andhra pradesh medtech zone limited · jitendar kumar sharma) date october 27, 2017 managing...

Andhra Pradesh MedTech Zone Limited

1st Annual Report 2016-17

(As revised in May 2018)

Hill No. 2, IT Park, VSEZ, Visakhapatnam – 530045, Andhra Pradesh, India

Andhra Pradesh MedTech Zone Ltd., Visakhapatnam

iii

CONTENTS

NOTICE OF ANNUAL GENERAL MEETING…………………………………………….VI

DIRECTORS' REPORT……………………………………………………………………….1

INDEPENDENT AUDITOR’S REPORT….………………………………………………..21

COMMENTS OF CAG DATED APRIL 24, 2018 ON THE FINANCIAL STATEMENTS...31

BALANCE SHEET AND P&L A/C…………..……………………………………………..33

CASH FLOW STATEMENT FOR THE YEAR 2016-2017…………………………………35

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH

2017………………………………………………………………………………………….38

Annual Report 2016-17

iv

BOARD OF DIRECTORS

1. Dr. (Smt.) Poonam Malakondaiah

Principal Secretary, Health Medical and Family Welfare Department, Govt of Andhra Pradesh

2. Shri Bhupinder Singh Bhalla

Joint Secretary (Engineering), Department of Commerce, Govt of India

3. Shri Sudhir Kumar

Joint Secretary (Regulations), Ministry of Health and Family Welfare, Govt. of India

4. Shri Dinesh Kapila

Economic Advisor (Medical Devices), Department of Pharmaceuticals, Govt. of India

5. Shri Ravi Shankar

Director General, Drugs & Copyrights, Drugs Control Administration, Govt of Andhra Pradesh

6. Smt. Sujata Sharma

Special Commissioner of Health Medical & Family Welfare, Govt. of Andhra Pradesh

7. Shri Babu A.

Vice Chairman & Managing Director, APIIC Limited

8. Shri Solomon Arokia Raj

Secretary, Industries & Commerce Department, Govt of Andhra Pradesh

9. Shri Muddada Ravichandra

Special Chief Secretary, Finance Department, Govt. of Andhra Pradesh

10. Dr. Jitendar Sharma

Managing Director & Chief Executive Officer, AMTZ


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Independent Directors

1. Prof. M. K. Surappa

Dean, Faculty of Engineering and Professor, Department of Materials Engineering,

Indian Institute of Science

2. Dr. D. S. Nagesh

Scientist-G & Head, Department of Technology & Quality Management, Scientist-in-Charge,

Division of Extracorporeal Devices, Biomedical Technology Wing, SCTIMST

REGISTERED OFFICE

Ground Floor, Administrative Building, Auto Nagar, Vijayawada, Krishna, Andhra Pradesh,

India, 520007

AUDITORS

M/s S. R. Garimella & Co.

Chartered Accountants, 26-25-8, Durgi Vari Street, Gandhi Nagar, Vijayawada - 520003

BANKERS

• State Bank of India

• HDFC Bank

• ICICI Bank

• YES Bank


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ANDHRA PRADESH MEDTECH ZONE LIMITED

(CIN: U85190AP2016SGC103153)

REGD. OFFICE: - Hill No.2, IT Park, VSEZ, Visakhapatnam 530045 Andhra Pradesh India

NOTICE OF FIRST ANNUAL GENERAL MEETING

NOTICE is hereby given to all the members of the Company that the First Annual General Meeting of

the Company will be held on October 27, 2017 at 1430 hours at the Registered Office of the Company

situated at Ground Floor, Administrative Building Auto Nagar Vijayawada, Krishna Andhra Pradesh

520007 India to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the annual accounts consisting of Balance Sheet as at

31st March, 2017, Profit & Loss Account for the year ended 31st March, 2017 together with

notes and schedules attached thereto and the reports of the Auditors and Directors thereon.

