DOLPHIN MEDICAL SERVICES LTD-AGM 2009-10 difficulties faced by the company in marketing its Diagnostic services, ... emphasis on product quality, ... DOLPHIN MEDICAL SERVICES LIMITED

DolphinMedical Services Limited

Regd. Office: # 417, Sanali Heavens, Ameerpet, HYDERABAD - 500 073, A.P. IndiaCorp. Office: Ramachandra Rao Road, VIJAYAWADA - 520 002, A.P. India

Website : www.dolphinmedicalindia.comE-mail ID for Investor’s Grievances : [email protected]

18th ANNUAL REPORT2009 - 2010

DOLPHIN MEDICAL SERVICES LIMITED 18th Annual Report

BOARD OF DIRECTORSDr. G.V. MOHAN PRASAD Managing DirectorDr. M. LAKSHMI SUDHA DirectorMr. VINAY VISHNURAJ NAYAK Independent DirectorMr. NARENDRA SEENA KARKERA Independent DirectorMr. M. HEMANTH KUMAR Independent Director

REGISTERED OFFICE CORPORATE OFFICE# 417, Sanali Heavens Ramachandra Rao RoadAmeerpet SuryaraopetHYDERABAD - 500 073 VIJAYAWADA - 520 002Andhra Pradesh Krishna DistrictIndia Andhra Pradesh, India

AUDITORSM/s. PINNAMANENI & CO.Chartered AccountantsMoghulrajpuramVIJAYAWADA - 520 010 &AmeerpetHYDERABAD - 500 073

SHARE TRANSFER AGENTS BANKERSM/s. XL SOFTECH SYSTEMS LTD. Canara Bank3, Sagar Society, Road No.2 The Federal Bank Ltd.Banjara ills HDFC Bank Ltd.HYDERABAD - 500 034 ICICI Bank Ltd.

18th ANNUAL GENERAL MEETING Contents Page Nos.

Date : 30th September, 2010

Time : 09.45 A.M.

Venue : Neni Hi-tech Club169, Lal BungalowOld Airport RoadNew BowenpallySECUNDERABAD - 500 011

01. Notice 102 Directors’ Report 203. Auditors’ Report on Consolidated

Financial Statements 1104. Consolidated Balance Sheet 1205. Consolidated Profit & Loss Account 1306. Schedules 1407. Consolidated Cash Flow Statement 1808 Auditors’ Report 1909. Balance Sheet 2110. Profit & Loss Account 2211. Schedules 2312. Cash Flow Statement 2713. Balance Sheet Abstract 28


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NOTICE

NOTICE is hereby given that the 18th Annual General Meeting of the members of M/s. DOLPHIN MEDICALSERVICES LIMITED will be held on Thursday, the 30th September, 2010 at 9.45 A.M at Neni Hi-techClub,169, Lal Bungalow, Old Airport Road, New Bowenpally, Secunderabad – 500 011 to transact thefollowing Ordinary business:

1. To receive, consider and adopt the Audited Balance Sheet and Profit and Loss Account for thefinancial year ended 31st March, 2010 and the Reports of the Directors and Auditors thereon.

2. To appoint a director in place of Mr. M. Hemanth Kumar, who retires by rotation and being eligibleoffers himself for re-appointment.

3. To appoint M/s. Pinnamaneni & Co., Chartered Accountants as Statutory Auditors of the Company,who shall hold office from the conclusion of this Annual General Meeting until the conclusion of thenext Annual General Meeting of the Company and to fix their remuneration.

//By Order of the Board//For DOLPHIN MEDICAL SERVICES LTD

Sd/-Dr. G.V. MOHAN PRASAD

MANAGING DIRECTORDate: 13.08.2010Place: Vijayawada

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE, IS ENTITLED TO APPOINT A PROXY TO ATTENDAND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER.

2. The instrument appointing a proxy should however be deposited at the Registered Office of theCompany not less than Forty Eight hours before the commencement of the Meeting.

3. Notice is also given that the Register of Members and Share Transfer books in respect of EquityShares of the Company will remain closed from 29th September to 30th September, 2010 (both daysinclusive).

4. Share holders are requested to notify change in address if any, immediately to the Company’sTransfer Agents.

5. Share holders are requested to bring their copies of Annual Report to the Meeting. Copies of theAnnual Report will not be available for distribution to Shareholders at the Hall.

6. Share holders attending the Meeting are requested to complete the enclosed attendance slip anddeliver the same at the entrance of the Meeting place.

7. Share holders intending to require information about Accounts to be explained in the Meeting arerequested to inform the Company at least 7 days in advance of the Annual General Meeting.

8. All Shareholders are advised to send their certificates for transfer & DEMAT directly to the ShareTransfer Agents.


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Directors’ Report

To,The Members of Dolphin Medical Services Ltd.

Your Directors have pleasure in submitting to you this Eighteenth Annual Report together with theAudited Statement of Accounts for the year ended 31st March 2010.

1. FINANCIAL RESULTS:

The Financial Results for the year ended 31t March 2010 are furnished below:

(Rs. In Lakhs)

Particulars 2008-09 2009-10

Operating Income 270.23 334.38

Other Income 4.74 7.28

Profit before Depreciation & Tax 59.76 116.71

Depreciation 38.28 56.70

Cash Profit 52.42 62.77

During the year under review your company has recorded a 23.7% growth in its gross income, butalso incurred higher expenses due to inception stage of some activities. The growth in the businesswas possible with steps initiated by the Board members. The Directors are further determined totake your company on to a path of substantial growth during years to come by undertaking newprojects and improve the bottom line.

2. SUBSIDIARY COMPANIES:

During the year under review the Subsidiary Companies incorporated were not able to not able torecord progress since activities undertaken are in the initial phase. The Directors have taken aconscious decision to concentrate on the growth of parent company first and thereafter attend toother business plan/s of these companies.

3. DIVIDEND:

The Directors have taken a decision not to recommend any dividend for the year 2009-10. Whiletaking such decision the Directors have taken into account to strengthen Financials of the companyby retaining earned profits.

4. PUBLIC DEPOSITS:

During the year under review the company has not accepted any ‘public deposit’ as in defined inprovision of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Deposits)Rules 1975 as amended from time to time. There are no outstanding unclaimed deposits as on 31st

March 2010.

5. MANAGEMENT PERCEPTION:

After reviewing performance of the Company during completed year and also taking into accountthe difficulties faced by the company in marketing its Diagnostic services, Directors have taken adecision to go in for diversification of Companies activities. The Board has decided that instead ofconcentrating on only ‘Diagnostic Services’ the Company should engage in many allied activitiessuch as ‘medical and non medical supplies’ to various hospitals and other organisations, ‘medicalaudit’ and ‘providing of training of operating staff at various ‘diagnostic units’. One more decisionwhich has been taken by the Board is to expand the area of operation of the Company from Vijayawada/Hyderabad to India level. For this purpose the Company may open up office at other centers such asBangalore/Mumbai. The Board is working out a detailed plans for this purpose including taking upother non medical project and will finalise it very soon in order to implement it in second half ofcurrent financial year.


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6. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION & FOREIGN EXCHANGE EARN-INGS AND OUT GO:

The required information as per Sec.217(1) (e) of the Companies Act 1956 is provided hereun-der:

A: CONSERVATION OF ENERGY:

The Company has taken necessary steps to conserve the energy utilization during the yearunder review.

B. TECHNOLOGY ABSORPTION:

1. Research and Development (R&D) : Rs.2.83 lakhs

2. Technology absorption, adoption and innovation : NIL

C. FOREIGN EXCHANGE EARNINGS AND OUT GO:

Foreign Exchange Earnings : NIL

Foreign Exchange Outgo : NIL

7. INTERNAL CONTROL AND ITS ADEQUACY:

The Board is committed to ensure that the Company’s ‘internal control’ system remains effectiveand efficient in areas such as operations and Security. For this purpose proper planning and effectiveconduct of the ‘internal audit’ is given top-most attention.

