Shalby Ltd Directors Report.

Dear Members,

Your Directors are pleased to present the Sixteenth Annual Report on business and operations of the Company along with audited financial statements for the financial year ended March 31, 2020.

FINANCIAL PERFORMANCE SUMMARY

The summarized financial highlights are depicted below:

[Rs. in million]

Particulars Standalone Consolidated
2019-20 2018-19 2019-20 2018-19
Revenue from operations 4,838.86 4,624.11 4,868.50 4,622.56
Other Income 177.42 93.68 173.71 92.59
Total Expenditure (Except Finance cost & Depreciation/
4,023.80 3,799.82 4,051.17 3,798.76
Amortization)
Profit before Interest Depreciation and Tax 992.48 917.97 991.05 916.39
Finance Cost 63.58 80.68 63.58 80.78
Depreciation/Amortization 358.61 330.04 360.20 331.73
Profit Before Tax 570.29 507.25 567.27 503.88
Provision for Taxation (Inclusive of provision for deferred tax) 290.57 186.23 291.41 187.34
Profit After Tax 279.72 321.01 275.86 316.54
Other comprehensive income 0.17 0.73 0.17 0.74
Total Comprehensive Income 279.89 321.74 276.03 317.28
Opening Balance In Retained Earnings 2,364.78 2,042.64 2,213.19 1,895.84
Add: Profit for the year including OCI 279.89 322.14 276.03 317.35
Less: Dividend including DDT 65.10 - 65.10 -
Amount available for appropriation 2,579.56 2,364.78 2,424.12 2,213.19

PERFORMANCE OF THE COMPANY

During the year under review, the revenue from operations of the Company increased to Rs. 4,838.86 million as compared to Rs. 4,624.11 million in the previous year, registering a growth of 4.64%. The EBITDA for the year under review increased to Rs. 992.48 million against previous year of Rs. 917.97 million registering growth of 8.12%. Your Company has earned profit after tax of Rs. 279.72 million as against Rs. 321.01 million in the previous year.

During the year under review, the consolidated revenue from operations increased to Rs. 4,868.50 million as compared to Rs. 4,622.56 million in the previous year, registering a growth of 5.32%. The consolidated EBITDA exhibited a growth of 8.15% in Fiscal 2020 rising to Rs. 991.05 million from Rs. 916.39 million in the previous financial year.

Consolidated Profit Margins:

Profit before tax (PBT) for Fiscal 2020 increased to Rs. 567.27 million as compared to Rs. 503.88 million in the previous year registering a growth of 12.58%. Profit after tax (PAT) was reduced to Rs. 275.86 million against Rs. 316.54 million in the previous year, which was mainly due to a decrease in deferred tax assets.

Consolidated Earnings per Share:

The Earnings per Share (EPS) of the Company decreased to Rs. 2.55 compared to previous year of Rs. 2.93 which can mainly be attributed to reduced earnings followed by the deferred tax treatment mentioned hereinabove.

OPERATIONAL PERFORMANCE

DIVIDEND

The Board of Directors has recommended a dividend of Rs. 0.50 per equity share (5% on the face value of Rs. 10 each) on the paid up share capital of the Company for financial year ended on March 31, 2020 amounting to Rs. 54 million, which if declared at the ensuing Annual General Meeting scheduled on September 14, 2020, will be paid to those shareholders whose names appear in the Register of Members as at closing hours of business on September 7, 2020 (‘Cut-off date). In respect of shares held in electronic form, the dividend will be paid on the basis of beneficial ownership furnished by both depositories, NSDL and CDSL for this purpose.

The Register of Members and Share Transfer Books will remain closed from Tuesday, September 8, 2020 to Monday, September 14, 2020 (both days inclusive).

