CONTENTS
In the Business of Life 03
Letter to Shareholders 04
Management Discussion and Analysis 16
Corporate Governance 58
Shareholders' Information 68
Financials MaxIndiaLimited 75 Max India Consolidated Statement of Accounts 125
Max India Limited ANNUAL REPORT 2008-09 1 Max India Limited ANNUAL REPORT 2008-09 2 IN THE BUSINESS OF LIFE
TRUST + SERVICE = GROWTH We are in The Business of Life… Building each of our businesses involves Trust Customers choose insurance companies and products on Trust The ailing choose healthcare and hospitals based on Trust Pharmaceutical and medical companies choose clinical research partners on Trust Manufacturers of food products and edibles select packaging material based on the Trust of health and safety Trust is paramount to our business…
As is our unwavering passion for best-in-class Service Everywhere; for every customer; all the time
Because we believe in a simple truth…
When you combine Trust with Service You get Growth
Max India Limited…Growing for India
Max India Limited ANNUAL REPORT 2008-09 3 Max India Limited ANNUAL REPORT 2008-09 4 LETTER TO SHAREHOLDERS
IN 2008-09, MAX INDIA AS A GROUP CROSSED THE US$ 1 BILLION REVENUE MARK
Dear Shareholders,
2008-09 has been the most volatile year witnessed by Then came September 2008 and with it the severe jolts the world economy since the 1930s. If you will from the US: the failure of Fannie Mae and Freddie recollect, despite the US overhang of sub-prime loans, Mac forcing a full-fledged government takeover; the year started with a continuing global price spiral. bankruptcy of Lehman Brothers; Merrill Lynch being The prices of all major commodities continued to rise forced to sell to Bank of America; the collapse and to alarming levels — and peaked in July 2008 when takeover of AIG; and the failure of Washington crude oil crossed US$ 145 per barrel. Mutual. As if on cue, the British financial system
Max India Limited ANNUAL REPORT 2008-09 5 MAX INDIA GROUP'S TOTAL CONSUMER BASE INCREASED FROM 2.5 MILLION IN 2007-08 TO 3.5 MILLION IN 2008-09
started to kneel over: first HBOS, then Bradford and < India is not essentially decoupled from the global Bingley, and finally a bailout of RBS. economy. While international trade is still a small part of its GDP, there is significant coupling in Soon the world faced a massive meltdown — starting with a terms of investment flows into the country. And complete freezing of liquidity and soon spreading to the this has certainly been affected. Even today, the real economy. While the financial system has come back to Government of India has a large role in managing some sort of normalcy, thanks to global interventions that the domestic economy. The direction and nature of are estimated to have cost well over US$ 3 trillion, the real this role is becoming critical in this economic economy continues to limp. As I write this letter to you: environment. For India, one would have to agree with Amartya Sen, Nobel prize-winning economist, < GDP growth for US in 2009 is estimated at -2.7%, with unemployment now at 9.5% and rising that the “ invisible hand of the market place has to be balanced by an emphasis on the visible hand of < Growth in the Euro Zone is expected to be worse still good governance. — estimated at -4.4% for 2009
< Japan is heading for another period of severe de- In such a milieu, is your Company, then, still in a “sweet growth, with GDP growth for 2009 estimated at -6.1% spot” that I wrote of in the last two annual reports? While there may be some differences in the extent of growth, < With an estimated 11% to 12% fall in the real value I would still argue that Max India is in a good place. Let of world trade, China's growth is expected to reduce me explain. to around 7%
< India's growth is down from the 9% plus range of the For the most part, Max India is in the business of life. last three years to 6.7% in 2008-09, with the chances Protecting Life through its life insurance subsidiary Max of it being the same in 2009-10 New York Life, a joint venture between Max India and
Max India Limited ANNUAL REPORT 2008-09 6 DURING 2008-09, WE LAID CONSIDERABLE EMPHASIS ON FURTHER ENHANCING THE GOVERNANCE SYSTEMS OF MAX INDIA AND OUR GROUP COMPANIES TO HELP BUILD A TRANSPARENT, TRUSTED COMPANY
New York Life, a Fortune 100 company. Caring for Life base increased from 2.5 million in 2007-08 to 3.5 through its healthcare company, Max Healthcare, a million in 2008-09. Your Company, therefore, remains subsidiary of your Company.Enhancing Life through its well positioned even in these difficult times. health insurance company, Max Bupa Health Insurance, During 2008-09, we also laid considerable emphasis on to be developed as a joint venture between Max India further enhancing the governance systems of Max India and Bupa Finance Plc., UK which is set to launch soon. and our group companies to help build a transparent, And,Improving Life through its clinical research trusted Company. Several renowned personalities with business Max Neeman, also a fully owned subsidiary of specific domain expertise that fit the Companies' profile Max India. were inducted as Directors on the Boards of our different One thing becomes clear if you look at all the economic group companies. data pouring out from different parts of the world. It is this: despite the severe downturn in growth across all Mr. Anuroop (Tony) Singh was appointed as Vice countries, very few have seen any long term Chairman (Non- Executive) of Max India Limited. Earlier, deterioration in spends that have to deal with the he has held leadership positions at Max New York Life business of life. To be sure, life insurance has found it (MNYL), ANZ Grindlays Bank, Bank of America and difficult to sustain the high growth rates of the past. American Express. Noted economist, Dr. Omkar Goswami, But even here, things are not as dismal as they are in the was appointed as an Independent Director on the Board financial sector in general or in manufacturing and of Max New York Life. Max Healthcare appointed Dr. Ajit exports. And as far as healthcare goes, it remains one of Singh as an Independent Director on its Board. He has a the very few beacons of light in a pall of gloom. In fact, rich 20 years of experience at Siemens in various roles, in 2008-09, Max India as a group crossed the US$1 most recently as the CEO of the Image & Knowledge billion mark in terms of revenues and its total consumer Management Business Group of Siemens Healthcare.
Max India Limited ANNUAL REPORT 2008-09 7 Additionally, Ms. Marielle Theron was appointed as Non- Executive Director at Max New York Life. She previously headed Business Development & Strategy, Asia, for Swiss Re Life & Health, a large global re- insurer. Mr. Tony Coleman, from Sydney, Australia, was appointed as Business Advisor to the Group and a permanent invitee to the Max India Board. He is currently Chairman of Enterprise & Financial Risk Committee of the International Actuarial Association.
Let me now highlight the performance of each of Max India's businesses. The details are to be found in our comprehensive chapter titled Management Discussion and Analysis.
MAX NEW YORK LIFE (MNYL) THE MARKET SHARE OF MNYL AMONGST In a difficult year, when most of the PRIVATE SECTOR INSURANCE COMPANIES competitors in private sector life insurance INCREASED BY 100 BASIS POINTS TO 6% were forced to de-grow, your Company continued increasing its business.
< Number of policies sold since inception crossed 36 lakh, with sum assured of around Rs. 94,000 crore
< Policies sold increased by 38% to 12.1 lakh in 2008-09 – crossing the 10 lakh policies a year mark for the first time since inception
Max India Limited ANNUAL REPORT 2008-09 8 Embeddded Value (Life Insurance)
1,316 2007-08 THE EMBEDDED VALUE OF THE LIFE 2,284 2008-09 INSURANCE BUSINESS INCREASED BY 74% TO RS. 2,284 CRORE IN (Rs. crore) 2008-09. EMBEDDED VALUE IS THE PRESENT VALUE OF THE FUTURE EARNINGS OF THE COMPANY AND IS A UNIVERSALLY USED METHOD OF MEASURING VALUE CREATION OF A LIFE INSURANCE COMPANY
< Gross premium increased by 42% to Rs. 3,857 crore 2008-09, MNYL significantly expanded the distribution
< First year premium (individual plus group) grew by reach by opening 279 agency offices, 95 offices for 15% to Rs. 1,843 crore. Individual adjusted first year Emerging Markets and 10 Direct Sales offices. In addition, premium (adjusted for single premium at 10%) MNYL tied up with Indian Oil Corporation and opened 124 increased by 22% from Rs. 1,308 crore in 2007-08 to sales offices at its Kisan Sewa Kendras in Punjab, Haryana Rs. 1,595 crore in 2008-09 and Uttar Pradesh, total network of offices reached to 705 as on March 31, 2009. The number of agent advisors < Renewal premium income grew by 80% to Rs. 2,014 crore in 2008-09 crossed 84,600, up by 129% over last year. MNYL significantly grew the partnership distribution channel by < Assets Under Managementgrew by 50% to Rs. 5,561 setting up ten new relationships — two with corporate crore in 2008-09 agents and eight with brokers— ten new bancassurance With this growth, the market share of MNYL amongst relationships with urban and rural cooperative banks. private sector insurance companies increased by 100 It entered the rural markets of Maharashtra and Gujarat basis points to 6% in 2008-09. And, the Embedded Value by opening 62 offices; and tied up with a multi-state of the life insurance business increased by 74% to scheduled co-operative bank and four district central Rs. 2,284 crore in 2008-09.Embedded Value is the cooperative banks to increase its potential reach to 38 present value of the future earnings of the Company and lakh customers through over 550 bank branches. During is a universally used method of measuring value creation the year, it also launched Max Vijay — a product designed of a life insurance company. to meet the insurance needs of the rural and semi-urban The growth shows up in many different ways. During markets.
Max India Limited ANNUAL REPORT 2008-09 9 MAX HEALTHCARE TURNED CASH POSITIVE DURING THE YEAR. IT IS PLANNING TO INCREASE ITS CAPACITY TO AROUND 1,800 BEDS BY 2011. NEW HOSPITALS ON THE ANVIL IN THE NATIONAL CAPITAL REGION INCLUDE SAKET, EAST DELHI, NORTH WEST DELHI, GREATER NOIDA AND IN DEHRADUN, MOHALI AND BHATINDA IN NORTH INDIA
In addition, MNYL launched its new brand positioning outperform benchmarks during 2008-09. In the with the tagline 'Karo Zyaada Ka Iraada'. Those of you sphere of investment management, Outlook Money who watched the IPL Twenty-20 matches in South Africa ranked MNYL as the top performer in three of its ULIP as well as the T-20 World Cup in England would have seen funds categories. the new MYNL advertisements on television. All of this was due to happy and motivated employees. Success in a long term business like Life Insurance The Gallup Employee Engagement score ranked MNYL as depends on how well a company deploys the the best employer in the financial services sector in India policy-holders' funds. In this, MNYL continued to and in the top 25 percentile globally.
Max India Limited ANNUAL REPORT 2008-09 10 MAX HEALTHCARE (MHC) Commitment to high class healthcare service has paid off in terms of profitability as well. Today, Max Healthcare has six super-speciality and multi-speciality hospitals and two speciality medical < Revenue from all hospitals in our network grew by centres located in the National Capital Region (NCR). nearly 13% to Rs. 423 crore in 2008-09 from It is in the process of expanding and upgrading its Rs. 372 crore in 2007-08 existing facilities as well as extending its footprint to < EBITDA for 2008-09 at Rs. 29 crore, grew 46% other cities in North India. Given its commitment to year-on-year. The EBITDA Margin improved to 7% the highest standards of medical and service in 2008-09 from 5% in 2007-08 excellence, patient care, scientific knowledge, research and medical education, Max Healthcare has < Business turned cash positive during the year emerged as one of the country's leading healthcare Max Devki Devi Heart and Vascular Institute combines service providers. cutting-edge technology with internationally Consider some of the facts: acclaimed professional expertise to deliver a range of advanced cardiac care services. This covers all areas of < The network of Max Healthcare hospitals non-invasive and interventional cardiology, performed over 450 open heart surgeries, 2,000 cardio-thoracic care and includes consultations and angioplasties and 4,130 angiographies. In diagnostics, testing, surgeries and post-surgical care. addition, there were over 2,150 ortho-surgeries, Max Super Speciality Hospital provides tertiary care 870 neuro-surgeries and 15,390 other surgeries facilities with Centres of Excellence in orthopaedics, and procedures. neurosciences, paediatrics, obstetrics and gynaecology, aesthetic and reconstructive surgery, < The average number of operational beds increased internal medicine, joint replacement and other from 662 in 2007-08 to 712 in 2008-09. The support services. average occupancy rate was 65% and average length of stay maintained at 3.3 days Max Healthcare is planning to increase its capacity to
< Number of patient episodes increased by almost around 1,800 beds by 2011. It plans to not only expand 19% to over 1.9 million in 2008-09. In the last further in the NCR region but also widen its operations quarter of 2008-09, Max Healthcare averaged to other parts of India. The 100 bed Max Hospital at around 165,000 patient episodes per month. Dehradun will become operational by first quarter of
Max India Limited ANNUAL REPORT 2008-09 11 2011. Max Healthcare has also been allotted land by consistently deliver high quality and best-in-class Government of Punjab under a public-private partnership customer experience. It has already put in place its CEO arrangement to set up 200 bed super-specialty hospitals and the Top Management team with domain expertise at Bhatinda and Mohali. and global exposure.
I would urge you to read the details on Max Healthcare in MAX NEEMAN the chapter on Management Discussion and Analysis. Max India's clinical research business via its subsidiary MAX BUPA Max Neeman Medical International Limited, provides a broad range of clinical research services to global In July 2008, your Company and the Bupa Group, a pharmaceutical, device and biotechnology companies, leading UK based international health and care company, and also collaborates with other contract research formed a new partnership to enter the health insurance organisations in various fields. market in India. The joint venture, Max Bupa Health Insurance Company Limited, will offer a suite of products Although at an early stage of development, Max Neeman to both consumers and business customers. The initial has enrolled over 5,800 patient subjects across 200 sites share capital of the JV will be Rs. 100 crore, where Max since its inception. In 2008-09, it enrolled more than 2,100 India will have a 74% stake while Bupa Group proposes to subjects. It has been steadily increasing its client base, hold the remaining stake. As in everything else that your which is now up to 48. In 2008-09 alone, Max Neeman Company does, Max Bupa is committed to become the successfully provided services to 21 clients for 55 new most admired health insurance company in India that will clinical research studies. Patients, too, are comfortable with
MAX BUPA IS COMMITTED TO BECOME THE MOST ADMIRED HEALTH INSURANCE COMPANY IN INDIA THAT WILL CONSISTENTLY DELIVER HIGH QUALITY AND BEST- IN-CLASS CUSTOMER EXPERIENCE. IT HAS ALREADY PUT IN PLACE ITS TOP MANAGEMENT TEAM
Max India Limited ANNUAL REPORT 2008-09 12 the company, whose patient retention rate — a critical < In 2008-09, Max Speciality Products' net revenue business driver in clinical trials — is 98% against an industry increased by 21% to Rs. 370 crore, sales volume grew average of 65% to 70%. Max Neeman caters to several by 19% y-o-y. prestigious customers that include large pharmaceutical < EBITDA was Rs. 51 crore with the operating margin companies such as Merck, GlaxoSmithKline, Bristol Myers (EBITDA to net sales) at 14%. Squibb, Sanofi-Aventis, Johnson & Johnson, Novartis, < Revenues from BOPP, the major business segment, Pfizer, AstraZeneca and Wyeth. increased by 24% to Rs. 362 crore in 2008-09. EBITDA in the BOPP business increased by 13% to MAX SPECIALITY PRODUCTS (MSP) Rs. 51 crore. PBT in the BOPP business grew by 21% to In addition to the business of life, your Company — Rs. 25 crore through Max Speciality Products — manufactures niche and high barrier BOPP films, thermal lamination films and Max Speciality Products is in the process of expanding its leather finishing foils. MSP leverages its strengths in production capacity of BOPP films. Its capacity is slated product technology and a keen knowledge of markets and to increase by 69% to 49,000 TPA by end of the next customer needs to produce and sell high value added financial year. products for the top end of the market.
MAX SPECIALITY PRODUCTS IS SLATED TO INCREASE ITS CAPACITY BY 69% TO 49,000 TPA BY END OF THE NEXT FINANCIAL YEAR
Max India Limited ANNUAL REPORT 2008-09 13 MAX INDIA FOUNDATION HAS TOUCHED AROUND 27,000 LIVES ACROSS 100 LOCATIONS THROUGH 2,300 VOLUNTEERS AND 90 NGO PARTNERS
MAX INDIA FOUNDATION (MIF) I believe that we will return to a higher growth path. Not the 9% that we saw earlier, but in the region of 7% in Business is not only about growth and increasing profits. 2009-10, if not a bit higher. Max India and its various Long term sustainability requires a commitment to being enterprises are well geared to take full advantage of this good corporate citizens. For your Company, corporate growth. I am therefore confident that your Company will social responsibility (CSR) is a way of life. The Max India do significantly better in 2009-10 and deliver superior Foundation is the CSR arm of Max India group. It value. spearheads the CSR initiatives of the various group companies and partners with several reputable NGOs Let me thank all the Board Members, Management, all the such as CanSupport, SOS Children's Village, Manav Seva employees of Max India group companies for the support Sannidhi and Chinmaya Mission. Max New York Life, Max and for their unwavering commitment to service quality Healthcare and Max Speciality Products are actively and delivery. With their dedication and your consistent involved in various CSR activities under its aegis. Max support, we will together conquer many a peak in the India Foundation has touched around 27,000 lives across years to come. 100 locations through 2,300 volunteers and 90 NGO partners. You can read more about our CSR interventions My special thanks to our partners New York Life and Bupa in the chapter on Management Discussion and Analysis. for their continuing faith and support.
India has weathered the growth downturn better than all With my best wishes, developed and most Emerging Market economies. Thanks to the stimulus given in the first budget of the Analjit Singh new government under Prime Minister Manmohan Singh, Chairman
Max India Limited ANNUAL REPORT 2008-09 14 BOARD OF DIRECTORS
MAX INDIA LIMITED MAX NEW YORK LIFE INSURANCE Mr. Analjit Singh - Chairman & COMPANY LIMITED Managing Director Mr. Analjit Singh – Chairman Mr. Anuroop (Tony) Singh - Vice Chairman Mr. Anuroop (Tony) Singh - Vice Chairman Mr. Aman Mehta - Non-executive Director Mr. Rajesh Sud - Chief Executive Officer Mr. Ashwani Windlass - Non-executive Director & Managing Director Mr. Leo Puri - Non-executive Director Mr. Rajit Mehta - Executive Director & Mr. N.C. Singhal - Non-executive Director Chief Operating Officer Mr. N. Rangachary - Non-executive Director Mr. John Harrison - Non-executive Director Mr. Piyush Mankad - Non-executive Director Ms. Marielle Theron - Non-executive Director Mr. Rajesh Khanna - Non-executive Director Dr. Omkar Goswami - Non-executive Director Mr. S.K. Bijlani - Non-executive Director Mr. Rajesh Khanna - Non-executive Director Dr. S.S. Baijal - Non-executive Director Mr. Richard Mucci - Non-executive Director
MAX HEALTHCARE INSTITUTE LIMITED MAX BUPA HEALTH INSURANCE Mr. Analjit Singh – Chairman COMPANY LIMITED Mr. Anuroop (Tony) Singh - Vice Chairman Mr. Analjit Singh - Chairman Dr. Pervez Ahmed - Managing Director Mr. Anthony Frank Cabrelli*- Non-executive Director Dr. Ajit Singh - Non-executive Director Mr. Anuroop (Tony) Singh - Non-executive Director Mr. K.K. Mathur - Non-executive Director Mr. Dean Allan Holden* - Non-executive Director Mr. Leo Puri - Non-executive Director Mr. Leo Puri - Non-executive Director Mr. Rajesh Khanna - Non-executive Director Mr. William Stephen Ward* - Non-executive Director
Dr. R.P. Soonawala - Non-executive Director *Bupa nominees to be formally inducted
Max India Limited ANNUAL REPORT 2008-09 15 Max India Limited ANNUAL REPORT 2008-09 16 MANAGEMENT DISCUSSION & ANALYSIS
MAX INDIA REMAINS COMMITTED TO ITS VISION TO BE ONE OF INDIA'S MOST ADMIRED COMPANIES THAT IS RECOGNISED FOR ITS SERVICE EXCELLENCE
INTRODUCTION < Protecting Life through its life insurance subsidiary Max New York Life, a joint venture between Max Max India Limited ('Max India or 'the Company') is a India and New York Life International, the global arm multi-business corporate entity. It is driven by the of New York Life, a Fortune 100 company spirit of enterprise with a focus on people and service oriented businesses. Through its different enterprises < Caring for Life through its healthcare company, — most of which, focus on bettering and protecting life Max Healthcare Institute Limited, a subsidiary of — Max India remains committed to its vision to be one Max India Limited of India's most admired companies that is recognised < Enhancing Life through its health insurance for service excellence. company, Max Bupa Health Insurance, a joint
Max India Limited ANNUAL REPORT 2008-09 17 venture between Max India and Bupa Finance Plc., UK and developing brand equity based on recognition for which is set to launch after statutory approvals excellence.
< Improving Life through its clinical research business, In addition to these “life-centred” businesses, Max India Max Neeman, a fully owned subsidiary of Max India. manufactures speciality products for the packaging industry through its division - Max Speciality Products. Each of these different ventures has a well defined It has a leadership position in India and is poised for strategy in place. Each operates in markets that have further growth. Here, too, there is a strong service significant potential for long term value generation. excellence orientation that strives on building long Today, these companies are in the investment and lasting partnerships with marquee customers. development phase of their growth cycles. Their business objectives are centred on developing the base Some of the major developments at Max India and its infrastructure, building long term customer relationships businesses in 2008-09 are given in Box 1.
BOX1: HIGHLIGHTS OF DEVELOPMENTS IN 2008-09
International Finance Corporation invested Government of Punjab to build hospitals in Rs. 150 crore in Max India Bathinda and Mohali, with 200 beds each under public private partnership by 2011 < 10,326,311 shares allotted at Rs. 145.26 per share for 4.4% stake in Max India < Max Healthcare continued implementing its plans to add around 1,000 beds by 2011-12 < IFC already holds 3.8% stake in Max Healthcare
Life Insurance Speciality Products < Initiated plans to add another 20,000 TPA capacity, < Embedded Value as on 31 March 2008-09 was Rs. 2,284 crore – growth of 74% over 2007-08 taking total capacity to 49,000 TPA by end of 2010 < Value of new business grew by 17% to Rs. 312 crore Max India resets its Health Insurance JV with Max in 2008-09 Bupa
Healthcare < Max India proposes to hold 74% stake in Max Bupa
< Max Healthcare was awarded land by the
While driven by the same value systems and underlying entities. In the next sections, we review each of the mission, each of the businesses have its own independent businesses, which is followed by a financial operational and market dynamics. In terms of their review of Max India as a consolidated entity. organisational structure, too, they operate as separate
Max India Limited ANNUAL REPORT 2008-09 18 www.maxnewyorklife.com
MAX NEW YORK LIFE INSURANCE COMPANY LTD.
OVERVIEW Max India Limited's foray into the insurance sector is relationships with customers. While growth is a through its subsidiary Max New York Life Insurance prerogative for MNYL, it remains committed to realising Company Ltd (MNYL). This is a joint venture (JV) with New its vision to be the most admired life insurance York Life International, the global arm of New York Life, a company in India. Fortune 100 company. MNYL offers both individual and group life insurance Since its incorporation in 2000 and commencement solutions. In 2008-09, it continued to improve the span of commercial operations in 2001, it has evolved into one and quality of its distribution network across India and of India's leading private sector insurance companies. develop flexible product and solutions with a goal to MNYL focuses on a positioning based on the quality create a long term value-based partnership with its platform. This includes quality of products, quality of customers. The salient features of MYNL's performance in service, quality of the asset base and quality of 2008-09 are given in Box 2.
Max India Limited ANNUAL REPORT 2008-09 19 www.maxnewyorklife.com
BOX 2: MNYL'S PERFORMANCE HIGHLIGHTS, 2008-09
< Number of policies sold since inception crossed 36 < Gross premium increased by 42% to Rs. 3,857 crore lakh, with sum assured of around Rs. 94,000 crore in 2008-09
< Policies sold increased by 38% to 12.1 lakh in < First year premium (individual + group) grew by 2008-09 – surpassing the 10 lakh policies - a year 15% to Rs. 1,843 crore in 2008-09
mark for the first time since its inception < Renewal premium income grew by 80% to Rs. 2,014 crore in 2008-09.
THE INDIAN LIFE INSURANCE SECTOR – The 'sub-prime' led global financial crisis followed by the FACING A SPEED BREAKER NOT A ROADBLOCK severe global liquidity crunch in August-November 2008 and the sharp fall in GDP growth across the world had its MNYL's development in 2008-09 in terms of its long term repercussions on the Indian insurance sector as well. positioning in the Indian life insurance space is better With global financial institutions being forced to understood by analysing its performance in light of the deleverage and re-capitalise their balance sheets, there developments in the life insurance sector in India. was massive capital flight from financial markets in emerging economies like India. Naturally, the Indian Looking back, there were two major factors that stock market witnessed a meltdown. This, coupled with had contributed significantly to the rapid expansion the general macro-economic uncertainty had an adverse of the life insurance industry in India during the last effect on investor sentiments. Indians were much more seven to eight years. First, with several new players cautious with their financial planning — resulting in a entering Life Insurance industry in the private sector, general trend to postpone financial commitments and there was a massive expansion in distribution hold on to cash. networks that helped penetrate the inherent untapped demand for insurance products in India. Second, In 2008-09, therefore, faced with a liquidity crunch and a there was the introduction of Unit Linked Insurance Plans focus on cost management, most insurance companies or ULIPs. These plans were hybrids of pure insurance re-evaluated their plans of rapidly growing their sales and savings, providing the policyholders an opportunity networks — especially at the pace seen earlier. As a result, to participate in market growth. In the milieu of a there was considerable slowdown in the expansion of buoyant stock market, these schemes provided agency distribution. And, with the stock market crashing, good returns and gained popularity among investors in returns from equity oriented ULIP funds became relatively the last few years. unattractive. Consequently, life insurance prospects took
Max India Limited ANNUAL REPORT 2008-09 20 longer to decide on buying ULIPs which further slowed down life insurance growth.
As a result, after eight years of strong growth since the opening up of the sector to private participation in 2000, the life insurance industry in India witnessed negative growth for the first time in 2008-09. As Chart A shows, the total first year life insurance premiums (including individual and group) fell by 6.3% in 2008-09 and the number of policies remained virtually flat — growing by only 0.1% in 2008-09.
Chart A: Total 1st Yr Life Insurers (India)
92,989 2007-08
87,108 2008-09
Premium (Rs.crore) MNYL HAS ALWAYS FOCUSED ON 50,874 2007-08 QUALITY. ON THE DISTRIBUTION SIDE, 50,923 2008-09 WHILE STEADILY GROWING THE Policies ('000) NETWORK, IT HAS CONTINUOUSLY EMPHASISED ON THE PRODUCTIVITY OF
Source: Insurance Regulatory and Development Authority of India (IRDA) ITS AGENTS
In this difficult scenario, it is worth noting that MNYL managed to overcome the market slowdown and actually recorded a growth of 22% in Individual
Max India Limited ANNUAL REPORT 2008-09 21 www.maxnewyorklife.com
adjusted first year premium (FYP). This bears testimony to In some ways, 2008-09 has been a year of correction. The its strategy of creating a superior positioning in the froth in the system created mainly by the aggressive Indian life insurance market. penetration of ULIPs has partly cleared out, and the industry is expected to grow according to its natural long As stated earlier, MNYL has always focused on quality. On term growth trajectory. the distribution side, while steadily growing the network, it has continuously emphasised on the productivity of its Equally, the industry is getting increasingly competitive. agents. So, while competitors have had to focus on costs Four new players entered the life insurance space during of distribution and curtail their aggressive growth plans 2008-2009. With their entry, India now has 21 private life in 2008-09, such considerations were already a part of insurance companies besides the government-owned Life MNYL's calibrated strategy for penetrating markets. As Insurance Corporation of India. In this market, MNYL will be discussed in detail in subsequent sections, it remains focused on its efforts to retain and further continued to effectively execute this strategy in 2008-09. develop its competitive advantage.
Despite significant slowdown in 2008-09, the Indian life MNYL – MAINTAINING INCREASED MARKET insurance market remains attractive in both the medium PENETRATION AND GROWTH and long term. There are several reasons for this. First year premium (including individual and group < The middle class in India is continuing to grow and so premium without adjusting for single premium) are incomes and savings. increased by 15% from Rs. 1,598 crore in 2007-08 to
< The demographic structure is still tilted towards the Rs. 1,843 crore in 2008-09. Individual adjusted first year younger generation, with the share of 15-30 year olds premium (adjusted for single premium at 10%) increased in the total population continuing to grow. This by 22% from Rs. 1,308 crore in 2007-08 to Rs. 1,595 crore generation has greater need to invest in securing in 2008-09. The group business recorded a first year against life-related risks. premium income of Rs. 31 crore in 2008-09. < Today, the Life Insurance sector is still just 4% of GDP. PERFORMANCE ACROSS INDIA Given the experience of other developed and relatively matured emerging market countries, there continues to Chart B shows that in 2008-09, the North Zone continued be large growth potential for insurance in India. to be the largest contributor to adjusted first year premium of the company with a share of 37%. The West Zone was < With no formal social security structure in place in the second largest contributor with 32% share, followed by India, the need for financial protection through the South with 20% and the East with 11% share. insurance products will continue to be even stronger
with increasing need for savings to meet various life < The North Zone: By adding 118 new offices and stage requirements. 26,576 new agent advisors in 2008-09, MNYL now
Max India Limited ANNUAL REPORT 2008-09 22 knowledgeable people of Gujarat and Maharashtra, it Chart B: Zone-Wise Performance remains a huge market for any life insurance company in India. MNYL expanded its distribution in these East states with a clear focus on developing its hub and 11% spoke model for rural markets. In 2008-09, West MNYL opened 148 new offices, 62 of which were 32% South in Emerging Markets, and added 22,894 new 20% agent advisors. With this expansion, it now has 29,442 agent advisors in 204 offices in the West Zone.
< The South Zone: MNYL added 82 new offices, taking the total to 120 at the end of 2008-09. 13,619 agent North 37% advisors were inducted to strengthen the existing team, taking the overall agent advisor strength to 15,095 in the south zone. MNYL also entered into four new referral tie-ups with district central cooperative banks has a team of 32,553 agent advisors in 202 agency for Emerging Markets in Andhra Pradesh.
offices. Within this zone, it strengthened its network < The East Zone: Here, the focus in 2008-2009 was to with a special focus on developing the Emerging develop the base distribution infrastructure. MNYL Markets in Haryana by opening 33 new offices. expanded its presence here. By the end of 2008-09, it < The West Zone: With the affluent and financially had 50 offices and 7,561 agent advisors.
MNYL MANAGED TO OVERCOME THE MARKET SLOWDOWN AND ACTUALLY RECORDED A GROWTH OF 22% IN INDIVIDUAL ADJUSTED FIRST YEAR PREMIUM (FYP) THIS BEARS TESTIMONY TO ITS STRATEGY OF CREATING A SUPERIOR POSITIONING IN THE INDIAN LIFE INSURANCE MARKET
Max India Limited ANNUAL REPORT 2008-09 23 www.maxnewyorklife.com
CHANNEL-WISE PERFORMANCE MNYL has always believed that a multi-channel distribution strategy is the right solution for succeeding Chart C: Channel-Wise Performance in a country as vast and diverse as India. Though the agency channel continues to be the core distribution Emerging channel, there are others as well. During 2008-2009, Markets 5% DST 5% Agency Distribution contributed 65% to the total sales, followed at 22% by Partnership Distribution, 3% by Bancassurance, 5% by DST and 5% by Emerging Markets Bancassurance (see Chart C). 3% MNYL significantly expanded the distribution reach by Agency opening 279 agency offices, 95 offices for Emerging 65% Markets and 10 DST offices in 2008-09. In addition, Partnership MNYL tied up with Indian Oil Corporation and opened Distribution 124 sales offices at its Kisan Sewa Kendras in Punjab, 22% Haryana and Uttar Pradesh, total network of offices reached 705 as on March 31, 2009. The number of agent advisors crossed 84,600, up by 129% over last year.
MNYL’S EMERGING MARKETS DISTRIBUTION CHANNEL ALSO TIED UP WITH A MULTI-STATE SCHEDULED CO-OPERATIVE BANK AND FOUR DISTRICT CENTRAL COOPERATIVE BANKS. CONSEQUENTLY, IT CAN NOW REACH 38 LAKH CUSTOMERS THROUGH A NETWORK OF MORE THAN 550 BANK BRANCHES
Max India Limited ANNUAL REPORT 2008-09 24 While agency expansion is important to drive the growth central cooperative banks. Consequently, it can now momentum by reaching out to a larger section of the reach 38 lakh customers through a network of more than population, MNYL remains focused on continuously 550 bank branches. increasing the productivity of its agent advisors. This has been the case throughout the company's operation, To further penetrate the Emerging Markets, MNYL tied- except in 2008-09. Due to depressed consumer up with Indian Oil Corporation to distribute its products sentiment, expansion into less lucrative smaller towns through its Kisan Seva Kendras, and activated 124 such and a minor shift in product mix towards protection outlets during 2008-09. These outlets are designed to oriented policies, there was a marginal decline in case service various needs of rural consumers, right from rate and case size of the agents in 2008-09. However agriculture inputs and mobile telephony to consumer MNYL agent advisors continued to be most productive in durables and life insurance. Indian Life Insurance industry. PRODUCT-WISE PERFORMANCE Training remains a critical element of MNYL's approach Subdued consumer sentiments and the Indian stock to effectively develop its distribution networks. It has 865 market downturn in 2008-09 resulted in a risk aversion in-house trainers across the country. Apart from and consequently greater demand for traditional providing pre/post - license and induction training, the products. The contribution of ULIPs to new business sales trainers also help the distribution teams stay abreast with reduced from 87% in 2007-08 to 75% in 2008-09 for market developments and new product launches. MNYL. MNYL, however, continued to focus on a balanced 2008-09 also witnessed a significant growth for MNYL's portfolio of ULIPs and traditional products for protection Partnership Distribution channel. It established ten new and long term wealth creation. relationships — two of which were with corporate agents The new products that had been launched in 2007-08 and eight with brokers. In addition, there were tie-ups done started generating results in 2008-09. In fact, these with nine banks as referral partners. MNYL also entered into products — such as Life Maker Premium, Life Invest, an agreement with Barclays Investments and Loans India Smart Steps and LifeLine series of health insurance Ltd. as a corporate agent providing it access to a network of products — were the major growth drivers for MNYL and around 1,200 branches. The DST channel was also contributed 37% of the annualised first year premium strengthened by opening 10 new branches. (AFYP) in 2008-2009. MNYL registered a strong growth in its distribution reach for Emerging Markets. For the first time, it entered the < Life Maker Premium, the savings cum insurance ULIP rural markets of Maharashtra and Gujarat by opening plan, became the most popular product in the 31 offices respectively in the two states. The Emerging company's portfolio. Markets distribution channel also tied up with a multi- < Smart Steps, the unit linked child plan, became one of state scheduled co-operative bank and four district the leading products in MNYL portfolio in the first
Max India Limited ANNUAL REPORT 2008-09 25 www.maxnewyorklife.com
THE NEW PRODUCTS THAT HAD BEEN LAUNCHED IN 2007-08 STARTED GENERATING RESULTS IN 2008-09. IN FACT, THESE PRODUCTS SUCH AS LIFE MAKER PREMIUM, LIFE INVEST, SMART STEPS AND LIFELINE SERIES OF HEALTH INSURANCE PRODUCTS WERE THE MAJOR GROWTH DRIVERS FOR MNYL
year of its launch. This is in line with conclusions from at protection and long-term wealth creation. consumer research that indicated that around 85% of the households in India who have children in the age < Smart Assure is a regular contribution-based ULIP. It group 0-12 years rate children's education as one of has innovative features like dynamic fund allocation the primary needs for savings. that adopts a life-stage based asset allocation strategy with an in-built mechanism to beat inflation < The LifeLine series of health insurance products also through premium and coverage indexation. Another received good response from the market with sales of innovation is the dynamic opportunities fund that almost 1,08,119 policies in 2008-09. rebalances assets depending on market conditions, < Retirement planning is also gaining momentum in helping stabilise and maximise return on investments India. MNYL's product, Smart Invest, the unit linked for customers. The product has been well accepted by retirement plan, received an encouraging response the market. from the market. < Unit Builder was launched for partnership During 2008-09, MNYL launched two new products — distribution channel as a strategy to introduce more Smart Assure and Unit Builder, both ULIP products aimed customised channel specific product solutions. It is a
Max India Limited ANNUAL REPORT 2008-09 26 regular premium unit linked product for the mid- as the number of languages used in which customers can market segment — a customer segment where interact. After careful analysis of the customer base, the partnership distribution has strong reach. IVR service has been launched in 10 selected languages. The IVR is available round the clock and is supplemented To cater to changing customer preferences and risk by customer service executives who are available from perceptions, MNYL is in the process of enhancing its 7.30 am to 11 pm. product portfolio by introducing debt-based funds with assured minimum return along with unit linked solutions MNYL has also enhanced its customer offerings by and family floater health insurance. It will also launch an enhancing convenience and options for payments. Today, innovative new platform, which will have assured apart from the regular option of paying by cheque or cash minimum accumulation benefit along with the at the company's offices, policyholders have the transparency and flexibility of a unit linked solution. convenience of paying through the internet or through texting using mobile phones or through bank ATMs and MNYL – FOCUSING ON CUSTOMERS multiple other means. To inform the policyholders about these payment options, MNYL ran multiple It is the strength of the long term relationships that MNYL communication campaigns throughout 2008-09. builds with its customers that has helped sustain growth especially in times of a market slowdown like 2008-09. On the operations front, MNYL launched I-Care, which There are four broad areas of MNYL's focus on customers. provides single-window view of the customer's details These are: even at its branch offices. With this facility, customer service executives can immediately resolve queries at the < Customer relationship management point of customer contact without having to refer them < Brand positioning and development to the centralised customer service centre. To create one < Special product customisation view of the customer and to manage and track all
< Asset management customer touch points, a state-of-the-art Customer Service Management System was launched. This system CUSTOMER RELATIONSHIP MANAGEMENT is now available at more than 320 offices across India and to the entire customer service team at the main office. In 2008-09, MNYL emphasised the use of technology to improve customer relationship and service. It launched an A customer portal was also launched in 2008-09. This Interactive Voice Recording (IVR), which is most provides policyholders with an option for managing their comprehensive both in terms of services covered as well relationships online. The website provides online access
Max India Limited ANNUAL REPORT 2008-09 27 www.maxnewyorklife.com
for service transactions, information on premium with the belief that brand building is not done through receipts, payments and the NAV status of ULIPs. marketing communication alone, but also by reinforcing its image and values at every customer touch point. MNYL focuses on integrating feedback from all key stakeholders to optimise its value proposition through It is important to periodically develop and refresh the continuous improvements in processes and practices. brand image while maintaining the core brand value and Emphasis is laid on utilising effective listening posts and ethos. In line with this belief, MNYL launched its new customer surveys and operations are regularly upgraded brand positioning with the new tagline 'Karo Zyaada Ka based on these inputs. Iraada' to provide a more dynamic and youthful image to the brand. This positioning is in tune with an ambitious Given the challenges facing MNYL in terms of managing and assertive India that is ready to compete for more, scale effectively and handling channel and geographical demand more, dream more and live more to create a diversity in the most optimum manner, it has started a better today and brighter tomorrow. strategic multi-functional project aimed at developing superior customer experiences. The benefits of this During 2008-09, MNYL was engaged in several initiative should be seen in the next financial year. innovative and pioneering marketing initiatives. It was the exclusive associate sponsor of the Indian Premier BRAND POSITIONING AND DEVELOPMENT League (IPL) 2008, the inaugural edition of India's In a highly competitive business like life insurance in professional cricket league. It also tied up with the Indian India, it is important to build long lasting relationships Railways for advertising on three Rajdhani Express trains, through a brand that the target audience spontaneously which provided a unique moving outdoor advertising relates to. MNYL has always concentrated on this front opportunity by covering the train with MNYL's messages.
MNYL LAUNCHED ITS NEW BRAND POSITIONING WITH THE NEW TAGLINE 'KARO ZYAADA KA IRAADA' TO PROVIDE A MORE DYNAMIC AND YOUTHFUL IMAGE TO THE BRAND RESULTING IN BRAND AWARENESS GROWING TO 74%
Max India Limited ANNUAL REPORT 2008-09 28 MNYL also launched five new advertising campaigns during 2008-09. Three of these got a place in the top 10 advertisements of the year lists by NDTV Profit, Mint and Synovate. The website of Max New York Life was rated No. 1 in design and No. 2 in usability by Juxt Consult, an Indian online research company. It received high share of voice in print and television editorial space.
All these marketing efforts resulted in brand awareness scores going up from 63% in 2007-08 to 74% in 2008-09 as per AC Nielsen brand track.
MNYL was declared a “Superbrand” by Superbrands India, an independent brand authority, formed with the objective of identifying and paying tribute to exceptional brands.
SPECIAL PRODUCT CUSTOMISATION: MAX VIJAY India is a vast country with heterogeneous markets. Therefore, for specific markets one needs to create specifically designed products and distribution systems. MNYL believes there is considerable scope of penetrating rural and semi-urban markets. Thus, in 2008-09, it MNYL BELIEVES THERE IS CONSIDERABLE launched Max Vijay — an initiative designed specifically SCOPE OF PENETRATING RURAL AND to match the lifestyle, income patterns and needs of this segment. SEMI-URBAN MARKETS. THUS, IN 2008- 09, IT LAUNCHED MAX VIJAY — AN Max Vijay has the potential to change the way insurance INITIATIVE DESIGNED SPECIFICALLY TO is procured, sold and serviced in the country. The product not only fulfils the customers' primary need of financial MATCH THE LIFESTYLE, INCOME protection, but also facilitates long-term savings. PATTERNS AND NEEDS OF THIS SEGMENT Specifically, its design helps to meet the unique challenges of unpredictability in life and income flow of the underserved segments of the Indian population. To reach out to remotely located customers, MNYL has placed 'Max Vijay' on a customised technology driven distribution and service model.