8. DIRECTORS’ RESPOSIBILITY:

To best of their knowledge and belief and on the basis of information furnished to them the Directorsmake following statement, which is required to be made in terms of Section 217 (2AA) of theCompanies Act, 1956:

(i) While preparing Annual Accounts, the applicable accounting standards have been followedalong with proper explanations

(ii) Appropriate ‘Accounting Policies’ have been selected and applied consistently. The judgmentsand estimates made are reasonable and prudent so as to present a true and fair picture ofstate of affairs of the Company.

(iii) Proper and Adequate care has been taken for maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956.

(iv) The Annual Accounts of the Company have been prepared on basis of a ‘going concern’.

9. CORPORATE GOVERNANCE:

a) A note on Management Discussion and Analysis of Report is enclosed.

b) As per clause 49 of the Listing Agreement with the Stock Exchanges, a separate section onCorporate Governance Practices followed by the Company together with a certificate obtainedfrom the auditors of the Company is set out in Annexure, forming part of this report.

10. PARTICULARS OF EMPLOYEES:

During the year under review, except Managing Director no employee of the company was in receiptof remuneration for the whole year which in the aggregate was Rs 24,00,000/- or more per annumnor was any employee in receipt of remuneration Rs.2,00,000/- or more per month for any part ofthe year in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975 as amended.


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During the year under review, industrial relations of the company continued to be cordial and peaceful.

11. DIRECTORS:

In accordance with requirements of the Companies Act, 1956 and Articles of Association of theCompany, Mr. M. Hemanth Kumar, retires by rotation and Board recommends his reappointment.

12. AUDITORS:

M/S Pinnamaneni & Co, Chartered Accountants, the Company’s auditors term office will concludewith this Annual General Meeting. They have expressed willingness to accept the assignment for afurther period on one more year. They have also confirmed their eligibility for such an appointmentunder Section 224(1-B) of the Companies Act, 1956.

13. LISTING AT STOCK EXCHANGES:

The Equity Shares of the Company are listed on Bombay Stock Exchange Limited, Phiroze JeejeebhoyTowers, Dalal Street, Mumbai - 400 001.

The listing fee to the Exchange has been paid up to date.

14. ACKNOWLEDGEMENTS:

Your Directors thank and appreciate all the executives, staff, Bankers, Customers and Workers of theCompany for their dedicated services.

//By Order of the Board//

For DOLPHIN MEDICAL SERVICES LIMITED

Sd/- Sd/-Dr. G.V. MOHAN PRASAD Dr. M. LAKSHMI SUDHA

Managing Director DirectorPlace: VijayawadaDate: 13.08.2010


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CORPORATE GOVERNANCE REPORTCorporate Governance is the system by which business corporations are directed and controlled. CorporateGovernance Structure specifies the relationship, distribution of Rights and responsibilities among differentparticipants in the Organization, such as the Board, Managers and shareholders, spells out the rules andprocedures for making decisions on corporate affairs. By doing this, it also provides the structure through whichthe Company objectives are set and the means of attaining these objectives and monitoring the performance.

The essence of Corporate Governance revolves around three basic interrelated segments. Integrity and fairness,transparency and disclosures, accountability and responsibility. It is about commitment to values and ethicalbusiness conduct, voluntary practices and compliance with laws and regulations leading to effective control andmanagement of the organization in achieving the objectives.

Dolphin believes that good corporate governance brings about sustained corporate growth and long termbenefits for share holders. The Company’s core values are based on integrity, respect for statutory/regulatoryrequirements and complaints thereof, emphasis on product quality, effective strategic planning and processes,growth and development of human resources, which entails converting opportunities into achievements.

Dolphin respects the rights of its share holders to information on the performance of the Company and focus onthe Trusteeship role of the Board in increasing the wealth and long term shareholders’ value creation over asustained period of time.

Dolphin continues to focus its resources strengths and strategies to achieve highest standards of corporategovernance and endeavors to implement the code of corporate governance in its true spirit.

In accordance with clause 49 of the Listing Agreement with Indian Stock Exchanges on corporate governance areport on the practices and compliances by the company is as follows

This Report provides the structure through which the company objectives are set and the means of attainingthe overall business objectives and goals.

A. BOARD OF DIRECTORS:

Composition:

The Board of Directors consists of Professionals drawn from diverse fields. All the Directors on theBoard consists of Executive and Non- Executive Directors and three of them being independent.

None of the Directors on the Board is a member in more than 10 committees or Chairman of more than5 Committees (as specified in Clause 49 of the Listing Agreement with Stock Exchanges). The Directorshave made the necessary disclosures regarding Committee memberships.

Sl. Name & Category of the No.of No.ofNo. Directors Directorships held Memberships/

in other Public Chairmanships heldCompanies in Committees of

other Companies

1. Dr. G.V. Mohan Prasad[Promoter & Executive Director] 2 —

2. Dr. M. Lakshmi Sudha[Promoter & Executive Director] 2 —

3. Mr. Vinay Vishnuraj Nayak[Independent Director] — —

4. Mr. Narendra Seena Karkera[Independent Director] — —

5. Mr. Hemanth Kumar Manikyam[Independent Director] — —

Details of Directors being appointed and reappointed at the ensuing Annual General Meeting:

A brief resume of the Director being re-appointed is as follows:Mr. M. Hemanth Kumar:

He has completed Post Graduation in Bio Chemistry from Periyar University, Salem, Tamilnadu. He ishaving reasonably good experience in Life Science Division both Technical and Marketing aspects. Heworked as an Assistant Professor and Entrepreneur Development Cell Manager for Audisankara EngineeringCollege, Nellore in Biotechnology Division. He is well trained as an Entrepreneur Development Facultyfrom National Institute of Small Scale Industrial Extension Training, Hyderabad. He has done research


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works in the area of Ethnopharmacology specially on anticancer, antiviral, antidiabetic, Drug Isolation and theirstudies in association with well reputed organisations. Later he worked as an Application Specialist inBiochemistry Clinical Division for Biosystems Private Limited, Bangalore.

B. BOARD MEETINGS:

During the Financial Year 2009-2010 the Board of Directors met 8 (Eight) times on the following dates:

26.04.2009, 22.06.2009, 31.07.2009, 21.08.2009, 30.09.2009, 30.10.2009, 27.01.2010 &09.03.2010.

The Attendance of Directors at these Board Meetings and at the previous Annual General Meeting wasunder:

Name of the Director No.of Board No.of WhetherMeetings held Meetings Present at the

during the attended by previous AGMtenure of the the Director

Director

Dr. G.V. Mohan Prasad 8 8 Yes

Dr. M. Lakshmi Sudha 8 8 Yes

Mr. Vinay Vishnuraj Nayak 8 6 No

Mr. Narendra Seena Karkera 8 6 No

Mr. Hemanth Kumar Manikyam 8 5 No

C. COMMITTEES OF THE BOARD:

In order to ensure that the functions of the Board are discharged effectively, information disclosed in thefinancial statements are in order and no material information is left undisclosed, besides ensuring thestricter implementation of the Corporate Governance, the Board has formed the following Three committees.

1. Audit Committee

2. Remuneration Committee

3. Investors/Share holders Grievances Committee

The scope of the said Committees, memberships and the powers delegated is enumerated hereunder:

1) Audit Committee:

Terms of Reference of Composition, Name of the Members and Chairman:

The Board has constituted an Audit Committee in accordance with Clause 49 of the listing Agreementas well as Section 292A of the Companies Act, 1956. The audit Committee comprises of 3 directors,2 of them being non-executive directors. The composition of Audit Committee is as follows:

Mr. Narendra Seena Karkera, Chairman of the committee, Mr. Vinay Vishnuraj Nayak and Dr. M.Lakshmi Sudha are the members of the Committee, all being directors. The Managing Director,along with Statutory Auditors and Accounts Manager are invitees to the meeting. The terms ofReference of this Committee are wide enough covering matters specified for Audit Committeesunder the Listing Agreement/Companies Act, 1956.