INITIATIVES AT SHALBY IN RESPONSE TO COVID 19 PANDEMIC

The COVID-19 pandemic has led to unprecedented disruption not only to the global economy but also to the lives of people across the globe and it has impacted all the businesses with different magnitude. During the lockdown declared by Ministry of Home Affairs (GOI), all our Hospital units in India remained open for treatment of medical emergency or other medications as healthcare falls under essential services. We have taken, inter alia, the following steps to safeguard our patients and minimize the infection at our hospital units:

Joined hands with the government in a tough time and started treatment of COVID-19 patients at four hospitals in addition to non COVID patients

Instigated tele-consultation for the benefit of the patients, which enabled patients to consult the doctors for any medication needs

Homecare services were also available to our patients and the public at large for supply of medicine, nursing services at home etc.

All our doctors and concerned staff have been provided Personal Protective Equipment Kits for safety purpose

Abundant precautions are being followed at every unit to handle COVID and non COVID patients

All our hospital units are being being sanitized frequently, strictly following the protocols for handling the protocols for handling COVID-19 positive and negative patients without disrupting the business operation

Maintaining social distancing norms and also framed work from home policy for our employees during the lockdown period Worked with limited number of employees and required doctors during the lock down period for safeguarding the interest of all

Conducted many webcasts through social media to address common query of patients and general public at large with immense response

• Conducted many webcasts to create general awareness about COVID-19 pandemic and precautions needed to protect from COVID-19 pandemic

BUSINESS AND STRATEGY

Nashik Project: The Company had entered into a definitive agreement (O & M Agreement) with Samruddhi Hospital P. Ltd in the year 2014 to operate and manage the hospital for a period of 30 years. Under this arrangement, Samruddhi will construct the hospital building and hand over to your Company ready to use building to manage the hospital and your Company will invest estimated capex of 310 million thereto. The project has been delayed due to the novel COVID-19 pandemic spread across the globe. It is estimated that your Company may receive possession of constructed building in Fiscal 2022 and it is anticipated to start the operation of the 113 bedded hospital in Fiscal 2023.

Mumbai Project: Your Company is in the process of setting up a 175 bedded hospital in the heart of Mumbai, Santacruz, to be equipped with state of the art equipment and technology. The existing structure in place is a building over 60 years old, which needs to be demolished completely and your Company together with counterpart are in the process of demolishing the existing structure to commence construction of new building. It is anticipated that necessary permission for demolition of existing structure and approval of proposed building will be received in current Fiscal 2021, thereafter your Company will start the construction and complete the new hospital building after investing estimated capex of Rs. 1,600 million. It is also estimated that the delay in this project will be more than six months due to consequential impact of ongoing novel COVID-19 pandemic spread across the Globe and it is expected to start the operations in later part of Fiscal 2024.

Information Technology Infrastructure

With the increase in demand of digital transformation in healthcare sector, Shalby embarked its journey of digital transformation across its all hospitals from 2018-19. Shalbys technology focus is not only about computerizing hospitals, making Apps, making it easier for patients to make an appointment online, ChatBots, IVR Based call centres, etc. but also about looking for a continuous and multidimensional process that is linked to social, economic and technological factors that go beyond the hospital walls and about a change of mind-set with regard to hospital processes. During this journey of digital transformation, Shalby as an organization is looking at the patient and organizing its process to give efficient and effective care, both from Clinical and the technical perspectives and has facilitated patient-physician exchange of information through safe communication and doctor-patient confidentiality. Members are requested to refer to Management Discussion and Analysis section for detailed information on enhancement of information technology infrastructure in the Company.

CREDIT RATING

During the year under review, IICRA Limited has reaffirmed the long term credit ratings as ICRA A on term loans and fund based facilities availed by the Company and the outlook on the long term rating as "Positive". This rating indicates an adequate degree of safety regarding timely servicing of financial obligations and low credit risk.