2. To take note the appointment of M/s S. R. Garimella & Co., Chartered Accountants, as

Statutory Auditors, appointed by the Comptroller and Auditor General of India. In this regard

this is to consider and if thought fit to pass the following with or without modifications as an

Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 139(5) and other Applicable

provisions of the Companies Act, 2013, the appointment of M/s. S. R. Garimella & Co., (FRN:

SR2289), Chartered Accountants, as the Statutory Auditors by the Comptroller and Auditor

General of India to hold the office from the conclusion of the First Annual General Meeting,

till the conclusion of the next Annual General Meeting, be and is hereby noted and taken on

record at a remuneration as may be fixed by the Board of Directors in consultation with the

Auditors.".

SPECIAL BUSINESS:

3. To appoint Sri. Mirle Surappa Krishnegowda (DIN: 07647700) as Independent Directors of the

Company and in this connection to consider and if thought fit, to pass with or without

modification(s) the following resolution as Ordinary Resolution.

“RESOLVED THAT pursuant to the provisions of section 149, 152 and any other applicable

provisions of the Companies Act, 2013, and the Rules made there under, Sri. Mirle Surappa

Krishnegowda (DIN: 07647700), who was appointed as an ‘Independent Director’ in the Board

of the Company with effect from 15th March, 2017 and who holds office up till the date of the


vii

AGM, in terms of Section 161 of the Companies Act, 2013, be and is hereby appointed as

Independent Director of the Company.

4. To appoint Sri. Nagesh Sulochana Divakara Panicker (DIN: 07647723) as Independent

Directors of the Company and in this connection to consider and if thought fit, to pass with or

without modification(s) the following resolution as Ordinary Resolution.

“RESOLVED THAT pursuant to the provisions of section 149, 152 and any other applicable

provisions of the Companies Act, 2013, and the Rules made there under, Sri. Nagesh Sulochana

Divakara Panicker (DIN: 07647723), who was appointed as an ‘Independent Director’ in the

Board of the Company with effect from 15th March, 2017 and who holds office up till the date

of the AGM, in terms of Section 161 of the Companies Act, 2013, be and is hereby appointed

as Independent Director of the Company.

BY ORDER OF THE BOARD

For ANDHRA PRADESH MEDTECH ZONE LIMITED

Sd/-

Place: Amaravathi (DR. JITENDAR KUMAR SHARMA)

Date October 27, 2017 Managing Director & Chief Executive Officer

Note:

1. EVERY MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL

MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD

OF HIMSELF AND SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY.

PROXY FORM IS ENCLOSED HEREWITH. PROXY FORM IF INTENDED TO BE USED,

IT SHOULD BE RETURNED TO THE COMPANY NOT LESS THAN 48 HOURS BEFORE

THE TIME FOR HOLDING THE ANNUAL GENERAL MEETING.

2. Explanatory Statement pursuant to the provisions of section 102 (1) of the Companies Act,

2013 is attached to and forms part of this notice.


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Board of Directors of AMTZ:

1. Principal Secretary, Health Medical and Family Welfare Department, Govt of Andhra Pradesh -

Chairperson

2. Joint Secretary (Engineering), Department of Commerce, Govt of India

3. Economic Advisor (Medical Devices), Department of Pharmaceuticals, Govt. of India

4. Joint Secretary (Regulations), Ministry of Health and Family Welfare, Govt. of India

5. Special Chief Secretary, Finance Department, Govt. of Andhra Pradesh

6. Secretary, Industries & Commerce Department, Govt of Andhra Pradesh

7. Vice Chairman & Managing Director, APIIC Limited

8. Special Commissioner of Health Medical & Family Welfare, Govt. of Andhra Pradesh

9. Director General, Drugs & Copyrights, Drugs Control Administration, Govt of Andhra Pradesh

10. Director & Chief Executive Officer, AMTZ

Independent Directors:

1. Dr. D. S. Nagesh

Scientist-G & Head, Department of Technology & Quality Management

Scientist-in-Charge, Division of Extracorporeal Devices, Biomedical Technology Wing

SCTIMST, Poojappura, Thiruvananthapuram - 695012

2. Prof. M. K. Surappa

Dean, Faculty of Engineering and Professor, Department of Materials Engineering

Indian Institute of Science, Bangalore – 560012

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(CIN: U85190AP2016SGC103153)

REGD. OFFICE: - Ground Floor, Administrative Building Auto Nagar Vijayawada,

Krishna Andhra Pradesh 520007 India

DIRECTORS' REPORT To

The Members

Your Directors have pleasure in presenting their First Annual Report together with the Audited

Accounts for the period ended 31st March, 2017.