Meetings and the attendance during the year:

During the year under review, the total number of meetings held was 5 (five) on the followingdates:1. 26th April, 2009 2. 31st July, 2009 3. 21st August, 20094. 30th October, 2009 and 5. 27th January, 2010

The attendance of the each member of the Committee is given below:

Name of the Director No.of Meetings held No. of Meetings attended

Mr. Narendra Seena Karkera 5 5

Mr. Vinay Vishnuraj Nayak 5 5

Dr. M. Lakshmi Sudha 5 5


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The primary objective of the audit Committee is to monitor and effectively supervise the Company’sfinancial reporting process with a view to provide accurate, timely and proper disclosures and theintegrity and quality of the financial reporting.

During the year, the Audit Committee met Five times. Executives of Accounts Department,Representative of the Statutory Auditors were invited to attend the Audit Committee Meetings.

2) Remuneration Committee

The Remuneration Committee consists of Mr. Hemanth Kumar Manikyam, Mr.Vinay Vishnuraj Nayakand Mr. Narendra Seena Karkera all being Independent non-executive directors. No remunerationcommittee meetings were held during the year.

The details of the remuneration paid to Managing Director and Whole-Time Director during the year2009-10 are given below:

Name & Designation All elements of remuneration packagesi.e., salary benefits, bonuses, pension etc.

Dr. G.V. Mohan PrasadManaging Director Rs.28,20,000/-

Dr. M. Lakshmi SudhaDirector Rs.13,80,000/-

The above directors did not receive any other benefits like incentives and stock options during the2009-2010 except the remuneration package.

3) Investors / Shareholders Grievance Committee:

The Company has constituted an Investors / Shareholders Grievance Committee under theChairmanship of Dr. M. Lakshmi Sudha. The other members of the Committee are Mr. HemanthKumar Manikyam and Mr.Vinay Vishnuraj Nayak. The Committee looks into the shareholders andinvestors complaints. The number of shares pending for transfer was NIL as on 31st March, 2010.

D. Annual General Meetings:

Particulars about the last three Annual General Meetings (AGMs) of the Company are as under:

Sl. No. Particulars Date Venue

1 15th AGM 27.12.2007 Ramachandra Rao Road,Vijayawada – 520 002, A.P.

2 16th AGM 29.12.2008 -do-

3 17th AGM 30.09.2009 Neni Hi-tech Club, 169, Lal Bungalow, Old AirportRoad, New Bowenpally, Secunderabad - 500 011

There was no Extra-ordinary General Meeting held during the year 2009 – 2010.

One Special resolution regarding change of other objects in the memorandum of Association was passedthrough postal ballot during the year 2009-10.

No Special resolution is proposed through postal ballot at the ensuing Annual General Meeting.

E. Disclosures

a. There is no materially significant related party transaction made by the company with its promoters,Directors or the management, their subsidiaries or relatives etc. that may have potential conflictwith the interests of the Company at large.

b. The Company had complied with the requirement of the Stock Exchange, SEBI and other statutoryauthorities on all matters relating to capital market during the last three years. No pecuniarypenalties have been imposed on the company by any of the above mentioned authorities.

c. The company has already put in place a system for employees to report to the management aboutconcerns relating to unethical behavior, any fraud or violation of companies Code of Conduct andaccess have been provided up to the higher level of supervision including the Audit Committee.

d. The Company has complied with all the mandatory requirements and has also disclosed informationrelating to non mandatory requirements.


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F. Means of Communication

* Half yearly report sent to No, as the results of the Company areEach household of the shareholder published in the newspapers.

* Quarterly Results -do-

* Any website where displayed -do-

* Whether it is also displayed in -do- Official newspapers

* The presentations made toInstitutional investors or to analysts -No-

* News papers in which results are 1) The Financial ExpressNormally published in 2) Andhra Prabha

The crux of the Corporate Governance is the transparency in disclosure of the timely, reliable and relevantinformation pertaining to the Organization. A good Corporate Governance is one in which all the stakeholdershave access to the similar information in quality and quantity which enables them to take an informeddecision at the right time.

Recognizing this prominent feature, the quarterly results of the Company for each quarter, the audited/unaudited annual results, are announced within the statutory time frame and published in The FinancialExpress and Andhra Prabha etc.

Management discussion and analysis forms part of the Annual Report, which is mailed to the shareholdersof the Company individually.

G. General Shareholder Information:

Annual general Meeting

Date 30.09.2010

Time 09.45 A.M

Venue Neni Hitech Club,169, Lal Bungalow, Old Airport Road, NewBowenpally, Secunderabad – 500 011, Andhra Pradesh.

Financial Calendar The following is the tentative financial calendar of the Companywhich is subject to change.

Quarter Period Declaration of results

First Apr-June Held on 13th Aug. 2010

Second July-Sep 2nd week of Nov. 2010

Third Oct-Dec 2nd week of Feb. 2011

Fourth Jan-Mar 2nd week of May, 2011

Date of Book Closure 29th September 2010 to 30th September 2010

Dividend Payment dates -NIL-

Listing on Stock Exchanges Bombay Stock Exchange Limited

Listing Fees Paid for the year 2010-2011

Stock Code - BSE 526504

ISIN Number for NSDL & CDSL INE 796 B 01013

Market Price Data: high & Lowduring each month for the As per Annexure Ifinancial year 2009-10.

Registrar and Share Transfer M/s. XL Softech Systems Ltd., 3, Sagar Society, Road No.2,Banjara Hills, Hyderabad – 500 034.

Share Transfer System Share Transfers would be registered and returned within aperiod of four weeks from the date of receipt, if the documentsare clear in all respects.

Agents


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The Share Transfer Committee, which normally meets twicein a month, or at more frequency depending on the volume oftransfers aims at ensuing registration and return of transferredshares promptly on receipt of completed documents.

Distribution of shareholdingand share holding pattern as As per Annexure – IIon 31st March, 2010

Dematerialization of The equity shares of the company are being traded in electronicmode from 22nd February 2002 as per SEBI Circular. Thisfacilitates faster and efficient Transfer system and also reduceinvestors risks of bad delivery/loss in transit of documentsbesides having the advantage of exemption from stamp duty.96.20% of the Equity Share Capital has been dematerializedas on 31.03.2010.

As per the directions of Securities and Exchange Board of India,trading in the company shares shall compulsorily be indematerialized form by all classes of investors and facilitiesfor dematerialization are fully operational. The company sharesare regularly traded on BSE.

Outstanding GDRs/ ADRs/Warrants or any convertibleinstruments conversion date -NIL-and likely impact on Equity

Plant Location #29-12-13A, Ramachandra Rao Road, Vijayawada, AndhraPradesh.

Address for Correspondence Share holders correspondence should be addressed to XLSoftech Systems Ltd., #3, Sagar Society, Road No.2, BanjaraHills, Hyderabad – 500 034, Andhra Pradesh.

Your Company has a website by name www.dolphinmedicalindia.comEmail Id for investor’s grievances: [email protected]

Address of Registrar and Transfer Agents:M/s. XL Softech Systems Ltd,3, Sagar Society, Road No.2, Banjara HillsHyderabad – 500 034. Andhra Pradesh.

NON-MANDATORY REQUIREMENTS:

The Company has not adopted the clauses specified in the non mandatory requirements of theListing agreement except constituting of the remuneration committee.