UTILIZATION OF IPO PROCEEDS & LISTING

During the Fiscal 2018, the Company had completed its initial public offering of 20,354,838 equity shares of Rs. 10 each at price of Rs. 248 per equity share (including premium of Rs. 238 per share) comprising of fresh issue of 19,354,838 equity shares amounting to Rs. 4,800 million and offer for sale of 1,000,000 equity shares amounting to Rs. 248 million aggregating to Rs. 5,048 million. The said equity shares got listed on National Stock Exchange Limited and BSE Limited effective from December 15, 2017. Out of the IPO proceeds of Rs. 4,800 million, your Company has utilized Rs. 4,196.39 million as per objects of the offer and the Company has varied in terms of the objects of initial public offering to the extent of Rs. 603.61 million after receiving shareholders approval by passing special resolution in the 15th Annual General Meeting held on August 26, 2019. During the year under review, your Company has fully utilized the said amount of Rs. 603.61 million as per revised objects and in the manner as approved by the shareholders as mentioned herein above. There was no amount of issue proceeds pending to be utilized at end of March, 2020. Your Company had appointed HDFC Bank Limited as the monitoring agency in terms of regulation 16 of SEBI (Issue of Capital and Disclosure Requirements) Regulation, 2009 as amended, to monitor the utilization of IPO proceeds and Company has obtained monitoring reports from the Monitoring agency upto the third quarter of the year under review and filed the same with both exchanges where equity shares of the Company are listed. The said reports issued by the monitoring agency together with statement of utilization of issue proceeds prepared pursuant to regulation 32 of SEBI (LODR) Regulation, 2015 are available at https://www.shalby.org/investors under Statement of Utilization / Deviation or Variation – IPO Proceeds.

SHARE CAPITAL

During the year under review, there is no change in the share capital of the Company. The authorized share capital of the Company stands at Rs. 1,177.50 million divided into 117,750,000 equity shares of Rs. 10 each. The issued, subscribed & paid up share capital of the Company stands at Rs. 1,080.10 million divided into 108,009,770 equity shares of Rs. 10 each.

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT ON PERFORMANCE OF SUBSIDIRIES

During the year under review, your Company has five subsidiaries viz. Vrundavan Shalby Hospitals Limited, Shalby (Kenya) Limited, Shalby International Limited, Yogeshwar Healthcare Limited, Griffin Mediquip LLP. During the current FY 2020-21, your Company has incorporated a new wholly owned subsidiary Company under the name and style ‘Mars Medical Devices Limited on April 3, 2020 with authorized share capital of Rs. 1,500,000 divided into 150,000 equity share of Rs. 10 each and paid up share capital of Rs. 500,000 divided into 50,000 equity share of Rs. 10 each. The said subsidiary Company is yet to commence its operation as of now.

In accordance with the provisions of Section 129(3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Consolidated Financial Statements form part of this Annual Report which shall also be laid before the ensuing Annual General Meeting of the Company.

The Standalone and Consolidated Financial Statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. A report on the performance and financial position of each of the subsidiaries and LLP as per the Companies Act, 2013 is provided as Annexure - A which forms part of this Report. In accordance with Section 136 of the Companies Act, 2013, the audited Financial statements, including consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available at Annual Reports section at https://www.shalby. org/investors. The financial statements of the Company and subsidiary companies shall be available for e-inspection. Members may refer note no 22 annexed to the notice of AGM for e-inspection.

AWARDS & RECOGNITIONS

During the financial year 2019-20, your Company has been awarded with the "Best Brand Evolution Award" in the category of Healthcare Excellence Awards, 2019, by Indian Express Group, "Dare to Dream Zee Business Awards-Company of the year" by Zee Business, "Gujarat Healthcare Leadership Award" and "Madhya Pradesh Healthcare Leadership Award", by World Health and Wellness Congress & Awards, "Medical Value Travel Specialist Hospital Award" in the Orthopedics category (Joint Replacement) instituted by Department of Commerce, Ministry of Commerce & Industry, Government of India and FICCI.

ANNUAL RETURN MGT 7

The Annual return of the Company for FY 2018-19 has been placed on the website of the Company at https://www.shalby. org/investors/ in Annual Return section. The Company will also place annual return for FY 2019-20 after completion of ensuing

Annual General Meeting of shareholders of the Company. The extract of Annual Return–MGT-9 as on March 31, 2020 is enclosed as Annexure – B herewith.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S 186 OF THE COMPANIES ACT, 2013

Particulars of loans given, investments made, guarantees given and securities provided in the notes to the standalone financial statements forming part of this annual report.

PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTY U/S 188 OF THE COMPANIES ACT, 2013

The transactions entered into with related parties during the year were generally on arms length basis. Pursuant to Regulation 23 of the Listing Regulations, all related party transactions were placed before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions for their review and approval.

During the year under review, there were no material transactions with related parties in terms of regulation 23 of SEBI Listing Regulations. The details of the related party transactions are provided in the Annexure- C (AOC - 2) pursuant to Section 134(3) (h) of the Act read with rule 8 (2) of the Companies (Accounts) Rules, 2014. Your Directors draw the attention of members to the notes to the financial statements which set out related party disclosures.

DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTMENT AND RESIGNATION

There is no change in Directors or Key Managerial Personnel during the year under review. As on March 31, 2020, Dr. Vikram Shah, Chairman & Managing Director, Mr. Prahlad Rai Inani, Chief Financial Officer and Mr. Jayesh Patel, Company Secretary of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013.

DIRECTORS RETIRING BY ROTATION

In terms of section 152 of the Companies Act, 2013, Mr. Shyamal Joshi (DIN: 00005766), being the longest in the office shall retire at the ensuing Annual General Meeting and being eligible for reappointment, offers himself for re-appointment.

A brief resume of Director being re-appointed along with the nature of his expertise, his shareholding in the Company and other details as stipulated under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard on general meeting (SS-2) is appended as an annexure to the Notice of the ensuing Annual General Meeting.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors confirming that they meet criteria of independence as prescribed under Section 149 (6) of the Companies Act, 2013 and under Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and they have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair their ability to discharge their duties with an objective independent judgment and without any external influence.

BOARD MEETINGS

The Board met four times during the year under review, on May 25, 2019, July 29, 2019, November 11, 2019 and February 3, 2020. The numbers of meetings and its attendance have been provided in the Report on Corporate Governance which forms part of Annual Report.

COMMITTEES

The Company has various committees which have been formed in compliance of provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are in compliance with the provisions of relevant statutes.

The Board has constituted following committees. i. Audit and Risk Management Committee ii. Stakeholder Relationship Committee iii. Nomination and Remuneration Committee iv. Corporate Social Responsibility Committee v. Management Committee

The terms of reference of Audit & Risk Management Committee, Nomination and Remuneration Committee and Stakeholder Relationship Committee have been amended in order to incorporate amendment made in SEBI(LODR) Regulations, 2015. The details with respect to the compositions, powers, roles, terms of reference, numbers of Committees along with their attendance etc. of respective Committees are provided in detail in the ‘Report on Corporate Governance which forms part of this Annual Report.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards (SS1 and SS2) issued by the Institute of Companies Secretaries of India relating to Meetings of the Board, its Committees and meeting of shareholders which are made mandatory.

POLICY ON APPOINTMENT AND REMUNERATION TO DIRECTORS, KMP & SENIOR MANAGEMENT PERSONNEL

The Companys policy on Directors appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 have been disclosed briefly in the Corporate Governance Report, which forms part of this Report. Your Company‘s Policy in this regard includes, inter alia, criteria for determining qualifications, positive attributes, independence of a director and other matters as required under sub-section (3) of Section 178 of the Companies Act, 2013. The said policy is available at https://www.shalby.org/wp-content/ uploads/2018/01/Nomination-Remueration-Policy final.pdf

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Your Company upholds the standards of governance and is compliant with the provisions of Corporate Governance as stipulated under SEBI (Listing Obligation and Disclosure Requirements), Regulations, 2015. The Report on Corporate Governance for FY 2019-20, as per Regulation 34(3) read with Schedule V of the SEBI (LODR), Regulations, 2015 forms a part of this Annual Report. The Certificate from Practicing Company Secretary confirming the compliance with the conditions of corporate governance as stipulated by Regulation 34(3) of SEBI (LODR), Regulations, 2015 is annexed to this Report.