Max India Limited ANNUAL REPORT 2008-09 29 www.maxnewyorklife.com
INVESTMENT MANAGEMENT to 60% in equity) categories. This reflects the investment MNYL continued to consistently outperform the management capabilities of the company to act in rapidly benchmarks during 2008-09. This was recognised by the changing market conditions and maximise returns to the business publication 'Outlook Money', which ranked policyholders over a long term. Table 1 compared the MNYL as the top performer in the Slow (up to 20% in performance of various MNYL products since inception as equity), Medium (up to 40% in equity) and Quick fund (up compared to a benchmark.
Table 1: Performance of MNYL ULIPs Since inception Fund Name Fund Performance Benchmark Performance Funds vs Benchmark Return Secure 7.33% 6.63% 0.70% Conservative 9.13% 7.14% 1.99% Balanced 11.44% 8.38% 3.06% Growth 15.80% 10.47% 5.33% Growth Super -8.78% -17.49% 8.71% Total Portfolio 10.30% 4.60% 5.70%
MNYL – FOCUSING ON ITS PEOPLE continues to focus on its 'Employee Value Proposition' which promotes a work culture where employees see MNYL is a diverse organisation bound together by a value in their engagement with the organisation — enjoy common thread of values. This value system is based their work, deliver results, develop great relationships around 6 cornerstones - caring, honesty, excellence, with supervisors and colleagues, get fairly rewarded for knowledge, integrity and teamwork. It is an open, honest their efforts and feel respected. and ethical organisation that puts emphasis on connecting with its employees, agent advisors and This is reflected in the Gallup Employee Engagement customers through all touch points and continuously scores, where MNYL is the best in the financial services communicating the strength of the organisation and its sector in India and in the top 25 percentile globally in the continued growth plans. Gallup universe. It has also won various other awards such as the BT Mercer award, which ranked it No.7 in the MNYL is a people centric company. Over the years, it has “Best Companies to Work For”, and the Gallup Great Work created a team of capable and engaged employees. MNYL Place Award 2009.
Max India Limited ANNUAL REPORT 2008-09 30 OVER THE YEARS, MNYL HAS CREATED A TEAM OF CAPABLE AND ENGAGED EMPLOYEES. MNYL RANKED BEST IN THE FINANCIAL SERVICES SECTOR IN INDIA AND IN THE TOP 25 PERCENTILE GLOBALLY IN THE GALLUP UNIVERSE. IT CONTINUES TO FOCUS ON ITS ‘EMPLOYEE VALUE PROPOSITION’ WHICH PROMOTES A WORK CULTURE WHERE EMPLOYEES SEE VALUE IN THEIR ENGAGEMENT WITH THE ORGANIZATION
During 2008-09, over 10,000 people were recruited Business Excellence journey — the only life insurance taking the current employee base to 15,402. company to do so. To institutionalise process excellence, more than 300 business processes were mapped and MNYL – FOCUSING ON QUALITY AND measured across MNYL to promote process orientation BUSINESS EXCELLENCE and data based decision making across the organisation. Findings from these will be converted into actionable During 2008-09, MNYL initiated the CII-Exim Bank goals to further enhance the quality platform.
Max India Limited ANNUAL REPORT 2008-09 31 www.maxnewyorklife.com
DURING 2008-09, MNYL INITIATED THE CII-EXIM BANK BUSINESS EXCELLENCE JOURNEY — THE ONLY LIFE INSURANCE COMPANY TO DO SO
The company also initiated more than 100 Six Sigma operating systems, internal policies, and regulatory Programs, which enabled it to leverage cutting edge requirements are continuously monitored to maintain quality tools and techniques to enhance both adequacy and effectiveness. effectiveness and efficiency of its key processes. The ERM framework is being further strengthened to RISKS, CONCERNS AND INTERNAL CONTROL provide sharper focus on key business risks, SYSTEMS encompassing the internal and external landscape. MNYL's Internal Audit and risk management function MNYL remains strongly committed towards ensuring an follows the COSO framework and conducts periodic risk- effective internal control environment. It continuously based reviews. The internal control environment across strives to provide assurance on the efficiency and efficacy the various functions and the status of compliance with of internal controls and security of company assets.
Max India Limited ANNUAL REPORT 2008-09 32 www.maxhealthcare.in
MAX HEALTHCARE INSTITUTE LTD.
OVERVIEW Through its subsidiary Max Healthcare Institute Limited of its existing facilities and also extending its footprint to (MHC), Max India Limited provides comprehensive other cities in North India. international-class healthcare services in India. As a business, MHC is progressing as per plan. With six super-speciality and multi-speciality hospitals Shareholders may recall that in 2007-08. MHC generated and two speciality medical centres located in the operating profits (positive EBIDTA) for the first time in its National Capital Region (NCR) and commitment to the history. This trend continued in 2008-09 and MHC in its highest standards of medical and service excellence, network of hospitals turned Cash positive. MHC financial patient care, scientific knowledge, research and medical highlights are given in Box 3. education, MHC has emerged as one of the country's leading top-of-the-line healthcare service providers. It is Some mistakenly believe that there is a dichotomy in the process of expanding and further upgrading some between profits and social goals in the field of healthcare.
Max India Limited ANNUAL REPORT 2008-09 33 www.maxhealthcare.in
BOX 3: FINANCIAL HIGHLIGHTS – MHC (2008-09)
< Revenue from all hospitals in our network grew by year-on-year. The EBITDA Margin improved to 7% nearly 13% to Rs. 423 crore in 2008-09 from in 2008-09 from 5% in 2007-08
Rs. 372 crore in 2007-08 < Business turned cash positive during the year < EBITDA for 2008-09 at Rs. 29 crore, grew 46%
This is not true. Sustainable profits occur only when perspective, in MHC they will have a reliable institution, patient needs are met — when more and more patients which they can rely on whenever there is a need for any come to healthcare facilities driven by the reputation for service related to healthcare. quality and affordability, and when these patients leave satisfied by their treatment and after care. Satisfied THE MACRO ENVIRONMENT patients are any healthcare entity's best referrals. And The basic social and demographic characteristics in India satisfied patients require commitment to medical quality continue to drive demand for healthcare services in India. and care. So, it is only when the social goal is served — The primary drivers are: providing people with high quality yet affordable healthcare — can profits flow in. For Max Healthcare, the < Growing elderly population two objectives are well aligned and accountability is < Rise in income levels leading to greater ability to ensured. There is a large segment of the Indian population afford better healthcare services that is looking towards institutions that can regularly cater to their healthcare needs with the best of services at < Rise in incidence of lifestyle related health problems prices that are affordable to the people. MHC is focused < Greater access to medical insurance. on establishing itself as a 'one of its kind' healthcare service provider — a trend setter that epitomises the The macro opportunity for healthcare in India is large. highest standards of healthcare services in the country. On any of the key metrics, be it number of hospital beds (India has 1 for every 1,500 people as against the World It is this commitment to 'Excellence in Patient Care' that Health Organisation's requirement of 1 for every 300), is at the core of a mutual relationship of trust between number of doctors or potential size of the industry- the MHC and its patient base. From MHC's perspective, its opportunity is promising. business growth will depend on the sustainability of long term relations that can be developed with patients. These Given these trends, the healthcare industry in India is relations also help create reputational value for further expected to reach over US$75 billion by 2012 and growth of the patient base. From the patients' US$150 billion by 2017 (Technopak Advisors Report,
Max India Limited ANNUAL REPORT 2008-09 34 India Healthcare Trends 2008). Given that much of the services are necessities, this sector will remain more or BOX 4: OPERATIONAL HIGHLIGHTS, MHC IN less insulated from external economic developments, as 2008-09 was evident in 2008-09. < The network of hospitals performed over 450 open heart surgeries, 2,000 angioplasties and 4,130 However, there were hurdles in making new investments. angiographies. In addition, MHC performed over Especially, with a virtual freeze on access to capital, 2,150 ortho-surgeries, 870 neuro-surgeries and funding new facilities was difficult. In fact, the economic 15,390 other surgeries and procedures slump in 2008-09 had offered opportunities for healthcare services players to focus on developing < The average number of operational beds at facilities at relatively lower costs. But, not many players MHC increased from 662 in 2007-08 to 712 in could take this opportunity. MHC, on the other hand, 2008-09. Average occupancy rate at MHC hospitals continued to implement its investments plans in existing was 65% and average length of stay maintained at and new facilities. 3.3 days < Number of patient episodes (measured by number of As a result, while investments were on, the focus in this invoices issued to patients during any period) segment has been on developing operational efficiencies, increased from 1.6 million in 2007-08 to over 1.9 make ventures more profitable and to stress on providing million in 2008-09. In the last quarter of 2008-09, better customer experience to grow the patient base. MHC averaged around 165,000 patient episodes per month MHC OPERATIONS - FOCUS ON QUALITY AND
FACILITIES MHC has stressed on retaining and growing patient The highlights of MHC's operations are given in Box 4. traffic by providing a comprehensive and seamless 'start
MHC IS COMMITTED TO THE HIGHEST STANDARDS OF MEDICAL AND SERVICE EXCELLENCE, PATIENT CARE, SCIENTIFIC KNOWLEDGE, RESEARCH AND MEDICAL EDUCATION
Max India Limited ANNUAL REPORT 2008-09 35 www.maxhealthcare.in
MHC HAS EMERGED AS ONE OF THE COUNTRY’S LEADING TOP- OF-THE-LINE HEALTHCARE SERVICE PROVIDER. MHC IS IN THE PROCESS OF EXPANDING ITS CAPACITY TO AROUND 1,800 BEDS BY 2011
to finish healthcare services that include consultations excellence across different activities. Some of the and diagnostics, testing, treatment and post-surgical important aspects that are covered include clinical care. There is considerable emphasis on investing in governance, certifying credentials and clinical privileging state-of-the-art healthcare infrastructure and of physicians and nurses, use of standardised and equipment. Some of the cutting edge equipment used at evidenced based protocols, patient and staff safety, MHC includes BrainSUITE (Asia's first and India's most infection control, audit culture and continuous advanced neurosurgical operating theatre), Novalis Tx professional development. with RapidArc technology, LINAC, DSA Lab and 64-Slice CT Angio. MHC also lays strong emphasis on service quality. This is maintained through a system that continuously assesses There are three focus areas of MHC's operations. These operational efficiencies and effectiveness and is oriented include: towards process based performance. The organisation has processes laid down to meet customer expectations < Excellence in patient care as per ISO standards. Various CTQs (Critical to Quality) < Excellence in training, education and research steps from each process have been identified and these
< Development of world class facilities are regularly monitored.
EXCELLENCE IN PATIENT CARE For quality improvement, MHC has adopted Six Sigma. The focus is to not only satisfy customer needs completely At the core of all MHC's operations is the concept of but to also do so in the most cost efficient manner. For 'Patient Centred Care'. This has been executed primarily this purpose, it has adopted DMAIC and Lean by a rigorous implementation of the 'Medical & Service methodology. A systematic data driven approach is used Excellence Model'. The model promotes operational to reduce variation in process outcomes, eliminate non
Max India Limited ANNUAL REPORT 2008-09 36 FOR QUALITY IMPROVEMENT, MHC HAS ADOPTED SIX SIGMA. THE FOCUS IS TO NOT ONLY SATISFY CUSTOMER NEEDS COMPLETELY BUT TO ALSO DO SO IN THE MOST COST EFFICIENT MANNER
value-added activities, and to optimise process faster response time for these customer feedbacks. deliverables. On the quality front alone, MHC has received several There is a comprehensive performance measurement certifications and awards. These include: system for key processes that include medical and services related activities. The system named 'SPARSH' < The prestigious DL Shah National Award on has 90 key performance indicators that are tracked 'Economics of Quality' from the Quality Council of uniformly across all hospitals. These are regularly India, conferred during the National Quality Conclave reviewed against preset targets to see the performance held in New Delhi in February 2009. MHC is the first trend and identify opportunities for improvement. Apart organisation in the country from the healthcare from this, a Medical Quality Dashboard has been sector to receive this award. introduced to monitor adverse events and clinical < Express Healthcare Excellence Awards –Max outcomes. Recently, an innovative, first of its kind Healthcare won the Express Healthcare Excellence “Scorecard” has been developed for key clinical awards for 'Best Managed Healthcare Program' and departments that tracks business, service and clinical 'Innovative Marketing Practices' outcomes on an integrated platform. < ISO: Five of MHC's hospitals and the home office were MHC continuously generates feedback through a re-certified for ISO 9001, i.e. QMS (Quality customer satisfaction questionnaire, which is then Management System), and one hospital is certified analysed for problem areas. The current patient for ISO 14001 i.e. EMS (Environment Management satisfaction levels with the medical care and service System). Two hospitals are in process of getting IMS deliverables range above 90%. A new electronic feedback (Integrated Management System) encompassing system has been introduced with the expectation of QMS+EMS+OHSAS.
Max India Limited ANNUAL REPORT 2008-09 37 www.maxhealthcare.in
< National Accreditation Board for Hospitals and Health Care Organisations (NABH): NABH is an autonomous body established in 2005 under the Quality Council of India for setting benchmarks in Indian healthcare industry. • In 2006-07, the tertiary care hospitals of Max Healthcare-Max Devki Devi Heart and Vascular Institute (MDDHVI) and the Max Super-Speciality Hospital (MSSH) became the first two hospitals of North India to receive the NABH accreditation. • National Accreditation Board for Laboratories (NABL): In 2006-07, MHC acquired the NABL accreditation for its laboratory at MSSH. • NABH standards for Blood Bank Accreditation: The Blood Bank in Saket (Delhi) is among the first few in the country to receive this accreditation in February 2009, MHC HAS STRESSED ON RETAINING AND which is aimed specifically at accrediting for excellence and safety GROWING PATIENT TRAFFIC BY PROVIDING in management of Blood Banks. The COMPREHENSIVE AND SEAMLESS ‘START Blood Bank at Max Balaji Hospital TO FINISH’ HEALTHCARE SERVICES THAT PPG has recently undergone a successful NABH accreditation INCLUDE CONSULTATIONS AND assessment and the final DIAGNOSTICS, TESTING, TREATMENT AND announcement is awaited. POST-SURGICAL CARE
Max India Limited ANNUAL REPORT 2008-09 38 EXCELLENCE IN TRAINING, EDUCATION AND Support Training, Basic Cardiac Life Support Training, RESEARCH Pediatric Life Support, First aid and Airway Management. MHC has achieved distinction in training, education and clinical research. < Under an MOU with Hamdard University, New Delhi, BSc in Emergency Trauma Care and Technology. On education, Max Healthcare has established several < Residency Exchange Program with Mount Sinai Post Graduate/Under Graduate education programmes. Medical School, USA Some of these are: < Several short courses /Fellowships to expose
< Post Graduate Programs (Diplomate National Board) physicians in periphery to super-speciality areas like in Cardiology, Cardiac Surgery, Cardiac Anaesthesia, neuroradiology, spine surgery, cardiology, Interventional Cardiology, Internal Medicine, neonatology and laparoscopic surgery Radiology and Pathology < Simulation Based Trainings have been introduced this year < Post Graduate Diploma in Clinical Cardiology (IGNOU) < Post Graduate Diploma in Neuro Nursing. < Fellowship in Emergency Medicine in Collaboration with George Washington University, USA On training, there were around 100 doctors/paramedics/ nurses undergoing formal education programs in 2008-09. < Post Graduate Diploma in Critical Care Medicine under aegis of Indian Society of Critical Care On research, Several Clinical Trials are underway. The Medicine, Fellowship in Critical Care organization has recently established a Stem Cell < Max Healthcare is an American Heart Association Research Committee, and is exploring this new exciting (AHA) recognized centre for Advanced Cardiac Life area of research.
MAX HEALTHCARE HAS ESTABLISHED SEVERAL POST GRADUATE/UNDER GRADUATE EDUCATION PROGRAMMES WITH AROUND 100 DOCTORS/ PARAMEDICS/NURSES UNDERGOING FORMAL EDUCATION PROGRAMS IN 2008-09
Max India Limited ANNUAL REPORT 2008-09 39 www.maxhealthcare.in
WORLD CLASS FACILITIES technology including BrainSUITETM (Asia's first and The details of the existing facilities are as follows: India's most advanced neurosurgical operating theatre), Flat Panel DSA lab. It also has India's first Max Devki Devi Heart and Vascular Institute DynaCT for treatment of stroke, aneurysm and spine combines cutting edge technology with internationally — where an interventional neuro-radiologist can see acclaimed professional expertise to deliver a range of live images of the brain while performing the advanced cardiac care services. This covers all areas of procedure. BrainSUITETM is the first integrated high non-invasive and interventional cardiology, cardio- field intra-operative MRI, which neurosurgeons can thoracic care and include consultations and diagnostics, use to operate upon complicated brain tumours with testing, surgeries and post - surgical care. utmost precision. Max Institute of Paediatrics has a team of highly Max Super Speciality Hospital provides tertiary care < experienced paediatricians and paediatric super- facilities with Centres of Excellence in Orthopaedics specialists. It has fully equipped neo-natal ICUs and joint replacement, Neurosciences, Paediatrics, with round-the-clock neonatologists providing Obstetrics and Gynaecology, Aesthetic and multi-speciality care to premature babies. Our Reconstructive surgery, Internal medicine and other state-of-the-art paediatric ICUs (PICU) can treat support services. The Centres of Excellence at Max Super critically ill children suffering from life threatening Speciality Hospital include: conditions.
< Max Institute of Orthopaedics and Joint Replacement < Max Institute of Obstetrics and Gynaecology offers offers comprehensive and latest treatment for joint advanced maternity and reproductive healthcare replacement using computer navigation and ortho service even to patients in high risk groups. Other disciplines like sports medicine, management of services range from reproductive care and mother and arthritis and trauma, ortho-trauma, spinal surgery child healthcare to infertility.
and paediatric orthopaedics < Max Institute of Aesthetic and Reconstructive < Max Institute of Neurosciences boasts of high-end Surgery is a Centre of Excellence for advanced
Max India Limited ANNUAL REPORT 2008-09 40 microsurgery and craniofacial surgery. It is also a endoscopy suite, sleep lab and five modular operation pioneer in aesthetic surgery of the face and body. The theatres.
Institute has introduced the latest techniques in < Max Balaji Hospital is a world class tertiary plastic surgery like vacuum assisted wound healthcare facility. It is equipped with high-end healing, absorbable facial fracture plating, facial infrastructure, systems and processes. The facility and assembly, disassembly for brain base tumours, and equipment at present offers medical and surgical feather lift in aesthetic surgery. It is in the process of services in all major disciplines. entering into the futuristic domain of stem cell < Max Hospital, Pitampura provides excellent research. healthcare over a range of services. Well-equipped < Max Institute of Internal Medicine offers core OTs, dialysis services and facilities for advanced medical services, which include indoor patient care, laparoscopic surgery are some of the services outdoor patient care and preventive health checks. available. Max Home Care programme under the aegis of this < Max Hospital, Noida offers speciality treatment for a institute extends healthcare services to patients wide range of ailments including chronic care beyond the confines of the hospital and enables programmes in diabetes, asthma, arthritis and patients and caregivers to maintain continuity of hypertension. care.
< Max Institute of Allied Medical Sciences offers < Max Hospital, Gurgaon is a multi-speciality hospital comprehensive services in medical, surgical and with intensive care services, an endoscopy unit, minimal access surgery programmes with a state-of- modular OTs and advanced radiology and pathology the-art surgical ICU, medical ICU, dedicated diagnostics.
Max India Limited ANNUAL REPORT 2008-09 41 www.maxhealthcare.in
MHC is working on increasing its capacity to around engine of economic growth. Opportunities will bring 1,800 beds by 2011.With the first phase of roll-out competition from other Indian and foreign players already completed, the second phase of expansion is including new entrants in the healthcare sector. MHC progressing as per plan. During this phase, MHC plans to recognises that high quality standards and strong brand not only expand further in the NCR region but also widen recall will be the major determinants of competitive its operations beyond the NCR of Delhi to other parts of advantage in an increasingly competitive market. India. Some facts about the progress of the entire expansion are: With MHC almost doubling its bed capacities, managing the increased scale of operations and < The new wing of the Max Balaji Hospital with 260 improving utilisation rates will be challenges. The beds (at Patparganj, across the river Yamuna) is modern healthcare services industry is very capital expected to start operations by October 2009 intensive and the expansion plans will require significant capital expenditure. Thus, the growth strategies depend < Comprehensive oncology care to start at Saket by September 2009. on the ability to fund these expenditures and build, acquire and manage additional hospitals as well as < Additional 90 beds at Saket will become operational expand, improve and augment the existing hospitals. by April 2010.
< The 100 bed Max Hospital at Dehradun will become Healthcare business is highly dependent on the ability to operational by first quarter 2011 attract and retain leading doctors and other healthcare professionals, particularly nurses and paramedics < MHC has acquired land in north-west Delhi and professionals. Given MHC's excellent facilities and best- Greater Noida for setting up 300-bed hospitals in-class compensation packages, it expects to continue < MHC has been allotted land by Government of Punjab hiring doctors and nurses according to needs. under a public-private partnership arrangement to set up 200 bed super specialty hospitals at Bathinda On balance, MHC is confident of achieving the and Mohali. expansions on time, meeting its growth targets, offering greater patient care and facilities, and generating OUTLOOK, RISKS AND CONCERNS superior shareholder returns in the future. We believe that Max Healthcare occupies a sweet spot in a rapidly The healthcare delivery industry is set to become an growing industry.
Max India Limited ANNUAL REPORT 2008-09 42 www.maxbupa.com
MAX BUPA HEALTH INSURANCE COMPANY LTD.
OVERVIEW Max India Limited and Bupa Finance Plc, a leading UK business strategy and creating the management team. based international health and care company, formed a joint venture to enter the health insurance market in MARKETS AND OPPORTUNITIES India in September 2008. With a 2% penetration, health insurance usage is low in The venture called Max Bupa Health Insurance Company India and around 70% of the population uses self- Limited, will offer a suite of products catering to the health funding for medical treatment. While health insurance is and wellness needs of its customers subject to regulatory a nascent industry, it has immense growth potential. This approvals. The initial share capital of the JV will be Rs. 100 has been evident from the recent past, which suggests crore, where Max proposes to hold a 74% stake while Bupa that the health insurance industry has grown at a CAGR Finance Plc proposes to hold the remaining stake. During of 36% over the last eight years. The total market size was 2008-09, this business concentrated on developing its estimated at Rs. 6,604 crore in 2008-09.
Max India Limited ANNUAL REPORT 2008-09 43 www.maxbupa.com
WITH A 2% PENETRATION, HEALTH INSURANCE USAGE IS LOW IN INDIA AND AROUND 70% OF THE POPULATION USES SELF-FUNDING FOR MEDICAL TREATMENT. WHILE HEALTH INSURANCE IS A NASCENT INDUSTRY, IT HAS IMMENSE POTENTIAL FOR GROWTH, EVIDENCED BY THE FACT THAT IT HAS GROWN AT A CAGR OF 36% OVER THE LAST EIGHT YEARS. THUS, MAX BUPA IS COMMITTED TO BECOME THE MOST ADMIRED HEALTH INSURANCE COMPANY IN INDIA
Today, the category is undifferentiated and India. The strategic focus is on evolving a consumer-centric commoditised with both the quality and price of products model that delivers a high quality and consistent customer being fairly low. Max Bupa views the existing low experience. The mission is to help families live healthier and consumer awareness, experience and lack of product and more successful lives by becoming their healthcare partner service innovation as potential areas to provide by providing expertise for life. differentiation and gain market share as a new entrant. The aim is to drive the above by differentiating on product In fact, given these market realities, there is tremendous and service delivery, leveraging global expertise in health opportunity for Max Bupa to help shape the industry in a management solutions that go beyond health funding. positive way in India. There is need in the market for high quality health insurance products that can add value to In order to take advantage of the timing of the start up of the lives of the people insured. The key opportunities lie in Max Bupa and the heritage of the investors, the company improving product and process transparency, improving is focusing their attention through 2009 on the following customer service and creating trust. It will also be areas to help achieve the strategy: important to differentiate on health care support as well < Build better products as insurance funding. < Embrace technology THE STRATEGY < Customer service differentiation In line with the group's vision, Max Bupa is also committed < Risk management focus to become the most admired health insurance Company in < Provider - relations management
Max India Limited ANNUAL REPORT 2008-09 44 www.neeman-medical.com
MAX NEEMAN MEDICAL INTERNATIONAL LTD.
OVERVIEW Extending the scope of operations in the healthcare USA is the global pharmaceuticals hub, its global related space, Max India Limited entered the business of headquarters is at Cary, North Carolina, USA. With closer clinical research through its subsidiary Max Neeman proximity to customers, the US operation is mainly Medical International Limited (MNMI). responsible for business development and marketing initiatives. The actual clinical research operations are It is a value adding clinical research organisation (CRO) based out of India. that provides a broad range of clinical research services to global pharmaceutical, device and biotechnology INDUSTRY STRUCTURE AND DEVELOPMENT companies. It also collaborates with other CROs in providing a variety of services. Given the cost-cutting imperatives that large pharmaceutical companies face, clinical research is an MNMI operates through a dual-shoring model. As the attractive opportunity. With its talented clinicians,
Max India Limited ANNUAL REPORT 2008-09 45 www.neeman-medical.com
diverse patient pool and lower cost advantage, India is from Rs. 4.1 crore in 2007-08. During 2008-09, site well poised to take advantage of the outsourcing monitoring grew 88%, and clinical data management by opportunity arising from the implementation of the 164% — albeit over a low base. Trade-Related Aspects of Intellectual Property Rights (TRIPS) accord and World Trade Organization (WTO) OPERATIONS norms. Estimates suggest that the Indian clinical trials With operations stabilising, MNMI now offers services industry will reach US$1.3bn by 2012, implying a CAGR of across five segments: (i) Site Management (ii) Site more than 40% over the next five years. Monitoring (iii) Clinical Data Management (iv) Project However, newer entrants in this industry may have to go Management and (v) Supply Chain Management of through longer gestation periods to develop relationships clinical trial material. with innovators — as was the case with contract On the clinical research front, where it provides services manufacturing companies. There continues to be some in Phases II, III, and IV of clinical trial studies, it now has hurdles. For example, Phase-I trials of foreign drugs can access to over 1,000 ICH GCP trained investigators. A be conducted in India but only as a 'repeat' of an earlier team of over 120 clinical research coordinators and Phase-I trial done outside India. Applying for this requires associates with a pan-India presence across 22 cities submission to the regulators of the earlier Phase-I data gives MNMI access to patients and investigator sites for generated outside India. Although the regulation is in various therapeutic areas. place to avoid potential abuse, it takes away a part of the potential revenues from Indian companies. With a wider portfolio of offerings, MNMI started getting greater business from several of its established partners PERFORMANCE HIGHLIGHTS in the US and Europe. As a business, MNMI is still at a very early stage of Since the commencement of MNMI's India operations, development. Revenues increased from Rs. 11.1 crore in over 5,800 subjects have been enrolled at over 200 sites. 2007-08 to Rs. 15.0 crore during 2008-09, while profits In 2008-09 alone, MNMI enrolled more than 2,100 grew to Rs 1.2 crore in 2008-09 against a profit of subjects. An automated workflow process ensures Rs. 0.7 crore in 2007-08. efficient and accurate data management. With its MNMI is increasing its client base. It added five high quality operating standards, MNMI successfully new clients during 2008-09 taking the total client provided services to 21 clients over 55 new studies base to 48. during 2008-09.
The site monitoring and clinical data management unit, MNMI's patient retention rate — a critical business driver which was set up in 2006-07, is starting to bear fruit. In in clinical trials — is 98% against an industry average of its second full year of operations in 2008-09, revenues 65% to 70%. It caters to several prestigious customers from the site monitoring unit increased to Rs. 7.7 crore that include large pharmaceutical companies such as
Max India Limited ANNUAL REPORT 2008-09 46 SINCE THE COMMENCEMENT OF MNMI'S INDIA OPERATIONS, OVER 5,800 SUBJECTS HAVE BEEN ENROLLED AT OVER 200 SITES. IN 2008-09 ALONE, MNMI ENROLLED MORE THAN 2,100 SUBJECTS
Merck, GlaxoSmithKline, Bristol Myers Squibb, Sanofi- expenditures of pharmaceutical and biotech companies. Aventis, Johnson & Johnson, Novartis, Pfizer, These expenditures vary in any given year. Operating AstraZeneca and Wyeth as well as other medium size results are also subject to volatility due to external companies such as Achillion, Globelimmune, AP Pharma, constraints such as the commencement, completion, ORA, KV Pharmaceuticals and Onconova. cancellation or delay of contracts. Progress of ongoing projects, cost overruns and competitive industry Most employees of MNMI have professional degrees in conditions are also sources of risks. The ability to develop medicine or pharmacology. All employees have been and market new services on a timely basis with changes in trained for a minimum of 50 hours in 2008-09 to improve the service mix for various clients always remains a skill sets. High retention rate has been maintained by challenge. Equally, this provides an opportunity to providing a harmonious and favourable work increase client retention with the delivery of superior environment. The employee count increased from 150 at service skills and offerings. the end of 2007-08 to over 200 at the end 2008-09. In this business, there are potential product and MNMI follows a robust system of quality control and all conduct liability risks. There is also competition from its operational activities are governed by strict adherence in-house research departments of pharmaceutical to ICH-GCP guidelines. It is the first CRO in India whose companies, universities and teaching hospitals, as well four sites have been audited successfully by USFDA. as other CROs. MNMI has been certified for ISO 9001:2000 for site management, monitoring, and data management. All its Despite these risks, MNMI is confident of future growth. activities and operations are governed by robust standard It has the requisite skill sets and infrastructure. It is operating procedures (SOPs). developing deep relationships with many marquee clients. It has best-in-class processes and controls. OUTLOOK, RISKS AND CONCERNS Therefore, it expects growing revenues and profits in the The CRO industry is highly dependent on R&D years ahead.
Max India Limited ANNUAL REPORT 2008-09 47 www.maxspecialityproducts.com
MAX SPECIALITY PRODUCTS LTD.
OVERVIEW Max Speciality Products (MSP) – a division of Max India and abroad. Its ability to build lasting relationships with Limited - manufactures niche and high barrier such customers has resulted in sustained growth over the BOPP films, thermal lamination films and leather last few years. In 2008-09, MSP continued with its finishing foils. pursuit of quality, making it one of the most recognised and respected players in the BOPP industry. In the leather MSP's core strength is its product technology and its finishing foil business, MSP has added capacity, which ability to produce and sell value added products with will further enhance its product range. focus on successfully catering to the demands of top end quality conscious customers. PERFORMANCE HIGHLIGHTS Today, MSP has a distinguished customer base in India The financial highlights are given in Box 5.
Max India Limited ANNUAL REPORT 2008-09 48 BOX 5: MSP'S FINANCIAL HIGHLIGHTS, 2008-09
< In 2008-09, MSP's net revenue increased by 21% to < Revenues from BOPP, the major business segment, Rs. 370 crore, sales volume grew by 19% y-o-y. increased by 24% to Rs. 362 crore in 2008-09.
< EBIDTA increased by 4% to Rs. 51 crore in 2008-09. EBIDTA in the BOPP business increased by 13% to Rs. 51 crore. PBT in the BOPP business increased by < Operating margin (EBIDTA to net sales) at 14% in 21% to Rs. 25 crore. 2008-09.
INDUSTRY STRUCTURE AND DEVELOPMENT their European, American and Japanese counterparts because of the low cost base and large growing Indian The BOPP industry continues to witness a growth of 18% market. Also the consumption of flexible packaging in to 20% per annum in India and 7% per annum globally. To India is relatively low. These factors will enable flexible take advantage of this growth, the installed capacity of packaging industry in India to grow at a healthy rate. BOPP in India increased by 20% in 2008-09. This addition in capacity got absorbed without any negative impact on OPERATIONS Industry. In fact, in 2009-10, one expects this capacity to go up further. MSP's plant is located at Railmajra, near Chandigarh. It is accredited with ISO 9001:2008 and ISO14001: 2004 and India still has a low per capita consumption compared to also certification for OHSAS 18001:2007 for China and other more developed regions of the world. So, environment, occupational health and safety. even with a 6%-6.5% growth in GDP per annum, there is expected to be a healthy growth in packaging demand in During 2008-09, the plant successfully catered to increasing volumes. It witnessed volume growth of 18% India. There are also other growth drivers, which are in sales of BOPP film and 28% in thermal film sales. Much accelerating BOPP films demand in India. These are: of this was achieved by maintaining high production < The retail boom efficiencies. In fact, in 2008-09 all its BOPP production and metallisation lines achieved 100% capacity < The strong 15% growth per annum in the Indian utilization. converting industry < India emerging as the hub for supplies to HUMAN RESOURCES multinational companies in the converted products space Human resources are the most valuable asset at MSP and it continues to focus on attracting and retaining the best Indian BOPP players have significant advantages over available talent. MSP provides an excellent and
Max India Limited ANNUAL REPORT 2008-09 49 www.maxspecialityproducts.com
TODAY, MSP HAS A DISTINGUISHED CUSTOMER BASE IN INDIA AND ABROAD. ITS ABILITY TO BUILD LASTING RELATIONSHIPS WITH CUSTOMERS HAS RESULTED IN SUSTAINED GROWTH OVER THE LAST FEW YEARS
professional work environment and also ensures comfort about their adequacy and adherence. Further customised training and development programmes at all internal audit and management reviews are conducted levels of employees. Performance is recognised and regularly and the reports are regularly submitted for rewarded on merit and special stress is laid on innovation. review to the Audit Committee. MSP has also initiated skill-upgradation and education programmes for its workmen. OUTLOOK, RISKS AND CONCERNS
The total number of employees as on 31 March 2009 Large capacity additions are on the anvil in India in 2009- was 429. 10, which may put pressure on margin. However, it is expected to be a temporary phenomenon. After the Relationship with workmen is cordial and MSP staff first half of 2010-11, with a higher demand-supply continues to get awards from Government organizations equilibrium, this margin pressure should ease up. for safety. In its endeavour to adopt world class manufacturing as the primary initiative, MSP has There can be likely pressure on margins due to large developed a mission that pursues ecologically capacity addition in China and Middle-East creating an sustainable economic growth and has signed the code for initial phase of over-supply and price competition. Also, ecologically sustainable business growth evolved by the sharp fluctuation in PP prices (PP is derivative of petroleum Confederation of Indian Industry (CII). It is the first prices) as was seen in 2008-09 may result in inventory company in the BOPP sector to sign this code. gains or losses. In 2008-09, MSP successfully passed on all raw material and other cost increases to the market.
INTERNAL CONTROL SYSTEM AND ADEQUACY MSP will strive to mitigate all these risks by a sharp focus MSP has adequate internal control system in place. It has on development of new products, enhancing sales of well established management systems and procedures. speciality products, focusing on Blue Chip customers and Periodic audit of these by accrediting agencies, gives further improving operational efficiencies.
Max India Limited ANNUAL REPORT 2008-09 50 MAX HEALTHSTAFF INTERNATIONAL LTD.
OVERVIEW In the healthcare business, Max India had also entered proceedings, are subject to limits as imposed by the US the business of sourcing, training and placing healthcare government. In the recent past and even today, the personnel in India and abroad with a specific focus on the demand for EB-3 visas far exceeds the quota limit set by United States. the US government. This has also led to visa retrogression. Due to the enforcement of visa retrogression, MHS has This was carried out through Max HealthStaff International considerably scaled down its operations till the time Limited (MHS), a 100% subsidiary of Max India. further clarity on immigration laws emerge.
The professionals sourced by MHS have to obtain an EB-3 Accordingly, based on prudent accounting practices, the category visa which allows healthcare professionals to management of Max India Ltd. has decided to provide for remain and work in the US. The numbers of such visas, diminution in the value of investments and loans given to which are provided in the usual course of US immigration MHS in the financial statements.
Max India Limited ANNUAL REPORT 2008-09 51 www.maxindiafoundation.org
CORPORATE SOCIAL RESPONSIBILITY: MAX INDIA FOUNDATION
Max India Foundation (MIF) is the social service arm of The Foundation's main focus areas are: Max India Group. MIF spearheads the CSR initiatives of the various Max India Group companies and also partners < Providing improved access to quality healthcare for with several reputable NGOs such as CanSupport, SOS underprivileged sections of society, particularly Children's Village, Manav Seva Sannidhi and Chinmaya children. Mission. < Creating awareness on issues of concern such as women's health, cancer, cardiovascular diseases and Max New York Life, Max Healthcare and Max Speciality immunisation of children. Products are actively involved in various CSR activities under its aegis. Max India Foundation has touched < Improving awareness of environmental issues with a around 27,000 lives across 100 locations through view to supporting a sustainable and eco-friendly 2,300 volunteers and 90 NGO partners. environment.
Max India Limited ANNUAL REPORT 2008-09 52 Given below are some of the initiatives undertaken by the < CanSupport's East Delhi Field Centre: MIF has MIF in association with its partner NGOs in 2008-2009: sponsored a Field Centre at East Delhi for its partner NGO, CanSupport, a Delhi based NGO caring for < Pan-India Immunisation Programme: MIF is people with cancer, to provide palliative care to conducting an immunisation programme for patients and their families struggling with cancer. It underprivileged children in locations where Max New was inaugurated on 21 May 2008, and will have two York Life (MNYL) has offices, supported by their home-based palliative care teams. MIF is sponsoring volunteers. Around 100 children are immunised in the entire cost of running this centre including each location. The programme was started in July doctors' and nurses' salaries, transportation, and 2008, and every month new locations are being medicines. 178 patients have received treatment added. Twenty locations were covered from July till under this centre up to March 2009. 31 March 2009. In the months of April-May 2009, 24 Walk for Life - Breast Cancer Awareness Event: MIF new locations were added. The total numbers of < has contributed to the Global Cancer Control Mission children immunised was more than 5,000. through sponsorship, support and participation in our < SOS Children's Villages of India (SOS): MIF is partner NGO CanSupport's “Walk for Life: Stride working to strengthen the existing association of Max against Breast Cancer” held on 15 February 2009 at New York Life with SOS Children's Villages of India New Delhi. The walk was organised to raise awareness (SOS). Since inception, MNYL has contributed over on the increasing incidence of breast cancer. Rs. 5 million to SOS. More recently, MIF supported a Health Centres: MIF Health Centre at Rail Majra fund raising programme organised by SOS through a < village, near Rupnagar, Punjab provides free medical contribution of Rs. 500,000 to pay for a year's consultation and medicines to the villagers. Since its expenses on stay, food and other amenities for 100 launch on 1 February 2008, over 10,000 patients have children of the SOS village. MIF is conducting been treated. immunisation camps with SOS in their outreach program venues. ·Adoption of the Government School: MIF is also providing extra coaching for Class 10 students of < Artificial Limbs and Polio Calipers Camp: MIF, in collaboration with partner NGO, Manav Seva Government High School at Rail Majra for Sannidhi, organised an Artificial Limbs and Polio mathematics, science and english. It has also Calipers camp at Mohali during 3-9 December 2008. undertaken initiatives such as free medical camps, The camp provided artificial limbs to 380 patients. A donated ceiling fans, sweaters, books and utensils for distinctive feature of the camp was that the patients the mid-day meal for children. came from Himachal, Punjab, and Haryana with their < Health Care Unit, Sunlight Colony, New Delhi: MIF, attendants and stayed there till they were in collaboration with its partner NGO, the Chinmaya comfortable with their new limbs — bonding together Mission, has set up a Health Care Unit in Sunlight as a family and giving each other encouragement. Colony. The community is charged a nominal amount
Max India Limited ANNUAL REPORT 2008-09 53 www.maxindiafoundation.org
for consultation, including medicines. Doctors with at Max House on 25 March, 2009. Dr. Natasha Das experience in treating general patients, conducted the workshop discussing the method for gynaecological, ophthalmology and dental cases are “Breast Self Examination' stressing on its importance available for consultation. Costs incurred for running for early detection and treatment.
the clinic are shared between the Chinmaya mission < Dr. Sujeet Jha, Head, Endocrinology Department, Max and MIF. Camps are also conducted. Healthcare, conducted an awareness talk on diabetes < Surgical treatment for the poor: MIF facilitates and its management, 15 April 2009 at Max House.
treatment and procedures including surgery for the < MIF, through Max Speciality Products and Max poor. In the last one year, MIF has sponsored about 60 Healthcare, conducted an eye and dental check-up on such surgeries for the underprivileged including 17-18 April 2009 at the Government Secondary paediatric surgeries. School, Rail Majra. Some 570 cases were checked: 12 cases were identified for cataract surgery which was Health workshops and camps are organised regularly to done free of cost for the patients; 30 cases were reach out to the underprivileged and spread Health identified for dental treatment; 43 pairs of spectacles Awareness: were given to the people who were identified for short < A multi-specialty health camp was organised at vision during the camp. Colony No. 5, Slum Cluster, Sector 50, Chandigarh on < Max India Foundation with Max Healthcare 18-19 October 2008. Some 950 patients were organised a general health camp on 29 April 2009 for checked and given free medicines. the underprivileged community and Waste collectors < A free health check-up camp was organised on 8 of Shahpur Jat. Dr. Pratima Kiro conducted the camp. March 09, by Max India Foundation and Max < A cleft lip and palate camp was organised on 3 May Healthcare at Goshala Temple, Kishangarh in 2009 at the Chinmaya Ashram's Health Centre to association with the NGO Agragati. The camp had provide free surgeries to patients at Max Healthcare. facilities for cardio investigation such as ECG, blood Dr. Sunil Chaudhary, Senior Consultant and Head, pressure, blood sugar and also eye examination. Some Aesthetic and Reconstructive Plastic Surgery, Max 200 patients were served. Healthcare conducted the camp. Three < For International Women's Day, Max India underprivileged children were identified for surgery Foundation through Max Healthcare conducted a and operated on 14 May 2009 at Max Super- Workshop on Women's Health Issues for the Waste Specialty Hospital. Collectors Community in association with NGO Jamghat Health and Day Care Centre: MIF has partnered Vatavaran at Shahpur Jat. Dr. Poonam Kirtani of Max with an NGO, 'Jamghat – a Group of Street Children', and Healthcare discussed various health issues. 30-35 sponsored a health and day care centre in the Jama patients were served. Masjid Area. It was inaugurated on 23 May 2008. A < A Breast Cancer Awareness Workshop was organised paediatrician from Max Healthcare is visiting the area
Max India Limited ANNUAL REPORT 2008-09 54 MIF IS CONDUCTING AN IMMUNISATION PROGRAMME FOR UNDERPRIVILEGED CHILDREN IN WHICH IT IMMUNISED MORE THAN 5,000 CHILDREN IN 2008-09
twice a month for health check-ups and providing business environment and growth here will be as per required medicines. This centre is a hub for rehabilitation Max India's efforts. The healthcare services businesses of these street children, and is used to impart vocational will have some pressure on profitability due to costs training, life skills and provide them toilet and bathing related to the starting of some new hospitals. The most facilities. profitable business, Max Speciality Limited, will face Environmental Awareness: MIF is committed to spread some pricing pressure with new capacities coming on awareness of environment friendly initiatives and board in the industry. However, its product quality and encourages sustainable practices of conservation of marquee customer base will help in growth. energy, waste management, reduction in the use of Our outlook, therefore, for 2009-10 is cautiously paper, electricity and water across all the Max India optimistic. Group entities. CAUTIONARY STATEMENT OUTLOOK Statements in this management discussion and analysis The outlook for Max India has to do with those of its describing the company's objectives, projections, estimates different businesses. As mentioned earlier, most of the and expectations may be 'forward looking statements' businesses are in a development phase. The economic within the meaning of applicable laws and regulations. environment is expected to gradually improve from the Actual results may differ substantially or materially from lows seen in the second half of 2008-09. However, growth will be lower than what has been witnessed in the those expressed or implied. Important developments that last five years. Even so, there will be opportunities to tap could affect the company's operations include a downward markets. trend in the Indian economy or the healthcare and packaging industry, rise in input costs, exchange rate In line with this view, the insurance business is expected fluctuations, and significant changes in political and to grow but at a lower rate than what was seen between economic environment in India, environment standards, 2001 and 2007. The healthcare space is not affected by tax laws, litigation and labour relations.