ANNEXURE I:

High / Low of market price of the Company’s shares traded on Bombay Stock Exchange Ltd., Mumbaiduring the financial year 2009-10:

Month Highest Lowest Month Highest Lowest

April, 09 3.37 1.86 October 3.31 2.56

May 4.66 2.24 November 3.15 2.71

June 5.00 3.01 December 5.26 2.80

July 3.30 2.42 January, 10 5.77 3.83

August 3.43 2.65 February 4.24 3.42

September 3.55 2.80 March 4.00 3.15

Shares and Liquidity


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ANNEXURE II:

The distribution of shareholding as on 31st March, 2010:

No. of Equity Shares held No. of Folios % No. of shares %

Up to 500 3,617 57.60 8,58,313 5.68

501 - 1000 1,092 17.39 9,69,291 6.42

1001 - 2000 659 10.50 10,73,303 7.11

2001 - 3000 259 4.12 6,87,866 4.56

3001 - 4000 128 2.04 4,81,436 3.19

4001 - 5000 148 2.36 7,11,983 4.71

5001 - 10000 219 3.49 16,80,529 11.13

10001 and above 157 2.50 86,37,231 57.20

Grand Total 6,279 100.00 1,50,99,952 100.00

No. of Shares in Physical Mode 5,73,211 3.80

No. of Shares in Electronic Mode 1,45,26,741 96.20

Shareholding Pattern as on 31st March, 2010:

Category No. of Shareholders No. of Shares %

Promoters 46 41,43,801 27.44

Foreign Collaborators —- —- —-

Mutual Funds —- —- —-

Fls./Banks 1 200 0.00

FIIs/NRIs 19 88,515 0.59

Domestic Companies 153 10,25,060 6.79

Public 6,041 97,99,029 64.90

Others 19 43,347 0.28

Total 6,279 1,50,99,952 100.00

DECLARATION BY CEO OF THE COMPANY ON CODE OF CONDUCTAs per the revised clause 49 of the listing agreement of the Stock Exchanges the Board shall lay down a codeof conduct for all board members and senior management of the Company. The code of conduct shall be postedon the website of the Company and all the members and senior management personnel shall affirm compliancewith the code on annual basis. The annual report of the Company shall contain a declaration to this effectsigned by CEO of the Company.

I hereby declare that:

1. Code of conduct prepared for the Board Members and senior management of the Company was approvedby the Board of Directors and the same was adopted by the Company.

2. Code of Conduct adopted by the Company was circulated to the members of the Board and seniormanagement of the Company and also posted in the website of the Company.

3. All the members of the Board and senior management of the Company have complied with all theprovisions of the code of conduct.

For DOLPHIN MEDICAL SERVICES LIMITEDSd/-

Dr.G.V.Mohan PrasadManaging Director


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AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

ToThe Members of Dolphin Medical Services Limited

We have examined the compliance of conditions of Corporate Governance by Dolphin Medical Services Limited, for theyear ended on 31st March, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with StockExchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination waslimited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditionsof the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and according to the explanations given to us, we certify that theCompany has complied with the conditions of Corporate Governance as stipulated in the Listing Agreement.

We state that no investor grievance is pending for a period exceeding one month against the Company as per therecords maintained by the Shareholders/Investor Grievance Committee except one issue, which was brought to thelight later. The issue is pertaining to the transfer of shares. We understand that every effort is made to resolve thisissue by discussing with the concerned party by verification of the facts.

We further state that such compliance is neither an assurance as to the future viability of the Company nor theefficiency or effectiveness with which the management has conducted the affairs of the Company.

For M/s. PINNAMANENI & CO.,Chartered Accountants

Sd/-Place : Vijayawada P.V.V. SatyanarayanaDate : 13.08.2010 Partner==================================================================================================================

AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTSToThe Board of Directors of M/s. Dolphin Medical Services Ltd.

1. We have audited the attached Consolidated Balance Sheet of M/s. Dolphin Medical Services Ltd. and its subsidiariesM/s.Bridge Corporate Services Private Limited and M/s. Evum Life Sciences Private Limited (hereinafter togetherreferred to as ‘consolidated entities’) as at 31st March, 2010, the related Consolidated Profit and Loss Accountand Consolidated Cash Flow Statement for the year ended on that, which we have signed under reference to thisreport. These Consolidated Financial Statements are the responsibility of the company’s management. Ourresponsibility is to express an opinion on these consolidated financial statement based on our audit.

2. We conducted the audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

3. We report that the Consolidated Financial Statements have been prepared by the Company’s management inaccordance with the requirements of Accounting Standard 21, ‘Consolidated Financial Statements’ as referred toin sub-section (3C) of Section 211 of the Companies Act, 1956 and on the basis of the separate audited financialstatements of the company and its subsidiaries included in the Consolidated Financial Statements.

4. On the basis of the information and explanations given to us and on consideration of the separate audit reportson individual audited financial statements of the company and its aforesaid consolidated entities, in our opinion,the Consolidated Financial Statements give a true and fair view in conformity with the accounting principlesgenerally accepted in India.

a. in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the company and itsconsolidated entities as at 31st March, 2010.

b. in the case of the consolidated Profit and Loss Account, of the consolidated results of operations of companyand its consolidated entities for the year ended 31st March, 2010 and

c. in the case of the consolidated cash flow statement, of the consolidated cash flows of the company and itsconsolidated entities for the year ended 31st March, 2010.

for PINNAMANENI & Co.,Place : Vijayawada Chartered AccountantsDate : 13.08.2010 Sd/-

P.V.V.SATYANARAYANAPartner


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CONSOLIDATED BALANCE SHEET AS ON 31.03.2010

AS ON 31.03.2009AMOUNT (Rs.)

AS ON 31.03.2010AMOUNT (Rs.)PARTICULARS

I. SOURCE OF FUNDS1. Share Holder’s Funds

a) Share Capital 1 1,50,999,520.00 150,999,520.00b) Share Premium 23,689.704.00 23,689,704.00c) Share Warrants -- 3,225,000.00d) Capital Reserve 2 3,225,000.00 --

2. Minority Interest 400,000.00 200,000.003. Loan Funds

a) Secured Loans- Canara Bank Loan 67,888,425.00 54,046,810.00- HDFC Vehicle Loans 1,508,759.67 821,278.22

4. Deferred Tax Liability 4 4,821,401.00 3,314,262.00

TOTAL 252,532,809.67 236,296,574.22

II. APPLICATION OF FUNDS1. FIXED ASSETS

a) Gross Block 11 155,429,369.88 113,280,720.16b) Less: Depreciation 33,990,887.50 28,320,382.50

c) Net Block 121,438,482.38 84,960,337.66d) Capital Work in Progress 51,707,160.00 70,952,166.00

(including capital advances)173,145,642.38 155,912,503.66

2. Expenditure during construction period,pending allocation (Net) 14,636,704.00 10,458,550.00

3. Investments 5 4,100,000.00 4,100,000.004. CURRENT ASSETS, LOANS & ADVANCES

a) Cash and Bank Balances 6 1,055,510.38 1,982,884.96b) Deposits with Banks -- 4,091,185.00c) Deposits 7 835,453.00 3,185,453.00d) Loans & Advances 8 27,694,791.00 26,798,525.00e) Other Current Assets 274,091.61 795,454.96f) Inventory 351,740.00 326,790.00

30,211,585.99 37,180,292.92Less: CURRENT LIABILITIES & PROVISIONSCurrent Liabilities & Provisions 9 1,101,661.60 988,471.79

Net Current Assets 29,109,924.39 36,191,821.135. Profit & Loss Account 3 818,545.30 (81,475.576. Research & Development Expenditure 8,206,460.00 7,923,470.007. Miscellaneous Expenditure 22,515,533.60 21,791,705.00

(to the extent not written off or adjusted)

TOTAL 252,532,809.67 236,296,574.228. Significant Accounting Policies and 12

Notes to the Consolidated Accounts

As per our report of even datefor DOLPHIN MEDICAL SERVICES LIMITED for PINNAMANENI & CO.,Sd/- CHARTERED ACOUNTANTSDr. G. V. MOHAN PRASAD Sd/-Managing Director P.V.V.SATYANARAYANASd/- PartnerDr. M. LAKSHMI SUDHADirector

Place : VijayawadaDate : 13.08.2010

Schedule

)


13

CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2010

FOR THE YEAR2008-2009 (Rs.)

