Medinova Diagnostic Services Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the Twenty-Sixth (26th) Annual Report of the Company along with Companys audited Financial Statements (Standalone and Consolidated) for the Financial Year ended on March 31, 2019.

1. Financial Highlights - Standalone

Particulars F.Y. (Rs. in Lakhs)
2018-19 2017-18
Revenue from Operations 674.33 668.43
Other Income 16.96 7.43
Expenses:
Operating Expenses 643.87 702.40
Finance Cost 43.21 47.92
Depreciation 55.15 86.47
Profit before Tax -50.94 -160.93
Tax Expenses:
Current tax 0.0 0.0
Exceptional Items 161.32 162.57
Taxes of earlier years 32.50 3.72
Deferred tax charge/(credit) 1.08 -4.92
Total Tax expense 33.58 (1.20)
Profit after Tax 76.80 2.84
Other Comprehensive Income -1.57 -18.07
Total Comprehensive Income 75.23 -15.23
Transfer to General Reserve NIL NIL

Performance Review

During the year under review, your Company achieved revenue of Rs. 674.33 lakhs as against Rs. 668.43 lakhs in the previous year. Your Company has earned a gross profit of Rs. 47.42 Lakhs before interest, depreciation and tax as against a loss of Rs. 26.54 lakhs in the previous year. The operations resulted in a net profit of Rs. 76.80 lakhs as against Rs. 2.84 lakhs in the previous year.

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

With a view to conserve the resources in long run, your Directors have not recommended any dividend for the year ended 31st March, 2019.

Transfer to General Reserves:

During the year under review, no amount has been transferred to the General Reserve of the Company.

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.

During the financial year the Company has not made any investments.

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 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 Companies for the financial year ended March 31, 2019 is attached as Annexure-A and forms part of this Report.

Managements discussion and analysis

Business Overview and Outlook and the state of the affairs of the Company and the Industry in which it operates, is discussed in detail in the section relating to Management Discussion & Analysis.

Related Party Transactions

All related party transactions that were entered into during the financial year were in the ordinary course of the business of the Company and were on an arms length basis. There were no materially significant related party transactions entered by the Company during the year with the Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Company.

The policy on related party transactions as approved by the Audit Committee and the Board of Directors is hosted on the website of the Company www.medinovaindia.com. Prior omnibus approvals from the Audit Committee are obtained for transactions which are repetitive and also normal in nature. Further, disclosures are made to the Committee and the Board on a quarterly basis.

Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arms length basis, the requirement of furnishing the requisite details in Form AOC-2 is not applicable to the Company.

Details of the transactions with Related Parties are provided in the accompanying financial statements.

Corporate Governance

Pursuant to the provisions of Chapter IV read with Schedule V of SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance has been incorporated in the Annual Report for the information of the shareholders. A certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under the said Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 also forms part of this Annual Report.

Directors and key Managerial Personnel

Dr. G. Ramesh Ramayya resigned as a Director of the Company w.e.f. October 04, 2018. Your Board places on record the valuable services rendered by Dr. G. Ramesh Ramayya during his tenure as Director of the Company.

Mrs. Sura Suprita Reddy who is liable to retire by rotation and eligible for re-appointment expressed her intention not to seek re-appointment at the ensuing AGM due to preoccupation. The Board of Directors records its sincere appreciation and recognition of the valuable contribution and services rendered by Mrs. Sura Suprita Reddy during her long association with the Company.

In accordance with Section 152 of Companies Act, 2013, Dr Sura Surendranath Reddy, retires by rotation at the ensuing Annual General Meeting and being eligible offered himself for re-appointment. The Board recommends his re-appointment.

The Board of Directors on the recommendation of Nomination and Remuneration Committee in their meeting held on August 14, 2019 appointed Mrs. B. Vishnu Priya Reddy as an Additional Director and holds office up to the date of ensuing Annual General Meeting of the Company in terms of Section 161 of the Companies Act, 2013. The Company has received notice under Section 160 of the Act proposing the appointment of Mrs. B. Vishnu Priya Reddy as a Non-Executive Director of the Company.

An ordinary resolution seeking approval of the Members for the appointment of Mrs. B. Vishnu Priya Reddy as a Non-Executive Director liable to retire by rotation have been incorporated in the notice of the Annual General Meeting of the Company.

The Board of Directors on the recommendation of Nomination and Remuneration Committee in their meeting held on August 14, 2019 subject to the approval of the Members of the Company at the ensuing Annual General Meeting considered and approved the reappointment of Mr. Sunil Chandra Kondapally (DIN No. 01409332) as a Managing Director of the Company for a further period of Five (5) Years commencing from 25.09.2019 to 24.09.2024 without any remuneration.

Dr. Balamba Puranam appointed as an Additional Director (Independent) on February 02, 2019. The Company has received notice under Section 160 of the Act proposing the appointment of Dr. Balamba Puranam as a Non-Executive Independent Director. As per Regulation 17(1A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR), as amended vide SEBI LODR (Amendment) Regulations, 2018 w.e.f. April 1, 2019, no listed entity shall appoint a person or continue the directorship of any person as a Non-Executive Director who has attained the age of seventy five (75) years unless a special resolution is passed to that effect.