Max India Limited ANNUAL REPORT 2008-09 55 MAX INDIA LIMITED: CONSOLIDATED FINANCIAL REVIEW
Max India Limited's abridged consolidated profit and loss statement is given in Table 2.
Table 2: Abridged Consolidated Financials, Max India Limited Rs. in crore 2008-09 2007-08 INCOME Net Sales 401.61 321.85 Service Income 4106.07 2922.20 Income from Investment Activities 330.24 324.93 Other Income 53.52 41.57 TOTAL INCOME 4891.44 3610.55 EXPENDITURE Increase / (Decrease) in Inventory (0.19) 5.03 Manufacturing, Trading and Direct Expenses 3414.94 2690.77 Personnel Expenses 843.76 454.84 General and Administration Expenses 841.98 399.39 PBDIT (209.43) 70.59 Financial Expenses 50.57 47.31 Depreciation 97.01 66.34 (LOSS) BEFORE TAX (357.01) (43.06) Tax Expense (23.84) 16.72 (LOSS) AFTER TAX (333.17) (59.78) Funds for Future Appropriations - Participating Policies 26.41 (37.09) Minority Interest 88.38 47.98 NET (LOSS) (218.39) (48.90)
Max India Limited ANNUAL REPORT 2008-09 56 Revenues were generated from the following sources: sources including the sale of scrap in the speciality plastic products business. Other incomes increased Sales revenue was generated from the speciality < by 28.7% from Rs. 41.57 crore in 2007-08 to plastic products business and trading of consumables, Rs. 53.52 crore in 2008-09 drugs and pharmaceuticals as a part of the healthcare business. Net sales increased by 24.8% from Max India Limited is in a growth phase, where value is Rs. 321.85 crore in 2007-08 to Rs. 401.61 crore in created through revenue expansion and enhanced 2008-09 operating efficiencies. It has successfully grown revenues through all income sources. Our Consolidated revenues < Service income was primarily from premiums increased by 35.5% from Rs. 3,610.55in 2007-08 to recognised in the life insurance business, healthcare Rs. 4,891.44 crore in 2008-09. services revenues, income from clinical trials and placement revenues. Service income grew by 40.5% There were costs incurred on the expansion plans of the — from Rs. 2,922.20 crore in 2007-08 to company, particularly in the insurance businesses, which Rs. 4,106.07 crore in 2008-09 have resulted in negative operating profits (PBDIT). Moreover, it is worth noting that for a group, which is < Income from investments activities was on account of in an expansionary phase, Max India has a very low level treasury surplus available with the group companies of financial leverage. Total debt as a ratio to net worth and from the investment corpus of the life insurance has, in fact, further decreased from 0.36 in 2007-08 to business. Income from investment activities remained 0.23 in 2008-09. In an environment of scarcity of capital, stable at Rs. 330.24 crore in 2008-09 this provides Max India opportunity to further leverage < Other income includes income from miscellaneous and grow.
Max India Limited ANNUAL REPORT 2008-09 57 Max India Limited ANNUAL REPORT 2008-09 58 CORPORATE GOVERNANCE REPORT
PHILOSOPHY OF CORPORATE GOVERNANCE members with an Executive Director and ten Non- Executive Directors of which eight are independent. Compliance is one driver of Corporate Governance. Mr. Analjit Singh, Chairman & Managing Director of The Max India Group sees corporate governance as an the Company is a Promoter Director. Mr. Anuroop actual operating mechanism in driving its various (Tony) Singh has been appointed as the Vice Chairman businesses as increasingly we move towards a Board (Non-executive) of the Company to strengthen the managed structure across the Group. Hence, the Governance and Strategic Planning process. No addition of functional experts in our various Boards Director is a member in more than ten committees, or and an enhanced interface between Management, the Chairman of more than five committees, across all Sub-committees and the Boards. This almost public companies in which he is a Director. automatically achieves value driven leadership and highest standards of accountability, transparency and The composition of directors and the attendance at ethics across the Group. the Board meeting during the year 2008-09 and at the last annual general meeting, including the details of BOARD COMPOSITION their directorships and committee memberships are Your Board of Directors currently comprises of eleven given herewith:
Max India Limited ANNUAL REPORT 2008-09 59 Director Board Attendance Directorships* Memberships/ meetings at last AGM Chairmanships attended of Board Committees** Mr. Analjit Singh 08✔ 14 Nil [Promoter Director] Dr. S.S. Baijal 06 — 06 6 (including 3 [Non-Executive Independent Director] as Chairman) Mr. N.C. Singhal 08✔ 10 5 (including 4 [Non-Executive Independent Director] as Chairman) Mr. Ashwani Windlass 09 — 01 2 (including 1 [Non-Executive Independent Director] as Chairman) Mr. Rajesh Khanna 03 — 07 03 [Non-Executive Director] Mr. N. Rangachary 07 — 03 02 [Non-Executive Independent Director] Mr. Piyush Mankad 09✔ 13 09 (including 1 [Non-Executive Independent Director] as Chairman) Mr. Anuroop (Tony) Singh 05 — 05 Nil [Non-Executive Independent Director] Mr. Leo Puri 05 — 03 02 [Non-Executive Director] (Appointed w.e.f. May 17, 2008) Mr. S.K. Bijlani 06 — 02 01 [Non-Executive Independent Director] (Appointed w.e.f. October 22, 2008) Mr. Aman Mehta 01 — 07 7 (including 3 [Non-Executive Independent Director] as Chairman) (Appointed w.e.f. December 12, 2008) Mr. Bharat Sahgal 01 — 01 Nil [Non-Executive Independent Director] (Resigned w.e.f. March 31, 2009) Mr. B. Anantharaman 01 — 01 01 Jt. Managing Director (Resigned w.e.f. June 30, 2008)
* Excludes Directorships in Indian private limited companies, unlimited liability companies, companies incorporated under Section 25 of the Companies Act, 1956, foreign companies, memberships of managing committees of various chambers/bodies and alternate Directorships. ** Represents Memberships/Chairmanships of Audit Committee & Shareholders/Investors Grievance Committee
Max India Limited ANNUAL REPORT 2008-09 60 Details of Board meetings held during the year ended effectively, members of the Board are briefed at every March 31, 2009: Board meeting, on the overall performance of the Company and it’s subsidiaries/joint ventures. Senior Date Board No. of Management is often invited to attend the Board Strength Directors meetings to provide detailed insight into the items being present discussed. May 17, 2008 11 07 July 11, 2008 10 05 CODE OF CONDUCT FOR DIRECTORS & SENIOR July 18. 2008 10 08 MANAGEMENT August 28, 2008 10 09 Max India has a Code of Conduct for the Directors and October 22, 2008 11 08 Employees of the Company to guide them on: November 7, 2008 11 09 < Adherence to the highest standards of honesty, integrity and avoidance of conflicts of interest. November 28, 2008 11 04 < Carrying out their duties in an honest, fair, diligent December 12, 2008 12 04 and ethical manner, within the ambit of authority January 28, 2009 12 10 conferred upon them and in accordance with February 3, 2009 12 06 applicable laws.
< Their responsibility to take decisions and implement BOARD PROCEDURES policies in the best interests of the Company and all TheCompanyholdsatleastoneBoardmeetinginaquarter its stakeholders. to review financial results and business performance. The gap between two board meetings does not exceed four The Code of Conduct is prominently displayed on the calendar months. Apart from aforesaid four meetings, Company website. additional board meetings are also convened, from time to time. Some urgent matters are approved by the Board by COMMITTEES OF THE BOARD resolutions passed by circulation. AUDIT COMMITTEE This Committee currently comprises of Mr. N.C. Singhal All the Agenda items are accompanied by comprehensive (Chairman), Dr. S.S. Baijal, Mr. N. Rangachary, Mr. Leo notes on the related subject and in certain areas such as Puri and Mr. Ashwani Windlass. All members of the business plans/business reviews and financial results, Committee, except Mr. Leo Puri, are Independent detailed presentations are made to the Board members. Directors. The Company Secretary of the Company acts as Additionally, the Board is free to recommend inclusion of the Secretary of this Committee. This Committee inter any matter for discussion in consultation with the alia, recommends appointment of statutory auditors; Chairman. reviews Company’s financial reporting processes and To enable the Board to discharge its responsibilities systems; reviews financial and risk management policies;
Max India Limited ANNUAL REPORT 2008-09 61 Company’s financial statements, including annual and Independent Directors. This Committee evaluates quarterly financial results; and financial accounting compensations and benefits for Executive Directors practices & policies. The scope of the audit committee has and administers the ESOP Scheme of the Company. The been defined by the Board of Directors in accordance with remuneration policy of the Company is aimed at Clause 49 of the Listing Agreement and Section 292A of the attracting and retaining the best talent to leverage Companies Act, 1956. The Internal Auditors and performance in a significant manner. The strategy takes representatives of Statutory Auditors are invited to the into account, the remuneration trends, talent market meetings of the Committee, as required. Mr. N.C. Singhal, and competitive requirements. the Chairman of the Audit Committee, was present at the last Annual General Meeting. Mr. Leo Puri was inducted Meetings & attendance during the year: into the Committee during the course of the year. Director Number of Number of meetings held meetings Meetings & attendance during the year: attended Director Number of Number of Dr. S.S. Baijal 03 02 meetings held meetings Mr. Analjit Singh 03 01 attended Mr. Ashwani Windlass 03 03 Mr. N. C. Singhal 06 06 Mr. Leo Puri 02 02 Dr. S.S. Baijal 06 05 Mr. N.C. Singhal 03 03 Mr. Ashwani Windlass 06 04 Mr. Rajesh Khanna 01 01 Mr. N. Rangachary 06 06 Mr. Leo Puri 04 04 REMUNERATION PAID TO DIRECTORS DURING Mr. Rajesh Khanna 02 - 2008-2009 The Company has not paid any remuneration to its REMUNERATION COMMITTEE Non-Executive Directors, except for the Sitting Fees This Committee currently comprises of Dr. S.S. Baijal for attending meetings of the Board/Committees @ (Chairman), Mr. Analjit Singh, Mr. Ashwani Windlass, Rs. 15,000/- per meeting. Details of the remuneration Mr. Leo Puri and Mr. N.C. Singhal, out of which, Dr. S.S. paid to the Executive Directors of the Company for the Baijal, Mr. Ashwani Windlass and Mr. N.C. Singhal are year ended March 31, 2009 are as under:
Max India Limited ANNUAL REPORT 2008-09 62 (Amount in Rs.) Description Mr. Analjit Singh Mr. B. Anantharaman (from April 1, 2008 to (from April 1, 2008 to March 31, 2009) June 30, 2008) Salary 2,86,42,000 56,25,510 House Rent Allowance/ Housing — 7,50,000 Benefits (Perquisites) 16,66,331 1,70,659** Bonuses/Performance Incentives 1,50,00,000 1,29,37,397 Retirals 29,16,000 4,86,000 Service contract — — Notice period 3 months 3 months Stock options, if any (in numbers) — 2,80,175*
* 2,80,175 Stock Options were vested and 2,80,175 equity shares of Rs. 2/- each were allotted on May 5, 2008. ** This does not include loss on sale of assets amounting to Rs. 28.79 lakhs arising out of final settlement.
Details of equity shares of Rs. 2/- each held by Directors Meetings & attendance during the year: of the Company as on March 31, 2009 are: (a) Mr. Analjit Director Number of Number of Singh 41,68,192 shares, (b) Dr. S.S. Baijal – 25,000 shares, meetings held meetings (c) Mr. N.C. Singhal – 20,000 Shares, and (d) Mr. Ashwani attended Windlass – 1,23,800 shares. Mr. Ashwani Windlass 07 07
SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE Mr. Piyush Mankad 07 07 Dr. S.S. Baijal 05 03 This Committee was reconstituted during the year under review. Currently, this Committee comprises of Mr. Mr. B. Anantharaman 02 01 Ashwani Windlass (Chairman), Mr. Piyush Mankad and Besides, the Company Secretary has been authorized to Dr. S.S. Baijal. It approves the transfer and transmission effect transfer of shares upto 500 per folio. Mr. V. of securities; issuance of duplicate certificates, redressal Krishnan, Company Secretary is the Compliance Officer of investors’ grievances. It also suggests and monitors for the Company. The Company has normally attended to measures to improve investor relations. the Shareholders/Investors complaints within a period of
Max India Limited ANNUAL REPORT 2008-09 63 7 working days except in cases which were under legal (B) COMPLIANCE BY THE COMPANY proceedings/disputes. The Company received 60 The Company has complied with the requirements of complaints from the shareholders during the financial the stock exchanges, SEBI and other statutory year ended March 31, 2009 and the Company has authorities on all matters relating to capital markets attended to all the complaints received. during the last three years. No penalties or strictures have been imposed on the Company by the stock BANKING OPERATIONS COMMITTEE exchanges, SEBI, or any other statutory authorities This Committee approves opening and operation of bank on any matter relating to capital markets during the accounts and reviews its mandate, from time to time. This last three years. Committee was reconstituted during the year under review. Currently, the Committee comprises of Mr. GENERAL BODY MEETINGS Analjit Singh, Mr. Piyush Mankad and Dr. S.S. Baijal. This The Annual General Meetings (AGMs) of the Company is Committee met once during the year under review. held at the Registered Office of the Company. The last DISCLOSURES three AGMs were held as under: (A) RELATED PARTY TRANSACTIONS Date Time The Company has not entered into any transaction of September 15, 2006 10.30 AM a material nature with the promoters, Directors or September 14, 2007 10.30 AM the management, their subsidiaries or relatives, etc., September 16, 2008 10.00 AM that may have any potential conflict with the interest of the Company.
The following special resolutions were passed by the shareholders in the previous three AGMs: Date of AGM Subject matter of the resolution
September 15, 2006< Payment of managerial remuneration to Mr. Analjit Singh, Executive Chairman for a three- year period from April 1, 2006.
< Payment of managerial remuneration to Mr. B. Anantharaman, Jt. Managing Director for a three-year period from April 1, 2006.
< Amendment of Articles of Association of the Company.
September 14, 2007< Approval for making further investment of Rs. 1000 crore in Max New York Life Insurance Company Limited, a Subsidiary of the Company.
September 16, 2008< Approval for making investment upto an amount of Rs. 100 crore in the equity share capital of a joint venture company for Health Insurance business in collaboration with Bupa Finance Plc., UK.
Max India Limited ANNUAL REPORT 2008-09 64 POSTAL BALLOT COMPLIANCE CERTIFICATE OF THE AUDITORS During the year under review, no resolution was passed The statutory auditors of the Company have certified that through postal ballot. The Company proposes to pass the Company has complied with the conditions of special resolutions through postal ballot for (i) providing Corporate Governance as stipulated in Clause 49 of the guarantees up to an amount of Rs. 500 crore on behalf of Listing Agreement with Stock Exchanges and the same is Max Healthcare Institute Limited and (ii) give loan annexed to the Report. to/make investment upto an amount of Rs. 150 crore in NON-MANDATORY REQUIREMENTS Max Healthcare Institute Limited, a subsidiary of the Company. The result of the said postal ballot resolutions Details of non-mandatory requirements of clause 49 to the extent to which the Company has adopted are given will be declared at the ensuing Annual General Meeting. below: The Postal Ballot is carried out, whenever required, The Company has set up a Remuneration Committee, following the procedure set out in section 192A of the with an independent director as is Chairman, to Companies Act, 1956 read with the Companies (The determine on their behalf and on behalf of the Passing of the Resolutions by Postal Ballot) Rules, 2001. shareholders with agreed terms of reference, the MEANS OF COMMUNICATION Company’s policy on specific remuneration packages for Executive Directors including pension rights and any Timely disclosure of reliable information and corporate compensation payment. There is no audit qualification financial performance is at the core of good Corporate in respect of financial statements of the Company. All Governance. Towards this direction, the quarterly/annual Board members are experts in their respective fields. results of the Company were announced within the They are well aware of the business model of the prescribed period and published in The Economic Company as well as the risk profile of the Company. Times/Business Standard/Desh Sewak among others. The Remaining non-mandatory requirements of clause 49 are results can also be accessed on the Company’s website expected to be addressed in due course. www.maxindia.com. The official news releases and the DECLARATION BY THE CMD ON CODE OF presentations made to the investors/analysts are also displayed on the Company’s website. The results are not CONDUCT AS REQUIRED BY CLAUSE 49 I (D) (II) sent individually to the shareholders. The Company made This is to declare that the Company has received presentations to financial analysts and institutional affirmations of compliance with the provisions of investors after the quarterly/annual financial results Company’s Code of Conduct for the financial year ended were approved by the Board. March 31, 2009 from all Directors and Senior Management personnel of the Company. GENERAL SHAREHOLDER INFORMATION A section on the ‘Shareholders' Information’ is annexed, and forms part of this Annual Report. For MaxIndiaLimited MANAGEMENT DISCUSSION & ANALYSIS A section on the ‘Management Discussion & Analysis’ is New Delhi Analjit Singh annexed, and forms part of this Annual Report. July 30, 2009 Chairman & Managing Director
Max India Limited ANNUAL REPORT 2008-09 65 CERTIFICATION BY CHAIRMAN & MANAGING DIRECTOR AND CHIEF FINANCIAL CONTROLLER
July 30, 2009
The Board of Directors MaxIndiaLimited Bhai Mohan Singh Nagar, Railmajra, Tehsil Balachaur, Dist. Nawanshahr Punjab – 144 533
We, Analjit Singh, Chairman & Managing Director and internal controls and that we have evaluated the Sujatha Ratnam, Chief Financial Controller of Max India effectiveness of the internal control systems of the Limited certify to the Board in terms of the requirement Company pertaining to financial reporting and we of Clause 49(V) of the listing agreement, that we have have disclosed to the Auditors and the Audit reviewed the financial statement and the cash flow Committee, deficiencies in the design or operation statement of the Company for the financial year ended of internal controls (if any), and further state that March 31, 2009. the internal control systems are adequate and commensurate with the size of business. 1. To the best of our knowledge, we certify that: 3. We do further certify that there has been: (a) these statements do not contain any materially untrue statement or omit any material fact or (a) no significant changes in internal controls contain statements that are misleading; during the year (b) these statements together present a true and (b) no significant changes in accounting policies fair view of the Company’s affairs and are in during the year and compliance with existing accounting standards, applicable laws and regulations; and (c) no instances of fraud, of which we are aware during the period. (c) there are no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s Code of Conduct. Analjit Singh Sujatha Ratnam 2. For the purposes of financial reporting, we accept Chairman & Chief Financial Controller the responsibility for establishing and maintaining Managing Director
Max India Limited ANNUAL REPORT 2008-09 66 AUDITORS' CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE
To the Members of Max India Limited
We have examined the compliance of conditions of In our opinion and to the best of our information and Corporate Governance by Max India Limited, for the year according to the explanations given to us, We certify that ended March 31, 2009, as stipulated in Clause 49 of the the Company has complied with the conditions of Listing Agreements of the said Company with stock Corporate Governance as stipulated in the above exchanges in India. mentioned Listing Agreements.
The compliance of conditions of Corporate Governance is We state that such compliance is neither an assurance as the responsibility of the Company's management. Our to the future viability of the Company nor the efficiency examination was carried out in accordance with the or effectiveness with which the management has Guidance Note on Certification of Corporate Governance conducted the affairs of the Company. (as stipulated in Clause 49 of the Listing Agreement), issued by the Institute of Chartered Accountants of India V. NIJHAWAN and was limited to procedures and implementation Partner thereof, adopted by the Company for ensuring the Membership No: F 87228 compliance of the conditions of Corporate Governance. It For and on behalf of is neither an audit nor an expression of opinion on the Gurgaon Price Waterhouse financial statements of the Company. July 30, 2009 Chartered Accountants
Max India Limited ANNUAL REPORT 2008-09 67 SHAREHOLDERS’ INFORMATION
REGISTERED OFFICE AND PLANT LOCATION BOOK CLOSURE Bhai Mohan Singh Nagar, Railmajra, Tehsil Balachaur, Wednesday, September 16, 2009 to District Nawanshahr, Punjab- 144533. Wednesday, September 23, 2009 (both days inclusive) INVESTOR HELPLINE Max House, 1, Dr. Jha Marg, Okhla, Phase III, FINANCIAL CALENDAR - 2009-10 New Delhi–110 020 1. First quarter results - July 2009 Tel: 011-42598000, Fax: 011-26324126 2. Second quarter & half yearly results - October 2009 E-mail: [email protected] 3. Third quarter results - January 2010 SHARE TRANSFER AGENT 4. Annual results - June 2010
Mas Services Limited LISTING ON STOCK EXCHANGES T-34, 2nd Floor, Okhla Industrial Area, Phase II, New Delhi–110 020 The Equity Shares of the Company are listed on the Tel: 011-26387281 / 82 / 83 Bombay Stock Exchange Limited ('BSE') and the National Fax: 011-26387384 Stock Exchange of India Limited ('NSE'). The Company has e-mail: [email protected] received in-principle approval for delisting its shares from The Calcutta Stock Exchange. The Company ANNUAL GENERAL MEETING confirms that it has paid annual listing fees due to BSE and NSE for the year 2009-10. Date and Time: Wednesday, September 23, 2009 at 10.30 a.m. CONNECTIVITY WITH DEPOSITORIES Venue : Registered Office of the Company The Company's shares are in dematerialized mode through National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
Max India Limited ANNUAL REPORT 2008-09 68 STOCK CODE Bombay Stock Exchange Limited - 500271 National Stock Exchange of India Limited - MAX Demat ISIN No. for NSDL and CDSL - INE180A01020
Reuters Bloomberg Bombay Stock Exchange MAXI.BO MAX:IN National Stock Exchange MAXI.NS NMAX:IN
Monthly high and low quotation on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE)
Month BSE NSE High (Rs.) Low(Rs.) High (Rs.) Low(Rs.)
April, 08 180.90 138.20 181.90 140.50 May, 08 179.00 148.80 178.90 148.15 June,08 188.00 147.50 187.50 147.60 July, 08 204.40 140.00 206.50 143.00 August, 08 232.00 186.20 232.90 192.55 September, 08 219.00 155.05 218.60 154.00 October, 08 185.00 81.00 184.70 80.00 November, 08 140.60 91.15 141.00 90.50 December, 08 128.40 90.10 128.80 90.30 January, 09 127.90 100.50 124.75 100.05 February, 09 128.00 101.00 127.90 101.25 March, 09 109.00 96.00 108.00 97.00
Max India Limited ANNUAL REPORT 2008-09 69 Share Price Vs. Sensex**
250.00 20000.00 18000.00 200.00 16000.00 14000.00 150.00 12000.00 Price 10000.00 Sensex 100.00 8000.00 6000.00 50.00 4000.00 2000.00 0.00 0.00
8 8 8 8 8 8 8 8 8 9 9 9 0 0 0 0 0 0 0 , 0 0 0 0 0 l, , e, , , r, , r , y, , , ri y n ly t e r e r r ry h p a u u s b be b be a a rc A M J J gu o m u u a u em t e m n r A t c v e Ja b M p O o ec Fe Se N D
Shareholding Pattern as on March 31, 2009 Category No. of shares held % of shareholding Promoters 77354820 34.84 Mutual Funds and UTI 5387658 2.43 Banks, Financial Institutions 19015 0.009 Insurance Companies 45750 0.021 Foreign Institutional Investors 82547353 37.18 Foreign Direct Investment 29823320 13.43 Bodies Corporate 2470670 1.11 Non-resident Indians/ Overseas Corporate Bodies 7080025 3.19 Clearing Members 223771 0.10 Resident Individuals 17077928 7.69 Total 222030310 100.00
Max India Limited ANNUAL REPORT 2008-09 70 Distribution of shareholding as on March 31, 2009
No. of Percentage Shareholdings No. of shares Percentage Shareholders to total to total 27038 97.05 01 – 500 9455513 4.26 422 1.52 501 – 1000 1554108 0.70 167 0.60 1001 – 2000 1206560 0.54 40 0.14 2001 – 3000 484571 0.22 25 0.09 3001 – 4000 439942 0.20 25 0.09 4001 – 5000 577659 0.26 34 0.12 5001 – 10000 1213299 0.55 110 0.39 10001 - above 207098658 93.27 27861 100.00 Total 222030310 100.00
DEMATERIALISATION STATUS AS ON FOR SHAREHOLDERS HOLDING SHARES IN MARCH 31, 2009 DEMATERIALISED MODE (i) Shareholding in dematerialized mode 98.38% Shareholders holding shares in dematerialised mode are (ii) Shareholding in physical mode 1.62% requested to intimate all changes with respect to bank details, mandate, nomination, power of attorney, change SECRETARIAL AUDIT REPORT of address, change of name etc. to their depository participant (DP). These changes will be reflected in the As stipulated by the Securities and Exchange Board of Company’s records on the down loading of information India, a qualified practicing Company Secretary carries from Depositories, which will help the Company provide out the Secretarial Audit, on a quarterly basis, to better service to its shareholders. reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central SHARE TRANSFER SYSTEM Depository Services (India) Limited (CDSL) with the total listed and paid-up capital. The audit, inter alia, confirms In respect of shares upto 500 per folio, transfers are that the total listed and paid up capital of the Company is effected on a weekly basis. For others, the transfers are in agreement with the aggregate of the total number of effected within limits prescribed by law. The average shares in dematerialized form and total number of shares turnaround time for processing registration of transfers in physical form. is 9 days from the date of receipt of requests.
Max India Limited ANNUAL REPORT 2008-09 71 The processing activities with respect to requests Times/Business Standard/Desh Sewak. The financial received for dematerialization are completed within 8 - results are also available on the Company’s website- 10 days. www.maxindia.com
UNCLAIMED/UNPAID DIVIDEND Please visit us at www.maxindia.com for financial and other information about your Company. Under Section 205C of the Companies Act, 1956 the amount of dividend remaining unclaimed for a period of seven years from the date of payment have been transferred to the Investor Education and Protection Fund. For Max India Limited
COMMUNICATION OF FINANCIAL RESULTS The unaudited quarterly financial results and the audited New Delhi Analjit Singh annual accounts are normally published in Economic July 30, 2009 Chairman & Managing Director
Max India Limited ANNUAL REPORT 2008-09 72 MAXINDIALIMITED
COMPANY INFORMATION
BOARD OF DIRECTORS BANKERS Mr. Analjit Singh - Chairman & Citibank N.A. Managing Director Yes Bank Ltd Mr. Anuroop (Tony) Singh - Vice Chairman Kotak Mahindra Bank Ltd Mr. Aman Mehta Punjab National Bank Mr. Ashwani Windlass Oriental Bank of Commerce Mr. Leo Puri Mr. N.C. Singhal CORPORATE OFFICE Mr. N. Rangachary Max House, Okhla, New Delhi - 110 020. Mr. Piyush Mankad SHARE TRANSFER AGENT Mr. Rajesh Khanna Mas Services Limited Mr. S.K. Bijlani T-34, 2nd Floor, Dr. S.S. Baijal Okhla Industrial Area Phase II New Delhi – 110 020 COMPANY SECRETARY Tel: 011-26387281 - 83, Fax: 011-26387384 Mr.V.Krishnan E-mail: [email protected]
MAJOR INTERNATIONAL AFFILIATES WEBSITE New York Life International Inc., USA www.maxindia.com Bupa Finance Plc., UK
AUDITORS Price Waterhouse, Chartered Accountants
Max India Limited ANNUAL REPORT 2008-09 73
MAXINDIA LIMITED
MAX INDIA LIMITED
Directors’ Report
Your Directors have pleasure in presenting the twenty-first Annual (i) Max New York Life Insurance Company Limited: Report of your Company, with the audited Statement of Accounts, Financial Year 2008-09 was a year of continued growth for for the financial year ended March 31, 2009. Max New York Life Insurance Company Limited (MNYL). During the year under review, gross premium income stood at Rs.3,857 FINANCIAL RESULTS crore, recording a growth of 42% over the previous financial The highlights of the consolidated financial results of your Company year. First year premium income grew by 15% to Rs. 1,843 and its subsidiaries are as under: crore. With 80% increase over the previous year, renewal premium stood at Rs.2,014 crore. MNYL sold over 12.1 lacs (Rs. crore) policies in 2008-09 compared to 8.7 lacs policies in the Year ended Year ended previous year. This achieved a cumulative sum assured of March March Rs. 94,000 crore. 31,2009 31,2008 Income MNYL expanded its distribution capabilities by enhancing its Net Sales 401.6 321.9 Agency strength, adding Corporate Agents & Broking House Service Income 4106.1 2922.2 tie-ups and consolidating its existing Bancassurance channel. Income from investment activities 330.2 324.9 During the financial year, the number of agent advisors Other Income 53.5 41.6 increased by 129% over last year’s 84,600. Agency sales recorded a growth of 34%, touching Rs. 1,355 crore during 4891.4 3610.6 the year as compared to Rs. 1,012 crore in the last financial Expenses year. Contribution of agency distribution to total sales was Manufacturing, Trading and Direct 3415.1 2685.8 65%, indicating success of MNYL’s multi-channel distribution Expenses strategy. During the calendar year 2008, 213 agent advisors Personnel Expenses 843.8 454.8 joined the Million Dollar Round Table club (MDRT). Further, by General and Administration Expenses 841.9 399.4 adding 511 new offices during the financial year, MNYL now Financial Expenses 50.6 47.3 has a network of 705 offices as on March 31, 2009. Depreciation 97.0 66.4 5248.4 3653.7 During 2008-09, MNYL launched two new products — Smart (Loss) Before Tax (357.0) (43.1) Assure and Unit Builder, both ULIP products aimed at protection Tax Expense (23.8) 16.7 and long-term wealth creation. MNYL also launched Max Vijay — a product designed to meet the insurance needs of the rural (Loss) After Tax (333.2) (59.8) and semi-urban markets. Funds for Future Appropriations 26.4 (37.1) - Participating Policies (ii) Max Healthcare: Minority Interest 88.4 48.0 Max Healthcare (MHC) provides comprehensive, integrated and Net (Loss) (218.4) (48.9) world-class healthcare services with state-of-the-art infrastructure designed in accordance with international CONSOLIDATED BUSINESS RESULTS: norms. MHC operates six super-speciality and multi-speciality The year 2008-09 proved to be another year of high growth for hospitals and two speciality medical centres located in New your Company and its subsidiaries. During financial year 2008-09, Delhi and the surrounding NCR region. the consolidated Group revenue was Rs. 4,891.4 crore representing Fiscal 2008-09 was a landmark year for MHC in terms of a growth of 35% over the previous year. Net loss for 2008-09 stood financial performance. For the first time in its short history, at Rs. 333.2 crore against Rs. 59.8 crore in the previous year. The MHC turned cash positive. Revenue from all hospitals in the increase in losses was on account of significant expansion MHC network grew by nearly 13% to Rs 423 crore in 2008- undertaken in the Life Insurance business. Subsidiaries of your 09. During the year ended March 31, 2009, MHC’s network of Company continued to post strong business performance for the hospitals performed over 450 open heart surgeries, 2,000 year under review. A brief update on the business achievements of angioplasties and 4,130 angiographies. In addition, MHC’s your Company’s key operating subsidiaries is as below: hospital network performed over 2,150 ortho-surgeries, 870
Max India Limited ANNUAL REPORT 2008-09 77
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neuro-surgeries and 15,400 other surgeries and procedures. professionals for healthcare institutions in India and abroad with a specific focus on the United States. Average number of operational beds at MHC increased from approximately 660 in 2007-08 to 720 in 2008-09. MHC The professionals sourced by MHS have to obtain an EB-3 managed 20 operation theatres and 230 critical care beds category visa which allows healthcare professionals to remain across a completely integrated network. Average occupancy and work in the US. The number of such visas, which are rate at MHC hospitals was approximately 65%. Number of provided in the usual course of US immigration proceedings, patient episodes (measured by number of invoices issued to is subject to limits as imposed by the US government. In the patients during any period) increased from 1.6 million in 2007- recent past and even today, the demand for EB-3 visas far 08 to around 1.9 million in 2008-09. In the last quarter of exceeds the quota limit set by the US government. This has 2008-09, MHC averaged around 165,000 patient episodes per also led to visa retrogression. Due to the enforcement of visa month. retrogression, MHS has considerably scaled down its operations till the time further clarity on immigration laws emerges. As on March 31, 2009, MHC had manpower strength of around 1,200 physicians, including several doctors of international The highlights of the stand-alone financial results of your repute; 1,600 nurses; 350 paramedic staff; and 1,120 other Company are as under: support staff. (Rs. crore) (iii) Max Neeman Medical International Limited: Year ended Year ended Max Neeman Medical International Limited (MNMI) is a value March March added contract research organization (CRO) providing a broad 31,2009 31,2008 range of clinical research services to global pharmaceutical, Income device and biotechnology companies. Gross Sales 393.5 323.0 MNMI also collaborates with other CROs in providing a variety Less: Sales returns (3.7) (4.0) of clinical services. MNMI provides clinical research services Excise duty (36.0) (34.7) in the space of phase II, III, & IV studies and has access to over Net Sales 353.8 284.3 850 ICH GCP trained investigators. The team of over 120 clinical Service and other income 66.2 91.1 research coordinators/clinical research associates in 22 cities 420.0 375.4 across India gives it access to patients and investigator sites Expenditure in various therapeutic areas. Since commencement of its Indian Manufacturing and other expenses 358.6 284.1 operations, over 5,800 subjects have been enrolled at over Financial expenses 16.3 14.6 200 sites. An Impressive Operating Standard enabled MNMI Depreciation and amortization 12.1 11.4 to provide services to 21 clients over 55 contracts during fiscal 387.0 310.1 2008-09. MNMI’s automated workflow process using the SAS Profit from operations 33.0 65.3 CDMS (PheedIT) software system ensures efficient and accurate Diminution in value of investment data management. and doubtful advances to subsidiary 22.6 - In fiscal 2008-09, MNMI registered revenues of Rs 15.0 crore Profit Before Tax 10.4 65.3 representing a growth of 36% over the previous year. MNMI Tax Expense (11.4) 3.4 generated a profit of Rs. 1.2 crore in 2008-09, a growth of Profit After Tax 21.8 61.9 67% over the previous year, putting the operations in positive RESULTS OF STAND-ALONE OPERATIONS: and profitable territory. Its order book increased from Rs. 34 crore in 2007-08 to Rs. 40 crore in 2008-09. It added 5 new Fiscal 2008-09 was a year of consolidation for Max Speciality clients during the year, taking its total client base to 48. Products (MSP), the Speciality Packaging Manufacturing division of Max India Limited. All BOPP production lines at MSP operated at (iv) Max HealthStaff International Limited: 100% capacity utilization. During the year, sales volume of BOPP Max HealthStaff International (MHS) is a healthcare staffing Films improved to 28 KTA compared to 24 KTA in 2008-09. In the and training Company. Its focus is on providing trained Indian same period, sales volume of thermal films grew by 28% over the
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previous year, in line with MSP’s focus on high contribution and Proposed issuance of equity shares to Qualified Institutional Investors high value-addition products. On an overall basis, net sales recorded Your Company proposes to issue securities up to an amount of a strong 24% year-on-year growth at Rs. 354 crore in 2008-09 Rs. 450 crores to Qualified Institutional Buyers (QIBs) under the against Rs. 284 crore for 2007-08. Qualified Institutional Placement (QIP) mechanism stipulated by Raw material prices which had an uptrend in the first half year the Securities and Exchange Board of India (SEBI) vide Chapter started coming down in the second half of the year due to high XIII-A of the SEBI (Disclosure and Investor Protection) Guidelines, volatility in global crude prices. Further, the competitive landscape 2000. became stiffer with enhanced production capacity in the domestic RESCINDMENT OF RIGHTS ISSUE market, raising domestic supply to 235 KTA as of March 2009 relative to 198 KTA in the previous year. The Board rescinded its earlier decision taken on February 3, 2009 for issuance of equity shares up to an amount of Rs. 650 crores, on Your Company made a profit after tax of Rs.21.8 crore in the current Rights basis with detachable warrants. This decision has since been year as compared to Rs. 61.9 crore in the previous year. The reduction changed in favour of the decision for private placement of shares in profit was mainly on account of lower investment income with QIBs. resulting from deployment of treasury funds to support our businesses and diminution in the value of investment in loans to in ADDITIONAL BUSINESS INVESTMENTS Max HealthStaff International Limited, a subsidiary of your The Company made a further investment of Rs.555 crore in Max Company, which is provided for in the accounts. New York Life Insurance Company Ltd. during the year under review, DIVIDEND taking the total equity contribution in MNYL to Rs.1,313.50 crore as of March 31, 2009. Your directors do not recommend any dividend in view of their decision to deploy internal accruals towards the growth of the FIXED DEPOSITS Company’s Life Insurance, Healthcare and Health Insurance There are no overdue deposits as at the end of the financial year businesses. under review. Your Company has not accepted/renewed any deposit MAX BUPA JOINT VENTURE up to the date of this Report.
During the year under review, your Company entered into a joint EMPLOYEE STOCK OPTION PLANS venture with Bupa Finance Plc, UK for its foray into the health (i) Your Company had instituted an ‘Employee Stock Plan 2003’ insurance business. The joint venture Company, viz., Max Bupa (‘2003 Plan’), which was approved by the Board of Directors Health Insurance Company Limited (Max Bupa) will be a 74:26 in August 2003 and by the shareholders in September 2003. joint venture between the Company and Bupa Finance Plc, UK. Max The 2003 Plan provides for grant of stock options Bupa is in the process of obtaining requisite approvals from the aggregating not more than 5% of number of issued equity Insurance Regulatory and Development Authority (IRDA). shares of the Company to eligible employees and directors FUND RAISING PROGRAMMES OF THE COMPANY of the Company. The 2003 Plan is administered by the Remuneration Committee appointed by the Board of Allotment of Equity Shares to International Finance Corporation, Directors. During the year under review, 2,87,765 Options USA, on Preferential basis were vested and upon exercise, 2,87,765 equity shares of The Company allotted 10,326,311 equity shares of Rs. 2/- each Rs. 2/- each for cash at par were allotted. Your Company representing 4.44% of the present paid up equity share capital of also granted 66,320 Options to certain employees during the Company on June 19, 2009, at a premium of Rs.143.26 per the year under review. equity share aggregating to Rs.150 crore to International Finance (ii) The particulars of options granted, as on the date of this report, Corporation, Washington, USA, on preferential basis. under the aforesaid stock option plan as required under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given below:
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Sl. No. Description 2003 Plan been recognized as compensation cost if the Company had used fair value basis instead of adopting intrinsic (a) Total number of options granted till 14,61,250 value basis of accounting for these stock options. March 31, 2009 (b) The pricing formula Rs. 2/- b) On fair value basis of recognizing the employee per share compensation cost, profit after tax for the current (c) Number of options vested till 10,94,925 financial year would have been Rs. 21.84 crore instead of March 31, 2009 Rs. 21.83 crore reported in the Profit and Loss account. (d) Number of options exercised till 10,94,925 c) Basic and diluted earnings per share would have remained March 31, 2009 unchanged at Rs. 0.98, had the Company adopted fair (e) Total number of shares arising from 10,94,925 value basis of recognizing the employee compensation exercise of options cost due to insignificant amount of difference in the (f) Number of options lapsed/forfeited till 3,00,005 recognized expense and fair value of the ESOP expense. March 31, 2009 (g) Variation in terms of options — d) The exercise price of the stock options on the grant date (k) Money realized by exercise of options (Rs. crore) 0.22 is Rs. 2/- per existing equity share of Rs. 2/- each and the (l) Total number of options in force as on date 66,320 fair value of each option works out to Rs. 106.58 for (m) Number of options granted to senior December 2005 and Rs. 158.98 for June 2006 grant. management including directors in FY 2008-09 66,320 e) The computation of fair value of stock options granted (n) Employees holding 5% or more of the total under the 2003 Plan has been done using Black Scholes number of options granted during the year None Option Pricing Model. The following assumptions have (o) Employees granted options equal to or been used in applying this options pricing model: exceeding 1% or more of the issued capital during the year None i) Risk free interest rate of 6.48% for November 2008 grant, and 3.90% for January 2009 grant, The diluted earning per share was Rs. 0.98 for the financial year ended March 31, 2009. The diluted earnings per share for the ii) Expected life of 3 years of these stock options for previous year was Rs. 2.90. November 2008 grant, and 1 year for January 2009 grant, (iii) In respect of stock options granted till March 31, 2009 under the 2003 Plan, the Company has calculated employee iii) Expected volatility of 51.60% for 3 year options and compensation cost using intrinsic value of the stock options. 64.86% for 1 year options based on historical Accordingly, an amount of Rs. 14.6 crore has been recognized volatility of the Company’s share, as total compensation charge for grants made in October 2003, iv) No dividend expectation based on current year’s dividend March 2005, December 2005, June 2006, November 2008 and recommendation, and January 2009 out of which, in the current financial year, Rs. 0.59 crore has been taken to the Profit and Loss account v) Price of Rs. 113.20 for November 2008 grant and Rs. 107.30 as expense. The additional details required to be disclosed in for January 2009 grant being the latest available closing price accordance with SEBI (Employee Stock Option Scheme and of the Company’s share on the National Stock Exchange prior Employee Stock Purchase Scheme) Guidelines, 1999 relating to the date of grant. to the 2003 Plan are given below: ADDITIONAL INFORMATION
a) The employee compensation cost based on fair value of Information in accordance with the provisions of Section 217(1)(e) stock options granted in October 2003, March 2005, of the Companies Act, 1956, read with the Companies (Disclosures December 2005, June 2006, November 2008 and January of Particulars in the Report of Board of Directors) Rules, 1988 are 2009 under the 2003 Plan is Rs. 14.6 crore, out of which, given in the prescribed format annexed to this Report as in the current financial year, Rs. 0.59 crore would have Annexure –A.