FOR THE YEAR2009-2010 (Rs.)PARTICULARS

INCOME

Medical Division :

Diagnostic Services 31,656,758.00 23,470,535.00

Ophthalmology Services 1,049,350.00 2,669,640.00

Biotech & Herbal Services 315,962.00 452,050.00

Software Division:

Software Operations 415,700.00 430,300.00

Other Income 727,834.00 474,586.16

TOTAL 34,165,604.00 27,497,111.16

EXPENDITURE - SCHEDULE 10 22,494,158.42 21,521,414.23

Profit before Depreciation & Income Tax 11,671,445.58 5,975,696.93

Provision for Depreciation 5,670,505.00 3,827,952.00

Interest & Finance charges 5,271,543.45 128,984.38

Profit before Tax 729,397.13 2,018,760.55

Provision for Tax 122,279.00 530,076.00

Provision for FBT -- 75,580.00

Provision for Deferred Tax 1,507,139.00 135,570.00

Profit after Tax (900,020.87 1,277,534.55



)


14

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET

AS AT 31.03.2009Rs.

AS AT 31.03.2010Rs.PARTICULARS

SCHEDULE - IAUTHORISED SHARE CAPITAL2,50,00,000 Equity Shares of Rs.10/- each 250,000,000.00 250,000,000.00

ISSUED CAPITAL1,62,75,300 Equity Shares of Rs.10/- each 162,753,000.00 162,753,000.00

SUBSCRIBED & PAIDUP CAPITALSubscribed & Paid up Capital 150,999,520.00 150,999,520.00

SCHEDULE - 2Convertible Share Warrants32,25,000 Share Warrants of Rs.10/- each 32,250,000.00 32,250,000.00Less: Amounts Receivable 29,025,000.00 29,025,000.00

3,225,000.00 3,225,000.00Transferred to Capital Reserve 3,225,000.00 --SCHEDULE - 3RESERVES & SURPLUSProfit & Loss AccountOpening Balance 81,475.57 (1,196,058.98)Add: Profit during the year (900,020.87 1,277,534.55

Transferred to Balance Sheet (818,545.30 81,475.57

SCHEDULE - 4DEFERRED TAX LIABILITYOpening Balance 3,314,262.00 3,178,692.00Add: Current Year (Asset)/Liability 1,507,139.00 135,570.00

TOTAL 4,821,401.00 3,314,262.00

SCHEDULE - 5INVESTMENTSMeridian Projects Limited 3,200,000.00 3,200,000.00Cosmic Fortunes India Ltd 900,000.00 900,000.00

TOTAL 4,100,000.00 4,100,000.00

SCHEDULE - 6CASH & BANK BALANCECash in Hand 271,712.00 208,864.00Cash at Banks 783,798.38 1,774,020.96

TOTAL 1,055,510.38 1,982,884.96

SCHEDULE - 7DEPOSITSRent Deposit 575,920.00 575,920.00Rent Deposit for Hyderabad premises -- 2,350,000.00Telephone Deposit 53,000.00 53,000.00Electricity Deposit 103,502.00 103,502.00PF Deposit 103,031.00 103,031.00

TOTAL 835,453.00 3,185,453.00

)

)


15

AS AT 31.03.2009Rs.


SCHEDULE - 8LOANS & ADVANCES(Advances recoverable in cash or kindor for value to be received)a) To Directors --- ---b) To others 27,694,791.00 26,798,525.00

TOTAL 27,694,791.00 26,798,525.00

SCHEDULE - 9CURRENT LIABILITIES & PROVISIONSLiabilities 122,733.07 84,320.68Provisions 978,928.53 904,151.11

TOTAL 1,101,661.60 988,471.79

SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT

SCHEDULE - 10EXPENDITUREChemicals, Films, kits, consumables, disposables & Herbals etc. 6,275,940.00 5,250,310.00Salaries 1,906,030.00 1,668,620.00Directors Remuneration 4,020,000.00 3,166,667.00Consultancy Charges 543,330.00 461,216.00Incentives to Staff 385,410.00 378,300.00Laboratory Maintenance 327,892.00 324,794.00Repairs & Maintenance 2,029,932.00 3,480,716.00Medical Expenses 339,867.00 337,472.00Provident Fund to Staff 64,599.00 39,905.00Rent 767,088.00 724,944.00Misc. Aminities 210,640.00 203,500.00Printing & Stationery 319,058.00 316,047.00Postage & Telegrams 176,820.00 159,686.00Staff Welfare 71,104.00 69,911.00Conveyance 91,465.00 89,381.00Travelling Expenses 1,558,754.22 1,479,906.47Hospital Maintenance 323,041.00 297,844.00Vehicle Maintenance 179,898.00 137,775.00Books & Subscriptions 142,308.00 131,207.62Advertisement 47,613.00 157,348.00Rates, Taxes & Fees 43,964.00 66,431.09Interest on Income Tax 62,052.89 94,539.00Bank Charges 43,242.31 20,624.01Computers Maintenance 207,100.00 191,362.13Software Development 152,200.00 347,100.00Share Transfer Expenses 54,579.00 46,048.00Listing Fees 100,564.00 78,195.00Generators Maintenance 172,400.00 142,800.00Marketing Expenses 613,932.00 608,274.50Telephone Charges 219,597.00 183,554.00Electricity Charges 406,274.00 305,056.00Insurance 74,944.00 75,761.36Educational Updates 329,540.00 253,920.00Seminars 212,980.00 171,304.05Loss on Ambulance -- 40,895.00Audit Fees 20,000.00 20,000.00

TOTAL 22,494,158.42 21,521,414.23

AS AT 31.03.2009Rs.

AS AT 31.03.2010Rs.

PARTICULARS

DOLPHIN MEDICAL SERVICES LIMITED 18th Annual ReportS

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17

SCHEDULE 12: SIGNIFICANT ACCOUNTING POLICIES and NOTES ANNEXED TO ANDFORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2010

I. SIGNIFICANT ACCOUNTING POLICIES TO THE CONSOLIDATED ACCOUNTS.a. Basis of Preparation of Consolidated Financial Statements:

The Consolidated Financial Statements include accounts of Dolphin Medical Services Limited (‘the company’)and its subsidiaries Bridge Corporate Services Private Ltd. and Evum Life Sciences Private Ltd. The Consolidatedfinancial statements have been prepared under historical cost convention and in conformity with the generallyaccepted accounting principles in India, the Accounting Standards notified under Sub-section 3(C) of Section211 of the Companies Act, 1956 of India and other relevant provisions of the Act. All inter company transactionsbetween subsidiary companies are eliminated.

b. Income and Expenditure:All items and expenditure shown in the statement having material bearing on the accounts are accounted onaccrual basis.

c. Fixed Assets:Fixed Assets are stated at cost of acquisition. Cost of acquisition is inclusive of freight, duties, levies, preparatoryworks, errection, installation and all incidentals attributable to bringing the asset to its working condition.

d. Capital Work in Progress:The assets under installation or under construction and related advances as at the Balance Sheet date areshown as Capital Work in Progress.

e. Depreciation :Depreciation is computed on Straight Line method basis in accordance with the provision of Schedule XIV ofthe Companies Act, 1956.

f. InvestmentsInvestments are stated at cost of acquisition and the same are considered as long term investments

g. Provision for TaxProvision for tax has been computed on the basis of Profits in accordance with the Income Tax .Act, 1961.

h. Deferred Income TaxThe Company has accounted for Deferred Tax in accordance with the Accounting Standard-22 “Accounting forTaxes on Income” issued by the Institute of Chartered Accountants of India.Deferred tax is accounted for by computing the tax effect of timing differences, which arise during the yearand reverse in subsequent periods.The deferred Tax Liability for the current year amounting to Rs.15.07 Lakhs is shown in the Profit and Lossaccount under provision for Deferred tax. As at the year end, Deferred Tax liability aggregates to Rs.48.21Lakhs.

i. Employee BenefitsProvident fund: The Company makes contribution to Provident Fund administered by the Central Governmentunder the Provident Fund Act, 1952.

j. Contingent LiabilitiesContingent Liabilities are generally not provided for in the accounts and are shown separately if any in thenotes on accounts.

II. NOTES ON ACCOUNTS TO THE CONSOLIDATED ACCOUNTS.Notes to the accounts forming part of Consolidated Balance Sheet as on 31st March 2010 and Consolidated Profitand Loss account for the year ended on that date.1. The company is a holding company with investments in subsidiary companies.2. All the fixed assets are located in India and are as detailed in Schedule.113. The stocks are valued at cost or market value whichever is less.4. Contingent liabilities not provided for.5. Figures have been re-grouped wherever necessary.6. Confirmation of balances are not obtained for sundry creditors and advances made.