In compliance with Corporate Governance requirements as per the SEBI Listing Regulations, your Company has formulated and implemented a Code of Conduct for all Board members and senior management personnel of the Company, who have affirmed the compliance thereto and the same is available at https://www. shalby.org/wp-content/uploads/2017/10/Code-of-Conduct-for-Directors-Senior-Management.pdf

In terms of regulation 34 of the Listing Regulations, the Management Discussion and Analysis Report on the Companys financial and operational performance, industry trends, business outlook and Initiatives and other material changes with respect to the Company and its subsidiaries, wherever applicable are presented in a separate section which forms part of the Annual Report.

BUSINESS RESPONSIBILITY REPORT

In terms of regulation 34 of the Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Company from an environment, social and governance perspective in the format specified by SEBI is presented in a separate section which forms part of the Annual Report.

PERFORMANCE EVALUATION OF BOARD AND ITS COMMITTEE

The criteria for performance evaluation and the statement indicating the manner in which formal annual evaluation has been made by the Board are given in the ‘Report on Corporate Governance, which forms part of this Annual Report.

Pursuant to provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, Board committees and Individual Directors in the manner prescribed in Performance Evaluation Policy, which is available at https://www.shalby.org/wp-content/ uploads/2017/10/Performance-Evaluation-Policy-for-BOD.pdf

DEPOSITS

During the year, the Company has not accepted any fixed deposits from the public as per provisions of section 73 to 76 of the Companies Act, 2013 and Rules made there under. Hence, the disclosures as required under Rule 8 (5) (v) & (vi) of the Companies (Accounts) Rules, 2014, are not applicable to your Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to section 134 (5) of the Companies Act, 2013, your Directors hereby confirm that: a) in the preparation of the annual accounts for the year ended March 31, 2020, the applicable accounting standards read with requirement set out under Schedule III to the Act have been followed and there are no material departures from the same; b) they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) they had prepared the annual accounts on a going concern basis; e) they 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) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required under the Companies (Accounts) Rules, 2014 is set out below

(A) Conservation of Energy:

The operations of the Company are not energy-intensive.

However, the following significant measures are being taken to reduce energy consumption by using energy efficient equipment.

• Phasing out of CFL lamps to LED lights

• Occupancy sensors installation in toilets to avoid permanent illumination and save electrical consumption

Proper thermal insulation to increase efficiency of HVAC system and thereby reducing energy consumption

• Use windows and doors to provide good levels of natural ventilation in some areas within a hospital, allowing mechanical ventilation to be switched off or turned down to save energy

• Provide infrared controllers in water taps as they provide water only when required, switch off automatically and can save between 5 to 15% of water per tap per year

• Introduction of timer based operation of air handling units to reduce power consumption

Energy optimization practices implemented in transformer operation

• VFD installation for AHU motor in a phased manner

• All lifts and OT AHUs are operated with VFD panels

• For recently commissioned units, building orientation has been designed to maximize use of daylight and to reduce heat gain in order to reduce energy consumption

• For recently commissioned units, the building is being constructed by using structural steel to reduce embedded energy and also to reduce the impact of construction activities to the neighborhood and environment and with STP and recycled water is being used for flushing and plant watering to reduce water usage

• The glass used for facade in a number of facilities is double glazed and is energy efficient low emissivity type which helps in reducing solar heat gain coefficient while improving the visibility

• Rain water harvesting system installed at our Greenfield recently completed projects to conserve natural resources

• HVAC temperature is being adjusted based on the seasonal temperature and particular clinical requirements, to reduce the power consumption

Discipline wise SOP is being followed for routine maintenance on daily, weekly, monthly, and yearly basis, as required to keep the system installed in check and reduce consumptions of water and electricity

In case of modification or renovation, we maximize the usage of existing materials to conserve the natural resources

There would not be a material financial implication of said measures as energy costs comprise a very small portion of your Companys total expenses.

(B) Technology absorption:

I. The effort made towards technology absorption: Over the years, your Company has brought into the country the best technology available in healthcare to serve the patients better and to bring healthcare of international standard within the reach of every individual.