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PARTICULARS OF EMPLOYEES GROUP FOR INTERSE TRANSFER OF SHARES
A statement giving particulars of employees under Section 217(2A) As required under Clause 3(e) of Securities and Exchange Board of of the Companies Act, 1956 read with the Companies (Particulars India (Substantial Acquisition of Shares and Takeovers) Regulations, of Employees) Rules, 1975 for the financial year ended March 31, 1997, persons constituting Group within the meaning as defined 2009 is annexed to this Report as Annexure-B. in the Monopolies and Restrictive Trade Practices Act, 1969 for the purpose of Regulation 10 to 12 of aforesaid SEBI Regulations are SUBSIDIARY COMPANIES as follows: Statement pursuant to Section 212 of the Companies Act, 1956, (a) Mr. Analjit Singh, (b) Mrs. Neelu Analjit Singh, (c) Ms. Piya Singh relating to the subsidiaries of your Company, is annexed to this (d) Mr. Veer Singh, (e) Ms. Tara Singh, (f) Neelu Family Trust, (g) Report. Medicare Investment Limited, (h) Cheminvest Limited, (i) Liquid Your Company has been exempted by the Central Government vide Investment and Trading Co., (j) Maxopp Investments Limited, (k) their letter No. 47/364/2009-CL-III dated May 14, 2009 under Mohair Investment & Trading Co. (P) Ltd., (l) Boom Investments Section 212 (8) of the Companies Act, 1956 from attaching a copy Private Limited, (m) PVT Investment Limited, (n) Pen Investments of the Balance Sheet, Profit & Loss Account, Report of the Board of Limited, (o) Pivet Finances Limited, (p) Dynavest India Private Directors and the Report of the Auditors of the subsidiary companies. Limited. (q) Maxpak Investment Limited, (r) Trophy Holdings Private However, pursuant to Accounting Standard 21 issued by the Limited and (s) Moav Investment Limited. Institute of Chartered Accountants of India, Consolidated Financial DIRECTORS Statements presented by the Company include the financial information of the subsidiaries. Mr. Anuroop (Tony) Singh was appointed Vice Chairman of the Company effective April 23, 2009. Your Company will make available these documents/details upon request by any member of the Company and its subsidiaries Mr. S.K. Bijlani and Mr. Aman Mehta have been co-opted as interested in obtaining the same. The annual accounts of the additional directors on the Board of Directors of the Company subsidiary companies will also be kept open for inspection by a effective October 22 and December 12, 2008, respectively. The member at the respective registered offices of the Company and Company has received notices under Section 257 of the Companies its subsidiary companies. Act, 1956 proposing their candidature for being appointed as Directors of the Company at the ensuing Annual General Meeting. AUDITORS In accordance with the provisions of the Companies Act, 1956 and Price Waterhouse, Statutory Auditors of your Company, retire and the Articles of Association of the Company, Mr. N. Rangachary, Mr. offer themselves for re-appointment. Your Company has received Piyush Mankad, Mr. Anuroop (Tony) Singh and Mr. N.C. Singhal from them a certificate required under Section 224(1-B) of the retire by rotation at the ensuing Annual General Meeting and are Companies Act, 1956 to the effect that their re-appointment, if eligible for re-appointment. made, would be in conformity with the limits specified in that Section. Mr. Bharat Sahgal resigned from the Board of Directors of the Company effective March 31, 2009. Your Directors place on record, FINDINGS OF AGREED UPON PROCEDURES their appreciation for the valuable contribution made by him during Your Company engaged M/s. S.R. Batliboi & Co. to carry out certain his association with the Company. “Agreed Upon Procedures” [AUP] on various financial parameters CAUTIONARY STATEMENT for the financial year ended March 31, 2009 related to Consolidated Financial Statements of the Company. We are pleased to inform Statements in this Report, particularly those which relate to you that there are no material adjustments to be made in the Management Discussion and Analysis describing the Company’s Consolidated Financial Statements of the Company arising out of objectives, projections, estimates and expectations, may constitute findings of the AUP. “forward looking statements” within the meaning of applicable laws
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and regulations. Actual results might differ materially from those of Punjab to set a second Campus of ISB at Knowledge City, Mohali, either expressed or implied in the statements depending on the Punjab. The ISB Campus, Mohali will have four specialist Institutes, circumstances. termed as Centres of Excellence, for promoting research and offering specializations in post graduate programmes. One such institution DIRECTORS’ RESPONSIBILITY STATEMENT will be named as ‘Max India Institute of Healthcare Management’. The Board of Directors of the Company confirms that: Max India Institute of Healthcare Management will impart industry relevant skill-sets to students in this programme to meet India’s (i) In the preparation of annual accounts, the applicable growing need for quality healthcare professionals. In this regard, it accounting standards have been followed, along with proper has been proposed to contribute a sum of Rs. 50 crores from Max explanation relating to material departures. India Group, which will be contributed 1/3rd from the Company, 1/ (ii) The Directors have selected such accounting policies and 3rd from its subsidiary, Max Healthcare Institute Limited and the applied them consistently and made judgments and estimates balance 1/3rd from the Promoters of the Company, over the next that are reasonable and prudent, so as to give a true and fair two to three years. view of the state of affairs of the Company at the end of the ACKNOWLEDGEMENTS financial year and of the profit or loss of the Company for that period. Your Directors would like to place on record their appreciation of the contribution made by the Management and the employees who (iii) The Directors have taken proper and sufficient care for the through their competence and commitment have enabled the maintenance of adequate accounting records in accordance Company to achieve impressive growth. Your Directors acknowledge with the provisions of the Companies Act, 1956, for with thanks the co-operation and assistance received from various safeguarding the assets of the Company and for preventing agencies of the Central and State Governments, Financial and detecting fraud and other irregularities. Institutions and Banks, Shareholders, Joint Venture partners and (iv) The Directors have prepared the annual accounts on a going all other business associates. concern basis.
CONTRIBUTION FOR EDUCATIONAL CAUSE For and on behalf of the Board of Directors Being in the service sector, where talent is a key asset, the Max New Delhi ANALJIT SINGH India Group along with three other business groups have joined JULY 30, 2009 Chairman & Managing Director hands with Indian School of Business, Hyderabad and Government
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Annexure - ‘A’
PARTICULARS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988
A. CONSERVATION OF ENERGY
a) Energy Conservation measures taken
The Company has taken several steps to conserve energy. Energy conservation continues to be on high priority for existing as well as new projects. Various steps taken to bring about savings are - • External audit of BOPP lines from technical cell of leading European based BOPP plant manufacturer. • To conserve energy, reduce waste & aggressively promote, reuse & recycle of materials adopted the mission pursuing ecologically sustainable economic growth & signed code for ecologically sustainable business growth evolved by CII. • Installation of AC drives for Die exhaust fan & cooling tower fans . • Installation of high efficient electrical motors in plant. • Conservation of energy by using day light in new BOPP line. • Reduction in energy consumption by use of cooling tower water instead of chilled water in winter for new BOPP film line. • Reduction in specific energy consumption of Metalliser by optimizing Metallization Parameters. • Reduction in Furnace oil consumption of new BOPP line by adopting the best operational practices. (b) Additional investments and proposals, if any, being implemented for reduction in consumption of energy New Energy cell being created to identify and implement new Energy saving projects/measures. Highly energy efficient equipments are being added for upcoming projects. (c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods Above measures will result in reduction in energy consumption and consequent savings in Specific energy consumption per unit between 5% to 7%. (d) Total energy consumption and energy consumption per unit of production as per Form A of the Annexure of “Particulars pursuant to Companies (Disclosure of particulars in the Report of the Board of Directors) Rule 1988
NOT APPLICABLE
B. RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION
I. RESEARCH AND DEVELOPMENT
(a) Research & Development • The R&D efforts of the company are continuously directed towards development new products, new applications, quality improvement and product innovation. • Continuous research, in-house as well as on customer machines, is being carried out . Our constant efforts to develop new products every year is paying dividends and usage of BOPP film is continuously increasing year after year.
(b) Process Improvement and Development • Optimization of process parameters of BOPP film lines to enhance efficiencies/ yields. • Improvement in efficiency of newly developed high value added products • Process optimization of metallisers to increase production. • Quality of reprocessed granules being continuously improved.
(c ) Benefits Derived • Cost competitiveness, effectiveness and high quality products. • Steady increase in efficiency of machines, productivity and reduction in waste. • Scientific working has substantially improved the machine utilization, devices, processes, materials, systems and services.
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• Products suitable to ever changing customer needs
(d) Future Plan of Action • High value added niche products to be continuously added to existing range, every year. • Efficiency improvement to surpass even international standards. • To further improve product mix resulting in better value addition. • To improve further quality and delivery index for top customers.
(e) Expenditure on R & D • Capital : ‘Nil’ • Recurring : Rs. 16.51 lacs • Total : Rs. 16.51 lacs • R&D expenditure : 0.05% as % of net sales
II. TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION
(A) EFFORTS MADE TOWARDS TECHNOLOGY ABSORPTION, ADAPTION AND INNOVATION Company has in- house development and R & D cell which perpetually develops new products. These products are commercialized after successful trials at customer end.
(B) BENEFITS DERIVED AS A RESULT OF ABOVE EFFORTS
New developments as per customer’s requirements further result in product mix optimization & higher margins.
(C ) INFORMATION ABOUT IMPORTED TECHNOLOGY IN LAST 5 YEARS
BOPP and Foil Business did not import any technology in the last 5 years.
C. FOREIGN EXCHANGE EARNING AND OUTGO
(a) Activities Relating to Exports • Enhanced Focus to increase exports of high-value-added films. • Increased presence in European market and exploring market in USA for thermal films. • Increasing presence in Asian countries, specially Middle-East region. • During 2008-09, exports of BOPP Including thermal films have increased by 10%
(b) TOTAL FOREIGN EXCHANGE EARNED AND USED
(Rs. lacs) Year ended Year ended March 2009 March 2008 Earnings 6,557.51 6,273.69 Outgo 6,721.88 5,353.88
For and on behalf of Board of Directors
New Delhi ANALJIT SINGH JULY 30, 2009 Chairman & Managing Director
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Annexure - ‘B’ eer HR nsel ef ist ANALJIT SINGH Manager - or-Human r Officer Finance . Deputy Director irector & Head Legal Affairs Marketing Administration (India/ South Asia) Owner Chairman & Managing Director On behalf of the Board Directors gies Ltd. Sr. Manager - Corporate Synthetics President & Chi Express VP & Group Cou Chartered Bank D tional Academy of Sr Corporate Vice President - Ltd. Senior Chem Ltd. Assistant Vice President - (Govt of India) Ester Industries Ltd. Production Engin 26 Swaraj Majda Ltd. Senio 33 Ester Industries Ltd. Vice President - 40 Glaxo SmithKline20 Direct Self Employed 2008 28 Amway India EnterprisesBusiness Independent 11.2007 30 Standard 02.2001 30 Indo Rama 10.1989 37 SRF .07.2008 19 American of employment L.L.B., 02.04.2007 & Psychology Administration PersonnelManagement & Industrial Relations Service Ltd. Science & Law,PGD IR & PMGeneralCorp, Banking Office Counsel’s India & Area Countries ACS Finance (Arts), PostGraduate(Hospitality Management) FICWA, FCS India Ltd.Bank, Wholesale East India Financial Officer (Boston) B.Com, ACA,ACS 26.09.1989 & Accounts B. Com, ACS 18.06.2003 PGDM (PM & IR) Consumer Healthcare Resources & CTORS’ REPORT nce, personal accident and health insurance, Company’s contribution to Provident, Pension, Gratuity (In Rs.) Commencement (Yrs.) Organisation Designation 3,744,452 B.A. (Hons), MBA 01.04. 4,019,724 MA in Economics 22.03.2007 23 LBS Na 3,443,849 Masters in 07.07.2004 20 Hero 2,294,361 B. Com, L.L.B.7,962,681 17.08.2004 Bachelor of 30 30 EIH 5,722,184(Hons),Com B. 12.07.2004 20 Jubilant Orgnosys Ltd. General 4,292,653 B. Sc., LPRI 09. 9,015,600 B. Sc., 13,141,795 Post Graduate 01. of the Company as date this report. Accounts 7,110,869 M.Com, ACA, 01.05.2002 17 HCL Technolo HR & Administration Law Matters 2,679,311 & Commercial 3,720,283 Management 27,274,672 B.Com, FCA, 07. Legal Matters Accounts & TreasuryGeneral Management 48,178,090 BA, BS, MBA 30.10.2001 ACA 31 Max UK Ltd. Chairman Finance Corporate Finance/ Office 2.19% of the Equity Shares Office Corporate Support, Chairman’s Finance Corporate Finance & erations Operations 2,563,119 BE (Chemicals) 26.09.1990 23 BOPP Operations 6,743,579 B.Tech, PGDBM 06.10.2005 Superannuation fund, leave encashment and monetary value of perquisites. 16 Sud Kirti Madhok 54 Director - Corporate Support, Chairman’s 15SekhriRajni Sibal, 49 Director - Health Insurance Health Insurance 14Rajan Sharma, 44 Vice President - HR Corporate 12 Nagar, Prabhat13V.C. Raghu 53 Vice President - Legal 46 Director - Legal & Regulatory Affairs Legal Matters B. Employed for part of the year and were in receipt remuneration not less than Rs. 2,00,000/- per month 10B. Anantharaman, 11 Basur, Neeraj 54 Jt. Managing Director 40 Sr. Vice President - Corporate General 8 Singh, Dalbir9 Talwar, Mohit 50 49 Vice President - Finance & Commercial Director - Corporate Development Finance Development Business 7 Singh, Analjit 55 Chairman & Managing Director 6 Ratnam, Sujatha 45 Chief Financial Controller 23 Kaushik, P. K.4 Krishnan V.5 Manohar K. Mathur, S. K. 58 45 Chief Operating Officer - Leather Finishing Foil 43 Operations 56Secretary Company Sr. General Manager - Op Chief Executive - Company A. Employed throughout the year and were in receipt of remuneration not less than Rs. 24,00,000/- per annum 1 Dwarakanath, P. 61 Director - Group Human CapitalResources Human Group Notes : 1 Remuneration includes salary, allowances, value of rent free accommodation, bonus, medical reimbursement, leave travel assista FOR THE YEAR ENDED MARCH 31, 2009 PARTICULARS OF EMPLOYEES INFORMATION AS PER SECTION 217 (2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART DIRE Sr. NameNo. Age Designation (Yrs.) Nature of duties Remuneration Qualification Date of Experience Last Employment Held 23 None of the above employees is a relative any director Company. 4 The services of Mr. Analjit Singh and B. Anantharaman are contractual in nature. Mr. Analjit Singh holds by himself and along-with his spouse dependent children New Delhi JULY 30, 2009
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TO THE MEMBERS OF MAX INDIA LIMITED (c) On the basis of our examination of the inventory 1. We have audited the attached Balance Sheet of Max India records, in our opinion, the Company is maintaining Limited, as at March 31, 2009, and the related Profit and Loss proper records of inventory. The discrepancies Account and Cash Flow Statement for the year ended on that noticed on physical verification of inventory as date annexed thereto, which we have signed under reference compared to book records were not material. to this report. These financial statements are the responsibility (iii) (a) The Company has not granted any loans, secured or of the Company’s management. Our responsibility is to express unsecured, to companies, firms or other parties an opinion on these financial statements based on our audit. covered in the register maintained under Section 301 2. We conducted our audit in accordance with the auditing of the Act. standards generally accepted in India. Those Standards require (b) The Company has not taken any loans, secured or that we plan and perform the audit to obtain reasonable unsecured, from companies, firms or other parties assurance about whether the financial statements are free of covered in the register maintained under Section 301 material misstatement. An audit includes examining, on a test of the Act. basis, evidence supporting the amounts and disclosures in the (iv) In our opinion and according to the information and financial statements. An audit also includes assessing the explanations given to us, having regard to the accounting principles used and significant estimates made by explanation that certain items purchased are of special management, as well as evaluating the overall financial nature for which suitable alternative sources do not statement presentation. We believe that our audit provides a exist for obtaining comparative quotations, there is reasonable basis for our opinion. an adequate internal control system commensurate 3. As required by the Companies (Auditor’s Report) Order, 2003, with the size of the Company and the nature of its as amended by the Companies (Auditor’s Report) (Amendment) business for the purchase of inventory, fixed assets Order, 2004, issued by the Central Government of India in terms and for the sale of goods and services. Further, on the of sub-section (4A) of Section 227 of ‘The Companies Act, basis of our examination of the books and records of 1956’ of India (the ‘Act’) and on the basis of such checks of the Company, and according to the information and the books and records of the Company as we considered explanations given to us, we have neither come across appropriate and according to the information and explanations nor have been informed of any continuing failure to given to us, we further report that: correct major weaknesses in the aforesaid internal (i) (a) The Company is maintaining proper records showing control system. full particulars including quantitative details and (v) According to the information and explanations given to situation of fixed assets. us, there have been no contracts or arrangements referred (b) The fixed assets are physically verified by the to in Section 301 of the Act during the year to be entered management according to a phased programme in the register required to be maintained under that Section. designed to cover all the items over a period of three Accordingly, commenting on transactions made in years, which in our opinion, is reasonable having pursuance of such contracts or arrangements does not arise. regard to the size of the Company and the nature of (vi) The Company has not accepted any deposits from the its assets. Pursuant to the programme, a portion of public within the meaning of Sections 58A and 58AA the fixed assets has been physically verified by the of the Act and the rules framed there under. management during the year and no material (vii) In our opinion, the Company has an internal audit system discrepancies between the book records and the commensurate with its size and nature of its business. physical inventory have been noticed. (viii) The Central Government of India has not prescribed (c) In our opinion and according to the information and the maintenance of cost records under clause (d) of explanations given to us, a substantial part of fixed sub-section (1) of Section 209 of the Act for any of assets has not been disposed of by the Company the products of the Company. during the year. (ix) (a) According to the information and explanations (ii) (a) The inventory (excluding stocks with third parties) has given to us and the records of the Company been physically verified by the management during examined by us, in our opinion, the Company is the year. In respect of inventory lying with third parties, regular in depositing the undisputed statutory these have substantially been confirmed by them. In dues including provident fund, investor our opinion, the frequency of verification is reasonable. education and protection fund, employees’ state (b) In our opinion, the procedures of physical verification insurance, income-tax, sales-tax, wealth tax, of inventory followed by the management are service tax, customs duty, excise duty, cess and reasonable and adequate in relation to the size of other material statutory dues as applicable with the Company and the nature of its business. the appropriate authorities.
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(b) According to the information and explanations (xxi) During the course of our examination of the books given to us and the records of the Company and records of the Company, carried out in accordance examined by us, the particulars of dues of with the generally accepted auditing practices in India, income-tax, sales-tax, wealth tax, service tax, and according to the information and explanations customs duty, excise duty and cess as at March given to us, we have neither come across any instance 31, 2009 which have not been deposited on of fraud on or by the Company, noticed or reported account of a dispute, are disclosed in Notes 1(d) during the year, nor have we been informed of such and 4 on Schedule 22B. case by the management. (x) The Company has no accumulated losses as at March 4. Further to our comments in paragraph 3 above, we report that: 31, 2009 and it has not incurred any cash losses in (a) We have obtained all the information and the financial year ended on that date or in the explanations, which to the best of our knowledge and immediately preceding financial year. belief were necessary for the purposes of our audit; (xi) According to the records of the Company examined (b) In our opinion, proper books of account as required by by us and the information and explanation given to law have been kept by the Company so far as appears us, the Company has not defaulted in repayment of from our examination of those books; dues to any financial institution or bank or debenture holders as at the balance sheet date. (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in (xii) The Company has not granted any loans and advances agreement with the books of account; on the basis of security by way of pledge of shares, debentures and other securities. (d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this (xiii) The provisions of any special statute applicable to chit report comply with the accounting standards referred fund / nidhi / mutual benefit fund/societies are not to in sub-section (3C) of Section 211 of the Act; applicable to the Company. (e) On the basis of written representations received from (xiv) In our opinion, the Company has maintained proper the directors, as on March 31, 2009 and taken on records of transactions and contracts relating to record by the Board of Directors, none of the directors dealing or trading in shares, securities, debentures and is disqualified as on March 31, 2009 from being other investments during the year and timely entries appointed as a director in terms of clause (g) of sub- have been made therein. Further, such securities have section (1) of Section 274 of the Act; been held by the Company in its own name. (f) In our opinion and to the best of our information and (xv) In our opinion and according to the information and according to the explanations given to us, the said explanations given to us, the terms and conditions of financial statements together with the notes thereon the guarantees given by the Company, for loans taken and attached thereto give in the prescribed manner by others from banks or financial institutions during the information required by the Act and give a true the year, are not prejudicial to the interest of the and fair view in conformity with the accounting Company. principles generally accepted in India: (xvi) In our opinion, and according to the information and (i) in the case of the Balance Sheet, of the state of explanations given to us, on an overall basis, the term affairs of the Company as at March 31, 2009; loans have been applied for the purposes for which they were obtained. (ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and (xvii) On the basis of an overall examination of the balance sheet of the Company, in our opinion and according (iii) in the case of the Cash Flow Statement, of the to the information and explanations given to us, there cash flows for the year ended on that date. are no funds raised on a short-term basis which have been used for long-term investment. (xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the V. NIHAWAN register maintained under Section 301 of the Act Partner during the year. Membership Number F 87228 (xix) There are no debentures outstanding as at the year end. For and on behalf of (xx) The Company has not raised any money by public issues Gurgaon Price Waterhouse during the year. JUNE 26, 2009 Chartered Accountants
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Balance Sheet as at March 31, 2009
(RS. LACS) Schedule As at As at March 31, 2009 March 31, 2008 SOURCES OF FUNDS SHAREHOLDERS’ FUNDS Share Capital 1 4440.61 4434.85 Reserves and Surplus 2 201794.77 199943.43 206235.38 204378.28 LOAN FUNDS Secured Loans 3 10058.75 12133.93 Unsecured Loans 4 - Loans 82.61 85.98 - Advance from Others - 17420.55 10141.36 29640.46 Deferred Tax Liability (Net) 5 - 1200.14 216376.74 235218.88 APPLICATION OF FUNDS FIXED ASSETS 6 Gross Block 24921.16 23754.60 Less: Depreciation 7493.83 6346.71 Net Block 17427.33 17407.89 Capital Work in Progress 2560.05 521.54 19987.38 17929.43 INVESTMENTS 7 169030.46 206453.55 CURRENT ASSETS, LOANS AND ADVANCES Inventories 8 2804.31 2760.86 Sundry Debtors 9 5289.74 6152.47 Cash and Bank Balances 10 16633.20 757.19 Other Current Assets 11 49.93 - Loans and Advances 12 6668.06 5750.58 31445.24 15421.10 Less: CURRENT LIABILITIES AND PROVISIONS Current Liabilities 13 3308.49 3961.93 Provisions 14 837.88 893.96 4146.37 4855.89 NET CURRENT ASSETS 27298.87 10565.21 MISCELLANEOUS EXPENDITURE 15 60.03 270.69 (To the extent not written off or adjusted) 216376.74 235218.88 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 22
The Schedules referred to above form an integral part of the Balance Sheet For and on behalf of the Board of Directors This is the Balance Sheet referred to in our report of even date V. NIJHAWAN ANALJIT SINGH Chairman & Managing Director Partner N. RANGACHARY Director Membership No. F 87228 ASHWANI WINDLASS Director For and on behalf of SUJATHA RATNAM Chief Financial Controller Price Waterhouse V. KRISHNAN Company Secretary Chartered Accountants Gurgaon New Delhi JUNE 26, 2009 JUNE 26, 2009
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Profit and Loss Account for the year ended March 31, 2009
(RS. LACS) Schedule For the Year Ended For the Year Ended March 31, 2009 March 31, 2008
INCOME Sales 39349.42 32299.22 Less: Sales Return (367.72) (398.81) Excise Duty (3606.19) (3470.99) 35375.51 28429.42 Income from Investment Activities 16 4719.98 6917.96 Other Income 17 1896.98 2188.90 41992.47 37536.28 INCREASE/(DECREASE) IN INVENTORY 18 (18.87) 503.49 41973.60 38039.77 EXPENDITURE Manufacturing and Other Expenses 19 35839.22 28909.85 Financial Expenses 20 1624.83 1459.52 Depreciation 6 1205.99 1138.92 38670.04 31508.29 PROFIT FROM OPERATIONS 3303.56 6531.48 Diminution in value of Investments and Doubtful Advances to Subsidiary 2262.17 - (Refer Note B32 on Schedule 22) PROFIT BEFORE TAX 1041.39 6531.48 Tax Expense 21 (1142.08) 341.02 PROFIT AFTER TAX 2183.47 6190.46 PROFIT BROUGHT FORWARD 66533.48 60343.02 BALANCE CARRIED FORWARD TO THE BALANCE SHEET 68716.95 66533.48 Earnings Per Share (Rs. per equity share of Rs. 2/- each) (Refer Note B12 on Schedule 22) - Basic 0.98 2.90 - Diluted 0.98 2.90 Number of Shares used in computing earnings per share - Basic 22,19,98,514 21,31,18,796 - Diluted 22,21,22,712 21,37,72,230 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 22
The Schedules referred to above form an integral part of the For and on behalf of the Board of Directors Profit and Loss Account This is the Profit and Loss Account referred to in our report of even date V. NIJHAWAN ANALJIT SINGH Chairman & Managing Director Partner N. RANGACHARY Director Membership No. F 87228 ASHWANI WINDLASS Director For and on behalf of SUJATHA RATNAM Chief Financial Controller Price Waterhouse V. KRISHNAN Company Secretary Chartered Accountants
Gurgaon New Delhi JUNE 26, 2009 JUNE 26, 2009
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Cash Flow Statement for the year ended March 31, 2009
(RS. LACS) Schedule For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 A. CASH FLOW FROM OPERATING ACTIVITIES: NET PROFIT BEFORE TAX 1041.39 6531.48 Adjustment for Depreciation 1205.99 1138.92 Miscellaneous Expenditure Written Off - 0.31 ESOP Lapsed Written Back (180.82) - ESOP Compensation Expense 59.35 362.36 Net Loss on Sale of Fixed Assets 44.54 22.98 Net Profit on Sale of Investments (13.32) (30.37) Fixed Assets and Spares Written Off 2.87 0.40 Debit Balances Written Off 2.81 0.11 Provision for Doubtful Debts and Advances 99.69 20.50 Diminution in value of Investments and Doubtful Advances to Subsidiary 2262.17 - Stocks Written Off - 0.16 Provision for Leave Encashment 66.12 42.41 Provision for Gratuity 62.06 66.24 Interest Expense 1537.61 1393.51 Interest Income (800.57) (174.20) Dividend Income From Non Trade Investments-Current (3906.09) (6713.39) Liability/Provision no Longer Required Written Back (245.54) (15.30) Unrealised Foreign Exchange (Gain)/Loss 8.81 25.85 TDS on Service/Other Operating Income (2.59) (7.13) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 1244.48 2664.84 Adjustment for Trade and Other Receivables (1949.26) (4334.36) Inventories (43.46) (1427.25) Trade Payables (651.09) 1435.57 CASH GENERATED FROM/(USED IN) OPERATIONS (1399.33) (1661.20) Income Tax Refunded/(Paid) - 21.16 Fringe Benefit Tax (Paid) (59.88) (188.04) Wealth Tax (Paid) (1.48) (1.24) CASH FROM/(USED IN) OPERATING ACTIVITIES (1460.69) (1829.32) B. CASH FLOW FROM INVESTING ACTIVITIES Investments made (Others) (228905.32) (393624.96) Sale of Investments 265893.86 293029.58 Purchase of Fixed Assets (3066.07) (3135.60) Sale of Fixed Assets 21.83 30.99 Interest Received (Net) 572.26 137.76 Dividend Income From Non Trade Investments-Current 3906.09 6713.39 CASH FROM/(USED IN) INVESTMENT ACTIVITIES 38422.65 (96848.84)
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(RS. LACS) Schedule For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 C. CASH FLOW FROM FINANCING ACTIVITIES Issue of Shares to QIBs - 99999.98 Shares Issue Expenses - (2069.59) ESOPs Excercised 5.76 3.48 Capital Subsidy received - 50.00 Interest Paid (1592.61) (1437.34) Proceeds from Long Term Loans 15.96 1725.33 Repayment of Long Term Loans (2205.05) (1226.88) Proceeds/(Repayment) of Short Term Borrowings (Net) 110.54 1575.41 Refund of Other Advances Received (17420.55) - CASH FROM/(USED IN) FINANCING ACTIVITIES (21085.95) 98620.39 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 15876.01 (57.77) CASH AND CASH EQUIVALENTS - OPENING BALANCE 757.19 814.96 CASH AND CASH EQUIVALENTS - CLOSING BALANCE 16633.20 757.19 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 15876.01 (57.77) Notes 1. The above Cash Flow statement has been prepared under the “Indirect Method” as set out in the Accounting Standard-3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India. 2. Cash and Cash Equivalents at the end of the year consist of Cash and Stamps in Hand, Fixed Deposits and Balances with Banks:
As at As at March 31, 2009 March 31, 2008
Cash in Hand 4.61 4.25 Stamps in Hand 0.18 0.20 Cheques in Hand - 10.20 Fixed Deposits 4000.00 - Balances with Banks * 5499.53 742.54 Remitance in Transit 7128.88 - 16633.20 757.19 * Includes Rs. 12.82 Lacs (Previous year Rs. 23.89 Lacs) not available for use by the Company. 3. Previous year’s figures have been regrouped / reclassified wherever necessary to conform to current year’s classification. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 22
The Schedules referred to above form an integral part of the For and on behalf of the Board of Directors Cash Flow Statement This is the Cash Flow Statement referred to in our report of even date V. NIJHAWAN ANALJIT SINGH Chairman & Managing Director Partner N. RANGACHARY Director Membership No. F 87228 ASHWANI WINDLASS Director For and on behalf of SUJATHA RATNAM Chief Financial Controller Price Waterhouse V. KRISHNAN Company Secretary Chartered Accountants
Gurgaon New Delhi JUNE 26, 2009 JUNE 26, 2009
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Schedules annexed to and forming part of the accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-1 SHARE CAPITAL AUTHORISED 46,00,00,000 Equity Shares of Rs. 2/- each (Previous year 46,00,00,000 Equity Shares of Rs. 2/- each) 9200.00 9200.00 8,00,000 Preference Shares of Rs. 100/- each (Previous year 8,00,000 Preference Shares of Rs. 100/- each) 800.00 800.00 10000.00 10000.00 ISSUED, SUBSCRIBED AND PAID UP (Refer Notes A9, B6 and B9 on Schedule 22) 22,20,30,310 Equity Shares of Rs. 2/- each fully paid up (Previous year 22,17,42,545 Equity Shares of Rs. 2/- each fully paid up) 4440.61 4434.85 4440.61 4434.85 Paid up Share Capital includes: - 5,76,60,400 Equity Shares of Rs. 2/- each (Previous year 5,76,60,400 Equity Shares of Rs. 2/- each) allotted as fully paid up by way of bonus shares out of Securities Premium Account; and - 14,49,925 Equity Shares of Rs. 2/- each (Previous year 11,62,160 Equity Shares of Rs. 2/- each) allotted under employees stock option plan
SCHEDULE-2 RESERVES AND SURPLUS (Refer Notes A8, A9, B6, B9, B15, B24, B25 and B30 on Schedule 22) Capital Reserve Opening Balance 50.00 - Additions during the year - 50.00 Closing Balance 50.00 50.00 Securities Premium Account Opening Balance 123588.13 26241.52 Additions during the year 414.46 99416.20 Deletions/utilisations during the year - 2069.59 Closing Balance 124002.59 123588.13 Employee Stock Option Outstanding Opening Balance 819.98 1069.53 Additions during the year 73.39 - Deletions/utilisations during the year 819.98 249.55 Closing Balance 73.39 819.98 General Reserve Opening Balance 8951.84 9072.95 Deletions/utilisations during the year - 121.11 Closing Balance 8951.84 8951.84 Profit and Loss Account Opening Balance 66533.48 60343.02 Additions during the year 2183.47 6190.46 Closing Balance 68716.95 66533.48 201794.77 199943.43
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Schedules annexed to and forming part of the accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-3 SECURED LOANS (Refer Note B5 on Schedule 22) Loans and Advances From Banks - Term Loan * 7228.57 9414.29 - Fund Based Working Capital Facilities 2830.18 2719.64 10058.75 12133.93 * Amount repayable within one year Rs. 1885.71 Lacs (Previous year Rs. 3185.71 Lacs)
SCHEDULE-4 UNSECURED LOANS
Other Loans From Banks ** 82.61 85.98 Advances from Others - 17420.55 (Refer Note B8 on Schedule 22) 82.61 17506.53
** Amount repayable to banks within one year Rs. 32.54 Lacs (Previous year Rs. 30.78 Lacs)
SCHEDULE-5 DEFERRED TAX LIABILITY (NET) (Refer Notes A10, B10 and B15 on Schedule 22) Deferred Tax Liability Opening Balance 1754.89 1617.69 Movement during the year 201.20 137.20 Closing Balance 1956.09 1754.89
Deferred Tax (Asset) Opening Balance (554.75) (512.80) Impact of transitional liabililty on employee benefits - (54.16) Movement during the year (1401.34) 12.21 Closing Balance (1956.09) (554.75) Net Deferred Tax Liability - 1200.14
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Schedules annexed to and forming part of the accounts
SCHEDULE-6 FIXED ASSETS (Refer Notes A3, A4, A5 and B2 on Schedule 22) (RS. LACS) Gross Block Depreciation Net Block Particulars As at Additions Deletions/ As at As at Additions Deletions/ As at As at As at April 1, Adjustments March 31, April 1, Adjustments March 31, March 31, March 31, 2008 2009 2008 2009 2009 2008 Tangible Assets Land (Freehold) 82.62 127.26 - 209.88 - - - - 209.88 82.62 Building 2836.74 271.59 - 3108.33 480.29 94.23 - 574.52 2533.81 2356.45 Leasehold Improvements 355.51 - - 355.51 320.33 35.18 - 355.51 - 35.18 Plant and Machinery 19210.77 712.72 - 19923.49 4877.49 975.07 - 5852.56 14070.93 14333.28 Furniture, Fittings and Equipments 761.75 73.52 45.06 790.21 486.97 49.43 31.77 504.63 285.58 274.78 Vehicles 321.68 96.65 83.05 335.28 72.26 29.38 27.10 74.54 260.74 249.42 Intangible Assets Software 185.53 12.93 - 198.46 109.37 22.70 - 132.07 66.39 76.16 Total 23754.60 1294.67 128.11 24921.16 6346.71 1205.99 58.87 7493.83 17427.33 17407.89 Previous year 22017.07 1852.89 115.36 23754.60 5268.78 1138.92 60.99 6346.71 Capital Work in Progress 2560.05 521.54
19987.38 17929.43
Notes : 1. Additions include: - Interest capitalised Nil (Previous year Rs. 32.73 Lacs). - Pre-Operative expenses capitalised Rs. 26.64 Lacs (Previous year Rs. 185.94 Lacs). - Foreign Exchange Fluctuations Nil (Previous year Rs. 41.27 Lacs). 2. Leasehold Improvements represents civil and other improvements at Company’s leased premises. 3. Plant and Machinery includes an amount of Rs. 135.08 Lacs (Previous year Rs. 135.08 Lacs) paid to PSEB for drawing a power line representing assets not owned by the Company. The same has been depreciated over a period of five years. 4. The above includes vehicles hypothecated amounting to Rs. 176.48 Lacs (Previous year Rs. 125.78 Lacs). 5. Capital Work in Progress includes: - Pre-Operative expenses pending allocation and capitalisation Rs. 114.06 Lacs (Previous year Rs. 0.98 Lacs). - Capital Advance Rs. 118.31 Lacs (Previous year Rs. 91.01 Lacs).