Signatures to Schedules 1 to 12




18

AUDITORS’ CERTIFICATE ON CONSOLIDATED CASH FLOW STATEMENTWe have examined the attached Consolidated Cash Flow Statement of M/s. Dolphin Medical Services Limited forthe year ended 31.03.2010. The statement has been prepared by the company in accordance with therequirements of listing agreement Clause 32 read with the annexure attached thereto with Bombay StockExchange Limited and is based on and in agreement with corresponding Profit and Loss Account and BalanceSheet of the Company covered by our report of 13.08.2010 to the members of the Company.

For M/s. PINNAMANENI & CO.,Chartered AccountantsSd/-

Place : Vijayawada P.V.V. SatyanarayanaDate : 13.08.2010 Partner

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31.03.2010

AMOUNTRs.

CASH FLOW FROM OPERATING ACTIVITIESNet Profit After Tax (900.020.87)Adjustment forDepreciation 5,670,505.00Proposed Dividend ---Profit / Loss on sale of asset ---Interest & Finance Charges 5,271.543.45Prel. Exp. W/o ---Operating Profit/(Loss) before Working Capital charges 10,042,027.58Adjustment forIncrease / Decrease in Inventory (24,950.00)Increase / Decrease in Loans & Advances (896,266.00)Incrase / Decrease in Deposits 2,350,000.00Increase / Decrease in Other Current Assets 521,363.35Increase / Decrease in Trade payables 38,412.39Increase / Decrease in Provisions 74,777.42Provision for Deferred Tax 1,507,139.00Cash Generated from Operations (A) 13,612,503.74CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (27,081,797.72)Sale of Fixed Assets ---Finance Charges paid ---Sale of Investment ---Interest Received ---Dividend Received ---Finance Charges paid (5,271,543.45)Net Cash Flow from Investing Activities (B) (32,353,341.17)CASH FLOW FROM FINANCIAL ACTIVITIESIncrease / Decrease in Minority Interest 200,000.00Proceeds from Borrowings 13,841,615.00Payment of Borrowings 687,481.45Dividend Paid ---Misc. Expenditure (1,006,818.60)Net Cash used in Financing Activities (C) 13,722,277.85Net Increase / (Decrease) in cash and cash equivalents (A+B+C) (5,018,559.58)Cash and Cash equivalents as at previous year 6,074,069.96Cash and Cash equivalents as at current year 1,055,510.38


19

AUDITORS’ REPORT

ToThe Members of M/s. Dolphin Medical Services Ltd.1. We have audited the attached Balance Sheet of M/s. Dolphin Medical Services Limited, as at 31st March, 2010, the

Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. Thesefinancial statements are the responsibility of the company’s management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the companies (Auditor’s Report)Order (Amendment) 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4and 5 of the said order.

4. Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purpose of our audit;

b) In our opinion, proper books of account as required by law have been kept by the company so far as appearsfrom our examination of those books;.

c) The Balance Sheet and Profit & Loss account dealt with by this report are in agreement with the books ofaccount.

d) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with theaccounting standards referred in sub-section (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representation received from the directors, as on 31st March, 2010, and taken onrecord by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010,from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the CompaniesAct, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the saidaccounts give the information required by the Companies Act, 1956, in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2010;

ii) in the case of the Profit and Loss Accounts, of the profit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.



ANNEXURE TO THE REPORT OF THE AUDITORSReferred to in Paragraph 1 of our report of even date.

1.1 The Company has maintained proper records showing full particulars including quantitative details and situationof fixed assets.

1.2 The fixed assets have been physically verified by the management during the period and no serious discrepancieshave been noticed on such verification.

1.3 The Company not disposed substantial part of the fixed assets during the period and hence do not effect goingconcern status of the company.

2.1 The stock of inventory have been physically verified during the year by the management. In our opinion, thefrequency of verification is reasonable.

2.2 In our opinion, the procedures of physical verification of inventory followed by the management are reasonableand adequate considering the size of the Company and the nature of its business.

2.3 No material discrepancies have been noticed on physical verification of stocks as compared to book records in sofar as appears from our examination of the books.

03. According to the information and the explanations given to us, the Company has not granted any loans secured or


20

unsecured to companies, firms or other parties to be listed in the Register to be maintained under section 301 ofthe Companies Act, 1956. Accordingly the provisions of clauses 4(iii)(b), 4(iii)(c) & 4(iii)(d) order are not applicable.

04. In our opinion and according to the information and explanations given to us, there are adequate internal controlsystem commensurate with the size of the Company and the nature of its business, for the purchase of inventoryand fixed assets and for the sale of goods and services. During the course of our audit, we have not observed anycontinuing failure to correct major weaknesses in internal controls system.

05. According to the information and explanations given to us, we are of the opinion that the company has notpurchased any goods, materials and had not sold goods, materials and services in pursuance of contracts orarrangements to be entered in the register to be maintained U/S 301 of the Companies Act, 1956. Accordinglyclause 4(v)(b) is not applicable.

06. In our opinion and according to the information and explanations given to us and as shown by the books ofaccounts, the Company has not accepted deposits within the meaning Section 58A, 58AA or any other relevantprovisions of the Companies Act, 1956. Hence compliance of provisions of Section 58A, 58AA or any otherrelevant provisions of the Companies Act, 1956 does not arise.

07. In our opinion that the Company has an Internal Audit system commensurate with its size and nature of itsBusiness.

08. We have been informed by the Company that the Central Government had not prescribed any cost records U/s.209(1)(d) of the Companies Act, 1956 and hence the Company did not maintain any cost records.

9.1 According to the books and records examined by us and the information and explanations given to us, thecompany is regular in depositing with appropriate authorities the undisputed statutory dues payable in respect ofIncome-tax, Wealth-tax, Sales-tax, Service-tax, customs duty and excise duty which have remained outstandingas at 31st March, 2010 for a period exceeding six months from the date they became payable.

9.2 According to the books and records examined by us and the information and explanations given to us, there wereno disputed amounts which are not deposited payable in respect of Income-tax, Wealth-tax, Sales-tax, Services-tax, customs duty and excise duty which have remained outstanding as at 31st March, 2010 for a period exceedingsix months from the date they became payable.

10. The Company has accumulated losses at the end of the financial year. Further the Company has not incurred anycash losses during the financial year and in the immediately preceeding financial year.

11. In our opinion and according to the information and explanations furnished to us by the Company, there were nodefaults in repayment of its dues to financial institution during the year. The Company has not issued any debentures.

12. According to the books and accounts examined by us and the information and explanations given to us, theCompany has not granted any loans and advances against security by way pledge of shares, debentures andother securities.

13. The company is not a chit fund, nidhi, mutual benefit fund or a society. Accordingly, the provisions of clause 4(xiii)of the Order is not applicable.

14. According to the information and explanations given to us, the company is not dealing or trading in shares,securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order, is notapplicable.

15. According to the information and explanations given to us, the company has not given any guarantee for loanstaken by others from bank or financial institutions.

16. According to the books and records examined by us, and information and expiations given to us, the company hasobtained term loan of Rs.665.45 lakhs from Canara Bank, Hyderabad and the same was utilised for the purposefor which they have been sanctioned.

17. According to the information and explanations given to us, and books and records examined by us, no fundsraised on short-term basis have been utilised for long-term investment.

18. According to the information and explanations given to us, and books and records examined by us, the companyhas not made any preferential allotment of shares to parties and companies covered in the register maintainedunder Section 301 of the Act during the year.

19. According to the information and explanations given to us, the company has not issued debentures during theperiod under audit. Accordingly, the provisions of clause 4(xix) of the Order, is not applicable.

20. The company has not issued any money by public issues during the year.

21. During the course of our examination of the accounts of the Company in accordance with generally acceptedauditing practices, we have not come across any instances of fraud on or by the Company, nor we have beeninformed by the management, of any such instance being the noticed or reported during the year.