In order to promote indigenous technology absorption, the following equipment, inter alia, has been installed at our various units;

a) Anesthesia workstation;

b) Tripple Dome OT lights;

c) Electric OT table with 10 functions for renal transplant;

d) Single door auto clave machine;

e) Fabrilator Machine;

f) Biosafety Cabinet for Chemotherapy;

g) Anesthesia Trolley;

h) Baby Cradle with infant Bed;

i) Blood bank equipment including Deep freezer, Blood bank refrigerator, Platelet agitator/ incubator, Blood collection monitor and tube sealer, Donor couch compofuge;

j) X-ray system;

k) Dialysis machine;

l) Ventilator;

m) CT scanning machines;

n) MRI scanning machines;

o) Ultrasound systems; and

p) Linac systems.

During the year, the Company has installed indigenous medical technology to the tune of 7 million. The benefit accrued due to this is primarily cost reduction from import substitution considering the impact of exchange rate fluctuation and revision of customs duty tariffs. The performance and quality of this equipment have been found to be quite satisfactory

II. The Company has imported the latest and state of the art equipment to the tune of over 9.6 million to have latest technology in the hospital and the details of latest key medical equipment/machinery imported and installed at various units of Shalby are set out below:

Technology absorption, adaption and innovation Benefits Imported technology from
Oxygen Concentrator An oxygen concentrator is a device that concentrates the oxygen from a gas supply (typically ambient air) by selectively removing nitrogen to supply an oxygen-enriched product gas stream. USA
Haemodialysis Machine To achieve the extracorporeal removal of waste products such as creatinine and urea and free water from the blood when the kidneys are in a state of kidney failure. Germany
Defibrilator BI Phasic To survive patient from cardiac arrest by DC shock treatment. a biphasic defibrillator delivers current that travels through the heart in two directions. The first phase is the same as in conventional defibrillation. In the second phase, the current reverses direction, flowing through the heart again and back to the first electrode. Japan
Zimmer Tourniquet It is used in TKR & other Orthopedic surgeries in order to reduce blood loss during surgery. A tourniquet is a constricting or compressing device used to control venous and arterial circulation to an extremity for a period of time. Pressure is applied circumferentially to the skin and underlying tissues a limb; this pressure is transferred to the vessel wall causing a temporary occlusion. USA
Laser System (Karl Storz,- Model : Calculase Being used for Ablation of the Prostate & Urology surgeries Germany
Hopkins Telescope 6 Degree 18 FT - 27294AA For visualization of the surgical site during diagnostic and therapeutic endoscopic procedures Germany
Central Monitoring System- 16 Beds Central Monitor system to be connected with all patients standlone monitors in order to monitor parameters in doctors surveillance to be used in ICCU having back up capacity - 10 to 15 days. Japan
Flexible Uretero Reno Scope flexible ureteroscopes permits complete maneuverability within the intrarenal collecting system. This scope allows both up and down deflection in a single plane. Germany
Digital Radiography Detector Panel It is dynamic flat-panel detector being used for digital fluoroscopy and angiography Germany
Drill Unit System For precision cutting of bones and drilling at high speed and perfection for properly affixing the implant in TKR & THR surgeries USA

Apart from above, various other small equipment imported and are installed at various units of Shalby.

III. The expenditure incurred on Research and Development NIL

(C) Foreign exchange earnings and expenditure:

[Rs. in million]

Particulars 2019-2020 2018-2019
Earnings in Foreign Currency 81.93 111.57
CIF Value of Imports - -
Expenses in Foreign Currency 10.68 9.06

PARTICULARS OF EMPLOYEES & REMUNERATION

The details regarding ratio of remuneration of each Director to the median employees remuneration and other details as required in section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended herewith as Annexure - D.

The statement containing information as per provision of Section 197(12) read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in separate annexure forming part of this report. However, Annual Report is being sent without said annexure. In terms of provisions of section 136 of the Companies Act, 2013, the said annexure is open for e-inspection. Members may refer to note number 22 annexed to the notice of AGM for e-inspection. Any member interested in obtaining the copy of the same may write to the Company Secretary at the Registered Office of the Company.

INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

The Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures. The Company has in place adequate internal financial controls in order to ensure that the financial statements of the Company depict a true and fair position of the business of the Company. The Company continuously monitors and looks for possible gaps in its processes and it devices and adopts improved controls wherever necessary.

RISK MANAGEMENT

The risks are measured, estimated and controlled with the objective to mitigate adverse impact. Your Companys fundamental approach to risk management includes anticipating, identifying and measuring the risk. Your Company has in place a mechanism to monitor and mitigate various risks associated with the business. The Company has adopted a Risk Management Policy which inter alia, sets out our approach towards risk assessment, risk management and risk monitoring, which is periodically reviewed by the Board. The Risk Management Policy is available at https://www.shalby.org/wp-content/uploads/2018/12/Risk-Management-Policy Final.pdf

VIGIL MECHANISM

The Company has established a vigil mechanism and accordingly framed a Whistleblower Policy. The policy enables the employees to report genuine concerns to the management regarding instances of unethical behavior, actual or suspected fraud or violation of Companys Code of Conduct or mismanagement, if any. Further, the mechanism adopted by the Company encourages the whistleblower to report genuine concerns or grievances and provide for strict confidentiality, adequate safeguards against victimization of whistleblower who avails of such mechanism and also provides for direct access to the Chairman of the Audit and Risk Management Committee, in appropriate cases. The functioning of vigil mechanism is reviewed by the Audit and Risk Management Committee from time to time. None of the whistleblowers has been denied access to the Audit and Risk Management Committee of the Board pertaining to Whistleblower Policy. The said Vigil Mechanism and Whistleblower Policy is available at https://www.shalby.org/ wp-content/uploads/2018/01/Vigil-Mechanism-and-Whistle-blower policy-1.pdf

CORPORATE SOCIAL RESPONSIBILITY

In accordance with the requirements of Section 135 of the Act, your Company has constituted a CSR Committee, which comprises Mrs. Sujana Shah, Chairperson (w.e.f. November 11, 2019), Mr. Umesh Menon, Member (Chairman upto November 10, 2019) Mr. Shyamal Joshi as its members as on March 31, 2020. The Company has also framed a CSR Policy in compliance with the provisions of the Act which is available at https:// www.shalby.org/wp-content/uploads/2018/12/Corporate-Social-Responsibility-CSR-Policy.pdf. The Annual Report on CSR activities outlining geographical areas for CSR activities, composition of CSR committee, amount of CSR fund expended etc is annexed herewith as Annexure - E.

OTHER DISCLOSURES AND INFORMATION

1. Anti-sexual Harassment of Women at workplace

Your Company has adopted a policy for prevention, prohibition and redressal of sexual harassment at workplace under the provisions of Sexual Harassment of Women at the workplace (Prevention, Prohibition and Redressal) Act 2013 and rules framed thereunder. The Company has anti Sexual harassment Committee to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review, there was one complaint received which was investigated and resolved and there were no complaints pending at March 31, 2020.

2. Significant or Material Orders passed by the Authority

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status of the Company and its future operations.

3. Material changes and commitments affecting financial position

The outbreak of Coronavirus (COVID-19) pandemic globally and In India is causing significant disturbance and slowdown of economic activity. The Company is providing healthcare services, being "essential services" there has been no suspension of operation and the Company has taken further steps for smooth functioning of its operations during the pandemic. The management has also evaluated impact of this pandemic on its business operations and based on its review and current Indicators of future economic conditions, no material impact is anticipated on the financials of the Company in the long run. Due to the temporary suspension of services of elective surgeries and travel restrictions of overseas patients, business operations of the Company are expected to be lower in the short term, though the same is not likely to have a continuing impact on the business of the Company in the long run. Further, the Management believes that in the long term, there may not be material impact of COVID-19 pandemic on the financial position and performance of the Company. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration and accordingly the impact may be different from that estimated as at the date of approval of this report. The Company will continue to monitor any material changes to future economic conditions.