(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-7 INVESTMENTS (Refer Notes A6, B8, B16, B24 and B32 on Schedule 22) a) Long Term-Trade (Unquoted), at cost Subsidiaries Equity Shares 157031.75 101531.75 Less: Provision for Diminution (3686.73) 153345.02 (3238.86) Preference Shares 1505.00 1505.00 b) Long Term-Non Trade (Quoted), at cost Equity Shares 0.65 0.65 c) Current Non Trade (Unquoted), at cost Units in Mutual Fund - Unutilised monies raised through placement to QIBs 2009.84 75730.39 - Others 12169.95 14179.79 30924.62 169030.46 206453.55 Aggregate value of unquoted investments 169029.81 206452.90 Aggregate value of quoted investments 0.65 0.65 Market value of quoted investments 0.83 1.92
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Schedules annexed to and forming part of the accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-8 INVENTORIES (Refer Notes A7 and B22 on Schedule 22) Manufacturing and Trading Activities Raw Materials in Stores/Transit 1577.01 1582.05 Stores and Spares 455.41 388.05 Work in Process 579.29 625.19 Finished Goods 192.60 165.57 2804.31 2760.86
SCHEDULE-9 SUNDRY DEBTORS (Unsecured) Debts exceeding six months: Considered Good 0.92 11.89 Considered Doubtful 268.98 194.54 Less: Provision for Doubtful Debts (268.98) (194.54) 0.92 11.89 Other Debts Considered Good 5288.82 6140.58 Considered Doubtful 22.89 - Less: Provision for Doubtful Debts (22.89) - 5289.74 6152.47
SCHEDULE-10 CASH AND BANK BALANCES Cash in Hand 4.61 4.25 Cheques in Hand - 10.20 Remitance in Transit * 7128.88 - Balances with Scheduled Banks: In Current Accounts 5486.71 718.65 In Dividend Accounts - 9.10 In Debenture Interest Accounts 12.82 14.79 In Fixed Deposit Account 4000.00 - Stamps in Hand 0.18 0.20 16633.20 757.19 * Represents amounts receivable against redemption of units in mutual funds
SCHEDULE-11 OTHER CURRENT ASSETS Interest Receivable Considered Good 49.93 - Considered Doubtful 23.53 23.53 Less: Provision for Doubtful Interest (23.53) (23.53) 49.93 - Amounts due from companies under the same management - Pharmax Corporation Limited 49.54 - Maximum amount outstanding during the year from companies under the same management - Pharmax Corporation Limited 61.18 -
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Schedules annexed to and forming part of the accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-12 LOANS AND ADVANCES (Refer Note B32 on Schedule 22) (Considered good, unless otherwise stated) Secured Housing Loans 4.18 4.89 Unsecured Subsidiary Companies - Advances 1337.75 1058.89 - Loans Considered Good 896.97 2297.84 Considered Doubtful 2479.43 665.14 Less: Provision for Doubtful Loans (2479.43) 896.97 (665.14) - Inter Corporate Deposits 1138.00 358.00 - Security Deposit 120.80 58.02 Share Application Money Pending Allotment - Subsidiary companies 723.25 723.25 - Companies under the same management 800.00 - Others - Advances recoverable in cash or in kind or for value to be received Considered Good 1192.73 883.32 Considered Doubtful 304.35 305.42 Less: Provision for Doubtful Advances (304.35) 1192.73 (305.42) - Loans to Employees 19.25 15.61 - Inter Corporate Deposits Considered Doubtful 441.60 441.60 Less: Provision for Doubtful Deposits (441.60) - (441.60) - Balance with Excise Authorities 270.58 200.06 - Prepaid Expenses 34.23 34.19 - Security Deposits 130.32 116.51 6668.06 5750.58 Amount due from directors (Refer Note B11 on Schedule 22) - 622.36 Maximum amount outstanding during the year from directors 807.87 622.36
Amounts due from subsidiaries - Max Healthcare Institute Ltd. 1225.91 962.57 - Max New York Life Insurance Co. Ltd. 10.73 3.75 - Pharmax Corporation Ltd. 1267.33 416.02 - Max Ateev Ltd. 674.06 675.40 - Max Neeman Medical International Ltd. 888.06 660.84 - Max HealthStaff International Ltd. 1814.29 1626.74 - Neeman Medical International NV 92.57 92.57 - Neeman Medical International BV 723.25 723.25
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Schedules annexed to and forming part of the accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008
Maximum amount outstanding during the year from subsidiaries - Max Healthcare Institute Ltd. 1234.05 1156.65 - Max New York Life Insurance Co. Ltd. 22.38 11.06 - Pharmax Corporation Ltd. 5703.59 416.02 - Max Ateev Ltd. 676.62 675.76 - Max Neeman Medical International Ltd. 888.05 660.84 - Max HealthStaff International Ltd. 1820.53 1626.74 - Neeman Medical International NV 92.57 92.57 - Neeman Medical International BV 723.25 723.25 Amounts due from companies under the same management - Max BUPA Health Insurance Ltd. 985.16 - Maximum amount outstanding during the year from companies under the same management - Max BUPA Health Insurance Ltd. 1008.91 -
SCHEDULE-13 CURRENT LIABILITIES (Refer Note B17 on Schedule 22) Acceptances - 26.88 Sundry Creditors Total outstanding dues of micro enterprises and small enterprises* 79.70 - Total outstanding dues of creditors other than micro enterprises and small enterprises 3010.11 3718.90 Subsidiary Companies 17.06 - Investor Education and Protection Fund Unpaid Dividend - 9.10 Unpaid Debenture Interest 10.24 12.19 Other Liabilities 167.82 116.29 Interest Accrued but not Due 23.56 78.57 3308.49 3961.93 * As certified by the management SCHEDULE-14 PROVISIONS (Refer Notes A10, A11 and B15 on Schedule 22) Leave Encashment 260.85 194.73 Gratuity 320.16 258.10 Provision for Wealth Tax 1.63 1.48 Provision for Fringe Benefit Tax * 322.84 266.41 Less: Advance Fringe Benefit Tax * (324.89) (2.05) (265.01)
Provision for Income Tax 5511.07 5511.06 Less: Advance Income Tax (5253.78) 257.29 (5072.81) 837.88 893.96 * Does not include Rs. 152.19 Lacs paid by the Company against FBT on ESOP and recovered from the employees SCHEDULE-15 MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) (Refer Notes A13 and B13 on Schedule 22) Deferred Employee Compensation 60.03 270.69 60.03 270.69
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Schedules annexed to and forming part of the accounts
(RS. LACS) For the Year Ended For the Year Ended March 31, 2009 March 31, 2008
SCHEDULE-16 INCOME FROM INVESTMENT ACTIVITIES (Refer Notes A2, A6 and B16 on Schedule 22)
Dividend Income From Non Trade Investments-Current 3906.09 6713.39 Interest (Gross) on: * - Inter Corporate Deposits 287.15 26.85 - Fixed Deposits 502.35 136.40 - Others 11.07 800.57 10.95
Net Profit on Sale of Non Trade Investments-Current 13.32 30.37 4719.98 6917.96
* Tax deducted at source Rs. 178.38 Lacs (Previous year Rs. 36.44 Lacs)
SCHEDULE-17 OTHER INCOME Job Work Charges* 20.11 133.29 Liabilities/Provisions No Longer Required Written Back 245.54 15.30 Gain on Foreign Exchange Fluctuation - 207.21 Less: Loss on Foreign Exchange Fluctuation - (82.85) Miscellaneous Income 1631.33 1915.95 1896.98 2188.90 * Tax deducted at source Rs. 0.46 Lacs (Previous year Rs. 4.55 Lacs)
SCHEDULE-18 INCREASE/(DECREASE) IN INVENTORY Opening Stock Work in Process 625.19 231.27 Finished Goods 165.57 56.00 790.76 287.27 Less: Closing Stock Work in Process 579.29 625.19 Finished Goods 192.60 165.57 771.89 790.76 Net Increase/(Decrease) (18.87) 503.49
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Schedules annexed to and forming part of the accounts
(RS. LACS) For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 SCHEDULE-19 MANUFACTURING AND OTHER EXPENSES Manufacturing Raw Materials Consumed 23338.53 19117.82 Goods Purchased for Resale 1.50 - Excise Duty on Scrap and Others 164.49 265.01 Power and Fuel 2317.13 2055.62 Stores and Spares Consumed 469.89 386.55 Packing Material 1051.67 888.58 Freight Inward 45.08 40.63 Repairs and Maintenance-Plant and Machinery 153.12 98.54 Processing Charges 46.63 90.80 27588.04 22943.55 Personnel Salaries, Wages and Bonus * 3333.30 2405.39 Contribution to Provident and Other Funds 221.28 207.80 Recruitment 62.36 73.58 Staff Welfare 107.99 93.12 3724.93 2779.89 * Net of employee compensation expenses written back amounting to Rs. 180.82 Lacs (Previous year Nil) pertaining to earlier years Administration and others Rent 223.33 203.83 Insurance 78.01 86.22 Rates and Taxes 14.44 82.30 Repairs and Maintenance: Building 41.66 27.70 Others 352.72 205.06 Electricity and Water 37.69 33.16 Printing and Stationery 67.43 56.16 Travelling and Conveyance 721.61 530.33 Communication 79.10 70.42 Legal and Professional 739.59 419.25 Directors’ Fee 16.44 8.90 Business Promotion 65.35 75.42 Commission 81.14 93.93 Trade Discount 476.53 324.33 Selling and Distribution 1116.40 988.07 Advertisement and Publicity 24.81 56.83 Provision for Doubtful Debts and Advances 99.69 20.50 Loss on Sale/Disposal of Fixed Assets 44.60 23.00 Less: Profit on Sale/Disposal of Fixed Assets (0.06) 44.54 (0.02) Debit Balances Written Off 2.81 0.11 Fixed Assets and Spares Written Off 2.87 0.40 Charity and Donation 196.29 200.70 Stock Written Off - 0.16 Amortisation of Miscellaneous Expenditure - 0.31 Loss on Foreign Exchange Fluctuation 355.18 - Less: Profit on Foreign Exchange Fluctuation (309.79) 45.39 - Miscellaneous 349.26 55.47 Less: Overheads Recovery** (Refer Note B27 on Schedule 22) (350.85) (376.13) 4526.25 3186.41 35839.22 28909.85 ** Tax Deducted at source Rs. 2.13 Lacs (Previous year Rs. 2.58 Lacs)
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Schedules annexed to and forming part of the accounts
(RS. LACS) For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 SCHEDULE-20 FINANCIAL EXPENSES Interest on: Term Loans 1031.66 1097.19 Acceptances 32.02 41.54 Working Capital Facilities 369.02 247.06 Others 104.91 7.72 Bank Charges 63.27 58.20 Finance Charges 23.95 7.81 1624.83 1459.52
SCHEDULE-21 TAX EXPENSE (Refer Notes A10 and B10 on Schedule 22)
Current Year Tax Wealth Tax 1.63 1.48 Fringe Benefit Tax 56.43 190.13 Deferred Tax (1200.14) 149.41 (1142.08) 341.02
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Schedules annexed to and forming part of the accounts
SCHEDULE - 22 A. SIGNIFICANT ACCOUNTING POLICIES 1 Accounting Convention The Financial Statements are prepared to comply in all material aspects with the applicable accounting principles in India, the applicable accounting standards notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956. 2 Revenue Recognition (a) Export sales are accounted on the basis of the date of bill of lading/airways bill. Other sales are accounted for at ex-factory prices on transfer of risks and rewards. (b) Income from investments is credited to revenue in the year in which it accrues. Income is stated in full with the tax thereon being accounted for under advance tax. (c) Dividend is recognised as income as and when the right to receive such payment is established. 3 Fixed Assets (a) Fixed Assets are stated at their original cost including freight, duties (net of CENVAT), taxes and other incidental expenses relating to acquisition and installation. (b) Expenses of revenue nature, which are directly related to project set-up are transferred to "Preoperative expenses pending capitalisation". These expenses are allocated to fixed assets in the year of commencement of the related project. (c) Intangible assets are recognised if they are separately identifiable and the Company controls the future economic benefits arising out of them. All other expenses on intangible items are charged to the profit and loss account. Intangible assets are stated at cost less accumulated amortisation and impairment. 4 Borrowing Costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset in accordance with Accounting Standard 16 notified u/s 211(3C) of the Companies Act, 1956 on "Borrowing Costs". Other borrowing costs are recognized as an expense in the year in which they are incurred. Capitalisation of borrowing costs ceases when substantially all activities necessary to prepare the qualifying assets for its intended use are complete. 5 Depreciation (a) Depreciation is charged on straight-line method on a pro-rata basis at rates prescribed under Schedule XIV to the Companies Act, 1956. (b) Leasehold improvements are depreciated over respective lease periods. (c) Assets costing not more than Rs. 5,000 individually are depreciated at 100%. (d) Software in the nature of intangible assets are depreciated over a period of six years. 6 Investments (a) Investments are either classified as current investments or long-term investments. The cost of investments includes acquisition charges such as brokerage, fees and duties. Current investments are carried at lower of cost and fair value. (b) Long-term investments are carried at cost and provisions are recorded to recognise any decline, other than temporary, in the carrying value of each investment. 7 Inventories (a) Inventories are valued at lower of cost and net realisable value. Cost for this purpose is calculated on a weighted average method. In respect of finished goods and work in process, appropriate overheads are loaded. (b) Stock of securities is valued at lower of cost and market value, determined category wise. Cost for this purpose is calculated under First In First Out Method.
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Schedules annexed to and forming part of the accounts
8 Capital Subsidy Capital Subsidies, received under the state capital subsidy scheme are accounted for as capital reserve. 9 Employee Stock Option Scheme (a) The value of options is equal to the aggregate of the intrinsic value of the options granted. Intrinsic value is the option discount represented by the excess of market price on grant date over the exercise price of the option and is amortised on a straight line method basis over the vesting period in line with the Securities and Exchange Board of India (SEBI) Guidelines. (b) As and when the options are exercised, the same are accounted for as paid up capital to the extent of the face value and Share Premium to the extent of excess of market price over face value on grant date. (c) Options that lapse are reversed by a credit to employee compensation expense equal to the amortised portion of the value of the lapsed options and a credit to deferred employee compensation expense equal to the unamortised option. 10 Taxation Income taxes are computed using the tax effect accounting method, where taxes are accrued in the same period in which the related revenue and expenses arise. Provision for tax consists of current tax, fringe benefit tax and deferred tax. A provision is made for income tax annually based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matters is probable. The differences that result between the profit offered for income tax and the profit as per the financial statements are identified, and thereafter a deferred tax asset or deferred tax liability is recorded for timing differences namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on prevailing enacted or substantially enacted regulations. Deferred tax assets are recognised only if there is virtual certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. 11 Employee Benefits (a) Defined Contribution Plan i) Certain employees of the Company are participants of a defined superannuation plan. The Company makes contributions under the superannuation plan to "Max India Limited Superannuation Fund" based on a specified percentage of each covered employee's salary. ii) The Company makes monthly contributions to the "Max India Limited Employees' Provident Fund Trust" which is based on a specified percentage of the covered employee's salary. This fund is administered through trustees and the Company's contributions thereto are charged to revenue every year. (b) Defined Benefit Plans i) The liability in respect of Gratuity is provided for on the basis of an actuarial valuation carried out at the year-end using Projected Unit Credit Method. Actuarial gains and losses are recognized in full in the Profit and Loss Account for the year in which they occur. The Company has a recognised Trust for Gratuity benefits, "Max India Limited Employees' Gratuity Fund" to administer the Gratuity funds. The Trust has taken Master policy with the Life Insurance Corporation of India to cover its liability towards employees' Gratuity. The Gratuity obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost and as reduced by the fair value of Gratuity Fund. ii) The liability in respect of Leave Encashment is provided for on the basis of actuarial valuation carried out at the year- end for long term compensating absences using Projected Unit Credit Method. Actuarial gains and losses are recognized in full in the Profit and Loss Account for the year in which they occur. Short term compensated absences are provided for based on estimates. 12 Foreign Exchange Transactions (a) Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year-end rates. (b) The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions are recognised in the profit and loss account.
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Schedules annexed to and forming part of the accounts
(c) Exchange difference in respect of liabilities incurred to acquire fixed assets are recognised in the profit and loss account. 13 Miscellaneous Expenditure (a) Preliminary and Issue expenses are amortised over a period of 10 years, except cost incurred on raising of funds, which is being amortised over the life of the respective financial instrument. (b) Deferred employee compensation expense is amortised over the vesting period. (c) Other deferred revenue expenditure is amortised from the year they have been incurred/related projects commence operations, over 3 to 5 years based on the period over which future benefits are expected to be received. 14 Leases Leases of assets under which the lessor effectively retains all the risks and benefits of ownership are classified as operating lease. Payments made under operating lease are charged to Profit and Loss Account on a straight-line basis over the period of the lease. 15 Provision and Contingencies A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of a resource will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to reflect the current estimates. Contingent liabilities are disclosed after an evaluation of the fact and legal aspects of the matter involved. 16 Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
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Schedules annexed to and forming part of the accounts
B. NOTES TO ACCOUNTS 1 Contingent Liabilities (RS. LACS) Current Year Previous Year a) Corporate guarantees * 24000.00 24000.00 b) Claims against the Company not acknowledged as debts: - Excise Duty 709.26 662.22 - Custom Duty 364.09 413.39 - Service Tax 334.83 325.90 - Income Tax --- Refer Note B4 --- - Others - 254.31 c) Letter of Credit outstanding 202.14 284.83 d) The Company had received show cause notices from the excise department under Central Excise Act, 1944 against which it had filed its appeals to the relevant authorities. As at year end, the Company had filed appeal to CESTAT against the following: (RS. LACS) Financial year to which the amount relates Current Year Previous Year 2001-2002 145.27 145.27 2004-2005 0.73 1.06 2005-2006 - 0.32 e) Also refer to Note B7 below
* Loans of Rs. 22495.80 Lacs (Previous year Rs. 23561.10 Lacs) are outstanding against the aforesaid corporate guarantees
2 Capital Commitments (RS. LACS) Particulars Current Year Previous Year Estimated amount of contracts remaining to be executed on capital account and not provided for 233.88 579.22 Less: Capital Advances 118.31 91.01 Balance Value of Contracts 115.57 488.21
3 Concession in Custom Duty availed on Capital equipment imported during the year against export obligation undertaken under 'Export Promotion Capital Goods' Scheme is Rs. 86.55 Lacs (Previous year Rs. 170.28 Lacs). Movement of EPCG export obligation is given below: (RS. LACS) Particulars Current Year Previous Year Obligation as at April 1, 2008 19852.00 21606.00 Additions during the year 707.00 1573.00 Exports made during the year 3767.00 3327.00 Obligation as at March 31, 2009 16792.00 19852.00 4 Income Tax Cases (a) In the case of an erstwhile subsidiary of the Company, Max Telecom Ventures Ltd. ("MTVL") (since merged with the Company with effect from December 1, 2005), a demand of Rs. 9503.93 Lacs (Previous year Rs. 9503.93 Lacs) was raised by the income tax authorities for the assessment year 1998-99 in connection with capital gains realized by MTVL from the sale of shares of Hutchison Max Telecom Limited by holding that the sale transaction pertains to previous period relevant to assessment year 1998-99 and by denying exemption under section 10(23G) of the Income-tax Act, 1961. On appeal by MTVL, the CIT (Appeals) while holding that the sale transaction pertains to previous period relevant to assessment year 1998-99, quashed the order of the Assessing Officer regarding denial of exemption under section 10(23G) and the demand was cancelled. The tax authorities have filed an appeal against this order with the Income-Tax Appellate Tribunal ("ITAT"), which appeal is pending as on date.
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Schedules annexed to and forming part of the accounts
Subsequently, in the next assessment year, i.e. 1999-00, the above-mentioned transaction was once again sought to be taxed both as capital gains and under a different head of income (i.e., business income) on a protective basis by the Assessing Officer as MTVL had asked the tax authorities to treat the transaction as that arising in assessment year 1999-00 and not in assessment year 1998-99. This, along with a few other additions, resulted in creation of a further demand of Rs. 25630.03 Lacs (Previous year Rs. 25630.63 Lacs) which included the demand of Rs. 25002.53 Lacs (Rs. 25002.53 Lacs) on protective basis. On appeal by MTVL, the CIT (Appeals) decided in favor of MTVL and the demand was cancelled. The tax authorities have filed appeal against this order with ITAT, which appeal is pending as on date. MTVL had also filed an appeal before ITAT for assessment year 1998-99 contending that the aforesaid sale transaction pertains to Previous Period relevant to assessment year 1999-2000. This appeal had been disposed off by ITAT by applying a circular of tax department applicable only to capital gains and holding, as a result, that the transaction of sale of shares pertains to previous period relevant to assessment year 1998-99. However, the Tax authorities filed a petition before the ITAT requesting a review of the said order of the ITAT on the ground that all the three appeals pertaining to the aforesaid sale transaction should have been clubbed and heard together. The said petition of the Department was accepted by the ITAT which recalled its earlier order in the Company's appeal for Assessment year 1998-99. Aggrieved, the Company filed a writ petition to the Hon'ble High Court of Punjab and Haryana challenging the above action of ITAT on the ground that the same was beyond jurisdiction. The Hon'ble High Court of Punjab and Haryana has admitted the writ petition and stayed the operations of the order of ITAT accepting the petition filed by the Department. The ITAT has in the meanwhile adjourned sinedie all the three appeals pending operation of the stay imposed by the Hon'ble High Court. (b) The Company has received the following demands under section 156 of the Income Tax Act, 1961 relating to income tax assessments: (RS. LACS) Assessment year Demand Demand As at March 31, 2009 As at March 31, 2008 1999-2000 Nil 5.67 2000-2001 5.25 5.25 2001-2002 15.65 15.65 2002-2003 41.77 41.77 2003-2004 Nil Nil 2004-2005 0.76 0.76 2005-2006 Nil Nil 2006-2007 98.96 Nil The above relate to certain disallowances and other matters and are in various stages of appeal with the CIT(Appeals)/ITAT. Further, in the following cases, penalty under section 271(1)(c) of the Income Tax Act, 1961 has been levied for which the Company is in appeal before ITAT. (RS. LACS) Assessment year Demand Demand As at March 31, 2009 As at March 31, 2008
1992-1993 18.78 19.05 1993-1994 14.63 14.63 5 Loans (a) Term loan - II from Yes Bank Ltd amounting to Rs. 428.57 Lacs (Previous year Rs. 714.29 Lacs) is secured by a first pari passu charge on the fixed assets of the Company, both present and future. (b) Term loan - II from Punjab National Bank amounting to Rs. 3400.00 Lacs (Previous year Rs. 4000.00 Lacs) is secured by a first pari passu charge on the fixed assets and second pari passu charge on the current assets of the Company, both present and future.
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Schedules annexed to and forming part of the accounts
(c) Term loan from Oriental Bank of Commerce amounting to Rs. 3400.00 Lacs (Previous year Rs. 4000.00 Lacs) is secured by a first pari passu charge on the fixed assets and second pari passu charge on the current assets of the Company, both present and future. (d) Fund based working capital facilities from banks are secured by a first pari passu hypothecation charge on all current assets and a second charge on immovable and movable fixed assets of the Company, both present and future. 6 During year ended March 31, 2008, the Company had issued 4,16,66,660 Equity Shares of Rs. 2/- each at a premium of Rs. 238/- per share aggregating to Rs. 99999.98 Lacs to Qualified Institutional Buyers ("QIBs") under Chapter XIII-A of the Securities & Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000. 7 During year ended March 31, 2008, the Company had given a put option to International Finance Corporation ("IFC"), in respect of its subscription to the Company's subsidiary Max Healthcare Institute Limited's Optional Cumulative Partially Convertible Redeemable Preference Shares aggregating Rs. 25000.00 Lacs together with an assured IRR of 11.25%. The Company's obligation on the above put option is exercisable by IFC any time after 20th July, 2010 or in the event of non performance of certain obligations by Max Healthcare Institute Ltd. and/or by the Company. 8 In 2003-04, the Company had signed an amendment to the Joint Venture Agreement ("JVA") with New York Life International Inc. ("NYLI"). In terms of the amended JVA, both the parties agreed that the Company shall not transfer or otherwise dispose its shareholding to an extent of 24% of the paid up issued share capital ("Restricted Shares") of Max New York Life Insurance Company Ltd ("MNYL") to any person other than NYLI. The parties also agreed that NYLI shall pay to the Company the aggregate par value equal to 24% of the paid up issued share capital of MNYL from time to time. The aforesaid payment may be applied by NYLI to purchase the Restricted Shares of MNYL from the Company, when and to the extent permitted pursuant to applicable laws by March 2010 or become repayable thereafter. Pursuant to this amendment, the Company had received Rs. 17420.55 Lacs (Previous year Rs. 17420.55 Lacs) in aggregate from NYLI till March 31, 2008. Thereafter, on July 15, 2008, the Company amended the above mentioned JVA with NYLI. Under the new amended JVA, NYLI has an option for 8 years to increase its shareholding in MNYL by 24% upto a maximum of 50%, subject to regulations. The option can be exercised at a fair market value based formula defined as per the new amended JVA, less discount of 10%, as against a preferential formula earlier. Also, the option deposit of Rs. 17420.55 Lacs received from NYLI in line with the terms of the amendment in 2003- 04 has been refunded on July 15, 2008. 9 Employee Stock Option Plan - 2003 ("the 2003 Plan"): The Company had instituted the 2003 Plan, which was approved by the Board of Directors in August 2003 and by the shareholders in September 2003. The 2003 Plan provides for grant of stock options aggregating not more than 5% of number of issued equity shares of the Company to eligible employees and directors of the Company. The 2003 Plan is administered by the remuneration committee appointed by the board of directors. Details of the 2003 Plan are given below: (NOS) Year Ended Year Ended March 31, 2009 March 31, 2008 Options outstanding, beginning of the year 567,935 741,765 Granted during the year 66,320 - Exercised during the year (287,765) (173,830) Forfeited during the year (280,170) - Options outstanding, end of the year 66,320 567,935
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Schedules annexed to and forming part of the accounts
10 Deferred Tax The break up and movement of deferred tax assets and deferred tax liabilities into major components is given below: 2008-2009 (RS. LACS) Particulars As at April 01, Movement during Closing as at 2008 the year March 31, 2009 Deferred Tax Liability Depreciation Expense 1754.89 201.20 1956.09 1754.89 201.20 1956.09 Deferred Tax (Asset) Deduction u/s 43B (165.87) (49.01) (214.88) Other Provisions (388.88) (318.90) (707.78) Unabsorbed Depreciation - (1033.43) (1033.43) (554.75) (1401.34) (1956.09) Net Deferred Tax Liability 1200.14 1200.14 -
2007-2008 (RS. LACS) Particulars Opening Change in Adjustment* Movement Closing As at April 01, Tax Rate during the year As at March 31, 2007 2008 Deferred Tax Liability Depreciation 1617.58 (132.64) - 269.95 1754.89 Deduction u/s 35D/35DD 0.11 (0.01) - (0.10) - 1617.69 (132.65) - 269.85 1754.89 Deferred Tax (Asset) Deduction u/s 43B (79.41) 6.51 (54.16) (38.81) (165.87) Other Provisions (433.39) 35.54 - 8.97 (388.88) (512.80) 42.05 (54.16) (29.84) (554.75) Net Deferred Tax Liability /(Asset) 1104.89 (90.60) (54.16) 240.01 1200.14
Note: Deferred tax assets on timing differences and unabsorbed depreciation are created to the extent of their realisability in future. * Impact of transitional liability as per AS15 (Refer Note B15 below)
11 Directors' Remuneration (RS. LACS) Current Year Previous Year (a) Salary, wages and allowances 1203.01 429.60 (b) Contribution to provident fund and superannuation fund 74.52 24.30 (c) Value of perquisites 18.37 27.67 Total 1295.90 481.57
The above does not include leave encashment, gratuity, ESOP.
Notes: Remuneration for Current year includes an amount of Rs. 613.96 Lacs (Previous year Nil) relating to earlier years for which the Company has received Central Government approval during Current year. However, this does not include loss on sale of assets amounting to Rs. 28.79 Lacs arising out of final settlement. The excess amounts of Nil for the Current year (Previous year Rs. 613.96 Lacs) received by the concerned directors, are held by them in trust for the Company.
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Schedules annexed to and forming part of the accounts
12 Earnings per Share Calculation of EPS (Basic and Diluted) Particulars For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 Basic Profit after Tax (Rs. Lacs) 2,183.47 6,190.46 Weighted average number of Equity Shares 22,19,98,514 21,31,18,796 EPS (Rupees) 0.98 2.90 Equity Share Details (Nos) Outstanding as at the beginning of the year 22,17,42,545 17,99,02,055 Issued on May 5, 2008 2,80,175 - Issued on December 31, 2008 7,590 - Issued on June 15, 2007 - 4,16,66,660 Issued on September 22, 2007 - 1,66,250 Issued on February 7, 2008 - 7,580 Outstanding as at the end of the year 22,20,30,310 22,17,42,545 Diluted Profit after Tax (Rs. Lacs) 2183.47 6190.46 Weighted average number of Equity Shares 22,21,22,712 21,37,72,230 EPS (Rupees) 0.98 2.90 Equity Share Details (Nos) Outstanding as at the beginning of the year 22,23,10,480 18,06,43,820 Issued on June 15, 2007 - 4,16,66,660 ESOPs granted under the 2003 Plan 66,320 - ESOP forfeited 2,80,170 - Outstanding as at the end of the year 22,20,96,630 22,23,10,480
Reconciliation of denominators used for calculating basic and diluted earnings per share (NOS) Particulars For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 Denominator used for computing basic Earnings Per Share 22,19,98,514 21,31,18,796 Add :- Dilutive impact of - (i) ESOPs granted/forfeited under the 2003 Plan 1,24,198 6,53,434 Denominator used for computing diluted Earnings Per Share 22,21,22,712 21,37,72,230
13 Miscellaneous Expenditure (RS. LACS) Particulars As at April 1, Reversed Additions Amortised As at 2008 during the year during the year March 31, 2009 Preliminary and Share Issue Expenses - - - - - (0.31) (-) (-) (0.31) (-) Deferred Employee Compensation * 270.69 224.70 73.39 59.35 60.03 (633.05) (-) (-) (362.36) (270.69) 270.69 224.70 73.39 59.35 60.03 (633.36) (-) (-) (362.67) (270.69)
* Amortisation has been charged to salaries, wages and bonus. Previous year figures in bracket.
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Schedules annexed to and forming part of the accounts
14 In accordance with Accounting Standard AS-11 on the 'Effects of Changes in Foreign Exchange Rates' issued by the Institute of Chartered Accountants of India read with "Companies (Accounting Standards) Rules, 2006", the Company had adopted the accounting policies as shown in Note A12 above. There is no material impact on Profit and Loss Account on account of these changes. 15 Employee Benefits Defined Benefit Plans The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy. Unavailed leaves can be encashed (on Basic Salary) at the time of separation from the company. The Company had adopted Accounting Standard, AS-15 (revised 2005), on employee benefits with effect from April 1, 2007. Accordingly, the transitional obligation of the Company amounting to Rs. 121.11 Lacs (Net of tax of Rs. 54.16 Lacs) towards gratuity and leave encashment liability has been charged off to General Reserve in the previous year. The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans. (RS. LACS) Gratuity Leave Encashment Particulars As at As at As at As at 31.03.2009 31.03.2008 31.03.2009 31.03.2008 Net employee benefit expense (recognised in Employee Cost) Service cost 41.92 37.13 45.96 29.19 Interest cost 28.30 22.78 15.58 12.19 Expected return on plan assets (8.76) (8.50) - - Actuarial (gain)/loss 0.60 14.83 38.84 3.84 Net cost 62.06 66.24 100.38 45.22 Details of Provision for gratuity and Leave Encashment Benefits Present value of the obligation 393.12 353.76 260.85 194.73 Fair value of plan assets 72.96 95.66 - - Liability recognized at the year end 320.16 258.10 260.85 194.73 Change in present value of the defined benefits obligation are as follows: Obligations (Opening balance) 353.76 284.76 194.73 152.32 Service Cost 41.92 37.13 45.96 29.20 Interest cost 28.30 22.78 15.58 12.19 Benefits paid (29.72) (5.49) (34.26) (2.81) Actuarial (gain)/loss (1.14) 14.58 38.84 3.83 Obligation (Closing Balance) 393.12 353.76 260.85 194.73 Change in the fair value of plan assets are as follows: Fair value of plan assets (Opening balance) 95.66 92.90 - - Expected return on plan assets 8.76 8.50 - - Actuarial gain/(loss) (1.74) (0.25) - - Benefits paid (29.72) (5.49) - - Fair value of plan assets (Closing balance) 72.96 95.66 - - The Company expects to contribute NIL to gratuity in 2009-10.
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Gratuity Leave Encashment Particulars As at As at As at As at 31.03.2009 31.03.2008 31.03.2009 31.03.2008 The major categories of plan assets as a percentage of the fair value of total plan assets are as follows: Life Insurance Corporation of India 100% 100% Assumptions Discount rate 7.80% 8.00% 7.80% 8.00% Interest Rate 7.80% 8.00% 7.80% 8.00% Estimated rate of return on plan assets 9.15% 9.15% N.A. N.A. Salary Increase 10.00% 10.00% 10.00% 10.00% Attrition rate 1% to 5% 1% to 5% 1% to 5% 1% to 5% (Depending (Depending (Depending (Depending on Age) on Age) on Age) on Age) Leave availment in the service N.A. N.A. 5.00% 20.00% Retirement age 58 years 58 years 58 years 58 years The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market Amounts for the current and previous year are as follows: Defined benefit obligation 393.12 353.76 260.85 194.73 Plan assets 72.96 95.66 - - Surplus / (deficit) (320.16) (258.10) (260.85) (194.73) Experience adjustments on plan liabilities 8.79 (14.58) (97.56) (3.84) Experience adjustments on plan assets (1.74) (0.25) - - Defined Contribution Plans During the year, the Company contributed Rs. 92.58 Lacs (Previous year Rs. 87.51 Lacs) for provident fund and Rs. 48.55 Lacs (Previous year Rs. 44.70 Lacs) for superannuation fund which represents contribution to defined contribution plans. 16 Investments The details of investments are given below: Particulars Face As at March 31, 2009 As at March 31, 2008 Value Value Value (Rs.) Numbers (Rs. Lacs) Numbers (Rs. Lacs) LONG TERM TRADE (UNQUOTED), AT COST Subsidiaries Equity Shares Max Ateev Ltd. 10 3,14,43,600 3144.36 3,14,43,600 3144.36 Provision for Diminution (3144.36) (3144.36) Max New York Life Insurance Company Ltd. 10 131,35,00,014 131350.00 75,85,00,014 75850.00 Max Healthcare Institute Ltd. 10 16,61,00,000 16610.00 16,61,00,000 16610.00 Pharmax Corporation Ltd. 1 4,71,17,247 1420.65 4,71,17,247 1420.65 Max Neeman Medical International Ltd. 10 41,66,813 416.68 41,66,813 416.68 Max UK Ltd. GBP 1 2,99,742 213.00 2,99,742 213.00 Max Healthstaff International Ltd. 10 39,45,000 447.87 39,45,000 447.87 Provision for Diminution (447.87) - Neeman Medical International BV Euro 500 38 3334.69 38 3334.69 Max Visions Inc. USD 30 10,000 94.50 10,000 94.50 Provision for Diminution (94.50) (94.50) 153345.02 98292.89
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Schedules annexed to and forming part of the accounts
Particulars Face As at March 31, 2009 As at March 31, 2008 Value Value Value (Rs.) Numbers (Rs. Lacs) Numbers (Rs. Lacs) Preference Shares Pharmax Corporation Ltd.-9% CRPS 100 15,00,000 1500.00 15,00,000 1500.00 Max Neeman Medical International Ltd. 10 50,000 5.00 50,000 5.00 1505.00 1505.00 LONG TERM NON TRADE (QUOTED), AT COST Equity Shares ICICI Bank Ltd. 10 250 0.65 250 0.65 0.65 0.65 CURRENT NON TRADE (UNQUOTED), AT COST Units in Mutual Fund Birla Sun Life Liquid Plus-Instl.-Daily Dividend 10 - - 6,687,627 669.22 Birla Sun Life Interval Income Fund-Instl. -Quarterly Series 2-Dividend 10 - - 5,03,96,318 5039.69 Birla Sun Life Interval Income Fund-Instl. -Quarterly Series 3-Dividend 10 - - 5,03,39,408 5033.95 Birla Sun Life Short Term Fund - Growth 10 7,28,22,224 7598.35 - - DSP Merrill Lynch Liquid Plus-Institutional Plan -Daily Dividend 1000 - - 1,42,568 1426.22 HDFC Cash Management Fund-Savings Plus Plan -Wholesale-Daily Dividend 10 - - 9,58,81,127 9618.32 HSBC Liquid Plus-Inst Plus - Daily Dividend 10 - - 5,26,52,320 5271.87 ICICI Prudential Flexible Income Plan-Daily Dividend 10 3,88,46,655 5046.10 8,59,01,681 9082.81 ICICI Prudential Interval Fund Quarterly Interval Plan 1 Retail Dividend 10 - - 5,12,41,078 5124.11 ING Liquid Plus Fund-Institutional-Daily Dividend 10 - - 4,16,41,159 4165.49 Kotak Flexi Debt Scheme - Daily Dividend 10 - - 8,16,78,412 8193.24 Kotak Quarterly Interval Plan Series 6 - Dividend 10 - - 5,03,88,403 5038.85 Lotus India Liquid Plus Fund-Institutional-Daily Dividend 10 - - 5,11,87,145 5126.75 Principal Floating Rate Fund FMP - Instl. option - Daily Dividend 10 - - 1,02,76,472 1028.91 Reliance Liquidity Plus Fund -Institutional - Daily Dividend 1000 - - 14,91,315 14932.30 Grindlays Floating Rate Fund-LT-Inst Plan B-Daily Div. 10 - - 5,93,56,822 5937.22 SBI-SHF-Liquid Plus-Institutional Plan-Daily Dividend 10 - - 1,02,45,893 1025.10 TATA Floater Fund - Daily Dividend 10 - - 5,05,23,936 5070.38 TATA Fixed Horizon Fund Series 17 Scheme D - Inst. Plan-Periodic Dividend 10 - - 10,07,47,776 10074.80 Templeton Floating Rate Income Fund Long Term-Super Institutional-Daily Dividend 10 - - 4,79,11,926 4795.78 UTI Liquid Plus Fund Institutional Plan (Daily Dividend) - Reinvest 1000 1,07,457 1535.34 - - 14179.79 106655.01 TOTAL 169030.46 206453.55
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Schedules annexed to and forming part of the accounts
Name of the Investment Face Purchases Sales value Shares/Units Value Shares/Units Value (Rs.) (Numbers) (Rs. Lacs) (Numbers) (Rs. Lacs) Movement in Investments in Subsidiaries during the year Max New York Life Insurance Company Ltd. 10 55,50,00,000 55500.00 - - Movement in Current Non Trade Investments (Unquoted): Birla Cash Plus-Instl. Prem.-Daily Dividend 10 7,98,96,638 8005.24 7,98,96,638 8005.24 Birla Sun Life Liquid Plus-Instl.-Daily Dividend 10 10,55,92,051 10566.39 11,22,79,679 11235.60 Birla Sun Life Interval Income Fund-Instl.-Quarterly Series 2-Dividend 10 14,51,605 145.19 5,18,47,923 5184.88 Birla Sun Life Interval Income Fund-Instl.-Quarterly Series 3-Dividend 10 15,67,192 156.74 5,19,06,600 5190.69 Birla Sun Life Short Term Fund Daily Dividend - IP 1000 8,09,38,920 8098.34 8,09,38,920 8098.34 Birla Sun Life Short Term Fund - Growth 10 7,28,22,224 7598.34 - - DSP Merrill Lynch FMP 1M Series 1 10 5,03,49,651 5034.97 5,03,49,651 5034.97 DSP Merrill Lynch FMP 1M Series 3 IPDR 10 3,52,69,558 3526.96 3,52,69,558 3526.96 DSP Merrill Lynch Liquid Plus-Institutional Plan-Daily Dividend 1000 21,28,558 21430.91 22,71,126 22857.13 HDFC Cash Management Fund-Savings Plus Plan-Wholesale-Daily Dividend 10 13,90,854 139.52 9,72,71,981 9757.84 HSBC Liquid Plus-Inst Plus - Daily Dividend 10 13,95,054 139.68 5,40,47,374 5411.55 ICICI Prudential Institutional Liquid Plan-Super Institutional-Daily Dividend 10 5,00,05,550 5000.80 5,00,05,550 5000.80 ICICI Prudential Flexible Income Plan-Daily Dividend 10 23,21,15,927 25848.20 27,91,70,953 29884.91 ICICI Prudentail Interval Fund Quarterly Interval Plan 1 Retail Dividend 10 14,66,251 146.64 5,27,07,330 5270.75 ING Liquid Plus Fund-Institutional-Daily Dividend 10 15,15,608 151.61 4,31,56,766 4317.10 JP Morgan India Liquid Fund - Dividend Plan -Reinvest - 2/7/2008-3/7/2008 10 4,69,70,055 4700.72 4,69,70,055 4700.72 JP Morgan India Liquid Plus Fund - Dividend Plan -Reinvest-3/7/2008 10 4,80,78,000 4812.08 4,80,78,000 4812.08 Kotak Liquid (Institutional Premium) - Daily Dividend 10 2,04,48,311 2500.44 2,04,48,311 2500.44 Kotak Flexi Debt Scheme - Daily Dividend 10 15,51,093 155.59 8,32,29,506 8348.83 Kotak Flexi Debt Scheme Institutional - Daily Dividend 10 9,52,09,155 10273.84 9,52,09,155 10273.84 Kotak Quarterly Interval Plan Series 6 - Dividend 10 14,31,308 143.18 5,18,19,711 5182.03 Lotus India Liquid Plus Fund-Institutional-Daily Dividend 10 7,30,863 73.20 5,19,18,008 5199.95 Principal Floating Rate Fund FMP - Instl. option - Daily Dividend 10 1,94,491 19.47 1,04,70,963 1048.38 Reliance Liquidity Fund - Daily Dividend 10 5,60,29,681 9578.55 5,60,29,681 9578.55 Reliance Liquidity Plus Fund -Institutional - Daily Dividend 1000 52,191 522.50 15,43,506 15454.80 IDFC Floating Rate Fund-LT-Inst Plan B-Daily Div. 10 11,17,603 111.82 6,04,74,425 6049.04 SBI Debt Fund Series - 90 Days-18-(27-Nov-07)-Dividend 10 34,89,253 350.06 34,89,253 350.06 SBI-SHF-Liquid Plus-Institutional Plan-Daily Dividend 10 38,80,896 388.28 1,41,26,789 1413.39 TATA Liquid Super High Investment Fund - Daily Dividend 1000 3,58,971 4000.80 3,58,971 4000.80 TATA Floater Fund - Daily Dividend 10 24,74,65,597 24834.66 29,79,89,533 29905.04 TATA Fixed Horizon Fund Series 17 Scheme D - Inst. Plan-Periodic Dividend 10 12,19,836 122.01 10,19,67,612 10196.81 TATA Income Plus Fund Dividend 10 9,69,36,637 10178.94 9,69,36,637 10178.94 Templeton Floating Rate Income Fund Long Term-Super Institutional-Daily Dividend 10 7,85,877 78.67 4,86,97,803 4874.45 UTI Liquid Cash Plan Institutional - Daily Income Option - Re-investment 1000 1,47,164 1500.26 1,47,164 1500.26 UTI Liquid Plus Fund Institutional Plan (Daily Dividend Option) - Re-investment 1000 2,60,958 3070.68 153,501 1535.34
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Schedules annexed to and forming part of the accounts
17 As per information received from the suppliers, a few suppliers are identified as micro and small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006. During the year, there is no instance of late payment or overdue and remaining unpaid to these suppliers. Accordingly, no interest is paid or accrued and remaining unpaid to these suppliers. 18 Segment Reporting (a) Business Segments The Company has considered business segment as the primary segment for disclosure. The products/ services included in each of the reported business segments are as follows: • Speciality Plastic Products - The manufacturing facility located at Railmajra, Nawanshahr (Punjab), produces packaging films supported with polymers of propylene, leather finishing transfer foils and related products. • Business Investments - The Company has business investments in companies operating in the areas of Life Insurance, Healthcare, Clinical Research and Healthcare Staffing businesses. These investments along with its treasury investments have been combined to form Business Investment Segments. The above business segments have been identified considering: (i) The nature of products and services (ii) The differing risks and returns (iii) Organisational structure of the group, and (iv) The internal financial reporting systems. Segment Revenue consists of revenue from external customers only since there are no significant inter segment transfers. Segment Result is the difference of segment revenue and segment operating expenses. Unallocated Assets include assets pertaining to the corporate office such as loans, advance and deposits. Unallocated Liabilities include tax provisions and interest bearing loans not directly related to any business segment. Unallocated Expenses - Expenses incurred at corporate office relate to various business segments. As there is no reasonable basis of allocating this expenditure to various segments, the same are shown as unallocated reconciling expenses. Interest expense is not treated as part of a segment expense and is reflected as a separate line item, except interest on loans allocated to business segment. (b) Geographical Segments The Company has considered geographical segment as secondary reporting segment for disclosure. For this purpose, the revenues are bifurcated based on location of customers in India and outside India (primarily Europe and North America). Primary Segments (RS. LACS) Particulars Specialty Plastic Business Total Products Investments a) Segment Revenue from: Sales to External Customers 37003.51 - 37003.51 (30343.88) (-) (30343.88) Income from Investment Activities - 4708.91 4708.91 (-) (6907.01) (6907.01) Other Income 21.79 - 21.79 (251.83) (-) (251.83) Total Segment Revenue 37025.30 4708.91 41734.21 (30595.71) (6907.01) (37502.72) Interest Income 11.07 (10.95) Unallocated Income 247.19 (22.61) Total Revenue 41992.47 (37536.28)
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Schedules annexed to and forming part of the accounts
Primary Segments (Rs. Lacs) Particulars Specialty Plastic Business Total Products Investments
b) Segment Results 4003.67 4708.91 8712.58 (3912.75) (6906.85) (10819.60) Interest Income 11.07 (10.95) Less:- Unallocated Expenses 3795.26 (2839.55) Interest Expense 1624.83 (1459.52) Profit from Operations 3303.56 (6531.48) Diminution in Value of Investments and 2262.17 Doubtful Advances (-) Profit before Tax 1041.39 (6531.48) Provision for Taxation (Includes Provision (1142.08) for Deferred Tax Liabilities) (341.02) Profit after Tax 2183.47 (6190.46) c) Carrying Amount of Segment Assets 28929.50 174034.34 202963.84 (26959.19) (210916.59) (237875.78) Unallocated Assets 17559.27 (2198.99) Total Assets 220523.11 (240074.77) d) Segment Liabilities 2890.94 17.06 2908.00 (3175.14) (-) (3175.14) Unallocated Liabilities 11379.73 (32521.35) Total Liabilities 14287.73 (35696.49)
e) Cost to Acquire Tangible and Intangible Fixed Assets 1199.96 - 1199.96 (1745.54) (-) (1745.54) Unallocated 94.71 (107.35) Total Addition 1294.67 (1852.89) f) Depreciation and Amortisation Expense 1134.15 - 1134.15 (1056.15) (-) (1056.15) Unallocated Depreciation and Amortization 71.84 (83.08) Total Depreciation and Amortization 1205.99 (1139.23)
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Schedules annexed to and forming part of the accounts
Primary Segments (RS. LACS) Particulars Specialty Plastic Business Total Products Investments
g) Non-cash Expenses Other than Depreciation 152.64 2219.07 2371.71 and Amortization (32.74) (0.16) (32.90) Unallocated Non cash Expenses 40.37 (11.26) Total 2412.08 (44.16)
Secondary Segments (RS. LACS) Particulars India Outside India Total a) Revenue from External Customers 34817.66 6916.55 41734.21 (30971.59) (6531.13) (37502.72) b) Carrying Amount of Segment Assets by Location of Assets 197446.61 5517.23 202963.84 (231286.50) (6589.28) (237875.78) c) Cost to Acquire Tangible and Intangible Fixed Assets by Location of Assets 1199.96 - 1199.96 (1745.54) (-) (1745.54) Note: Figures in brackets are for previous year.