21

BALANCE SHEET AS ON 31.03.2010

AS ON 31.03.2009AMOUNT (Rs.)

AS ON 31.03.2010AMOUNT (Rs.)PARTICULARS

I. SOURCE OF FUNDS1. Share Holder’s Funds

a) Share Capital 1 150,999,520.00 150,999,520.00b) Share Premium 23,689,704.00 23,689,704.00c) Share Warrants --- 3,225,000.00d) Capital Reserve 2 3,225,000.00 ---

2. Secured Loans- Canara Bank Loan 67,888,425.00 54,046,810.00- HDFC Vehicle Loans 1,508,759.67 821,278.22

3. Deferred Tax Liability 4 4,821,401.00 3,314,262.00

TOTAL 252,132,809.67 236,096,574.22

II. APPLICATION OF FUNDS1. FIXED ASSETS

a) Gross Block 11 155,429,369.88 113,280,720.16b) Less: Depreciation 33,990,887.50 28,320,382.50

c) Net Block 121,438,482.38 84,960,337.66d) Capital Work in Progress 51,707,160.00 70,952,166.00

(including capital advances)173,145,642.38 155,912,503.66

2. Expenditure during construction period,pending allocation (Net) 14,636,704.00 10,458,550.00

3. Investments 5 4,725,000.00 4,161,500.004. CURRENT ASSETS, LOANS & ADVANCES

a) Cash and Bank Balances 6 998,338.98 1,965,384.96b) Deposits with Banks -- 4,091,185.00c) Deposits 7 835,453.00 3,185,453.00d) Loans & Advances 8 27,694,791.00 26,798,525.00e) Other Current Assets 274,091.61 795,454.96f) Inventory 351,740.00 326,790.00

30,154,414.59 37,162,792.92Less: CURRENT LIABILITIES & PROVISIONSCurrent Liabilities & Provisions 9 1,101,661.60 988,471.79

Net Current Assets 29,052,752.99 36,174,321.13

5. Profit & Loss Account 3 818,545.30 (81,475.57)6. Research & Development Expenditure 8,206,460.00 7,923,470.00

7. Miscellaneous Expenditure 21,547,705.00 21,547,705.00(to the extent not written off or adjusted)

TOTAL 252,132,809.67 236,096,574.22

8. Significant Accounting Policies and 12Notes on Accounts



Schedule


22

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2010

FOR THE YEAR2008-2009 (Rs.)

FOR THE YEAR2009-2010 (Rs.)PARTICULARS

INCOME

Medical Division :

Diagnostic Services 31,656,758.00 23,470,535.00

Ophthalmology Services 1,049,350.00 2,669,640.00

Biotech & Herbal Services 315,962.00 452,050.00

Software Division:

Software Operations 415,700.00 430,300.00

Other Income 727,834.00 474,586.16

TOTAL 34,165,604.00 27,497,111.16

EXPENDITURE - SCHEDULE 10 22,494,158.42 21,521,414.23

Profit before Depreciation & Income Tax 11,671,445.58 5,975,696.93

Provision for Depreciation 5,670,505.00 3,827,952.00

Interest & Finance charges 5,271,543.45 128,984.38

Profit before Tax 729,397.13 2,018,760.55

Provision for Tax 122,279.00 530,076.00

Provision for FBT -- 75,580.00

Provision for Deferred Tax 1,507,139.00 135,570.00

Profit after Tax (900,020.87) 1,277,534.55




23

SCHEDULES FORMING PART OF THE BALANCE SHEET

AS AT 31.03.2009Rs.


SCHEDULE - IAUTHORISED SHARE CAPITAL2,50,00,000 Equity Shares of Rs.10/- each 250,000,000.00 250,000,000.00

ISSUED CAPITAL1,62,75,300 Equity Shares of Rs.10/- each 162,753,000.00 162,753,000.00

SUBSCRIBED & PAIDUP CAPITALSubscribed & Paid up Capital 150,999,520.00 150,999,520.00

SCHEDULE - 2Convertible Share Warrants32,25,000 Share Warrants of Rs.10/- each 32,250,000.00 32,250,000.00Less: Amounts Receivable 29,025,000.00 29,025,000.00

3,225,000.00 3,225,000.00Transferred to Capital Reserve 3,225,000.00 ---

SCHEDULE - 3RESERVES & SURPLUSProfit & Loss AccountOpening Balance 81,475.57 (1,196,058.98)Add: Profit during the year (900,020.87) 1,277,534.55

Transferred to Balance Sheet (818,545.30) 81,475.57

SCHEDULE - 4DEFERRED TAX LIABILITYOpening Balance 3,314,262.00 3,178,692.00Add: Current Year (Asset)/Liability 1,507,139.00 135,570.00

TOTAL 4,821,401.00 3,314,262.00

SCHEDULE - 5INVESTMENTSMeridian Projects Limited 3,200,000.00 3,200,000.00Cosmic Fortunes India Ltd 900,000.00 900,000.00Bridge Corporate Services Pvt. Ltd. 325,000.00 29,000.00Evum Life Sciences Pvt. Ltd. 300,000.00 32,500.00

TOTAL 4,725,000.00 4,161,500.00

SCHEDULE - 6CASH & BANK BALANCECash in Hand 249,320.00 191,364.00Cash at Banks 749,018.98 1,774,020.96

TOTAL 998,338.98 1,965,384.96

SCHEDULE - 7DEPOSITSRent Deposit 575,920.00 575,920.00Rent Deposit for Hyderabad premises --- 2,350,000.00Telephone Deposit 53,000.00 53,000.00Electricity Deposit 103,502.00 103,502.00PF Deposit 103,031.00 103,031.00

TOTAL 835,453.00 3,185,453.00


24

AS AT 31.03.2009Rs.


SCHEDULE - 8LOANS & ADVANCES(Advances recoverable in cash or kindor for value to be received)a) To Directors --- ---b) To others 27,694,791.00 26,798,525.00

TOTAL 27,694,791.00 26,798,525.00

SCHEDULE - 9CURRENT LIABILITIES & PROVISIONSLiabilities 122,733.07 84,320.68Provisions 978,928.53 904,151.11

TOTAL 1,101,661.60 988,471.79

SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT

SCHEDULE - 10EXPENDITUREChemicals, Films, kits consumables, disposables & Herbals etc. 6,275,940.00 5,250,310.00Salaries 1,906,030.00 1,668,620.00Directors Remuneration 4,020,000.00 3,166,667.00Consultancy Charges 543,330.00 461,216.00Incentives to Staff 385,410.00 378,300.00Laboratory Maintenance 327,892.00 324,794.00Repairs & Maintenance 2,029,932.00 3,480,716.00Medical Expenses 339,867.00 337,472.00Provident Fund to Staff 64,599.00 39,905.00Rent 767,088.00 724,944.00Misc. Aminities 210,640.00 203,500.00Printing & Stationery 319,058.00 316,047.00Postage & Telegrams 176,820.00 159,686.00Staff Welfare 71,104.00 69,911.00Conveyance 91,465.00 89,381.00Travelling Expenses 1,558,754.22 1,479,906.47Hospital Maintenance 323,041.00 297,844.00Vehicle Maintenance 179,898.00 137,775.00Books & Subscriptions 142,308.00 131,207.62Advertisement 47,613.00 157,348.00Rates, Taxes & Fees 43,964.00 66,431.09Interest on Income Tax 62,052.89 94,539.00Bank Charges 43,242.31 20,624.01Computers Maintenance 207,100.00 191,362.13Software Development 152,200.00 347,100.00Share Transfer Expenses 54,579.00 46,048.00Listing Fees 100,564.00 78,195.00Generators Maintenance 172,400.00 142,800.00Marketing Expenses 613,932.00 608,274.50Telephone Charges 219,597.00 183,554.00Electricity Charges 406,274.00 305,056.00Insurance 74,944.00 75,761.36Educational Updates 329,540.00 253,920.00Seminars 212,980.00 171,304.05Loss on Ambulance -- 40,895.00Audit Fees 20,000.00 20,000.00

TOTAL 22,494,158.42 21,521,414.23

AS AT 31.03.2009Rs.


