Medinova Diagnostic Services Ltd Directors Report.

Dear Members,

The Directors are pleased to present the Twenty Seventh Annual Report along with the audited financial statements for the financial year ended March 31, 2020.

1. Financial Highlights– Standalone & Consolidated

Particulars

Standalone

Consolidated

(Rs. in lakhs)

(Rs. in lakhs)

F.Y. F.Y.
INCOME 2019-20 2018-19 2019-20 2018-19
Revenue from Operations 549.30 674.33 744.70 897.26
Other Income 26.32 16.96 7.40 9.98
Expenses:
Operating Expenses 519.03 643.87 625.19 765.22
Finance Cost 42.36 43.21 59.37 65.88
Depreciation 41.22 55.15 95.11 128.52
Profit before Tax (26.99) (50.94) (27.57) 108.94
Tax Expenses:
Current tax 0 0 0 0
Exceptional Items 0 161.32 0 161.32
Taxes of earlier years 0 32.50 0 32.50
Deferred tax charge/(credit) 2.58 1.08 (4.80) (5.85)
Total Tax expense 2.58 33.58 (4.80) 26.65
Profit after Tax (29.57) 76.80 (22.77) 82.29
Other Comprehensive Income (0.27) (1.57) (0.27) (1.57)
Total Comprehensive Income 29.84 75.23 (23.05) 80.72

Performance Review Standalone

During the year under review, your Company generated an income of Rs. 549.30 lakhs as compared to Rs. 674.33 lakhs in the previous year from the business operations. Your Company has earned a gross profit of Rs. 56.59 lakhs before interest, depreciation and tax as against profit of Rs. 47.42 lakhs in the previous year. The operations resulted in a net loss of Rs. (29.57) lakhs as against net profit of Rs. 76.80 lakhs in the previous year.

Consolidated

The Company achieved consolidated revenue of Rs. 744.70 lakhs as against Rs. 897.26 lakhs in the previous year. The operations resulted in consolidated net loss of Rs. (22.77) lakhs as against net profit of Rs. 82.29 lakhs in the previous year. The Standalone and Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) and approved by the Board of Directors of the Company forms part of this Annual Report. There is no change in the nature of business carried on by the Company during the year under review. There are no Material Changes and Commitments affecting the financial position of the Company which occurred between the end of the financial year to which the financial statements relate and the date of this Report.

Dividend

The Directors have not recommended any dividend for the year.

Transfer to General Reserves:

The Directors have not proposed transfer of any amount to General Reserve.

Subsidiary Companies

Your Company does not have any subsidiary Companies. However, as per explanation given to Section 2(87) of Companies Act, 2013 which defines Subsidiary Company, the Medinova Millennium MRI Services LLP is considered as a subsidiary being a body corporate. Pursuant to Proviso to Section129 (3) of the Act, a statement containing the brief details of performance and financials of the Subsidiary LLP for the financial year ended March 31, 2020 is attached as Annexure-A and forms part of this Report.

Deposits

During the year, the Company has not accepted any public deposits.

Loans, Guarantees or Investments

During the period under review, your Company has not given any loans and not made any investments.

Particulars of contracts / arrangements with related parties

All the related party transactions entered into during the year under review were on arms length basis and your Company had not entered into any contract / arrangement / transaction with related parties, which could be considered as material in accordance with the Companys Policy on Materiality of and Dealing with Related Party Transactions. Hence, disclosure in Form AOC - 2 is not required. The details of transactions with related parties have been disclosed in the notes forming part of the financial statements.

Managements discussion and analysis

Management Discussion and Analysis Report forms part of this Annual Report.

Corporate Governance

A report on Corporate Governance covering among others composition, details of meetings of the Board and Committees along with a certificate for compliance with the applicable conditions of Corporate Governance in accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, issued by the Statutory Auditors of the Company forms part of this Annual Report.

Cost Records

During the year under review, maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148 (1) of the Companies Act, 2013 are not applicable to the Company.