19 Related Parties (as identified by the management) are classified as:
Subsidiaries Max New York Life Insurance Company Ltd., Max Ateev Ltd., Neeman Medical International BV, Neeman Medical International NV, Max Neeman Medical International Inc., USA, Max Medical Services Ltd., Max Healthcare Institute Ltd., Alps Hospital Ltd., Max UK Ltd., Pharmax Corporation Ltd., Max Neeman Medical International Ltd., Max HealthStaff International Ltd.
Key Management Mr. Analjit Singh, Mr. B Anantharaman (till June 30, 2008) Personnel (Directors)
Relatives of Key Management Personnel Mr. Veer Singh
Enterprises over which Liquid Investments & Trading Company, New Delhi House Services Ltd., Medicare Investments Ltd., Key Management Maxopp Investments Ltd., Cheminvest Ltd., Pivet Finances Ltd., Lakeview Enterprises, Delhi Guest House Personnel have Pvt Ltd., Trophy Holdings Pvt. Ltd., M.V. Healthcare Services Pvt. Ltd., ND Callus Info Services Pvt. Ltd., Significant Influence Boom Investments Pvt. Ltd., Malsi Holdings Ltd., Dynavest India Pvt. Ltd., Scorpio Beverages Pvt. Ltd., Trophy Guest Houses & Resorts Pvt. Ltd., Trophy Estates Pvt. Ltd., Gaylord Impex Ltd., Pen Investments Ltd., Mohair Investment, PVT Investment Ltd., Malsi Estates Ltd, TVP Investments Pvt. Ltd., BAS Investments Pvt. Ltd., Vitasta Estate Pvt. Ltd., Terra Planet Estate Pvt. Ltd., Doon Holiday Resorts Pvt. Ltd., Urban Space Consultants Pvt. Ltd., Max India Foundation, Capricorn Health Services Private Ltd., Leo Retailing and Health Services Private Ltd., Nurture Health Services Pvt. Ltd., Capricorn Retailing and Services Pvt. Ltd., Veer Health Services Pvt. Ltd., Wegmans Business Park Pvt. Ltd., Synergy Infracon Pvt. Ltd., Max Speciality Products Ltd., Max Bupa Health Insurance Ltd. (Effective September 5, 2008), Malsi Hotels Ltd. (Effective March 20, 2009), Bhai Mohan Singh Foundation Employee benefit funds Max India Ltd. Employees' Provident Fund Trust, Max India Ltd. Superannuation Fund
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Schedules annexed to and forming part of the accounts
Summary of significant related party transactions (as identified by the management) carried out in ordinary course of business are as follows:
Particulars Subsidiaries Key Relatives of Enterprises Employee Management Key Over which Benefit Personnel Management Key Funds Personnel Management Personnel have Significant Influence 1 Fixed Assets Transferred --- -- (-) (-) (-) (16.75) (-) 2 Fixed Assets Purchased 45.54 - - 6.32 - (-) (-) (-) (-) (-) 3 Deposits and Advances given 62.77 - - - - (-) (387.87) (-) (-) (-) 4 Loans Given 5928.50 - - - - (704.53) (-) (-) (-) (-) 5 Income and Reimbursement - Interest Income 287.15 - - - - (26.85) (-) (-) (-) (-) - Reimbursement of Expenses 381.51 - - 236.79 - (392.72) (-) (-) (14.74) (-) 6 Expense - Services / Other Expenses Received 444.74 - 9.08 235.46 - (311.68) (-) (9.08) (271.87) (-) - Directors' Remuneration - 1295.90* - - - (-) (481.57) (-) (-) (-) - Company's Contribution to Trust - - - - 115.85 (-) (-) (-) (-) (97.55) 7 Investments - Made 55500.00 - - - - (22200.00) (-) (-) (-) (-) - Advance against Equity - - - 800.00 - (-) (-) (-) (-) (-) 8 Amount outstanding - Corporate Guarantee 24000.00 - - - - (24000.00) (-) (-) (-) (-) - Against Loan Given 4514.40 - - - - (3320.98) (-) (-) (-) (-) - Interest Receivable 49.54 - - - - (-) (-) (-) (-) (-) - Other Receivable 1458.55 - - 204.73 - (1116.91) (622.36) (-) (1.21) (-) - Other Payable 17.06 --9.33 - (-) (-) (-) (12.05) (-) Other relevant information - i) The above excludes sitting fees Rs. 16.44 Lacs (Previous year Rs. 8.90 Lacs) paid to non-executive directors. ii) Figures in brackets are for previous year. * Refer note B11 above.
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Schedules annexed to and forming part of the accounts
20 Leases Accounting for leases has been done in accordance with Accounting Standard-19 issued by the ICAI. Following are the details of lease transactions for the year: (a) Finance Lease The Company does not have any finance lease arrangement. (b) Operating Lease (i) Lease rentals recognised in the profit and loss account for the year is Rs. 223.33 Lacs (Previous year Rs. 203.83 Lacs). (ii) The Company has entered into operating leases for its office and for employees' residence that are renewable on a periodic basis and cancellable at Company's option. The Company has not entered into sublease agreements in respect of these leases. Further, the Company has not entered into any non-cancellable leases. Additional information pursuant to the provisions of paragraph 3, 4C and 4D of Part II of Schedule VI to the Companies Act,1956: 21 Details of Stock of Securities: Equity Shares Current Year Previous Year Numbers Value (Rs. Lacs) Numbers Value (Rs. Lacs) Opening Balance 8,27,166 - 8,27,466 0.16 Write Off - - 300 0.16 Closing Stock 8,27,166 - 8,27,166 -
22 A. (i) Installed Capacity and Actual Production Product Unit Installed Capacity * Actual Production (Annual) BOPP Film Tonnes 29,150 28,504.10 (29,150) (24,051.81) Soft Leather Finishing Foil Lacs (SFT) 555 84.97 (320) (164.49) Figures in brackets are for Previous year Notes: Licensed capacity is not applicable. *Annual installed capacities are certified by the management. (ii) Stock of Finished Goods Opening Stock Closing Stock Product Unit Quantity Value Quantity Value (Rs. Lacs) (Rs. Lacs) Manufactured BOPP Film Tonnes 148.89 153.43 150.20 181.42 (25.59) (46.47) (148.89) (153.43) Soft Leather Finishing Foil Lacs (SFT) 1.51 5.88 1.25 5.14 (0.89) (3.10) (1.51) (5.88) Traded Soft Leather Finishing Foil Lacs (SFT) 0.58 6.26 0.56 6.04 (0.61) (6.43) (0.58) (6.26) Total 165.57 192.60 (56.00) (165.57)
Figures in brackets are for previous year
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Schedules annexed to and forming part of the accounts
(iii) Turnover Product Unit Quantity Value (Rs. Lacs) a) Manufactured Goods BOPP Film Tonnes 28,501.99 38432.22 (23,928.51) (30724.57) Soft Leather Finishing Foil Lacs (SFT) 85.23 914.56 (163.87) (1574.38) b) Traded Goods Soft Leather Finishing Foil Lacs (SFT) 0.15 2.64 (0.03) (0.27) Total 39349.42 (32299.22)
Figures in brackets are for previous year
(iv) Purchase of Finished Goods Current Year Previous Year Product Quantity Value Quantity Value (Rs. Lacs) (Rs. Lacs) Soft Leather Finishing Foil Lacs (SFT) 0.13 1.50 - - Total 0.13 1.50 - - (v) Raw Materials Consumed Current Year Previous Year Product Quantity Value Quantity Value# (Rs. Lacs) (Rs. Lacs) Polypropylene Tonnes 28,917.20 20074.88 25,840.77 16140.73 Polypropylene Compounds Tonnes 1,848.34 2131.77 1,739.37 1709.93 Others * - 1131.88 1267.16 Total 23338.53 19117.82
Note: * It is not practicable to furnish quantitative information in view of large number of items, each being less than ten percent in value of total. # Excludes Rs. 51.90 Lacs relating to consumption during trial run.
(vi) Consumption of Raw Materials, Stores and Spares Current Year Previous Year Materials Value % of Value % of (Rs. Lacs) Consumption (Rs. Lacs) Consumption Raw Materials - Imported 4635.46 19.86 4427.41 23.16 - Indigenous 18703.07 80.14 14690.41 76.84 Total 23338.53 100.00 19117.82 100.00 Store and Spares - Imported 157.74 33.57 116.63 30.17 - Indigenous 312.15 66.43 269.92 69.83 Total 469.89 100.00 386.55 100.00
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Schedules annexed to and forming part of the accounts
B. Value of Imports calculated on CIF Basis (RS. LACS) Particulars Current Year Previous Year Raw Materials 5140.03 4094.02 Components and Spare Parts 264.29 240.60 Capital Goods 1075.09 811.72 Trading Goods 1.15 - Total 6480.56 5146.34 C. Expenditure in Foreign Currency (RS. LACS) Particulars Current Year Previous Year Legal and Professional 35.38 35.97 Commission 51.86 74.67 Technical - 4.96 Others 154.08 91.94 Total 241.32 207.54 D. Earnings in Foreign Currency (RS. LACS) Particulars Current Year Previous Year Exports on FOB basis 6557.51 6273.69 Total 6557.51 6273.69 23 Auditors' Remuneration (RS. LACS) Particulars Current Year Previous Year Audit fees (including service tax) 16.55 16.85 Out of pocket expenses 0.68 0.62 Total 17.23 17.47 24 Preferential / QIP Issue Proceeds Details of additions: (RS. LACS) Particulars Current Year Previous Year Opening Balance 75730.39 - Addition: On allotment of shares to QIBs - 99999.98 Total 75730.39 99999.98 Utilizations: Investment in subsidiary company 55500.00 22200.00 Advance against Investment in subsidiary company 800.00 - Refund of Option Deposit to New York Life International 17420.55 - Share issue expenses - 2069.59 Total 73720.55 24269.59 Balance invested in units of mutual fund 2009.84 75730.39
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Schedules annexed to and forming part of the accounts
25 Securities Premium Account (i) Details of additions: (RS. LACS) Particulars Current Year Previous Year
1. On allotment of shares to QIBs (Refer note 6 above) - 99166.65 2. Exercise of Stock Option 414.46 249.55 Total 414.46 99416.20 (ii) Details of utilization: (RS. LACS) Particulars Current Year Previous Year 1. Expenses on issuance of shares to QIBs - 2069.59 26 During the year, Rs. 16.51 Lacs (Previous year Rs. 14.13 Lacs) has been charged to the profit and loss account relating to Research and Development expenditure under the heads Raw Material - Consumed and Power & Fuel. 27 During the year, the Company shared the services of some of its employees and facilities with group companies. Consequently, the share of costs attributable to these companies has been charged out to the relevant group company. 28 On September 03, 2008, the Company signed a tripartite JVA with BUPA Finance Plc., UK and Mr. Analjit Singh for its proposed health insurance business. Subsequently, Max Bupa Health Insurance Limited ("MBHIL") has been incorporated on September 5, 2008 to operate the said business. In line with the guidelines issued by Insurance Regulatory and Development Authority, the initial share capital of MBHIL will be Rs.100 Crore. This will be contributed 50% by the Company, 24% by Mr. Analjit Singh and his associates and 26% by BUPA Finance Plc., UK through its Indian subsidiary and other entities. On January 13, 2009, the Company has contributed share application money amounting to Rs. 800.00 Lacs to MBHIL. Also, during the year, the Company incurred expenses amounting to Rs. 185.16 Lacs on behalf of MBHIL which are recoverable in terms of the aforesaid JVA. Consequently, the Board of Directors in their meeting held on June 26, 2009 have decided to invest upto 74% of equity shareholding of MBHIL, subject to shareholder's approval. 29 During the year, a Memorandum of Understanding (MOU) dated November 12, 2008 has been entered into amongst Government of Punjab ("GOP"), Max India Group and Others ("the Founder Supporters"), together with Indian School of Business, Hyderabad ("ISB"). As per the MOU, a second campus of ISB is purposed to be established in the Knowledge city at Mohali, with an equal contribution from each of the Founder Supporters. The Board of Directors has recommended a contribution for an amount not exceeding Rs. 1666.67 Lacs from the Company to this initiative over a period of 3-4 years, subject to the shareholders approval, out of the total commitment of Rs. 5000.00 Lacs from Max India Group. Of the above, a sum of Rs. 130.00 Lacs has been contributed by the Company during the year and included under the head Charity and Donation. 30 During the previous year, the Company received Rs. 50 Lacs as capital subsidy from the Director of Industries, Government of Punjab under "Punjab Industrial Incentives Code under the Industrial Policy, 1996" for substantial expansion during financial year 1996-97. The same has been accounted for as capital reserve. 31 Subsequent to the year end, the Board of Directors in their meeting held on May 15, 2009, approved the issuance of 10,326,311 equity shares of Rs 2/- each at a premium of Rs 143.26 per equity share, aggregating to Rs. 15000.00 Lacs to International Finance Corporation, Washington USA on a preferential basis. The same has been approved by the shareholders in an Extra-ordinary General Meeting held on Friday, June 12, 2009. Consequently, the Company in the meeting of Allotment Committee of Directors held on June 19, 2009 allotted the said shares.
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Schedules annexed to and forming part of the accounts
32 The Company invested Rs. 447.87 Lacs in the form of 39,45,000 equity shares of Rs. 10/- each and extended loans of Rs. 1814.29 Lacs to its wholly owned subsidiary Max HealthStaff International Limited (MHS) till March 31, 2009. MHS is in the business of sourcing, training and placing healthcare personnel in India and abroad more particularly in the United States. The placement of healthcare personnel in United States is subject to availability of immigrant visas, which is currently unavailable given the visa retrogression in force. Consequently, MHS has considerably scaled down its operations till the time further clarity on immigration laws emerges. Accordingly, based on prudent accounting practices, the management has decided to provide for diminution in the value of investments and loans given to MHS. 33 Previous year’s figures have been regrouped / reclassified wherever necessary to conform to current year's classification.
For and on behalf of the Board of Director ANALJIT SINGH Chairman & Managing Director N. RANGACHARY Director ASHWANI WINDLASS Director New Delhi SUJATHA RATNAM Chief Financial Controller JUNE 26, 2009 V. KRISHNAN Company Secretary
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Balance Sheet Abstract and company’s general business profile
I REGISTRATION DETAILS : Registration No. 08031 State Code 16 Balance Sheet Date 31 03 200 9 Date Month Year II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousand) Public Issue Rights Issue NIL NIL Bonus Issue Others NIL 576 III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. Thousand) Total Liabilities Total Assets 216 37674 21637674 SOURCES OF FUND Paid-up Capital Reserve and Surplus 4 44061 20179477 Secured Loans Unsecured Loans 10 05875 8261 Deferred Tax Liability (Net) NIL APPLICATION OF FUNDS Net Fixed Assets Investments 19 98738 16903046 Net Current assets Misc. Expenditure 27 29887 6003 Accumulated Losses NIL IV PERFORMANCE OF COMPANY (Amount in Rs. Thousand) Turnover (Total Income) Total Expenditure 4197360 4093221 +- Profit before Tax +- Profit after Tax √ 104139√ 218347 +- Basic Earning per Share in Rs. Dividend Rate (%) √ 0. 98 N I L +- Diluted Earning per Share in Rs. √ 0. 98 V NAME OF THREE PRINCIPAL PRODUCTS/SERVICE OF COMPANY Item Code No. (ITC code) 39 20.20
Product Description FILMS SUPPORTED WI TH POLYMERS
OF PROPYLE NE
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Disclosure of Loans/Advances and Investments
AS REQUIRED UNDER CLAUSE 32 OF THE LISTING AGREEMENT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2009 (RS. LACS) S.N. Name Amount Outstanding As of Maximum amount March 31, 2009 during the year I. Loans and advances in the nature of loans A. To Subsidiaries A.1 Max Ateev Ltd. 674.06 676.62 A.2 Pharmax Corporation Ltd. 1138.00 5558.00 A.3 Max HealthStaff International Ltd. 1814.29 1820.53 A.4 Max Neeman Medical International Ltd. 888.06 888.06 B. To Associates Nil Nil C. Where there is no repayment schedule or repayment beyond seven years Nil Nil D Where there is no interest or interest below Section 372A of Companies Act Nil Nil E To firms/Companies in which directors are interested Nil Nil
II. Investments by the loanee in the shares of parent company and subsidiary company when the company has made loan or advance in the nature of loan Nil Nil
Max India Limited ANNUAL REPORT 2008-09 123
1 Standalone.p65 123 8/7/2009, 9:50 AM MAX INDIA LIMITED e Holding Applicable Financial Company Company’s Subsidiary ANALJIT SINGH incorporating Year/Period of t of Chairman & Managing Director Holding For and on behalf of the Board Directors Members of Company concerns Company’s Account within the Company’s Account close of (Rs. Lacs) (Rs. Lacs) (Rs. Lacs) (Rs. Lacs) versa, so far as it concerns vice-versa, so far as it 31.03.2009 Members of Holding which are not dealt within the Company which are dealt changes since Financial Year Financial Year Financial Year Financial Year after deducting its losses or vice- after deducting its losses or interest as at Holding Current Previous Current Previous 1 each 85.20% 156.09 (771.15) NIL NIL Not Applicable i) Shareholding ii) Extent of For the For the For the For the relate to whichto Financial Year of Subsidiary Company Subsidiary Company’s profits Subsidiary Company’s profits Accounts STATEMENT REGARDING SUBSIDIARY COMPANIES PURSUANT TO SECTION 212(3) AND 212(5) OF THE ACT,1956 Name of the Subsidiary Company Financial Year Holding Company’s interest as at close ofDomestic: Max New York Life Insurance Company Ltd. 31.03.2009 Net aggregate amount ofeach10 Rs. of Shares Equity 131,35,00,014 Net aggregate amoun 73.69% (28961.32)Notes: 1. (44931.66)2. Held through Max Healthcare Institute Ltd. 3. Held through Max Medical Services Ltd. 4. NIL Held through Neeman Medical International B.V., Netherlands 5. Held through Neeman Medical International N.V., Netherlands 6. Paid value of 325 shares is US$ 750,000 equivalent Rs. 366.08 Lacs. Figures in brackets indicate loss. NIL Not Max Healthcare Institute Ltd.Max Medical Services Ltd. (Note 1)Alps Hospital Ltd. (Note 2)Max Neeman Medical International Ltd.Pharmax Corporation Ltd.Max Ateev Ltd.Max Healthstaff International Ltd. 31.03.2009Overseas: 31.03.2009 31.03.2009Neeman Medical International B.V.Neeman Medical International N.V. (Note 3) 1,41,42,535 Equity Shares of Rs. 10 eachMax Neeman Medical International Inc., USA (Note 4) 41,66,813 Equity Shares of Rs. 10 each 16,61,00,000 Equity Shares of Rs. 10 each 31.03.2009 31.03.2009UKLtd., UK Max 31.03.2009 31.03.2009 31.03.2009 50,000 Equity Shares of Rs. 10 each 325 Shares (Note 5) 70.04% 70.04% 31.03.2009 3,945,000 Equity Shares of Rs. 10 each 100.00% 4,71,17,247 Equity Shares of Re. 125 Ordinary Shares of Euro 500 each 31.03.2009 38 Ordinary Shares of Euro 500 each 3334.70 175.08 70.04% 3,14,43,600 Equity Shares of Rs. 10 each 121.98 100.00% 100.00% (10857.39) (630.81) (730.20) 100.00% 31.03.2009 (398.48) (270.49) 100.00%New Delhi NIL 100.00%JULY 30, 2009 NIL NIL 2,99,742 Ordinary Shares of GBP 1 each 5.18 (449.95) (1892.26) (11.36) (3.32) NIL (8626.80) (4.04) NIL NIL NIL (5393.97) NIL 100.00% (3801.48) (3670.45) NIL Not Applicable Not Applicable NIL Not Applicable NIL NIL NIL NIL 3.36 NIL Not Applicable Not Applicable NIL (145.52) NIL NIL Not Applicabl Not Applicable NIL Not Applicable Not Applicable NIL Not Applicable
Max India Limited ANNUAL REPORT 2008-09 124
1 Standalone.p65 124 8/7/2009, 9:51 AM MAXINDIA LIMITED CONSOLIDATED STATEMENTOF ACCOUNTS
MAX INDIA LIMITED CONSOLIDATED STATEMENT OF ACCOUNTS Auditors’ Report
TO THE BOARD OF DIRECTORS OF MAX INDIA LIMITED 4. We report that the consolidated financial statements have been prepared by the company in accordance with the 1. We have audited the attached Consolidated Balance Sheet of requirements of Accounting Standard 21, Consolidated Max India Limited and its subsidiaries as at March 31, 2009, Financial Statements, issued by the Institute of Chartered the Consolidated Profit and Loss Account for the year ended Accountants of India and on the basis of the separate audited on that date annexed thereto, and the Consolidated Cash Flow financial statements of Max India Limited and its subsidiaries Statement for the year ended on that date, which we have included in the consolidated financial statements. signed under reference to this report. These consolidated financial statements are the responsibility of the Company’s 5. On the basis of the information and explanations given to us management. Our responsibility is to express an opinion on and on consideration of the separate audit reports on individual these consolidated financial statements based on our audit. audited financial statements of Max India Limited and its aforesaid subsidiaries, in our opinion, the consolidated financial 2. We conducted our audit in accordance with auditing standards statements give a true and fair view in conformity with the generally accepted in India. Those Standards require that we accounting principles generally accepted in India: plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in all (a) in the case of the Consolidated Balance Sheet, of the material respects, in accordance with an identified financial consolidated state of affairs of Max India Limited and its reporting framework and are free of material misstatement. subsidiaries as at March 31, 2009; An audit includes examining, on a test basis, evidence (b) in the case of the Consolidated Profit and Loss Account, supporting the amounts and disclosures in the financial of the consolidated results of operations of Max India statements. An audit also includes assessing the accounting Limited and its subsidiaries for the year ended on that principles used and significant estimates made by date; and management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a (c) in the case of the Consolidated Cash Flow Statement, of reasonable basis for our opinion. the consolidated cash flows of Max India Limited and its subsidiaries for the year ended on that date. 3. We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets V. NIHAWAN of Rs. 41.0 crores as at March 31, 2009 and total revenues of Partner Rs. 9.4 crores for the year ended on that date. These financial Membership Number F 87228 statements have been audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates For and on behalf of to the amounts included in respect of these subsidiaries, is Gurgaon Price Waterhouse based solely on the report of the other auditors. JUNE 26, 2009 Chartered Accountants
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Consolidated Balance Sheet as at March 31, 2009
(RS. LACS) Schedule As at As at March 31, 2009 March 31, 2008 SOURCES OF FUNDS SHAREHOLDERS’ FUNDS Share Capital 1 4440.61 4434.85 Reserves and Surplus 2 146677.08 149940.49 151117.69 154375.34 Preference Shares 3 25000.00 25000.00 LOAN FUNDS Secured Loans 4 34415.38 37480.31 Unsecured Loans 5 - Loans 326.56 289.24 - Advances from Others - 17420.55 34741.94 55190.10 Deferred Tax Liability (Net) 6 20.07 3421.71 Policyholders’ Liabilities 498538.50 322742.74 Funds for Future Appropriations - Participating Policies 1694.32 4335.11 Minority Interest (Refer Note B3 on Schedule 26) 27637.93 17263.31 738750.45 582328.31 APPLICATION OF FUNDS FIXED ASSETS 7 Gross Block 121743.06 91717.81 Less: Depreciation 33623.31 24457.76 Net Block 88119.75 67260.05 Capital Work in Progress 4910.38 4562.56 93030.13 71822.61 INVESTMENTS 8 563788.84 484027.82 CURRENT ASSETS, LOANS AND ADVANCES Inventories 9 4063.23 3866.45 Sundry Debtors 10 27347.75 24119.94 Cash and Bank Balances 11 22836.87 3197.56 Other Current Assets 12 6816.14 4750.44 Loans and Advances 13 71221.65 52458.30 132285.64 88392.69 Less: CURRENT LIABILITIES AND PROVISIONS Current Liabilities 14 67954.27 61669.79 Provisions 15 2273.50 890.85 70227.77 62560.64 NET CURRENT ASSETS 62057.87 25832.05 MISCELLANEOUS EXPENDITURE 16 385.24 645.83 (To the extent not written off or adjusted) Profit and Loss Account 19488.37 - 738750.45 582328.31 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 26
The Schedules referred to above form an integral part of the Balance Sheet For and on behalf of the Board of Directors This is the Balance Sheet referred to in our report of even date V. NIJHAWAN ANALJIT SINGH Chairman & Managing Director Partner N. RANGACHARY Director Membership No. F 87228 ASHWANI WINDLASS Director For and on behalf of SUJATHA RATNAM Chief Financial Controller Price Waterhouse V. KRISHNAN Company Secretary Chartered Accountants Gurgaon New Delhi JUNE 26, 2009 JUNE 26, 2009
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Consolidated Profit and Loss Account for the year ended March 31, 2009
(RS. LACS) Schedule For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 INCOME Sales 44134.41 36054.34 Less: Sales Returns (367.72) (398.81) Excise Duty (3606.19) (3470.99) 40160.50 32184.54 Service Income 17 410606.87 292220.03 Income from Investment Activities 18 33024.49 32492.84 Other Income 19 5352.28 4157.38 489144.14 361054.79 INCREASE / (DECREASE) IN INVENTORY 20 (18.87) 503.49 489125.27 361558.28 EXPENDITURE Manufacturing, Trading and Direct Expenses 21 341493.83 269077.14 Personnel Expenses 22 84375.93 45483.79 General and Administration Expenses 23 84198.22 39938.56 Financial Expenses 24 5057.40 4731.04 Depreciation 7 9700.92 6634.09 524826.30 365864.62 (LOSS) BEFORE TAX (35701.03) (4306.34) Tax Expense 25 (2383.56) 1672.13 (LOSS) AFTER TAX (33317.47) (5978.47) Funds for Future Appropriations - Participating Policies 2640.79 (3709.44) Minority Interest 8838.07 4798.19 NET (LOSS) (21838.61) (4889.72) PROFIT BROUGHT FORWARD 3038.36 7928.08 PROFIT/(LOSS) AVAILABLE FOR APPROPRIATION (18800.25) 3038.36 APPROPRIATIONS (Refer Notes B3 & B11 on Schedule 26) Dividend on Preference Shares (839.73) - Corporate Dividend Tax (142.71) - (982.44) Share of Minority Interest 294.32 (688.12) - PROFIT/(LOSS) CARRIED FORWARD TO THE BALANCE SHEET (19488.37) 3038.36 Earnings Per Share (Rs. per equity share of Rs. 2/- each) (Refer Note B16 on Schedule 26) Basic (10.15) (2.29) Diluted (10.15) (2.29) Number of Shares used in computing earnings per share Basic 221,998,514 213,118,796 Diluted 222,122,712 213,772,230 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 26
The Schedules referred to above form an integral part of the For and on behalf of the Board of Directors Profit and Loss Account This is the Profit and Loss Account referred to in our report of even date V. NIJHAWAN ANALJIT SINGH Chairman & Managing Director Partner N. RANGACHARY Director Membership No. F 87228 ASHWANI WINDLASS Director For and on behalf of SUJATHA RATNAM Chief Financial Controller Price Waterhouse V. KRISHNAN Company Secretary Chartered Accountants Gurgaon New Delhi JUNE 26, 2009 JUNE 26, 2009
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Consolidated Cash Flow Statement for the year ended March 31, 2009
(RS. LACS) Schedule For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 A. CASH FLOW FROM OPERATING ACTIVITIES: NET PROFIT/(LOSS) BEFORE TAX (35701.03) (4306.34) Adjustments for: Depreciation 9700.92 6634.09 Interest Expense 3975.93 4158.93 Interest Income (24481.06) (14211.93) Amortisation of Discount/(Premium) on Non Trade Investments (1232.09) (57.72) Dividend Income from Non Trade Investments (5284.92) (6974.16) Net (Profit) / Loss on Sale of Fixed Assets 85.52 188.14 Net (Profit) / Loss on Sale of Investments 27435.00 (9407.67) Unrealised (Gain)/Loss on Investments 14410.79 (1736.42) Amortisation of Miscellaneous Expenditure 0.59 19.50 Fixed Assets and Spares Written off 14.77 53.46 Debts and Debit Balances Written Off 8.63 4.45 Provision for Doubtful Debts and Advances 591.22 274.43 Goodwill Written off 403.63 - Liability/ Provisions No Longer Required Written Back (453.81) (178.25) Provision for Diminution in Value of Investment - Long Term 422.49 51.38 ESOP Lapsed Written Back (180.82) - TDS on Service and Other Income (275.41) (333.31) Other Provisions 67.35 10.29 ESOP Compensation Expense 238.39 433.17 Change in Policyholder Reserves 175795.76 166033.55 Operating Profit Before Working Capital Changes 165541.85 140655.59 Adjustments for: Trade and Other Receivables (21740.46) (18254.03) Inventories (196.78) (1675.62) Trade and Other Payables 8918.63 20096.16 Provisions for Retirement Benefits 400.20 151.62 Cash Generated From Operations 152923.44 140973.72 Direct Taxes Refunded / (Paid) (Net) (512.55) (953.64) Cash From / (Used in) Operating Activities 152410.89 140020.08 B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (30113.73) (18806.62) Sale of Fixed Assets 209.53 124.30 Investments Made (Others) (1586529.64) (1141812.30) Sale of Investments 1463870.64 868659.14 Interest Received 23899.88 12440.15 Dividend Received on Non Trade Investments 3922.95 6733.41 Proceeds from Sale of Business - 105.10 Other Loans (3131.60) (898.12) Cash and Cash Equivalents Released on De-Subsidiarisation - (0.26) Cash From / (Used In) Investing Activities (127871.97) (273455.20)
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(RS. LACS) Schedule For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 C. CASH FLOW FROM FINANCING ACTIVITIES Issue of Shares to QIBs - 99999.98 Increase in Share Capital (Minority Share in Subsidiaries) 19505.00 12800.00 Issue of Preference Shares - 25000.00 (by Max Healthcare Institute Limited, a Subsidiary Company) ESOPs Exercised 5.76 3.48 Capital Subsidy Received - 50.00 Shares Issue Expenses - (2164.20) Proceeds from Long Term Loans 70.96 1771.01 Repayment of Long Term Loans (3453.69) (1878.02) Proceeds/(Repayment) of Short Term Borrowings (Net) 355.10 (570.67) Refund of Other Advances (17420.55) - Interest Paid (3999.71) (4194.97) Cash From / (Used In) Financing Activities (4937.13) 130816.61 Net Increase / (Decrease) in Cash and Cash Equivalents 19601.79 (2618.51) Impact of Foreign Exchange Fluctuations 37.52 (7.80) Cash and Cash Equivalents - Opening Balance 3197.56 5823.87 Cash and Cash Equivalents - Closing Balance 22836.87 3197.56
Notes 1 The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting Standard-3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India. 2 Cash and Cash Equivalents at the end of the year consist of Cash, Cheques in Hand and Balances with Banks: (RS. LACS) As at As at March 31, 2009 March 31, 2008 Cash in Hand 708.54 34.70 Stamps in Hand 19.18 0.20 Cheques in Hand 106.07 44.32 Fixed Deposits* 6553.28 36.60 Remittance in Transit 7128.88 - Balances with Banks ** 8320.92 3081.74 Total 22836.87 3197.56
* held under lien by various authorities Rs. 38.28 Lacs (Previous year Rs. 35.60 Lacs) ** Includes Rs. 12.82 Lacs (Previous year Rs. 23.89 Lacs) not available for use by the Company. 3 Previous year’s figures have been regrouped wherever necessary to conform to current years’ classification. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS 26
The Schedules referred to above form an integral part of the For and on behalf of the Board of Directors Cash Flow Statement This is the Cash Flow Statement referred to in our report of even date V. NIJHAWAN ANALJIT SINGH Chairman & Managing Director Partner N. RANGACHARY Director Membership No. F 87228 ASHWANI WINDLASS Director For and on behalf of SUJATHA RATNAM Chief Financial Controller Price Waterhouse V. KRISHNAN Company Secretary Chartered Accountants
Gurgaon New Delhi JUNE 26, 2009 JUNE 26, 2009
Max India Limited ANNUAL REPORT 2008-09 131
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Schedules annexed to and forming part of the consolidated accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-1 SHARE CAPITAL AUTHORISED 46,00,00,000 Equity Shares of Rs. 2/- each 9200.00 9200.00 (Previous year 46,00,00,000 Equity Shares of Rs. 2/- each) 8,00,000 Preference Shares of Rs. 100/- each 800.00 800.00 (Previous year 8,00,000 Preference Shares of Rs. 100/- each) 10000.00 10000.00 ISSUED, SUBSCRIBED AND PAID UP (Refer Notes A10, B9 and B13 on Schedule 26) 22,20,30,310 Equity Shares of Rs. 2/- each fully paid up (Previous year 22,17,42,545 Equity Shares of Rs. 2/- each fully paid up) 4440.61 4434.85 4440.61 4434.85 Paid up Share Capital includes: - 5,76,60,400 Equity Shares of Rs. 2/- each (Previous year 5,76,60,400 Equity Shares of Rs. 2/- each) allotted as fully paid up by way of bonus shares out of Securities Premium Account; and - 14,49,925 Equity Shares of Rs. 2/- each (Previous year 11,62,160 Equity Shares of Rs. 2/- each) allotted under employees stock option plan SCHEDULE-2 RESERVES AND SURPLUS (Refer Notes A9, A10, B2, B9, B11, B13, B18, B27, B29 and B33 on Schedule 26) Capital Reserve Opening Balance 50.39 0.39 Additions during the year - 50.00 Closing Balance 50.39 50.39 Securities Premium Account Opening Balance 137570.55 37693.49 Additions during the year 414.46 102012.93 Deletions/utilisations during the year 2.01 2135.87 Closing Balance 137983.00 137570.55 Employee Stock Option Outstanding Opening Balance 1567.48 1869.53 Additions during the year 245.59 - Deletions/utilisations during the year 862.48 302.05 Closing Balance 950.59 1567.48 Revaluation Reserve Opening Balance - 117.21 Deletions/utilisations during the year - 117.21 Closing Balance -- Foreign Currency Translation Reserve Opening Balance (177.98) (18.06) Additions during the year - 582.29 Deletions/utilisations during the year 20.61 742.21 Closing Balance (198.59) (177.98) General Reserve Opening Balance 7891.69 9072.97 Deletions/utilisations during the year - 1181.28 Closing Balance 7891.69 7891.69 Profit and Loss Account Opening Balance 3038.36 7928.08 Deletions/utilisations during the year 3038.36 4889.72 Closing Balance - 3038.36 146677.08 149940.49
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Schedules annexed to and forming part of the consolidated accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-3 PREFERENCE SHARES (Refer Notes B4 and B11 on Schedule 26) 250,000,000 (Previous year 250,000,000), 2% Cumulative Partially Convertible Preference Shares of Rs.10/- each 25000.00 25000.00 (issued by Max Healthcare Institute Limited, a Subsidiary Company) 25000.00 25000.00
SCHEDULE-4 SECURED LOANS (Refer Note B8 on Schedule 26) Loans and Advances from Banks Term Loan 8076.60 10445.65 Fund Based Working Capital Facilities 3842.98 3473.56 Term Loans from Financial Institutions 22495.80 23561.10 34415.38 37480.31
Amount repayable within one year Rs. 4793.40 Lacs (Previous year Rs. 4434.18 Lacs)
SCHEDULE-5 UNSECURED LOANS Short Term Loans From Others - 100.00 Other Loans From Banks 171.56 189.24 From Others 155.00 - 326.56 289.24 Advances from Others - 17420.55 (Refer Note B10 on Schedule 26) 326.56 17709.79
Amount repayable within one year Rs. 72.02 Lacs (Previous year Rs. 169.35 Lacs)
SCHEDULE-6 DEFERRED TAX LIABILITY (Refer Notes A11 and B14 on Schedule 26) Deferred Tax Liability Opening Balance 4388.26 3383.28 Movement during the year (255.25) 1004.98 Closing Balance 4133.01 4388.26 Deferred Tax Asset Opening Balance (966.55) (738.52) Impact of transitional liabililty on employee benefits - (53.99) Movement during the year (3146.39) (174.04) Closing Balance (4112.94) (966.55) Net Deferred Tax Liability 20.07 3421.71
Max India Limited ANNUAL REPORT 2008-09 133
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Schedules annexed to and forming part of the consolidated accounts
SCHEDULE-7 FIXED ASSETS (Refer Notes A4, A5, A6, A13, A15, B2, B5 and B36 on Schedule 26) (RS. LACS) Gross Block Depreciation Net Block Particulars As at Additions Deletions/ Translation As at As at For the Deletions/ Translation As at As at As at April 1, Adjustments Reserve March 31, April 1, Year Adjustments Reserve March 31, March 31, March 31, 2008 2009 2008 2009 2009 2008 Tangible Assets Land (Freehold) 83.46 127.26 - - 210.72 - - - - - 210.72 83.46 Land (Leasehold) 1741.92 4515.70 - - 6257.62 - - - - - 6257.62 1741.92 Building 12878.16 365.50 - - 13243.66 846.16 259.11 - - 1105.27 12138.39 12032.00 Leasehold Improvements 9956.54 11552.70 103.95 - 21405.29 4044.60 2132.80 60.02 - 6117.38 15287.91 5911.94 Plant and Machinery 36459.36 1217.88 13.54 - 37663.70 8212.87 2113.15 5.22 - 10320.80 27342.90 28246.49 Vehicles 1288.71 198.36 351.40 1.03 1136.70 482.61 155.46 240.50 0.53 398.10 738.60 806.10 Furniture, Fittings and Equipments 16465.10 10630.28 324.17 8.91 26780.12 7634.51 3606.99 237.26 7.10 11011.34 15768.78 8830.59 Intangible Assets Software 4599.23 2604.32 - - 7203.55 2440.17 1404.38 - - 3844.55 3359.00 2159.06 Goodwill* 7389.82 - 403.63 - 6986.19 - - - - - 6986.19 7389.82 Technical Know-how 855.51 - - - 855.51 796.84 29.03 - - 825.87 29.64 58.67 Total 91717.81 31212.00 1196.69 9.94 121743.06 24457.76 9700.92 543.00 7.63 33623.31 88119.75 67260.05 Previous year 78476.19 15220.79 1895.74 (83.43) 91717.81 18870.52 6634.09 1013.45 (33.40) 24457.76 Capital Work in Progress 4910.38 4562.56 93030.13 71822.61 * arising on consolidation
Notes:- a) Additions include: - Interest capitalised Nil (Previous year Rs. 32.73 Lacs). - Pre-Operative expenses capitalised Rs. 26.64 Lacs (Previous year Rs. 185.94). - Foreign Exchange Fluctuations Nil (Previous year Rs. 41.27 Lacs). b) Plant and Machinery includes an amount of Rs. 135.08 Lacs (Previous year Rs. 135.08 Lacs) paid to PSEB for drawing a power line representing assets not owned by the Company. The same has been depreciated over a period of five years. c) Vehicles includes vehicles hypothecated amounting to Rs. 306.15 Lacs (Previous year Rs. 302.38 Lacs). d) Capital work in progress includes: - Capital Advances Rs. 1373.48 Lacs (Previous year Rs. 3712.21 Lacs) - Pre-Operative expenses pending allocation and capitalisation Rs. 125.45 Lacs (Previous year Rs. 0.98 Lacs). e) Leasehold Improvements represents civil and other improvements at Group’s leased premises.
