengths to turn them into profitable healthcare units.

Threats:Of course there are challenges in terms of threats in increase for a healthcare industry to cause its foot prints into other neighboring states within the country, leave alone expanding its business into other countries. Few of the threats could be increase in competition in the healthcare industry, increase in cost of resources, losing out in medical tourism opportunities, and withdrawal of tax incentives etc., The healthcare services industry will need to work towards addressing the key issues plaguing the sector. In addition to the shortage and the inequitable distribution of health infrastructure across the country, the sector will have to tackle the shortage of doctors as well as the growing burden of lifestyle diseases.

Company Overview

“KIMS Hospitals” a vision of Dr. B. Bhaskar Rao commenced its journey in the year 2003-04 and has taken initial baby steps and accelerated its growth towards providing healthcare services covering all segments of population in the twin states of Telangana & Andhra Pradesh. Your company has been very successful in tapping the government schemes such as Arogyasri, ArogyaBhadrata, wherein it is providing affordable healthcare services to needy people.

Under the earmarked growth vision of Dr. B. Bhaskar Rao, your company till date has set-up 1800 hospital beds covering the twin states with 5 (five) up and successfully running hospitals. KIMS Secunderabad alone caters to 1000 beds having NABH, NABL and first hospital in India to get prestigious Green Operation Theatre (OT) award. The very foundation of KIMS stands rigid on its 7C values i.e.(Core, Care, Courtesy, Capability, Character, Commitment and Contribution) and on a soleMission to provide world-class healthcare services at affordable costs, across all medical departments, with a constant and relentless emphasis on quality, excellence in service, empathy and respect for the individual.

As compared to Indian healthcare industry standards, KIMS Hospitals definitely stands out in providing affordable healthcare to needy people thus contributing to overall growth of the healthcare industry. Your Company definitely has a further growth vision and path to upscale its operations by foraying its services in other parts of States such as Madhya Pradesh, Orissa, Assam and Karnataka. Your company will be acquiring more than 51% equity in KIMS Hospital Enterprises Pvt. Ltd to make the company subsidiary during the year.

For and on behalf of the Board of Directors

Place: Hyderabad                             Mr. B. Krishnaiah                Dr. B. Bhaskar Rao

Date:   22.06.2016                  Chairman                              Managing Director                                                    (DIN No.00025094)    (DIN No.00008985)   

KIMS Stand Alone: You will be glad to note that your Company has achieved total revenue of Rs.489.67 crores. The total income grew by 23% as compared to the previous year. The PBDIT increased by 36.29% to Rs. 105.95 crores. The Profit After Tax recorded at Rs. 20.03 crores as compared to the previous year profit of Rs.7.56 crores.   KIMS Consolidated: You will be glad to note that your Company along with it Subsidiaries has achieved total revenue of Rs. 517 crores. The total income grew by 21% as compared to the previous year. The PBDIT increased by 29.12% to Rs.110.66 Crores. The profit before tax has increased to Rs. 38.12 Crores, compared to the previous year PBT of Rs.18.37 Crores. Consequently the Profit after tax was recorded as Rs.22.54 Crores with a growth of 97.55%  as compared to the previous year profit of Rs.11.41 Crores.     Arunodaya Hospitals Pvt Ltd (Subsidiary Company): a 150 bedded multi-specialty hospital which is a subsidiary to KIMS Ltd has recorded the total revenue of Rs. 27.30 Crores during the financial year 2015-16.   KIMS Hospital Enterprises Pvt Ltd (Associated Company): a 150 bedded multi-specialty hospital which is an Associate Company to KIMS Ltd has recorded the total revenue of Rs. 51.16 Crores during the financial year 2015-16.   KIMS Hospitals Pvt Ltd (Wholly owned Subsidiary Company): a newly incorporated company in the State of Andhra Pradesh, Rajahmundry, which is still under the process of setting up of its infrastructure to run the hospital.    KIMS Swastha Private Limited (Wholly owned Subsidiary Company): a newly incorporated company in the state of Madhya Pradesh, Indore, which is still under the process of setting up of its infrastructure to run the hospital.    

Particulars required under section 134(3) of the Companies Act, 2013 read with Companies (accounts) Rules, 2014 is not applicable as the Company is not energy conservative; however your company is taking necessary steps save the energy.   

Particulars required under section 134(3) of the Companies Act, 2013 read with Companies (accounts) Rules, 2014 is not applicable as the Company is not energy conservative; however your company is taking necessary steps save the energy.   

During the year, the total foreign exchange  earned was Rs.  1.07 Crores.    

The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that—   (a)   in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;   (b)   the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;   (c)   the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of 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; and   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   

The company has not issued shares with differential voting rights nor granted stock option or sweat equity shares