Directors and key Managerial Personnel

Ms. Sura Suprita Reddy retired as a Director of the Company w.e.f. September 26, 2019. The Board of Directors records its sincere appreciation and recognition of the valuable contribution and services rendered by Ms. Sura Suprita Reddy during her long association with the Company. Mrs. B. Vishnu Priya Reddy was appointed as an Additional Director on 14.08.2019 by the Board of Directors and was appointed as a Non-Executive Director of the Company at the AGM held on 26.09.2019.

At the AGM held on September 26, 2019 Mr. Sunil Chandra Kondapally was reappointed as a Managing Director for a period of 5 years, Dr. Balamba Puranam was appointed as an Independent Director of the Company for a first term of 5 years and Mr. K. V. Ravindra Reddy was reappointed as an Independent Director of the Company for a second term of 5 years. In accordance with Section 152 of Companies Act, 2013, Mrs. B. Vishnu Priya Reddy, retires by rotation at the ensuing Annual General Meeting and being eligible offered herself for reappointment. The Board recommends her reappointment. Mr. P. Kamalakar Rao was appointed as a Non-Executive Director in the category of Independent Directors for a period of five years, not liable to retire by rotation by the shareholders in the Annual General Meeting held on 25.09.2015. The first term of his appointment expires on 24.09.2020. Accordingly, special resolution is proposed to take shareholders approval for reappointment of Mr. P. Kamalakar Rao as a Non-Executive Independent Director for the second term of five years w.e.f. 25.09.2020 to 24.09.2025.

The brief resumes and other disclosures relating to the Directors who are proposed to be appointed/ reappointed, as required to be disclosed pursuant to the provisions of the SEBI Listing Regulations and the Secretarial Standards are given in the Annexure to the Notice of the 27th AGM. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and under Regulation 16(1)(b) of SEBI Listing Regulations.

During the year under review, Mr. N. Ravi Kumar resigned as a Chief Financial Officer of the Company w.e.f. May 31, 2019 and Mr. Hrusikesh Behera was appointed as Chief Financial Officer w.e.f. November 07, 2019. Mr. Vijay Gupta resigned as a Company Secretary and Compliance Officer w.e.f. 03.06.2019 and Mrs. V. Sri Lakshmi was appointed as a Company Secretary and Compliance Officer of the Company w.e.f. 14.08.2019.

Board Evaluation

Pursuant to the corporate governance requirements as prescribed in the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015, the Board of Directors has carried out an annual evaluation of its own performance, Board Committees and of individual directors. In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole, performance of the Committee(s) of the Board and performance of the Chairman was evaluated, taking into account the views of other directors. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

Policy on Directors Appointment and remuneration and other Details

The Companys policy on Directors appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 is hosted on the Companys website www.medinovaindia.com.

The details of the familiarization programme formulated for Independent Directors is hosted on the Companys website at www.medinovaindia.com.

Meetings of Board of Directors

During the Financial Year Four (4) meetings of the Board of Directors were held. The details of the meetings of the Board are given under the Corporate Governance Report which forms part of this Report.

Audit Committee

The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the Rules made thereunder and Regulation 18 of the SEBI (LODR) Regulations, 2015. The details relating to the Audit Committee are given in the section relating to Corporate Governance forming part of the Board Report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under sub-section (3)(m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are as follows:

A. Conservation of Energy

The operations of your company do not consume high levels of energy. In its endeavour towards conservation of energy your Company ensures optimal use of energy, avoid wastages and endeavors to conserve energy as far as possible.

B. Technology Absorption

Your Company has not carried out any research and development activities during the year.

C. Foreign Exchange Earnings and outgo: NIL

Statutory Auditors

The members in the 26th Annual General Meeting held on September 26, 2019, appointed M/s. Ratnam Dhaveji & Co., Chartered Accountants, [Firms Registration No. 006677S] as the Statutory Auditors of the Company, to hold office for a term of five years from the conclusion of the 26th Annual General Meeting (AGM) until the conclusion of the 31st AGM of the Company on such remuneration as may be determined by the Board of Directors.