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Schedules annexed to and forming part of the consolidated accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008
SCHEDULE-8 INVESTMENTS (Refer Notes A7, B1, B25 and B26 on Schedule 26) Life Insurance Business: a) Long Term-Non Trade, at cost (Quoted) Government Securities1 208170.77 114510.36 Equity Shares2 142779.59 98284.55 Bonds3 137888.58 93833.94 Others - 132.05 (Unquoted) Term Deposit 1113.54 3053.79 b) Current-Non Trade, at cost (Quoted) Government Securities 2731.98 1159.09 Bonds 4099.42 10324.59 (Unquoted) Units in Mutual Fund4 3600.00 12608.96 Commercial Paper/Certificate of Deposit 25862.98 21167.82 Term Deposit 14284.21 2413.23 540531.07 357488.38 Other Business: a) Long Term-Trade, at cost (Unquoted) Equity Shares 455.75 400.75 b) Long Term-Non Trade, at cost (Quoted) Equity Shares 0.65 0.65 c) Current-Non Trade, at cost (Unquoted) Units in Mutual Fund - Unutilised monies raised through placement to QIBs 2009.84 75730.39 - Unutilised monies raised through preferential issue 8355.81 19156.04 - Others 12435.72 31251.61 23257.77 126539.44 563788.84 484027.82
Aggregate value of unquoted investments 68117.85 165782.59 Aggregate value of quoted investments 495670.99 318245.23 Market value of quoted investments 520684.99 333624.45
1 Includes Rs. 186278.37 Lacs (Previous year Rs. 101253.46 Lacs) earmarked for Life Insurance Policyholders 2 Net of credit in fair value change account amounting to Rs. (-) 78.49 Lacs (Previous year Rs. 856.04 Lacs) 3 Includes Rs. 129490.76 Lacs (Previous year Rs. 95214.43 Lacs) earmarked for Life Insurance Policyholders 4 Net of credit in fair value change account amounting to Nil (Previous year Rs. 69.41 Lacs)
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Schedules annexed to and forming part of the consolidated accounts
(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-9 INVENTORIES (Refer Note A8 on Schedule 26) Manufacturing Activities Raw Materials in Stores/Transit 1577.01 1582.05 Stores and Spares 455.41 388.03 Work in Process 579.29 625.20 Finished Goods 192.60 165.57 Trading Activities Stock-in-trade 1258.62 1105.60 Construction Activities Work in Process 0.30 - 4063.23 3866.45
SCHEDULE-10 SUNDRY DEBTORS (Unsecured) Debts exceeding six months Considered Good 11168.79 8214.31 Considered Doubtful 806.19 484.66 Less: Provision for Doubtful Debts (806.19) 11168.79 (484.66) Other Debts Considered Good 16178.96 15905.63 Considered Doubtful 22.89 - Less: Provision for Doubtful Debts (22.89) 16178.96 - 27347.75 24119.94 Amount due from directors during the year Nil (Previous year Rs. 0.11 Lacs) Maximum amount outstanding from directors during the year Rs. 0.11 lacs (Previous year Rs. 0.11 Lacs)
SCHEDULE-11 CASH AND BANK BALANCES (Refer Notes B19 and B26 on Schedule 26) Cash in Hand 708.54 34.70 Cheques in Hand 106.07 44.32 Remittance in Transit * 7128.88 - Balances with Scheduled Banks In Current Accounts 8199.20 2957.85 In Dividend Accounts - 9.10 In Debenture Interest Accounts 12.82 14.79 In Fixed Deposit Accounts** 6553.28 36.60 Stamps in Hand 19.18 0.20 Balances with Non-Scheduled Banks In Current Accounts 108.90 100.00 22836.87 3197.56
* Represents amounts receivable against redemption of units in mutual funds ** held under lien by various authorities Rs. 38.28 Lacs (Previous year Rs. 35.60 Lacs)
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(RS. LACS) As at As at March 31, 2009 March 31, 2008 SCHEDULE-12 OTHER CURRENT ASSETS Interest Receivable*** Considered Good 6816.14 4750.44 Considered Doubtful 23.53 23.53 Less: Provision for Doubtful Interest (23.53) 6816.14 (23.53) 6816.14 4750.44
*** Includes interest accrued on investments Rs. 5609.91 Lacs (Previous year Rs. 4316.52 Lacs)
SCHEDULE-13 LOANS AND ADVANCES (Considered good, unless otherwise stated) (Refer Notes A11, B24 and B31 on Schedule 26) Secured Housing Loans 4.18 4.89 Loans to Policyholders 482.67 287.72 Unsecured Advances recoverable in cash or in kind or for value to be received Considered Good 12932.06 8889.70 Considered Doubtful 687.67 501.84 Less: Provision for Doubtful Advances (687.67) 12932.06 (501.84) Loans to Employees 19.25 16.54 Other Loans 7986.56 4877.89 Inter Corporate Deposits Considered Good 800.00 - Considered Doubtful 441.60 441.60 Less: Provision for Doubtful Advances (441.60) 800.00 (441.60) Balance with Excise Authorities 10928.35 9728.27 Prepaid Expenses 11407.44 3599.91 Security Deposits Considered Good 8027.00 5082.24 Considered Doubtful 36.00 36.00 Less: Provision for Doubtful Deposits (36.00) 8027.00 (36.00) Share Application Money Pending Allotment - Companies under the same management 800.00 - Advance Tax Income Tax 5505.80 7483.31 Wealth Tax 1.48 1.23 Fringe Benefit Tax 2405.00 880.00 7912.28 Less: Provision for Tax Income Tax (3937.78) (5718.76) Wealth Tax (8.36) (7.41) Fringe Benefit Tax (2412.04) (905.21) (6358.18) 1554.10 Other Current Assets - Unit Linked 16280.04 18237.98 71221.65 52458.30
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(RS. LACS) As at As at March 31, 2009 March 31, 2008 Amount due from directors 0.54 622.36 Maximum amount outstanding during the year from directors 807.87 622.36 Amounts due from companies under the same management - Max BUPA Health Insurance Ltd. 985.16 - Maximum amount outstanding during the year from companies under the same management - Max BUPA Health Insurance Ltd. 1008.91 -
SCHEDULE-14 CURRENT LIABILITIES Acceptances - 26.88 Sundry Creditors Total outstanding dues of micro enterprises and small enterprises 79.70 - Total outstanding dues of creditors other than micro enterprises and small enterprises 48574.96 36707.93 Advances From Policyholders 11133.04 13555.15 Claims Outstanding (Includes Claims Pending Investigation) 1320.37 842.40 Advance from Customers 1357.97 1268.49 Investor Education and Protection Fund Unpaid Dividend - 9.10 Unpaid Debenture Interest 10.24 12.19 Interest Accrued But Not Due 113.10 129.20 Other Liabilities 4136.14 4077.66 Other Current Liabilities - Unit Linked 1228.75 5040.79 67954.27 61669.79
SCHEDULE-15 PROVISIONS (Refer Notes A12, A20, B11 and B18 on Schedule 26) Leave Encashment 647.67 517.20 Gratuity 643.39 373.65 Dividend on Preference Shares 839.73 - Corporate Dividend Tax 142.71 - 2273.50 890.85
SCHEDULE-16 MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) (Refer Notes A14 and B17 on Schedule 26) - Preliminary, Share and Debenture Issue Expenses 0.07 0.66 - Deferred Employee Compensation 385.17 645.17 385.24 645.83
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(RS. LACS) For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 SCHEDULE-17 SERVICE INCOME (Refer Note A3 on Schedule 26) Life Insurance Premium 385725.90 271460.45 Less: Premium on Reinsurance Ceded (3822.54) (2205.17) 381903.36 269255.28 Healthcare Business 1 26455.88 21549.76 Construction Activities 715.94 - Clinical Research Business 2 1397.02 1029.92 Placement Revenue 114.56 240.56 Other Services 3 20.11 144.51 410606.87 292220.03
1 Tax deducted at source Rs. 251.48 Lacs (Previous year Rs. 201.78 Lacs) and excludes discounts given. 2 Tax deducted at source Rs. 50.32 Lacs (Previous year Rs. 24.72 Lacs) 3 Tax deducted at source Rs. 0.46 Lacs (Previous year Rs. 4.55 Lacs)
SCHEDULE-18 INCOME FROM INVESTMENT ACTIVITIES (Refer Note A3 on Schedule 26) Dividend Income from Non Trade Investments-Long term 1361.97 240.75 Non Trade Investments-Current 3922.95 5284.92 6733.41 Interest on Loans and Non Trade Investments (Gross) 4 Government Securities 16268.82 9149.82 Bonds 5708.07 3883.12 Loans 1018.19 494.10 Fixed Deposits 1335.24 611.36 Others 150.74 24481.06 73.53 Amortisation of Discount/(Premium) on Non Trade Investments 1232.09 57.72 Profit on Sale of Investments-Long term - 8942.95 Profit on Sale of Investments-Current 2026.42 569.66 Unrealised Gain on Investments - 1736.42 33024.49 32492.84
4 Tax Deducted at Source Rs. 197.42 Lacs (Previous year Rs. 85.81 Lacs)
SCHEDULE-19 OTHER INCOME Liabilities/Provisions No Longer Required Written Back 453.81 178.25 Net Gain on Foreign Exchange Fluctuation - 180.02 Miscellaneous Income * 4898.47 3799.11 5352.28 4157.38
*Tax deducted at source Rs. 42.07 Lacs (Previous year Rs. 99.07 Lacs)
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(RS. LACS) For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 SCHEDULE-20 INCREASE/(DECREASE) IN INVENTORY Opening Stock Work in Process 625.19 231.27 Finished Goods 165.57 56.00 790.76 287.27 Less: Closing Stock Work in Process 579.29 625.19 Finished Goods 192.60 165.57 771.89 790.76 Net Increase / (Decrease) (18.87) 503.49
SCHEDULE-21 MANUFACTURING, TRADING AND DIRECT EXPENSES Manufacturing and Trading Expenses (Refer Note B28 on Schedule 26) Raw Materials Consumed 23338.53 19117.82 Goods Purchased for Resale 1.50 - Excise Duty on Scrap 164.49 265.01 Power and Fuel 2317.13 2055.62 Stores and Spares Consumed 469.89 386.55 Packing Material 1051.67 888.59 Freight Inward 45.08 41.05 Repairs and Maintenance-Plant and Machinery 153.12 98.54 Processing Charges 46.63 90.80 27588.04 22943.98 Direct Expenses Life Insurance Business Agents’ Commission 39157.67 38558.87 Increase in Policy Reserves 175795.76 166033.55 Unrealised loss on Investments 14410.79 - Loss on Sale of Investments-Long term (net) 29461.42 - Claims/other benefits 22082.06 13600.80 Policy Issuance Costs 13209.47 14045.22 Agency Training and Recruitment Expenses 3056.65 1647.04 297173.82 233885.48 Healthcare Business Consumption of Medical Consumables 4909.41 3838.10 Cost of Goods Sold 4567.08 3605.54 Professional and Consultancy Fee 5038.17 3709.49 Outside Lab Investigation 262.08 160.17 Repairs and Maintenance-Medical Equipments 492.86 341.68 Patient Catering Expenses 316.66 244.64 15586.26 11899.62 Healthcare Staffing Business Candidate Related Expenses 28.56 81.17 Sub-Contracting Expenses 715.94 - Clinical Research Business Clinical Trial Expenses (Refer Note B30 on Schedule 26) 401.21 266.89 341493.83 269077.14
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(RS. LACS) For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 SCHEDULE-22 PERSONNEL EXPENSES (Refer Notes B17 and B30 on Schedule 26) Salaries, Wages and Bonus * 70740.97 38995.74 Contribution to Provident and Other Funds 2766.66 1328.97 Recruitment and Training Expenses 8561.31 3809.10 Staff Welfare 2306.99 1349.98 84375.93 45483.79
* Net of Employee Compensation Expenses written back amounting to Rs. 180.82 Lacs (Previous year Nil) pertaining to earlier years
SCHEDULE-23 GENERAL AND ADMINISTRATION EXPENSES (Refer Notes B22, B32, B35, B36 and B37 on Schedule 26) Rent 8766.07 4921.96 Insurance 638.34 463.52 Rates and Taxes 11271.91 2157.82 Repairs and Maintenance: Building 354.31 205.48 Others 9686.58 6271.69 Electricity and Water 3667.99 2338.99 Printing and Stationery 3159.07 1851.03 Travelling and Conveyance 6481.47 5079.20 Communication 6739.01 3323.88 Legal and Professional 8058.42 2304.18 Directors’ Fee 19.14 8.90 Business Promotion 146.04 134.50 Commission 107.29 111.78 Trade Discount 476.52 324.33 Selling and Distribution 2836.10 2366.51 Branding, Advertisement and Publicity 16053.17 5400.74 Provision for Doubtful Debts and Advances 591.22 274.43 Net Loss on Sale/Disposal of Fixed Assets 85.52 188.14 Loss on Sale of Investments-Long term (net) - 104.94 Provision for Diminution in Investments 422.49 51.38 Goodwill written off 403.63 - Debts Written Off 5.82 3.70 Debit Balances Written Off 2.81 0.75 Fixed Assets and Spares Written Off 14.77 53.46 Charity and Donation 646.50 213.64 Amortisation of Miscellaneous Expenditure 0.59 19.50 Net Loss on Foreign Exchange Fluctuation 64.81 - Miscellaneous 3575.36 1797.73 Less: Overheads Recovered * (76.73) (33.62) 84198.22 39938.56
* Tax deducted at source Rs. 0.32 Lacs (Previous year Rs. 5.45 Lacs)
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(RS. LACS) For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 SCHEDULE-24 FINANCIAL EXPENSES Interest on: Short Term Loan 19.48 1.57 Acceptances 32.02 41.54 Term Loans 3371.07 3762.13 Working Capital Facilities 439.15 313.46 Others 114.21 40.23 Bank Charges 1057.47 561.40 Finance Charges 24.00 10.71 5057.40 4731.04
SCHEDULE-25 TAX EXPENSE (Refer Notes A11 and B14 on Schedule 26) Current Year Tax Income Tax 79.86 106.39 Wealth Tax 7.61 7.59 Fringe Benefits Tax 930.61 727.21 Add:- Deferred Tax (3401.64) 830.94 (2383.56) 1672.13
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SCHEDULE – 26 A. SIGNIFICANT ACCOUNTING POLICIES 1 Accounting Convention The consolidated financial statements are prepared to comply in material aspects, except as disclosed in the accounting policies given below with all the applicable accounting principles in India, the applicable accounting standards notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956 in so far as applicable to the consolidated financial statements. The financial statements of Max New York Life Insurance Company Limited, a subsidiary company, which are included in these Consolidated Financial Statements, are prepared in accordance with the accounting principles prescribed by the Insurance Regulatory and Development Authority (Preparation of Financial Statement and Auditor’s Report of Insurance Companies) Regulations, 2002, the accounting standards issued by the Institute of Chartered Accountants of India and the requirements of the Insurance Act 1938, Insurance Regulatory and Development Authority Act, 1999, and the regulations framed thereunder and the Companies Act, 1956, to the extent applicable and the practices prevailing within the insurance industry in India. 2 Basis of Consolidation The consolidated financial statements are prepared in accordance with the principles and procedures laid down by the accounting standard on Consolidated Financial Statements issued by the ICAI. The subsidiaries of Max India Ltd. (“Company”) have been defined as those entities in which the Company owns directly or indirectly more than one half of the voting power or otherwise has power to exercise control over the composition of the Board of Directors of such entities. Max India Ltd. and its subsidiaries are herein after referred to as Group Companies or Group. The financial statements of subsidiaries are consolidated from the date on which the control is transferred to a Group Company and are excluded from consolidation from the date such control ceases. The financial statements of all Group Companies have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating all intra-group balances and transactions and resulting unrealised gains/losses. The consolidated financial statements are prepared applying uniform accounting policies in use by the Company. 3 Revenue Recognition (a) Life Insurance Business: Premium is recognised as income when due. Uncollected premium on lapsed policies is not recognised as income until reinstated. For linked business, premium income is recognized when the associated units are allotted. In case of linked business, top-up premiums (i.e. premium paid in excess of annual target premium as per policy contract) are recognised as single premium. Fees on linked policies including fund charges, etc are recovered from the linked fund in accordance with the terms and conditions of the policies. Reinsurance premium ceded is accounted at the time of recognition of premium income in accordance with the treaty or in- principle arrangement with the re-insurers. (b) Clinical Research Business: Revenue from services is recognised by reference to the stage of completion of clinical study projects subscribed with pharmaceutical companies. Revenue from services is recognised with reference to the stage of completion of clinical data management service projects subscribed with pharmaceutical companies.
(c) Healthcare Business: Revenue from healthcare services is recognised on the performance of related service and includes pharmacy services on patients undergoing treatment and pending billing. Revenue from pharmacy sale is recognised on delivery of goods. Income from Healthcare Service Providers is recognised on the performance of related services as per terms of contracts. Income from Educational Programmes is recognised on accrual basis.
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(d) Healthcare Staffing Business: (i) Revenue from overseas placement of healthcare staff is recognized on the basis of time sheets received from customers on accrual basis. (ii) Revenue from training is recognized at the time of enrolment on accrual basis. (iii) Interest Income is recognized on a time proportion basis taking into account the amounts invested and the rate of interest. Income is stated in full with the tax thereon being accounted for under advance tax. (e) Lease Rentals In respect of lease rentals on operating leases, revenue is recognised proportionately over the period of the related agreements. (f) Export sales are accounted for on the basis of the date of bill of lading/airway bill. Other sales are accounted for at ex- factory prices on transfer of risks and rewards. (g) Income from investments is credited to revenue in the year in which it accrues. Income is stated in full with the tax thereon being accounted for under advance tax. (h) Dividend is recognised as and when the right to receive such payment is established. 4 Fixed Assets (a) Fixed Assets are stated at their original cost including freight, duties (net of CENVAT), taxes and other incidental expenses relating to acquisition and installation. (b) Expenses of revenue nature, which can be regarded as incidental and related to project set-up are transferred to “Pre- operative Expenses Pending Capitalisation”. These expenses are allocated to fixed assets/deferred revenue in the year of commencement of the related project. (c) Assets, which are revalued, are stated at the revalued amounts. The resultant increase in carrying amounts is credited to the revaluation reserve. Depreciation relating to the revalued amounts is adjusted against the revaluation reserve. 5 Borrowing Costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset in accordance with Accounting Standard 16 notified u/s 211(3C) of the Companies Act, 1956 on “Borrowing Costs”. Other borrowing costs are recognized as an expense in the period in which they are incurred. Capitalisation of borrowing costs ceases when substantially all activities necessary to prepare the qualifying assets for its intended use or sale are complete.
6 Depreciation (a) Depreciation is charged on straight-line method on a pro-rata basis at rates estimated by the management based on the economic useful life of the assets, which are not lower than the rates prescribed under Schedule XIV to the Companies Act, 1956. In life insurance business, depreciation is provided for the full month in the month of acquisition of the related asset and no depreciation is provided in the month of sale/disposal of the asset. (b) Leasehold improvements are depreciated over respective lease periods. (c) Assets costing not more than Rs. 5,000 each individually are depreciated at 100%. (d) Intangible assets are amortised over a period of 3-6 years based on management’s estimate of economic useful life of the assets. 7 Investments (a) Investments are classified into current investments and long-term investments. The cost of investments includes acquisition charges such as brokerage, fees and duties. Current investments are carried at lower of cost and fair value. (b) Long-term investments are valued at cost. Provision for diminution is made to recognise a decline, other than temporary, in the carrying value of each investment. (c) Life insurance business: Investments are made in accordance with the Insurance Act, 1938 and the Insurance Regulatory and Development Authority (Investment) Regulations, 2000. Investments are recorded at cost on date of purchase, which includes brokerage and statutory levies, if any and excludes interest paid, if any, on purchase. Diminution in the value of investment, other than temporary decline, is charged to revenue and profit and loss account as applicable.
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i) Classification Investments intended to be held for a period less than twelve months or maturing within twelve months from the balance sheet date are classified as short term investments. All other investments are classified as long-term investments. ii) Valuation - shareholders’ investments and non-linked policyholders’ investments Debt securities, which include government securities, are considered as ‘held to maturity’ and measured at historical cost. The premium/discount, if any, on purchase of debt securities is recognised and amortised in the profit and loss account, as the case may be, over the remaining period to maturity on the basis of their intrinsic yield. Policy loans are valued at historical cost net of repayments, capitalised interest and are subject to impairment, if any. Listed equity shares, as at balance sheet date, are valued at fair value, being the last quoted closing price on the National Stock Exchange (NSE) and in case the same is not available, then on the Stock Exchange, Mumbai (BSE). Unlisted Equity shares are valued at historical cost subject to provision for diminution. Investments in mutual fund units are valued at net asset value of the respective funds as at balance sheet date. iii) Valuation – Linked Investments Government securities are valued at the prices obtained from CRISIL (Credit Rating Information Services of India Limited). Debt securities other than Government Securities are valued on the basis of Bond Valuer (CRISIL). Listed equity shares are valued at fair value, being the last quoted closing price on NSE and in case the same is not available, then on the BSE. Mutual fund units are taken at the previous day’s net asset values. iv) Transfer of Investments Investments in debt securities are transferred from shareholders to policyholders at net amortised cost. Investments other than debt securities are transferred from shareholders to policyholders at lower of book value or market value. Transfer of investments between unit linked funds are effected at market price on date of transfer.
8 Inventories (a) Inventories are valued at lower of cost and net realisable value. Cost for this purpose is calculated on a weighted average method except in the case of medical supplies where cost is calculated on First In First Out basis. In respect of finished goods and work in process, appropriate overheads are loaded. (b) Stock of securities is valued at lower of cost and market value, determined category wise. Cost for this purpose is calculated under First In First Out Method.
9 Capital Subsidy Capital Subsidies, received under the state capital subsidy scheme, are accounted for as capital reserve. 10 Employee Stock Option Scheme Max India Limited (a) The value of options is equal to the aggregate of the intrinsic value of the options granted. Intrinsic value is the option discount represented by the excess of market price on grant date over the exercise price of the option and is amortised on a straight line method basis over the vesting period in line with the Securities and Exchange Board of India (SEBI) Guidelines. (b) As and when the options are exercised, the same will be accounted for as paid up capital to the extent of the face value and Share Premium to the extent of excess of market price over face value on grant date. (c) Options that lapse are reversed by a credit to employee compensation expense equal to the amortised portion of the value of the lapsed options and a credit to deferred employee compensation expense equal to the unamortised option. Max New York Life Insurance Company Limited The value of options is equal to the aggregate of the intrinsic value of the options granted. Intrinsic value is the option discount represented by excess of market price, which is determined by the independent valuer, over the exercise price. The intrinsic value of the options is amortised on a straight line basis over the vesting period. As and when the options are exercised, the same are accounted for as paid up capital to the extent of the face value. Options that lapse are reversed by a credit to employee compensation expense equal to the amortised portion of the value of the lapsed options and a credit to deferred employee compensation expense equal to the unamortised option.
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Max Healthcare Institute Limited The value of options is equal to the aggregate of the fair value of the options granted. Fair value is the face value of the paid up equity shares at which the share capital was introduced last by the Company or the net asset value, which ever is higher. As and when the options are exercised, the same are accounted for as paid up capital to the extent of the face value. Options that last are reversed by a credit to employee compensation expense equal to the amortised portion of the value of the lapsed options and a credit to deferred employee compensation expense equal to the unamortised options. 11 Taxation Income taxes are computed using the tax effect accounting method, where taxes are accrued in the same period in which the related revenue and expenses arise. Provision for tax consists of current tax, fringe benefits tax and deferred tax. A provision is made for income taxes annually based on the tax liability computed at rates as per local laws of the country in which each Group Company is incorporated after considering applicable tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matters is probable. The differences that result between the profit offered for income taxes and the profit as per financial statements are identified and, thereafter, a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. Deferred tax assets are recognised only if there is virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. 12 Employee Benefits (a) Defined Contribution Plan i) Certain employees of the Company are participants of a defined superannuation plan. The Company makes contributions under the superannuation plan to “Max India Limited Superannuation Fund” based on a specified percentage of each covered employee’s salary. ii) The Company makes monthly contributions to the “Max India Limited Employees’ Providend Fund Trust” which is based on a specified percentage of the covered employee’s salary. This fund is administered through trustees and the Company’s contributions thereto are charged to revenue every year. (b) Defined Benefit Plans i) The liability in respect of Gratuity is provided for on the basis of an actuarial valuation carried out at the year-end using Projected Unit Credit Method. Actuarial gains and losses are recognized in full in the Profit and Loss Account for the year in which they occur. The Company has a recognised Trust for Gratuity benefits, “Max India Limited Employees’ Gratuity Fund” to administer the Gratuity funds. The Trust has taken Master policy with the Life Insurance Corporation of India to cover its liability towards employees’ Gratuity. The Gratuity obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost and as reduced by the fair value of Gratuity Fund. ii) The liability in respect of Leave Encashment is provided for on the basis of actuarial valuation carried out at the year- end for long term compensating absences using Projected Unit Credit Method. Actuarial gains and losses are recognized in full in the Profit and Loss Account for the year in which they occur. Short term compensated absences are provided for based on estimates. Other Group Companies within India have various schemes of retirement benefits namely provident fund, superannuation and gratuity. Contributions made to these benefit plans are charged to revenue every year. Accruals for gratuity and leave encashment are made on the basis of actuarial valuation done at the year end. Group Companies situated outside India have employee benefit schemes as per their respective local laws. 13 Foreign Exchange Transactions (a) Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates.
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(b) The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions are recognised in the profit and loss account. (c) Exchange difference in respect of liabilities incurred to acquire fixed assets are recognised in the profit and loss account. (d) For consolidation of accounts, in respect of Group Companies situated outside India, the assets and liabilities are translated at closing rate whereas the revenue and expenses are translated using the average rate during the year. The resultant gain or loss arising out of such translation is recognised in a separate reserve “Foreign Currency Translation Reserve” as required under Accounting Standard-11 revised. 14 Miscellaneous Expenditure (a) Preliminary and share issue expenses are amortised over a period of 5 to 10 years, except cost incurred on raising of funds, which is being amortised over the life of the respective financial instrument. (b) Deferred employee compensation expense is amortised over the vesting period. (c) Other deferred revenue expenditure is amortised from the year they have been incurred/related projects commence operations, over 3 to 5 years based on the period over which future benefits are expected to be received. 15 Leases Assets given under operating lease are shown in the balance sheet under fixed assets and are depreciated on a basis consistent with the depreciation policy of the company. Lease income is recognised in the profit and loss account on accrual basis. Assets acquired on finance lease are recognised in the financial statements at an amount equal to the fair value of the leased asset at the inception of the lease. The depreciation policy for such assets is consistent with that for depreciable assets that are owned by the Group. Operating lease expense is recognised in the profit and loss account on a straight-line basis over the lease term. 16 Benefits for Life Insurance Policy Holders Benefits paid consist of the policy benefit amount and claim settlement costs, if any. Maturity claims are accounted when due for payment. Surrender, death and other claims are recognised for, when intimated. An additional provision is made, on the basis of actuarial estimate, for the benefits which are incurred but not reported. Repudiated claims disputed before judicial authorities are provided for based on management prudence considering the facts and evidences available in respect of such claims. Reinsurance recoverable, where applicable, are accounted in the same period. Withdrawals under linked policies are accounted in respective schemes along with cancellation of associated units. 17 Policy Holders’ Acquisition Cost Acquisition costs are expenses incurred to solicit and underwrite insurance contracts such as commission, medical fee etc. and are expensed in the year in which they are incurred. 18 Liability for Life Insurance Policies in Force The estimated liability for life policies in force is determined by the appointed actuary of Max New York Life Insurance Company Ltd. (“MNYL”), pursuant to his annual investigation of the life insurance business, using appropriate methods and assumptions that conform with regulations issued by Insurance Regulatory and Development Authority (Actuarial Report and Abstract) Regulations, 2000 and Professional Guidance notes issued by the Actuarial Society of India (ASI). The liability is so calculated that together with future premium payments and investment income, all future claims (including bonus entitlements to policyholders) and expenses are met. Liabilities, if any, as determined by appointed actuary, in respect of Linked policies which have lapsed are maintained till the expiry of the revival period and shown under funds for future appropriation. Liabilities under linked policies comprise of fund value and non unit liability for meeting mortality and morbidity risk, which is based on actuarial valuation done by appointed actuary. 19 Contributions to Policyholders’ Account (Technical Account) Contribution to Policyholders’ Account (Technical Account) is made as decided by the board of directors of MNYL and approved by the Shareholders.
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20 Provision and Contingencies A provision is recognized when there is a present obligation as a result of past event and it is probable that an outflow of a resource will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to reflect the current estimates. Contingent liabilities are disclosed after an evaluation of the fact and legal aspects of the matter involved.
21 Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
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B. NOTES TO THE ACCOUNTS 1 The consolidated financial statements have been prepared in accordance with Accounting Standard 21, Consolidated Financial Statements, issued by the ICAI. The consolidated financial statements comprises the financial statements of Max India Ltd. and its subsidiaries, listed below: Name of the Subsidiary Country of Proportion of Proportion of Incorporation ownership as at ownership as at March 31, 2009 March 31, 2008 Indian Subsidiaries 1 Max New York Life Insurance Company Ltd. India 73.69% 73.47% 2 Max Healthcare Institute Ltd. India 70.04% 70.06% 3 Max Medical Services Ltd. 1 India 100% 100% 4 Alps Hospital Ltd. 2 India 100% 100% 5 Max Neeman Medical International Ltd. 5 India 100% 100% 6 Pharmax Corporation Ltd. India 85.20% 85.20% 7 Max Ateev Ltd. India 100% 100% 8 Max HealthStaff International Ltd. India 100% 100%
Foreign Subsidiaries 1 Neeman Medical International BV Netherlands 100% 100% 2 Neeman Medical International NV 3 Netherlands 100% 100% 3 Max Neeman Medical International Inc. 4 United States of America 100% 100% 4 Max UK Ltd. United Kingdom 100% 100%
Notes: 1 Held through Max Healthcare Institute Ltd. 2 Formerly Alps Hospital Pvt. Ltd. Held through Max Medical Services Ltd. 3 Held through Neeman Medical International BV, Netherlands 4 Formerly Neeman Medical International Inc. Held through Neeman Medical International NV, Netherlands 5 Formerly Neeman Medical International (Asia) Ltd. 2 Reserves shown in the consolidated balance sheet represent the Group’s share in the respective reserves of the Group Companies. Goodwill arising on consolidation is shown under fixed assets (Refer Schedule 7). 3 The movement in share of minority interests is as follows: (RS. LACS) Name of the Subsidiary Balance as on Increase in Profit/(Loss) Adjustment* Balance as on April 1, 2008 Capital for the year March 31, 2009 Max New York Life Insurance Co. Ltd. 11215.25 19500.00 (10339.67) 136.67 20512.25 Max Healthcare Institute Ltd. 6048.06 5.00 1367.46 (294.84) 7125.68 Total 17263.31 19505.00 (8972.21) (158.17) 27637.93 * The adjustments in minority interest consist of: (i) Changes in the shareholding pattern during the year. (ii) Impact of dividend on preference shares and corporate dividend tax. (refer note B11 below)
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4 Contingent Liabilities (RS. LACS) Particulars Current Year Previous Year a) Corporate guarantees * 11500.00 11500.00 b) Claims not acknowledged as debts: - Excise Duty 855.26 808.87 - Customs 364.09 413.39 - Income Tax —— Refer Note B7 ——- - Service Tax 4166.81 325.90 - VAT - 109.01 - Other 1160.91 1192.37 - Potential liability in respect of repudiated policyholders claims 283.14 61.31 c) Bank Guarantees 41.00 37.00 d) Letter of Credit outstanding 205.38 284.83 e) Arrears of Dividend on Preference Shares 41.82 379.98 f) Corporate Dividend Tax on arrears of Dividend on Preference Shares 7.11 64.58 g) Liability on assumed IRR (Also refer Note B11 below) 4053.42 1594.31
* Loans of Rs. 2195.00 Lacs (Previous year Rs. 595.00 Lacs) are outstanding against the aforesaid corporate guarantees
5 Capital Commitments (RS. LACS) Particulars Current Year Previous Year Estimated amount of contracts remaining to be executed on capital 5761.48 8912.43 account and not provided for Less: Capital Advances 1373.48 3712.21 Balance value of contracts 4388.00 5200.22
6 Concession in Custom Duty availed on Capital equipment imported during the year against export obligation undertaken under ‘Export Promotion Capital Goods’ Scheme is Rs. 86.55 Lacs (Previous year Rs. 170.28 Lacs). Movement of EPCG export obligation is given below: (RS. LACS) Particulars Current Year Previous Year Obligation as at April 1, 2008 19852.00 21606.00 Additions during the year 707.00 1573.00 Exports made during the year 3767.00 3327.00 Obligation as at March 31, 2009 16792.00 19852.00
7 Income Tax Cases Max India Ltd. (a) In the case of an erstwhile subsidiary of the Company, Max Telecom Ventures Ltd. (“MTVL”) (since merged with the Company with effect from December 1, 2005), a demand of Rs. 9503.93 Lacs (Previous year Rs. 9503.93 Lacs) was raised by the income tax authorities for the assessment year 1998-99 in connection with capital gains realized by MTVL from the sale of shares of Hutchison Max Telecom Limited by holding that the sale transaction pertains to previous period relevant to assessment year 1998-99 and by denying exemption under section 10(23G) of the Income-tax Act, 1961. On appeal by MTVL, the CIT (Appeals) while holding that the sale transaction pertains to previous period relevant to assessment year 1998-99, quashed the order of the Assessing Officer regarding denial of exemption under section 10(23G) and the demand was cancelled. The tax authorities have filed an appeal against this order with the Income-Tax Appellate Tribunal (“ITAT”), which appeal is pending as on date. Subsequently, in the next assessment year, i.e. 1999-00, the above-mentioned transaction was once again sought to be taxed
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both as capital gains and under a different head of income (i.e., business income) on a protective basis by the Assessing Officer as MTVL had asked the tax authorities to treat the transaction as that arising in assessment year 1999-00 and not in assessment year 1998-99. This, along with a few other additions, resulted in creation of a further demand of Rs. 25630.03 Lacs (Previous year Rs. 25630.63 Lacs) which included the demand of Rs. 25002.53 Lacs (Rs. 25002.53 Lacs) on protective basis. On appeal by MTVL, the CIT (Appeals) decided in favor of MTVL and the demand was cancelled. The tax authorities have filed appeal against this order with ITAT, which appeal is pending as on date. MTVL had also filed an appeal before ITAT for assessment year 1998-99 contending that the aforesaid sale transaction pertains to Previous Period relevant to assessment year 1999-2000. This appeal had been disposed off by ITAT by applying a circular of tax department applicable only to capital gains and holding, as a result, that the transaction of sale of shares pertains to previous period relevant to assessment year 1998-99. However, the Tax authorities filed a petition before the ITAT requesting a review of the said order of the ITAT on the ground that all the three appeals pertaining to the aforesaid sale transaction should have been clubbed and heard together. The said petition of the Department was accepted by the ITAT which recalled its earlier order in the Company’s appeal for Assessment year 1998-99. Aggrieved, the Company filed a writ petition to the Hon’ble High Court of Punjab and Haryana challenging the above action of ITAT on the ground that the same was beyond jurisdiction. The Hon’ble High Court of Punjab and Haryana has admitted the writ petition and stayed the operations of the order of ITAT accepting the petition filed by the Department. The ITAT has in the meanwhile adjourned sine- die all the three appeals pending operation of the stay imposed by the Hon’ble High Court. (b) The Company has received the following demands under section 156 of the Income Tax Act, 1961 relating to income tax assessments: Assessment year Demand Demand As at March 31, 2009 As at March 31, 2008 (Rs. Lacs) (Rs. Lacs) 1999-2000 Nil 5.67 2000-2001 5.25 5.25 2001-2002 15.65 15.65 2002-2003 41.77 41.77 2003-2004 Nil Nil 2004-2005 0.76 0.76 2005-2006 Nil Nil 2006-2007 98.96 Nil The above relate to certain disallowances and other matters and are in various stages of appeal with the CIT(Appeals)/ITAT. Further, in the following cases, penalty under section 271(1)(c) of the Income Tax Act, 1961 has been levied for which the Company is in appeal before ITAT. Assessment year Demand Demand As at March 31, 2009 As at March 31, 2008 (Rs. Lacs) (Rs. Lacs) 1992-1993 18.78 19.05 1993-1994 14.63 14.63
Max Ateev Ltd. (“Max Ateev”) There are certain income-tax proceedings pending against the Company at various stages of appeal, as per the detailed given below:
Assessment year Appeal Pending Before 2003-2004 CIT(Appeals) 2004-2005 CIT(Appeals) 2005-2006 CIT(Appeals) The company is hopeful that the above appeals will be disposed off in its favour.
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Max Healthcare Institute Ltd. Certain income-tax proceedings are pending against the Company as detailed below:- (RS. LACS) Assessment Year 2003-04 2004-05 2005-06 2006-07 Disallowances made by the Assessing Officer 1157.72 641.01 649.14 462.42 (1157.72) - (649.14) - Appeal against the disallowance pending Before CIT (Appeals) CIT (Appeals) CIT (Appeals) CIT (Appeals) Demand (if any) - - - -
Previous year’s figures are given in brackets.
The Company is hopeful that the above appeals would be disposed off in its favour. Max New York Life Insurance Company Ltd. (“MNYL”) For the assessment year 2002-2003, the Assessing Officer has reduced the returned loss of Rs. 6684.09 Lacs (Previous year Rs. 6684.09 Lacs) to Rs. 6482.08 Lacs (Previous year Rs. 6482.08 Lacs) by making disallowance of Rs. 202.01 Lacs (Previous year Rs. 202.01 Lacs) u/s 92CA(3) of the Income-tax Act, 1961 relating to Transfer Pricing. Similarly, for the Assessment years 2003-04 & 2004-05, the returned losses have been reduced from Rs. 7408.37 Lacs (Previous year Rs. 7408.37 Lacs) to Rs. 7331.92 Lacs (Previous year Rs. 7331.92 Lacs) and from Rs. 7563.42 Lacs (Previous year Rs. 7563.42 Lacs) to Rs. 7285.17 Lacs (Previous year Rs. 7285.17 Lacs) respectively by the assessing officer by making similar disallowances Appeals against the above orders have been filed to the CIT (Appeals), which is pending disposal. Further, for the assessment year 2005-06, the returned loss has been reduced from Rs. 9427.20 Lacs to Rs. 8999.80 Lacs by making disallowance of Rs. 121.70 Lacs u/s 92CA(3) of the Income Tax Act, 1961 relating to Transfer Pricing and Rs. 105.70 Lacs due to disallowance of Income on sale of Investment. Appeal against the order has been filed to CIT(Appeals). Further , in this order there was a mistake apparent from record in respect of returned loss of Rs. 200.00 Lacs against which rectification application u/s 154 of the Act has been filed. Appeals against the above orders have been filed to the CIT (Appeals), which are pending disposal. 8 Loans Max India Ltd. a) Term loan - II from Yes Bank Ltd amounting to Rs. 428.57 Lacs (Previous year Rs. 714.29 Lacs) is secured by a first pari passu charge on the fixed assets of the Company, both present and future. b) Term loan - II from Punjab National Bank amounting to Rs. 3400.00 Lacs (Previous year Rs. 4000.00 Lacs) is secured by a first pari passu charge on the fixed assets and second pari passu charge on the current assets of the Company, both present and future. c) Term loan from Oriental Bank of Commerce amounting to Rs. 3400.00 Lacs (Previous year Rs. 4000.00 Lacs) is secured by a first pari passu charge on the fixed assets and second pari passu charge on the current assets of the Company, both present and future. d) Fund based working capital facilities from banks are secured by a first pari passu hypothecation charge on all current assets and a second charge on immovable and movable fixed assets of the Company, both present and future. Max Healthcare Institute Ltd. (“MHIL”) (a) MHIL has availed term loans to finance its hospital projects and details of loans outstanding as on date are as follows: (i) Rs. 9183.30 Lacs (Previous year Rs. 10061.10 Lacs) from Housing Developing Finance Corporation Ltd. (ii) Rs. 6000.00 Lacs (Previous year Rs. 6000.00 Lacs) from Infrastructure Development Finance Co. Ltd. (iii) Rs. 7312.50 Lacs (Previous year Rs. 7500.00 Lacs) from Export Import Bank of India The above loans from financial institution are secured by way of: - Equitable mortgage of the immovable properties of the company and a party having business arrangements with that company - Hypothecation of movable fixed assets of the company and its subsidiary - Corporate guarantees by the Company
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(b) Fund based working capital facility from Yes Bank for Rs. 1012.80 Lacs (Previous year Rs. 753.92 Lacs) is secured by way of hypothecation of all current assets of the company and a party having business arrangements with that company.