DOLPHIN MEDICAL SERVICES LIMITED 18th Annual ReportS

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26

SCHEDULE 12: NOTES ANNEXED TO AND FORMING PART OF

ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2010I. SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Preparation of financial statements:The financial statements have been prepared under historical cost convention and in conformity with thegenerally accepted accounting principles, applicable provisions of the Companies Act, 1956 and as per theAccounting Standards issued by the Institute of Chartered Accountants of India.

b. Income and Expenditure :All items and expenditure shown in the statement having material bearing on the accounts are accounted onaccrual basis.

c. Fixed Assets:Fixed Assets are stated at cost of acquisition. Cost of acquisition is inclusive of freight, duties, levies, preparatoryworks, errection, installation and all incidentals attributable to bringing the asset to its working condition.

d. Capital Work in Progress:The assets under installation or under construction and related advances as at the Balance Sheet date areshown as Capital Work in Progress.

e. Depreciation :Depreciation is computed on Straight Line method basis in accordance with the provision of Schedule XIV ofthe Companies Act, 1956.

f. InvestmentsInvestments are stated at cost of acquisition and the same are considered as long term investments.

g. Provision for TaxProvision for tax has been computed on the basis of Profits in accordance with the Income Tax .Act, 1961

h. Deferred Income TaxThe Company has accounted for Deferred Tax in accordance with the Accounting Standard-22 “Accounting forTaxes on Income” issued by the Institute of Chartered Accountants of India.Deferred tax is accounted for by computing the tax effect of timing differences, which arise during the yearand reverse in subsequent periods.The deferred Tax Liability for the current year amounting to Rs.15.07 Lakhs is shown in the Profit and Lossaccount under provision for Deferred tax. As at the year end, Deferred Tax liability aggregates to Rs.48.21Lakhs.

i. Employee BenefitsProvident fund: The Company makes contribution to Provident Fund administered by the Central Governmentunder the Provident Fund Act, 1952.

j. Contingent LiabilitiesContingent Liabilities are generally not provided for in the accounts and are shown separately if any in thenotes on accounts.

II. NOTES ON ACCOUNTSNotes to the accounts forming part of Balance Sheet as on 31st March 2010 and Profit and Loss account for theyear ended on that date.1. The company is a holding company with investments in subsidiary companies.2. All the fixed assets are located in India and are as detailed in Schedule.113. Remuneration to Auditors. Audit Fees : Rs.20,000/-4. The stocks are valued at cost or market value whichever is less.5. Contingent liabilities not provided for.6. Figures have been re-grouped wherever necessary.7. Confirmation of balances are not obtained for sundry creditors and advances made.

Signatures to Schedules 1 to 12




27

AUDITORS’ CERTIFICATE ON CASH FLOW STATEMENTWe have examined the attached Cash Flow Statement of M/s. Dolphin Medical Services Limited for the yearended 31.03.2010. The statement has been prepared by the company in accordance with the requirements oflisting agreement Clause 32 read with the annexure attached thereto with Bombay Stock Exchange Limited andis based on and in agreement with corresponding Profit and Loss Account and Balance Sheet of the Companycovered by our report of 13.08.2010 to the members of the Company.



CASH FLOW STATEMENT FOR THE YEAR ENDED ON 31.03.2010

AMOUNTRs.

CASH FLOW FROM OPERATING ACTIVITIESNet Profit After Tax (900,020.87)Adjustment forDepreciation 5,670,505.00Proposed Dividend ---Profit / Loss on sale of asset --Interest & Finance Charges 5,271,543.45Proef. Exp. W/o ---Operating Profit/(Loss) before Working Capital charges 10,042,027.58Adjustment forIncrease / Decrease in Inventory (24,950.00)Increase / Decrease in Loans & Advances (896,266.00)Incrase / Decrease in Deposits 2,350,000.00Increase / Decrease in Other Current Assets 521,363.35Increase / Decrease in Trade payables 38,412.39Increase / Decrease in Provisions 74,777.42Provision for Deferred Tax 1,507,139.00Cash Generated from Operations (A) 13,612,503.74CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (27,081,797.72)Sale of Fixed Assets ---Purchase of Investments (563,500.00)Sale of Investment ---Investment Received ---Dividend received ---Finance Charges paid (5,271,543.45)Net Cash Flow from Investing Activities (B) (32,916,841.17)CASH FLOW FROM FINANCIAL ACTIVITIESProceeds from Convertible Share Warrants ---Proceeds from Borrowings 13,841,615.00Payment of Borrowings 687,481.45Dividend Paid ---Misc. Expenditure (282,990.00)Net Cash used in Financing Activities (C) 14,246,106.45Net Increase / (Decrease) in cash and cash equivalents (A+B+C) (5,058,230.98)Cash and Cash equivalents as at previous year 6,056,569.96Cash and Cash equivalents as at current year 998,338.98


28

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

i. Registration Details

Registration No. State Code

Balance Sheet Date (Amount in Rs. Thousands)

ii. Capital Raised during the year Public Issue Rights Issue

iii. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

Source of Funds Paidup Capital Share Premium Capital Reserve

Secured Loans Deferred Tax Liability

Application of Funds Net Fixed Assets Investments

Net Current Assets Misc. Expenditure

Accumulated Losses

iv. Performance of Company (Amount in Rs.Thousands)

Gross Income Total Expenditure

Profit Before Tax Profit after Tax

Earning Per Share in Rs.

v. Generic Names of Three Principal Products/Services of the Company (as per Monetary terms)

DIAGNOSTIC, OPHTHALMIC & SOFTWARE SERVICES

For DOLPHIN MEDICAL SERVICES LIMITED

Sd/-Dr. G.V. MOHAN PRASADManaging DirectorSd/-Dr. M. LAKSHMI SUDHADirectorPlace : VijayawadaDate : 13.08.2010

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1 4 6 3 6


ATTENDANCE SLIPDOLPHIN MEDICAL SERVICES LIMITED

Regd. Office: # 417, Sanali Heavens, Ameerpet, HYDERABAD - 500 073, A.P. India

Please complete this attendance slip and hand it over at the entrance of the hall.* Only members or their proxies are entitled to be present at the meeting.* Please note that children will not be allowed inside the meeting hall.

FOLIO NO. NO.OF SHARES

NAME & ADDRESS

I hereby record my presence at the EIGHTEENTH ANNUAL GENERAL MEETING of the Company at Neni Hi-tech Club, 169,Lal Bungalow, Old Airport Road, New Bowenpally, Secunderabad - 500 011, A.P. India on Thursday, the 30th September, 2010 at09.45 A.M

SIGNATURE OF THE * SHAREHOLDER / PROXY

* Strike whichever is not applicable

Note : If you are attending the meeting in person or by proxy, the Balance Sheet of your Company may please be broughtwith you for your reference at this meeting.

========================================= CUT HERE ===========================================ATTENDANCE SLIP

DOLPHIN MEDICAL SERVICES LIMITEDRegd. Office: # 417, Sanali Heavens, Ameerpet, HYDERABAD - 500 073, A.P. India

I/We ____________________________________________________________________________________________ being aMember / Members of DOLPHIN MEDICAL SERVICES LIMITED hereby appoint ___________________________________________________________________________ son of _____________________________________________ or failing him______________________________________ son of _____________________________________________ or failing him________________________________________ son of ______________________________________________ as my / ourproxy to attend and vote for me / us and on my / our behalf at the EIGHTEENTH ANNUAL GENERAL MEETING of theCompany to be held on Thursday, the 30th September, 2010 and any adjournment thereof.

Dated this __________ day of _______________________ 2010.

Signed by the said ______________________________________________________________________________________

NOTE The proxy form duly signed by the member(s) across Re.1/- revenue stamp should reach the Company’s Share Department at the RegisteredOffice of the Company atleast 48 hours before the time fixed for the meeting.

Re1/-RevenueStamp tobe affixed

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Documents

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