The members may note that the Ministry of Corporate Affairs vide notification dated May 07, 2018, has done away with the requirement of yearly ratification of appointment of Statutory Auditors, at the AGM.

Pursuant to Section 139 of the Companies Act, 2013 the statutory auditors Ratnam Dhaveji & Co., Chartered Accountants have confirmed they are eligible to continue as auditors.

The Notes on financial statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark, or disclaimer.

No fraud has been reported by the Auditor under section 143(12) of the Companies Act, 2013 requiring disclosure in the Boards Report.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. D Balarama Krishna, Practicing Company Secretary, Hyderabad to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is available at "Annexure B" to this report. There are no qualifications, reservation or adverse remark or disclaimer made in the Secretarial Audit Report.

Compliance with Secretarial Standards

The Company has complied with applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Government of India under Section 118(10) of the Companies Act, 2013.

Extract of Annual Return

The extract of annual return in Form MGT- 9 as required under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 is attached as Annexure C hereto and forms a part of this Report. The same is also available on the Companys website at http://www.medinovaindia.com/investors.php.

The Annual Return in Form MGT- 7 will be hosted on website after necessary certification and filing the same with the Registrar of Companies.

Risk Management

The details relating to Risk Management is included in the Management Discussion and Analysis Report.

Internal Financial Controls and their adequacy

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Vigil Mechanism/ Whistle Blower Policy

The Company has a vigil mechanism policy to deal with instances of fraud and mismanagement, if any. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

Particulars of Employees:

No Salary is being paid to Directors of the Company including Managing Director other than sitting fee to Non- Executive Independent Directors and hence the details as required to be disclosed under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration to Key Managerial Personnel) Rules, 2014 is not applicable.

The information as per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request by any Member of the Company. In terms of Section 136 of the Companies Act, 2013, the Annual Report including the Boards Report and the Audited Accounts are being sent to the Members excluding the same. Any Member interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company.

Corporate Social Responsibility

The provisions of Section 135 of the Companies Act, 2013 are not applicable to the Company in the reporting financial year.

Significant and material orders

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

Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has adopted a policy against sexual harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. The Company has constituted Internal Complaints Committee for redressal of complaints on sexual harassment. During the year, the Company had not received any complaint on sexual harassment and no complaint was pending as on March 31, 2020.

Directors Responsibility Statement:

Pursuant to the requirement under Section 134(5) of the Act, with respect to Directors Responsibility Statement, your Directors, to the best of their knowledge and ability, hereby confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) we have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2020 and of the profit and loss of the Company for the year ended on that date; c) we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the annual accounts have been prepared on a going concern basis; e) the Company had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f) we have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgment:

Your Directors place on record their sincere appreciation and thanks for the valuable cooperation and support received from the employees of the Company at all levels, Companys Bankers, Associates, partners, clients, vendors, and Members of the Company and look forward for the same in equal measure in the coming years.

By the Order of the Board

For Medinova Diagnostic Services Limited

Dr. Sura Surendranath Reddy

Chairman

DIN: 00108599

Date: 13-08-202014.08.2019

Place: Hyderabad

ANNEXURE - A

FORM NO. AOC-1

Statement containing salient features of the financial statements of subsidiary as on March 31, 2020

Name of the Subsidiary: Medinova Millennium MRI Services LLP

Details (Amount in Rs.)
Capital 2,30,27,221
Reserves -2,71,99,414
Total Assets 1,57,64,855
Total Liabilities* 1,99,37,048
Turnover 2,04,03,891
Profit before taxation/(Loss) -59,352
Deferred tax(credit) -7,37,795
Profit/ (Loss) after taxation 6,78,443
Proposed dividend Nil
No. of Shares Nil
Investment 1,26,82,221

*Total liabilities are exclusive of Capital and Reserves