Pharmax Corporation Limited (“Pharmax”) Term loan from Canara Bank amounting to Rs. 848.03 Lacs (Previous year Rs. 1031.36 Lacs) availed by Pharmax is secured against charge of monthly lease rentals receivable from various lessee and equitable mortgage of undivided share of freehold property at Okhla, New Delhi. 9 During year ended March 31, 2008, the Company had issued 4,16,66,660 Equity Shares of Rs. 2/- each at a premium of Rs. 238/- per share aggregating to Rs. 99999.98 Lacs to Qualified Institutional Buyers (“QIBs”) under Chapter XIII-A of the Securities & Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000. 10 In 2003-04, the Company had signed an amendment to the Joint Venture Agreement (“JVA”) with New York Life International Inc. (“NYLI”). In terms of the amended JVA, both the parties agreed that the Company shall not transfer or otherwise dispose its shareholding to an extent of 24% of the paid up issued share capital (“Restricted Shares”) of Max New York Life Insurance Company Ltd (“MNYL”) to any person other than NYLI. The parties also agreed that NYLI shall pay to the Company the aggregate par value equal to 24% of the paid up issued share capital of MNYL from time to time. The aforesaid payment may be applied by NYLI to purchase the Restricted Shares of MNYL from the Company, when and to the extent permitted pursuant to applicable laws by March 2010 or become repayable thereafter. Pursuant to this amendment, the Company had received Rs. 17420.55 Lacs (Previous year Rs. 17420.55 Lacs) in aggregate from NYLI till March 31, 2008. Thereafter, on July 15, 2008, the Company amended the above mentioned JVA with NYLI. Under the new amended JVA, NYLI has an option for 8 years to increase its shareholding in MNYL by 24% upto a maximum of 50%, subject to regulations. The option can be exercised at a fair market value based formula defined as per the new amended JVA, less discount of 10%, as against a preferential formula earlier. Also, the option deposit of Rs. 17420.55 Lacs received from NYLI in line with the terms of the amendment in 2003- 04 has been refunded on July 15, 2008. 11 During the previous year, Max Healthcare Institute Limited (MHIL) together with the Company had entered into a tripartite subscription agreement dated June 29, 2007, for issue of equity and preference share capital, with International Finance Corporation, USA (IFC). As per the agreement, IFC has subscribed to the share capital of MHIL amounting to Rs. 30,000.00 Lacs on July 28, 2007, as detailed below: a. 90,90,909 Equity Shares of face value of Rs. 10/- each at a premium of Rs. 45/- each aggregating to Rs. 5000.00 Lacs. b. 250,000,000, 8 years 2% Cumulative Partially Convertible Preference Shares of Rs. 10/- each aggregating to Rs. 25000.00 Lacs. The Preference Shares carry a dividend rate of 2% which is cumulative in nature, payable until date of redemption or date of purchase or conversion into equity shares, whichever is earlier. The earliest date of redemption or conversion or purchase is 3 years from the date of issue of the said shares. Also, the Preference Shares have been issued with a guaranteed internal rate of return (GIRR) of 11.25%. The said GIRR is inclusive of 2% dividend rate, premium on redemption and discount to any initial public offering (IPO) price. The Preference Shareholders also have an option to convert a portion of Preference Shares into Equity Shares at a discount to a future IPO price of MHIL, subject to a maximum of 7.5% equity stake in MHIL upon such conversion. The Preference Shares which have not been converted into equity shares shall be redeemable at the expiry of eight years from the date of issue. The said redemption of Preference Shares will be at a GIRR of 11.25% p.a. inclusive of payment of 2% annual dividend and premium on redemption of Preference Shares. MHIL also has a right to redemption of the aforesaid preference shares at any time provided IFC is paid the redemption amount at the GIRR. Subsequent to the above mentioned agreement, MHIL has entered into another tripartite “put option” agreement together with the Company and IFC. As per the said agreement IFC has a right to exercise the put option in respect of the said preference shares as under:- i) At any time after 3 years from date of subscription; or
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ii) At any time after giving due notice, in the event of non-performance of certain obligation by MHIL and/or the Company. Also, the price to be determined as per the ‘put option’ would be equivalent to the amount paid to redeem the Preference Shares so as to generate GIRR of 11.25% as adjusted with the following:- i) Payment of 2% preference dividend; ii) Discount on IPO Price on such portion of Preference Shares which have been converted to Equity Shares; and iii) Premium paid on Preference Shares already redeemed or to be redeemed. The premium payable and the applicable discount on any future IPO price on redemption of the preference shares are dependent on future events and accordingly cannot be individually ascertained. However, the company has provided for dividend payable on these preference shares amounting to Rs. 500.00 Lacs for the current year and Rs. 339.73 Lacs for the previous year along with corporate dividend tax thereon. 12 Actuarial Assumptions – Life Insurance Business MNYL’s Appointed Actuary has determined valuation assumptions that conform with Regulations issued by the IRDA and professional guidance notes issued by the Actuarial Society of India (ASI). Details of assumptions are given below: (a) Interest: It is based upon the current and projected yields on the fund and the current and projected yields on G-sec. A valuation rate of interest of 7.5% (Previous year - 7.5%) for participating business, non-participating, health business and riders has been used. The valuation rate of interest rate was reduced by margins for adverse deviations of 0.75% (Previous year - 0.75%) for participating business and 1.75% (Previous year - 1.75%) for non-participating business. Gross unit growth rate of 7.5% pa (Previous year - 7.5% pa) has been used which was further reduced by a margin of adverse deviation of 1.25% (Previous year - 1.25%) per annum. (b) Mortality: It is based on experience (where credible) and on assumptions used in the previous annual valuation (to avoid arbitrary discontinuities). The assumptions are based on the base table IALM (94-96). For participating Life products 75% of the base table is used in year 1 and beyond year 1 70% is used. In general, the assumptions in the initial years have been increased to reflect anti-selection and those in the later years have been lightened in line with experience. The assumptions have been increased by a margin for adverse deviation of 10% (Previous year - 10%) for participating business and 25% (Previous year - 25%) for non-participating, unit linked and health business. (c) Morbidity: The IAI has recommended the CIBT93 study of UK for morbidity incident rates due to lack of any published Indian experience. Proportions of 95% to 300% (Previous year - 95% to 300%) of these tables have been used which were further increased by a margin for adverse deviation of 25% (Previous year – 25%). (d) Expenses: The per policy maintenance expenses used are based on projected expenses for the year. These are further increased by margins for adverse deviation of 10% (Previous year - 5%) for participating policies and 10% (Previous year - 10%) for non-participating policies and health. (e) Inflation: An assumption of 6% pa (Previous year - 6% pa) for expense inflation has been used. (f) Commission: It is based on the actual commission rates paid. There has been no change in these assumptions from those used last year. (g) Lapses: The lapse rates are based on experience (where credible). In general the lapses have been lightened compared to the assumptions used last year. The rates were further reduced by margins for adverse deviation of 20% (Previous year: 20%) for participating policies 50% (Previous year: 50%) for non-participating policies and 20% (Previous year: 20%) for health plans. (h) Future bonuses: Provision is made for future bonuses based on estimated expected bonus payouts consistent with valuation assumptions and policyholders’ reasonable expectations. Overall, the valuation assumptions provide a conservative set of bases. 13 Employee Stock Option plans Max India Limited Employee Stock Option Plan – 2003 (“the 2003 Plan”): The Company had instituted the 2003 Plan, which was approved by the Board of Directors in August 2003 and by the shareholders in September 2003. The 2003 Plan provides for grant of stock options aggregating not more than 5% of number of issued equity
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shares of the Company to eligible employees and directors of the Company. The 2003 Plan is administered by the remuneration committee appointed by the board of directors. Details of the 2003 Plan are given below: (NOS.) Particulars Year Ended Year Ended March 31, 2009 March 31, 2008 Options outstanding, beginning of the year 567,935 741,765 Granted during the year 66,320 - Exercised during the year (287,765) (173,830) Forfeited during the year (280,170) - Options outstanding, end of the year 66,320 567,935
Max New York Life Insurance Company Limited The company currently has following employee stock option plans: Employee Share Based Payment Plans (a) Employee Stock Option Plan 2004 (“the 2004 plan”): The 2004 plan was approved by the board in its meeting held on 28th September, 2004 and is proposed to be implemented by the management adopting the Trust route. Under the plan 5,900,000 options were granted at an exercise price of Re. 1/- per 1,000 equity shares of the Insurer. The options were granted with effect from July 1, 2004 and are to vest on July 1, 2009. The employees covered under the plan can exercise the options only if they are in service with the Insurer as on the vesting date. Under the plan, 4,975,000 shares were outstanding at the beginning of the year out of which 175,000 got lapsed due to attrition during the year. Cost of options under the plan is accounted using the Intrinsic Value method. During the year Rs 170.28 Lacs (Previous year - Rs 70.81 Lacs) has been accrued as ESOP cost in the revenue and profit and loss account as applicable. (b) Employee Stock Option Plan 2006 (“the 2006 plan”): The 2006 plan was approved by the board on 9th March 2007. Under this plan, 2,500,000 options in aggregate were granted to certain employees at an exercise price of Rs. 10/- per share. The options were granted with effect from July 1, 2006 and 75% of the options are to vest on July 1, 2009 and balance 25% on July 1, 2010 if the employee is in service with the Insurer as on the vesting date. Under the plan, 2,500,000 shares were outstanding at the beginning of the year out of which 250,000 got lapsed due to attrition during the year. Cost of options under the plan is accounted using Intrinsic Value method. During the year Rs 1.94 Lacs (Previous year - Nil) has been accrued as ESOP cost in the revenue and profit and loss account as applicable. A summary of status of Employee Stock Based Plans is given below: (NOS.) Particulars Year Ended Year Ended March 31, 2009 March 31, 2008 Outstanding at the beginning of the year 7,475,000 8,000,000 Add: granted during the year - - Exercised during the year - - Forfeited/lapsed during the year (425,000) (525,000) Outstanding at the end of the year 7,050,000 7,475,000
Max Healthcare Institute Limited Employee Stock Option Plan – 2006 (“the 2006 Plan”): The Company has instituted the 2006 Plan, which was approved by the Board of Directors on July 31, 2006 and subsequently by the shareholders on August 10, 2006. The 2006 Plan provides for grant of stock options aggregating not more than 5% of number of issued equity shares of the Company to eligible employees of the Company. The 2006 Plan is administered by the remuneration
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committee appointed by the board of directors. The options can be exercised during two to four years from the vesting date. Details of the 2006 Plan are given below: (NOS.) Particulars Year Ended Year Ended March 31, 2009 March 31, 2008 Options outstanding, beginning of the year 1,620,000 1,670,000 Options granted during the year 535,000 100,000 Options forfeited/lapsed during the year (1,200,000) (150,000) Exercised during the year (50,000) - Options outstanding, end of the year 905,000 1,620,000 14 Deferred Tax The movement of deferred tax is given below: 2008-09 (RS. LACS) Particulars As at April 01, Provision As at March 31, 2008 during the year 2009 Deferred Tax Liability Depreciation Expense 4309.80 (206.35) 4103.45 Deferred Revenue Expenses and preoperative expenditure 93.19 (48.73) 44.46 Deduction u/s 35D/35DD 0.17 (0.17) - Liability for increase in surcharge (14.90) - (14.90) Total 4388.26 (255.25) 4133.01 Deferred Tax (Assets) Deduction u/s 43B (287.07) (91.78) (378.85) Other Provisions (679.48) (405.94) (1085.42) Unabsorbed Depreciation - (2648.67) (2648.67) Total (966.55) (3146.39) (4112.94) Net Deferred Tax Liability/(Asset) 3421.71 (3401.64) 20.07
2007-08 (RS. LACS) Particulars As at Change in Provision Adjustment * As at April Tax Rate during March 01, 2007 the year 31, 2008 Deferred Tax Liability Depreciation 3238.15 (227.58) 1299.23 - 4309.80 Deferred Revenue Expenses and preoperative expenditure 156.64 (0.01) (63.44) - 93.19 Deduction u/s 35D/35DD 3.39 (0.01) (3.21) - 0.17 Liability for increase in surcharge (14.90) - - - (14.90) Total 3383.28 (227.60) 1232.58 - 4388.26 Deferred Tax (Assets) Deduction u/s 43B (151.61) 12.15 (93.62) (53.99) (287.07) Other Provisions (586.91) 46.63 (139.20) - (679.48) Total (738.52) 58.78 (232.82) (53.99) (966.55) Net Deferred Tax Liability/(Asset) 2644.76 (168.82) 999.76 (53.99) 3421.71
Note: Deferred tax assets on timing differences and unabsorbed depreciation are created to the extent of their realisability in future. * Impact of transitional liability as per AS15 (Refer Note B18 below)
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15 Directors’ Remuneration (RS. LACS) Current Year Previous Year (a) Salary, wages and allowances 1203.01 429.60 (b) Contribution to provident fund and superannuation fund 74.52 24.30 (c) Value of perquisites 18.37 27.67 Total 1295.90 481.57
The above does not include leave encashment, gratuity, ESOP.
Notes: Remuneration for Current year includes an amount of Rs. 613.96 Lacs (Previous year Nil) relating to earlier years for which the Company has received Central Government approval during Current year. However this does not include loss on sale of assets amounting to Rs. 28.79 Lacs arising out of final settlement. The excess amounts of Nil for the Current year (Previous year Rs. 613.96 Lacs) received by the concerned directors, are held by them in trust for the Company.
16 Earnings per Share Calculation of EPS (Basic and Diluted) Particulars For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 Basic Net (Loss) after tax (Rs. Lacs) (21838.61) (4889.72) Less: Dividend on Preference Shares 688.12 - Net (Loss) for EPS (22526.73) (4889.72) Weighted average number of Equity Shares 221998514 213118796 EPS (Rupees) (10.15) (2.29) Equity Share Details (Nos) Outstanding as at the beginning of the year 221742545 179902055 Issued on May 5, 2008 280175 - Issued on December 31, 2008 7590 - Issued on June 15, 2007 - 41666660 Issued on September 22, 2007 - 166250 Issued on February 7, 2008 - 7,580 Outstanding as at the end of the year 222030310 221742545 Diluted Net (Loss) after tax (Rs. Lacs) (21838.61) (4889.72) Less: Dividend on Preference Shares 688.12 - Net (Loss) for EPS (22526.73) (4889.72) Weighted average number of Equity Shares 222122712 213772230 EPS (Rupees) (10.15) (2.29) Equity Share Details (Nos) Outstanding as at the beginning of the year 222310480 180643820 Issued on June 15, 2007 - 41666660 ESOPs granted under the 2003 Plan 66320 - ESOP forfeited 280170 - Outstanding as at the end of the year 222096630 222310480
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Reconciliation of denominators used for calculating basic and diluted earnings per share
Particulars For the Year Ended For the Year Ended March 31, 2009 March 31, 2008 Denominator used for computing basic Earnings Per Share 22,19,98,514 21,31,18,796 Add :- Dilutive impact of - - ESOPs granted/forfeited under the 2003 Plan 1,24,198 6,53,434 Denominator used for computing diluted Earnings Per Share 22,21,22,712 21,37,72,230
17 Miscellaneous Expenditure (RS. LACS) Particulars As at Additions Adjustment Amortised As at April 1, during March 31, 2008 the year 2009 Preliminary and Issue Expenses 0.66 - - 0.59 0.07 (14.16) (-) (-) (13.50) (0.66) Deferred Revenue Expenditure -- --- (6.00) (-) (-) (6.00) (-) Deferred Employee Compensation * 645.17 245.59 (267.20) 238.39 385.17 (1130.85) (-) ((52.50)) (433.18) (645.17) 645.83 245.59 (267.20) 238.98 385.24 (1151.01) (-) ((52.50)) (452.68) (645.83)
* Amortisation has been charged to Salaries, Wages and Bonus.
18 Employee Benefits Defined Benefit Plans The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy. Unavailed leaves can be encashed (on Basic Salary) at the time of separation from the company. The Company had adopted Accounting Standard, AS-15 (revised 2005), on employee benefits with effect from April 1, 2007. Accordingly, the transitional obligation of the Company amounting to Rs. 187.13 Lacs (Net of tax of Rs. 53.99 Lacs) towards gratuity and leave encashment liability has been charged off to General Reserve in the previous year. The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the respective plans. (RS. LACS) Particulars Gratuity Leave Encashment As at As at As at As at 31.03.2009 31.03.2008 31.03.2009 31.03.2008 Net employee benefit expense (recognised in Employee Cost) Service cost 316.78 196.55 183.48 148.28 Interest cost 73.28 48.20 41.38 31.20 Expected return on plan assets (45.30) (34.59) - - Actuarial (gain)/loss 227.91 90.29 (16.54) (15.26) Net cost 572.67 300.45 208.32 164.22
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(RS. LACS) Particulars Gratuity Leave Encashment As at As at As at As at 31.03.2009 31.03.2008 31.03.2009 31.03.2008 Details of Provision for gratuity and Leave Encashment Benefits Present value of the obligation 1372.87 916.27 647.67 517.20 Fair value of plan assets 729.48 542.62 - - Liability recognized at the year end 643.39 373.65 647.67 517.20 Change in present value of the defined benefits obligation are as follow: Obligations (Opening balance) 916.26 610.36 517.20 390.01 Service Cost 316.78 196.55 183.48 148.28 Interest cost 73.28 48.20 41.38 31.20 Benefits paid (104.63) (42.19) (77.85) (37.58) Actuarial (gain)/loss 171.18 103.34 (16.54) (14.71) Obligation (Closing Balance) 1372.87 916.26 647.67 517.20 Change in the fair value of plan assets are as follow: Fair value of plans assets (Opening balance) 542.62 419.62 - - Expected return on plan assets 45.43 34.59 - - Actuarial gain/(loss) (56.86) 13.05 - - Contribution 302.54 117.56 - - Benefits paid (104.25) (42.19) - - Fair value of plan assets (Closing balance) 729.48 542.62 - - The Company expects to contribute NIL to gratuity in 2009-10. The major categories of plan assets as a percentage of the fair value of total plan assets are as follows Life Insurance Corporation of India (For all subsidiaries except Max New York Life Insurance Company Ltd (MNYL) who has taken a policy from MNYL only) 100% 100% - - Assumptions Discount rate 7.80-8.00% 8.00% 7.80-8.00% 8.00% Interest Rate 5.00-8.00% 8.00% 5.00-8.00% 8.00% Estimated rate of return on plan assets 8.00-9.15% 9.15% N.A. N.A. Salary Increase 5.00-15.00% 10.00% 5.00-15.00% 10.00% Attrition rate 1% to 40% 1% to 5% 1% to 40% 1% to 5% (Depending (Depending (Depending (Depending on Age) on Age) on Age) on Age) Leave availment in the service N.A. N.A. 5.00-10.00% 20.00% Retirement age 58 years 58 years 58 years 58 years The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market
Amounts for the current and previous year are as follows: Defined benefit obligation 1372.86 916.26 647.67 517.20 Plan assets 729.48 542.63 - - Surplus / (deficit) (643.38) (373.63) (647.67) (517.20) Experience adjustments on plan liabilities 50.22 2.42 (205.24) (24.84) Experience adjustments on plan assets (56.73) (31.35) - -
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Defined Contribution Plans During the year, the Company contributed Rs. 2099.54 Lacs (Previous year Rs. 1099.84 Lacs) for provident fund and Rs. 70.62 Lacs (Previous year Rs. 69.76 Lacs) for superannuation fund which represents contribution to defined contribution plans. Other Long Term Benefits During the year, consequent to the adoption of AS-15 (revised 2005), the company recognized in the Profit and Loss account Rs. 6.14 Lacs (previous year Rs 5.00 Lacs) for non-vesting compensated leaves and Rs. 7288.60 Lacs (Previous year Rs 4621.84 Lacs) for deferred compensation for employees. Transitional liability towards deferred compensation amounting to Rs 994.11 Lacs has been charged off in General Reserve in previous year.
19 Detail of Balances with Non-scheduled Banks (RS. LACS) Name of the Bank Balance as on Maximum Balance Maximum March 31, 2009 Balance as on March Balance Outstanding 31, 2008 Outstanding during April 01, during April 01, 2008 to March 2007 to March 31, 2009 31, 2008 In Current Accounts Wachovia Bank 9.88 47.06 7.39 31.95 Barclay Bank Plc 11.81 38.98 5.19 44.48 Rabo Bank 87.21 113.86 87.42 124.98 Total 108.90 100.00
20 Segment Reporting (a) Business Segments The Company has considered business segment as the primary segment for disclosure. The products/ services included in each of the reported business segments are as follows: • Speciality Plastic Products - The holding company’s manufacturing facility located at Railmajra, Nawanshar (Punjab), produces packaging films supported with polymers of propylene, leather finishing transfer foils and related products. • Life Insurance – This segment relates to the nation wide life insurance business carried out by one of the Company’s subsidiaries. • Healthcare Business – One of the Company’s subsidiaries is engaged in the delivery of healthcare services in the national capital territory of Delhi through its primary and tertiary health care delivery centers. This also includes revenue from leasing of medical and other equipments. • Clinical Research – Consists of business activities relating to conduct of ethical medical research involved in drug development process as a Clinical Research Service provider. The group of subsidiaries involved in this business segment offer study management services, project management services, data base management services, monitoring services and clinical trial pharmacy supply chain management services to the pharmaceutical, medical device, biotechnology and Contact Research Organizations worldwide. • Business Investments – This segment is represented by treasury investments. • Healthcare Staffing – Includes business activities relating to sourcing, training and placing healthcare personnel in India and abroad. • Others – The leasing activities undertaken by one of the Company’s subsidiary are classified under this segment. The above business segments have been identified considering: (i) The nature of products and services (ii) The differing risks and returns (iii) Organisational structure of the group, and (iv) The internal financial reporting systems.
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Segment Revenue consists of revenue from external customers and revenue from other segments. Segment Result is the difference of segment revenue and segment operating expenses. Unallocated Assets include assets pertaining to the holding company’s corporate office such as, loans, advance and deposits. Unallocated Liabilities include tax provisions and interest bearing loans not directly related to any business segment. Unallocated Expenses - Expenses incurred at corporate office of the holding company relate to various business segments. As there is no reasonable basis of allocating this expenditure to various segments, the same are shown as unallocated reconciling expenses. Interest expense is not treated as part of a segment expense and is reflected as a separate line item, except interest on loans allocated to business segment. The segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting these financial statements. (b) Geographical Segments The Company has considered geographical segment as secondary reporting segment for disclosure. For this purpose, the revenues are bifurcated based on location of customers in India and outside India.
SEGMENT INFORMATION PRIMARY SEGMENT (RS. LACS) Particulars Speciality Healthcare Business Life Healthcare Clinical Others Total Plastic Business Investment Insurance Staffing Research Products Services Services a. Segment Revenue from Sales to External Customers 37003.51 4784.99 - ----41788.50 (30343.88) (3755.12) (-) (-) (-) (-) (-) (34099.00) Service Income 20.11 27171.81 - 381903.36 114.56 1397.03 - 410606.87 (133.30) (21549.76) (-) (269255.28) (251.77) (1029.92) (-) (292220.03) Service/Interest Income from Inter Segments - 3040.83 287.15 - - 266.94 340.41 3935.33 (-) (2436.74) (26.85) (-) (-) (273.50) (328.72) (3065.81) Income from Investment Activities - 2761.06 4421.76 25409.41 0.75 2.21 290.54 32885.73 (-) (984.40) (6880.16) (24561.25) (0.71) (2.93) (22.72) (32452.17) Other Income 1.69 260.49 - 3001.64 35.86 25.20 152.21 3477.09 (118.53) (140.20) (-) (1596.97) ((3.23)) (101.93) (265.90) (2220.30) Total Segment Revenue 37025.31 38019.18 4708.91 410314.41 151.17 1691.38 783.16 492693.52 (30595.71) (28866.22) (6907.01) (295413.50) (249.25) (1428.08) (597.54) (364057.31) Less: Inter Segment Revenue 3935.33 (3065.81) Segment Revenue from External Customers 488758.19 (360991.50) Add: Unallocated Revenue 247.19 (22.63) Add: Interest Income 138.76 (40.66) Total Revenue 489144.14 (361054.79)
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(RS. LACS)
Particulars Speciality Healthcare Business Life Healthcare Clinical Others Total Plastic Business Investment Insurance Staffing Research Products Services Services
b. Segments Results 4003.66 4754.38 4421.76 (40247.85) (267.54) 95.89 369.05 (26870.65) (3912.75) (2676.02) (6880.00) ((10167.92)) ((441.88)) (62.87) (275.81) (3197.65) Interest Income 138.76 (40.66) Sub-total (26731.89) (3238.31) Less: Unallocated Expenses 3911.74 (2813.61) Interest Expenses 5057.40 (4731.04) (Loss) before tax (35701.03) ((4306.34)) Provision for Taxation (Includes Provision for Deferred Tax) (2383.56) (1672.13) (Loss) after Tax (33317.47) ((5978.47))
c. Carrying Amount of Segment Assets 28929.84 77547.68 14980.44 636948.14 98.87 1319.30 3628.75 763453.02 (26926.24) (74081.69) (106655.66) (421983.00) (243.86) (873.30) (2803.25) (633567.00) Add: Unallocated Assets 19050.64 (3932.13) Cost of Control 6986.19 (7389.82) Total Assets 789489.85 (644888.95)
d. Segment Liabilities 2890.94 7461.17 - 558183.70 51.02 687.75 202.27 569476.85 (3175.14) (5429.32) (-) (378957.68) (112.04) (474.72) (265.11) (388414.01) Add: Unallocated Liabilities 35745.75 (59836.29) Total Liabilities 605222.60 (448250.30)
e. Cost to Acquire Tangible and intangible Fixed Assets 1199.97 5382.71 - 24551.60 0.45 30.42 - 31165.15 (1745.54) (5129.86) (-) (8149.64) (33.05) (42.06) (13.30) (15113.45) Unallocated 46.85 (107.34) Total Addition 31212.00 (15220.79)
f. Depreciation and Amortisation Expenses 1134.14 1815.09 - 6515.98 39.84 57.96 66.65 9629.66 (1056.15) (1871.58) (-) (3438.88) (68.63) (66.29) (68.99) (6570.52) Unallocated Depreciation and Amortization 71.85 (83.07) Total Depreciation and Amortization 9701.51 (6653.59)
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(RS. LACS)
Particulars Speciality Healthcare Business Life Healthcare Clinical Others Total Plastic Business Investment Insurance Staffing Research Products Services Services
g. Non-cash Expenses other Than Depreciation and Amortisation 109.54 302.00 - 537.43 55.25 72.78 5.26 1082.26 (32.74) (372.93) (0.16) (135.64) (0.40) (105.19) (18.47) (665.53) Unallocated Non Cash Expenses 40.37 (11.26) Total 1122.63 (676.79)
SECONDARY SEGMENT (RS. LACS) Particulars India North Europe South Asia Total America Canada America Australia
a. Revenue from External Customers 480807.99 909.34 4142.57 808.81 2089.48 488758.19 (353420.97) (1049.11) (3167.99) (578.22) (2775.21) (360991.50) b. Carrying Amount of Segment Assets by Location of Assets 757256.74 534.73 5426.33 - 235.22 763453.02 (626580.06) (321.80) (5245.98) (207.22) (1211.94) (633567.00) c. Cost to Acquirer Tangible and Intangible Fixed Assets by Location of Assets 31164.51 0.64 - - - 31165.15 (15113.45) (-) (-) (-) (-) (15113.45)
21 Related Parties (as identified by the management) are classified as:
Key Management Personnel (Directors) Mr. Analjit Singh, Mr. B Anantharaman (till June 30, 2008)
Relatives of Key Management Personnel Mr. Veer Singh
Enterprises over Which Key Management Liquid Investments & Trading Company, New Delhi House Services Ltd., Medicare Personnel have Significant Influence Investments Ltd., Maxopp Investments Ltd., Cheminvest Ltd., Pivet Finances Ltd., Lakeview Enterprises, Delhi Guest House Pvt Ltd., Trophy Holdings Pvt. Ltd., M.V. Healthcare Services Pvt. Ltd., ND Callus Info Services Pvt. Ltd., Boom Investments Pvt. Ltd., Malsi Holdings Ltd., Dynavest India Pvt. Ltd., Scorpio Beverages Pvt. Ltd., Trophy Guest Houses & Resorts Pvt. Ltd., Trophy Estates Pvt. Ltd., Gaylord Impex Ltd., Pen Investments Ltd., Mohair Investment, PVT Investment Ltd., Malsi Estates Ltd, TVP Investments Pvt. Ltd., BAS Investments Pvt. Ltd., Vitasta Estate Pvt. Ltd., Terra Planet Estate Pvt. Ltd., Doon Holiday Resorts Pvt. Ltd., Urban Space Consultants Pvt. Ltd., Max India Foundation, Capricorn Health Services Private Ltd., Leo Retailing and Health Services Private Ltd., Nurture Health Services Pvt. Ltd., Capricorn Retailing and Services Pvt. Ltd., Veer Health Services Pvt. Ltd., Wegmans Business Park Pvt. Ltd., Synergy Infracon Pvt. Ltd., Max Speciality Products Ltd., Max Bupa Health Insurance Ltd. (Effective September 5, 2008), Malsi Hotels Ltd. (Effective March 20, 2009), Bhai Mohan Singh Foundation
Employee Benefit Funds Max India Ltd. Employees’ Provident Fund Trust, Max India Ltd. Superannuation Fund
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Summary of significant related party transactions (as identified by the management) carried out in ordinary course of business are as follows: (RS. LACS) Particulars Key Relatives of key Enterprises Employee Management Management over Which Key Benefit Funds Personnel Personnel Management Personnel have Significant Influence 1 Fixed Assets Purchased - - 88.99 - (-) (-) (-) (-) 2 Fixed Assets Sold - - 0.06 - (-) (-) (16.75) (-) 3 Deposits and Advances Accepted / Given ---- (387.87) (-) (-) (-) 4 Loans Taken - - 55.00 - (-) (-) (100.00) (-) 5 Loan Given - - 5550.00 - (-) (-) (-) (-) 6 Incomes and Reimbursement - Interest Income - - 270.30 - (-) (-) (-) (-) - Reimbursement of Expenses 21.73 1.49 309.95 - (9.84) (0.62) (24.23) (-) 7 Expense - Services / Other Expenses Received 1295.90 13.70 734.52 - (481.57) (11.49) (448.64) (-) - Interest Paid - - 19.48 - (-) (-) (1.57) (-) - Company’s Contribution to Trust - - - 115.85 (-) (-) (-) (97.59) 8 Amount Outstanding - Against Loan Taken - - 155.00 - (-) (-) (100.00) (-) - Interest Payable - 7.68 - (-) (-) (-) (-) - Against Loan Given - - 800.00 - (-) (-) (-) (-) - Interest Receivable - - 53.55 - (-) (-) (-) (-) - Other Receivable 0.54 1.50 226.38 - (622.47) (0.55) (4.08) (-) - Other Payable - 0.33 23.20 - (-) (-) (23.78) (-) Other relevant information - i) The above excludes sitting fees Rs. 16.44 Lacs (Previous year Rs. 8.90 Lacs) paid to non-executive diectors. ii) Previous year’s figures are given in brackets.
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22 Leases Accounting for leases has been done in accordance with Accounting Standard-19 issued by the ICAI. Following are the details of lease transactions for the year: (a) Finance Lease The Company does not have any finance lease agreement. (b) Operating Lease (i) Lease rentals recognised in the profit and loss account for the year is Rs. 8766.07 Lacs (Previous year Rs. 4921.96 Lacs). (ii) The Company has entered into operating leases for its office and for employees’ residence, vehicles for transportation, furniture that are renewable on a periodic basis. The total of future minimum lease payments under non-cancellable leases are as follows: (RS. LACS) March 31, 2009 March 31, 2008 Not later than one year 2738.99 748.18 Later than one year and not later than five year 3587.17 876.79 Later than five year - 228.81 Total 6326.16 1853.78
23 Movement in Policyholders’ Liability (RS. LACS) Current Year Previous Year Opening Balance 322742.74 156709.19 Add: Transfer to reserve 163914.63 156664.14 Add: Bonus payable to policyholders 11881.13 9369.41 Closing Balance 498538.50 322742.74
24 Max Medical Services Limited (a) As at December 10, 2001 the company had entered into an agreement with a healthcare service provider to construct a hospital building. The construction, as aforesaid had been completed and the building handed over as on March 31, 2005 to the healthcare service provider for a consideration of Rs. 2431.00 Lacs. The said consideration is repayable in equal installments over 26.5 years from the handover date. In addition, since the receipt of the consideration is spread over a long period, an income amounting to Rs. 234.70 Lacs (Previous year Rs. 245.60 Lacs) which is based on a fixed percentage of the turnover of the healthcare service provider has been accrued in these accounts and disclosed under Loans and Advances. (b) The company had entered into an agreement with a healthcare service provider on December 10, 2001 for supply of medical, other equipments and fixtures for an initial term of 30 years. Under the terms of the lease, the company is responsible for: (i) Acquisition of equipment including its repair and servicing; (ii) Ensuring adequate insurance coverage for the assets; and (iii) Replacement of any existing equipment or suitable equipment in lieu thereof. As per terms, lease rentals based on a fixed percentage of the turnover of the healthcare service provider are due to the company on a monthly basis. Accordingly, as at March 31, 2009 an amount of Rs. 971.52 Lacs (Previous year Rs. 1228.02 Lacs) has been accrued as lease rentals. The lease rent being contingent on turnover, hence cannot be quantified for any future periods and disclosed under Sundry Debtors.
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25 QIP Issue Proceeds Details of additions: (RS. LACS) Particulars Current Year Previous Year Opening Balance 75730.39 - Addition: On allotment of shares to QIBs - 99999.98 Total 75730.39 99999.98 Utilizations: Investment in subsidiary company 55500.00 22200.00 Advance against Investment in subsidiary company 800.00 - Refund of Option Deposit to New York Life International 17420.55 - Share issue expenses - 2069.59 Total 73720.55 24269.59 Balance invested in units of mutual fund 2009.84 75730.39 26 Preferential Issue Proceeds Details of additions: (RS. LACS)
Particulars Current Year Previous Year Opening Balance 19156.04 - Addition: On preferential allotment of share - 30000.00 Total 19156.04 30000.00 Utilizations: Repayment of Loans 614.09 8393.40 Advance for purchase of Land 4992.42 1080.00 Loan to Subsidiaries 945.82 682.02 Loan to other healthcare service provider 3042.10 688.54 Total 9594.43 10843.96 Balance invested in units of mutual fund 8355.81 19156.04 Deposit with Scheduled Bank 1205.80 - 27 Securities Premium Account (i) Details of additions: (RS. LACS) Particulars Current Year Previous Year 1. On preferential allotment of shares* - 2596.73 2. On allotment of shares to QIBs - 99166.65 3. Exercise of Stock Option 414.46 249.55 Total 414.46 102012.93 * Net of amount transfer to minority Nil (Previous year Rs. 1494.19 lacs)
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(ii) Details of utilization: (RS. LACS) Particulars Current Year Previous Year 1. Expenses on issuance of shares to QIBs - 2069.59 2. Fees for increase in authorized capital and other expenses 2.01 66.28 in connection with share issue* Total 2.01 2135.87
* Adjusted for transfer to minority Rs. 2.01 Lacs (Previous year Rs. 28.33 Lacs)
28 During the year, Rs. 16.51 Lacs (Previous year Rs. 14.13 Lacs) has been charged to the profit and loss account relating to Research and Development expenditure under the heads Raw Material – Consumed and Power & Fuel. 29 Additions/deletions in the schedule of Reserves and Surplus (Schedule 2) include adjustments in respect of consolidation level accounting in accordance with Accounting Standard 21. 30 Clinical Trial Expenses related to Clinical Research Business (Refer Schedule 21) includes: (RS. LACS) Particulars Current Year Previous Year 1. Salaries, Wages and Bonus 384.36 257.12 2. Contribution to Provident and Other Fund 16.85 9.53 Total Personnel Expenses 401.21 266.89
31 On September 03, 2008, the Company signed a tripartite JVA with BUPA Finance Plc., UK and Mr. Analjit Singh for its proposed health insurance business. Subsequently, Max Bupa Health Insurance Limited (“MBHIL”) has been incorporated on September 5, 2008 to operate the said business. In line with the guidelines issued by Insurance Regulatory and Development Authority, the initial share capital of MBHIL will be Rs. 100 Crore. This will be contributed 50% by the Company, 24% by Mr. Analjit Singh and his associates and 26% by BUPA Finance Plc., UK through its Indian subsidiary and other entities. On January 13, 2009, the Company has contributed share application money amounting to Rs. 800.00 Lacs to MBHIL Also, during the year, the Company incurred expenses amounting to Rs. 185.16 Lacs on behalf of MBHIL which are recoverable in terms of the aforesaid JVA. Consequently, the Board of Directors in their meeting held on June 26, 2009 have decided to invest upto 74% of equity shareholding of MBHIL, subject to shareholders’ approval. 32 During the year, a Memorandum of Understanding (MOU) dated November 12, 2008 has been entered into amongst Government of Punjab (“GOP”), Max India Group and Others (“the Founder Supporters”), together with Indian School of Business, Hyderabad (“ISB”). As per the MOU, a second campus of ISB is purposed to be established in the Knowledge city at Mohali, with an equal contribution from each of the Founder Supporters. The Board of Directors of Max India Limited and Max Healthcare Institute Limited has recommended a contribution for an amount not exceeding Rs. 1666.67 Lacs each to this initiative over a period of 3- 4 years, subject to the shareholders approval, out of the total commitment of Rs. 5000.00 Lacs from Max India Group. Of the above, a sum of Rs. 275.00 Lacs has been contributed during the year and included under the head Charity and Donation. 33 During the previous year, the Company received Rs. 50.00 lacs as capital subsidy from the Director of Industries, Government of Punjab under “Punjab Industrial Incentives Code under the Industrial Policy, 1996” for substantial expansion during financial year 1996-97. The same has been accounted for as capital reserve. 34 Subsequent to the year end, the Board of Directors in their meeting held on May 15, 2009, approved the issuance of 10,326,311 equity shares of Rs 2/- each at a premium of Rs. 143.26 per equity share, aggregating to Rs. 15000.00 Lacs to International Finance Corporation, Washington USA on a preferential basis. The same has been approved by the shareholders in an Extra-ordinary General Meeting held on Friday, June 12, 2009.
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Consequently, the Company in the meeting of Allotment Committee of Directors held on June 19, 2009 allotted the said shares. 35 During previous year, Neeman Medical International N.V. (“Neeman NV”) sold 494,699 Common and Nominative Shares, representing its entire 74.25% stake in Neeman Medical International Latin America, S.A. (“Neeman LA”), to Dr. Guillermo Rodriguez Gomez for Rs. 105.10 Lacs. The loss on sale amounting to Rs. 104.94 Lacs being the difference between the proceeds from the disposal of investment in Neeman LA and the carrying amount of the investment, net of provision against the said investment and accumulated losses, had been charged to Profit and Loss account. 36 Max HealthStaff International Limited (MHS), a 100% subsidiary of the Company, is in the business of sourcing, training and placing healthcare personnel in India and abroad more particularly in the United States. The placement of healthcare personnel in United States is subject to availability of immigrant visas, which is currently unavailable given the visa retrogression in force. Consequently, MHS has considerably scaled down its operations till the time further clarity on immigration laws emerges. Accordingly, based on prudent accounting practices, the management has to write off the goodwill of Rs. 403.63 Lacs. 37 The Company’s subsidiary MNYL has entered into an agreement called “The Brand License and Technical Services Agreement (Brand Agreement)” with New York Life Insurance Company and New York Life International, LLC for a duration of five years. The agreement states total consideration of Rs. 36972.63 Lacs for grant of license and provision of technical services to MNYL over the tenure of the agreement. During the current year, MNYL has recognised an expense of Rs. 5084.72 Lacs in Profit and Loss Account under the head of “Branding, Advertisement & Publicity”, considering amortization of total consideration on straight line basis over the tenure of the agreement. 38 Previous year’s figures have been regrouped/reclassified wherever necessary to conform to current year’s classification.
For and on behalf of the Board of Director
ANALJIT SINGH Chairman & Managing Director N. RANGACHARY Director ASHWANI WINDLASS Director New Delhi SUJATHA RATNAM Chief Financial Controller JUNE 26, 2009 V. KRISHNAN Company Secretary
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2 Consolidated.p65 168 8/6/2009, 6:37 PM MAX INDIA LIMITED CONSOLIDATED STATEMENT OF ACCOUNTS 6) (125.61) Medical Medical Medical Ltd., UK the year ended March 31, 2009 S Dollars = Rs. 52.1743 . 46.5739 Ministry of Company Affairs under Section 212(8) the Companies Act, 1956. Ltd. Ltd. B.V. N.V. Inc., USA International Ltd. Ltd. International International International International Alps Max Neeman Pharmax Max Max Neeman Neeman MaxUK Max Hospital Medical Corporation Ateev Healthstaff Indian Subsidiaries (Rs. Lacs) Foreign Subsidiaries (Rs. Lacs) ------Company Ltd.Ltd. Institute Ltd. Services Ltd. Life Insurance Healthcare Medical a) Item Nos. 1 to 6 and 11 are translated at exchange rates as on 31st March, 2009 follows: Pound Sterling = Rs.74.1579 U b) Item Nos. 7 to 10 are translated at annual average exchange rates as follows: Pound Sterling = Rs.79.5601 and US Dollars Rs not written off (Other than investment in subsidiaries) Statement pursuant to exemption received under Section 212 (8) of the Companies Act, 1956 relating subsidiary for Particulars12 Share Capital Reserves and Surplus Max New York Max 400,835.57 178,243.26 2,972.57 Max 48,714.45 (620.68) 1,414.2511 (1,211.35) Proposed Dividend (608.21) 5.00 (721.90) 421.68 (3,804.80) 2,055.77 (2,162.75) 3,144.36 5,723.35 3,224.68 394.50 (4,207.5 8.26 26.81 366.08 213.00 Note - In respect of foreign subsidiaries: 45 Total Assets6 Total Liabilities Details of Investments78 Turnover and Other Income9 Profit Before Taxation10 Provision for Taxation Profit After Taxation 556,143.51 635,596.45 56,771.79 401,810.67 81,852.35 8,355.81 30,236.35 31,748.51 19,144.87 18,438.18 (39,301.56) 4,811.49 3,302.78 6,017.84 - 3,186.02 1,318.11 3,082.07 (39,301.56) 1,504.64 (273.26) 3,894.84 - 1,498.73 4,761.14 2,560.97 - (1,575.12) (563.02) 20.77 717.61 249.96 681.21 (523.22) 99.63 107.51 (568.93) 1,875.76 - 4.99 5,742.53 5.91 253.60 121.98 10.92 721.52 3,428.39 156.74 (22.35) 176.90 (3.32) 183.20 103.20 3,944.68 1.17 - (267.84) 70.40 (3.32) 97.64 (11.36) 40.41 (270.49) 10.25 - - 268.06 (11.36) 5.18 2.65 - 60.61 (4.04) 5.18 (4.04) - - 4.07 3.36 - - - - 0.71 3 Miscellaneous Expenditure to the extent 254.1771.02 86.88 ------The above details have been annexed in terms of Letter No.47/364/2009-CL-III dated May 14, 2009 issued by Government India,
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2 Consolidated.p65 169 8/8/2009, 3:00 PM MAX INDIA LIMITED CONSOLIDATED STATEMENT OF ACCOUNTS
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2 Consolidated.p65 170 8/8/2009, 3:25 PM MAX INDIA LIMITED CONSOLIDATED STATEMENT OF ACCOUNTS Notes
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