AUDITORS

Statutory auditor & auditors report

Pursuant to Section 139 of the Companies Act, 2013, M/s. T. R. Chadha & Co., LLP, Chartered Accountants has been appointed as Statutory Auditors of the Company, for a period of 5 consecutive years who holds the office from the conclusion of 14th AGM which was held in 2018 till the conclusion of 19th AGM.

The said Statutory auditors have confirmed that they have not incurred any of the disqualification as mentioned in section 141(3) of the Companies Act, 2013 and the Rules framed thereunder.

During the year, the Auditors had not reported any matter under Section 143(12) of the Act and therefore, no detail is required to be disclosed under Section 134(3) (ca) of the Act.

The Statutory Auditors comment on your Companys account for the year ended March 31, 2020 are self-explanatory in nature and do not require any explanation. The Auditors Report does not contain any qualification or adverse remarks.

Internal auditor

M/s. Price Water House Coopers Pvt. Ltd. is the Internal Auditors to conduct internal audit as per agreed scope of works pursuant to the provision of section 138 of Companies Act, 2013 read with Companies (Accounts) Rules, 2014. They were re-appointed as Internal Auditor for FY 2020-21 to conduct internal audit of the functional activities of the Company.

Cost auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014 and Companies (Cost Records and Audit) Rules, 2014, M/s. Borad Sanjay B & Associates has been appointed as Cost Auditors by the Board of Directors on the recommendation of Audit Committee, for audit of cost records for the year ended on March 31, 2020 and their remuneration was ratified by members at the 15th Annual General Meeting of the Company.

Your Company has received consent along with confirmation from M/s. Borad Sanjay B & Associates that the appointment is in accordance with the applicable provisions of the Act and Rules framed thereunder and they do not hold any disqualification under section 139, 148 and 141 of the Companies Act, 2013 for their appointment for FY 2020-21. The Board of Directors of the Company re-appointed M/s. Borad Sanjay B & Associates for audit of cost records for the year ended on March 31, 2021 at a remuneration of Rs. 1,00.000/- plus applicable taxes and reimbursement of out of pocket expenses incurred, if any, in connection with the cost audit. The Board of Directors of the Company recommended the members for their ratification.

The Company has maintained cost account and records as specified by Central Government under Section 148(1) of the Act, read with Rule 8 of Companies (Accounts) Rule, 2014.

Secretarial auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had appointed Mr. Shambhu J. Bhikadia, Practicing Company Secretary (PCS Registration no. 3894) to conduct the Secretarial Audit of the Company for the year ended March 31, 2020. The

Secretarial Audit Report for the FY 2019-20 does not contain any qualification, reservation, or adverse remarks and is annexed to this Report as Annexure - F. Your Company has also obtained certificate from the secretarial auditor certifying that none of the directors of our Company has been debarred or disqualified from being continuing as directors of the Company by SEBI, Ministry of Corporate Affairs or such similar statutory authority.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their sincere appreciation for the whole hearted support and contribution made by all Doctors, nursing/para medics especially in the ongoing COVID-19 pandemic, bankers, Government Authorities, auditors and shareholders during the year under review. Your Directors express their deep sense of appreciation and extend their sincere thanks to every employee at all level for their dedicated services and look forward their continued support.

CAUTIONARY STATEMENT

The Boards Report and Management Discussion & Analysis may contain certain statements describing the Companys objectives, expectations or forecasts that appear to be forward-looking within the meaning of applicable securities laws and regulations while actual outcomes may differ materially from what is expressed herein. The Company is not obliged to update any such forward-looking statements. Some important factors that could influence the Companys operations comprise economic developments, pricing and demand and supply conditions in global and domestic markets, changes in government regulations, tax laws, litigation and industrial relations.

For and on behalf of the Board of Directors Dr. Vikram I. Shah
Place : Ahmedabad Chairman & Managing Director
Date : June 15, 2020 DIN : 00011653