And further as per the provisions of Section 149 (10) of the Companies Act, 2013 (the ‘Act), an Independent Director shall hold office for a term up to five consecutive years on the Board of the company and shall be eligible for reappointment for the second term on passing of a special resolution.

A special resolution seeking approval of the Members for the appointment of Dr. Balamba Puranam who has attained the age of seventy five (75) years as an Non-Executive Independent Director for a first term of five years w.e.f. 01.04.2019 to 31.03.2024 have been incorporated in the notice of the Annual General Meeting of the Company.

Accordingly, special resolution is proposed to take shareholders approval at the ensuing AGM for reappointment of Mr. K. V. Ravindra Reddy who attained the age of 75 years as an Non-Executive Independent Director for the second term of five years w.e.f. 01.04.2019 to 31.03.2024.

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 26th 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, Ms. Priyadarshini resigned as a Company Secretary and Compliance Officer w.e.f. 30.06.2018 and Mr. Vijay Gupta was appointed as a Company Secretary and Compliance Officer of the Company w.e.f. 22.10.2018.

Evaluation of performance of the Board, Members of the Board and the Committees of the Board of Directors

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 Six (6) 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. Details of Conservation of Energy

The operations of your company do not consume high levels of energy. The Company uses electric energy for its equipment such as computer terminals, air conditioners, lighting and utilities in the work premises. Adequate measures have been taken to conserve energy by using energy-efficient computers and equipment with the latest technologies.

However, the requirement of disclosure of particulars with respect to conservation of energy as prescribed in the Section 134(m) of the Companies Act, 2013, read with Rule 8(3) of Companies (Accounts) Rules, 2014 are not applicable to the Company and hence not provided.

B. Technology Absorption i. The efforts made towards technology absorption: Not Applicable since the company is engaged in providing diagnostic services. ii. The benefits derived like product improvement, cost reduction, product development or import substitution: The Company is engaged in health care services, usage of better technological equipment has resulted in improved efficiency and savings of cost. iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): Not Applicable iv. The expenditure incurred on Research and development: No specific allocation has been made.

C. Foreign Exchange Earnings and outgo: NIL Statutory Auditors

M/s. Ratnam Dhaveji & Co., Chartered Accountants (Firm Registration No. 006677S) are the Statutory Auditors of the Company. They were appointed by the Shareholders at the 21st Annual General Meeting for a period of 5 (Five) Years till the conclusion of 26th Annual General meeting.

The Independent Auditors Report(s) to the Members of the Company in respect of the Standalone Financial Statements and the Consolidated Financial Statements for the Financial Year ended March 31, 2019 form part of this Annual Report and do not contain any qualification(s) or adverse observations.

There have been no instances of fraud reported by the Auditors, including the Statutory of the Company under Section 143(12) of the Companies Act, 2013 and the Rules framed there under either to the Company or to the Central Government.

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules made thereunder, the first term of the appointment of the current Statutory Auditors of the Company, M/s. Ratnam Dhaveji & Co., Chartered Accountants (Firm Registration No. 006677S) expires at the conclusion of this 26th Annual General Meeting.

The resolution seeking the approval of the members to appoint M/s. Ratnam Dhaveji & Co., Chartered Accountants (Firm Registration No. 006677S) as Statutory Auditors of the Company for a second term of five (5) consecutive years to hold office from the conclusion of this 26th Annual General Meeting of the Company until the conclusion of the 31st Annual General Meeting of the Company and on such remuneration as may be decided by the Board of Directors in consultation with the Statutory Auditors of the Company in included in the notice of ensuing AGM.

Secretarial Audit Report

In compliance with the provisions of Section 204(1) of the Companies Act, 2013, the Company has appointed DVM Gopal & Associates, Practicing Company Secretaries to conduct Secretarial Audit of the records and documents of the Company for the Financial Year 2018-19. The Secretarial Audit Report for the Financial Year ended 31st March, 2019 in Form MR-3 is annexed to the Directors Report as Annexure-B and forms part of this Report.

With regard to the observations made in the Secretarial Audit Report, the statutory auditors stated that they have submitted the request to the peer review committee and peer reviewer. However, the peer review is awaited. The Secretarial Auditors Report to the Members of the Company for the Financial Year ended March 31, 2019 does not contain any other qualification(s) or adverse observations.

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 the Annual Return of the Company in Form MGT-9 for the Financial Year ended 31st March, 2019 is given in Annexure- C and forms part of the Directors Report.

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 and related disclosures:

No Salary is being paid to Directors of the Company including Managing Director other than sitting fee to Non- Executive Directors and 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 Directors 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 as it ceased to be a Company covered under subsection (1) of Section 135 of the Companies Act, 2013 in the reporting financial year; hence disclosure in this regard is not provided.

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.

Protection of Women at Work Place

The Company has formulated a policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the financial year ended 31st March, 2019, the Company has not received any complaints pertaining to Sexual Harassment.

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, 2019 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
Date: 14.08.2019 Director & Chairman of the Board
Place: Hyderabad DIN: 00108599