FINANCIAL RESULTS

2016-17 was the year of incorporation of the Company, and the Company has no revenue to

be reported for the FY 2016-17 as operations are expected to begin in year FY 2018-19.

SUBSIDIES / GRANTS

Your Company received a grant of Rs. 2.96 crores (INR Two crore ninety-six lakh only) as

part of Administrative Sanction authorising release of 25 crores by the Dept. of Health, Medical

& Family Welfare, Govt. of AP, towards development of infrastructure and meeting the

operational needs of the Company. Govt. of AP also transferred Rs. 25 crores to the District

Collector, Visakhapatnam towards compensation for acquisition of land for AMTZ, and this is

to be treated as funds transferred on behalf of AMTZ by the State Government.

OPERATIONS

Your Company, Andhra Pradesh MedTech Zone Limited (AMTZ) was setup by the

Government of Andhra Pradesh as a dedicated Public-Sector enterprise for creation of a ‘one-

stop solution’ industrial park for Medical Device Manufacturing. Government of AP allotted a

land of 270 acre in Visakhapatnam towards this purpose. The objective of the State

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Government is not only to provide a platform for manufacturing of medical devices at a

substantially reduced cost of upto 40%, but also to simplify the end-to-end operational needs

of the industry, in turn reducing the huge import dependency of the country on medical

devices. AMTZ’s mission is to create a world class manufacturing hub in the country for the

medical devices sector and catapult India as a global destination of world class medical

technology products, and provide easy and affordable access of health care products to the

citizens of India.

To identify a suitable location / property meeting the requirements of the company, due

diligence was made by prominent industry members representing medical device

manufacturing sector, which surveyed different land parcels in Visakhapatnam and based on

such due diligence, the site at Nadupuru, Pedda Gantyada, Visakhapatnam was finally selected.

This site with its proximity to Vizag Steel Plant was found to be an ideal location for the zone

with easy access to well-developed infrastructure, apart from the added advantage of its

proximity to both the international airport and seaport.

Your Company was incorporated as a private company under Section 2(68) of the Companies

Act, 2013 on April 30th, 2016 with an authorized capital of R 1 lakh (one lakh only) which is

fully paid up. Following were the first Directors of your company;

1. Dr. (Smt.) Poonam Malakondaiah

2. Shri Bandatmakur Sreedhar

3. Shri K V Satyanarayana

Dr. Jitendar Sharma, Advisor (Health) to Govt. of Andhra Pradesh was appointed as the first

Chief Executive Officer of the Company. The registered office for your company was duly

registered on April 30, 2016 at the following address:

“Ground Floor, Administrative Building, Auto Nagar, Vijayawada, Andhra Pradesh”

The first piece of land measuring 204.46 acres was also transferred to your company through

Government Order No –272 of the Revenue (Assignment-II) Department on July 01, 2016.

To identify the interventions needed to be done by the Company in accordance with the

mandate given, it was decided to assign the task of preparing the Detailed Project Report (DPR)

to KPMG. The DPR was submitted by KPMG on August 26, 2016. The DPR identified the

critical requirements of the project and provided the roadmap for your company to take forward

the mandate given by the Govt. of Andhra Pradesh for supporting competitive indigenous

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manufacturing in the zone and to establish a world class facility for Indian made products on

identified segments of the medical devices sector.

As part of background research for the DPR, the KPMG team visited Hsinchu Science Park,

Hsinchu, Taiwan. The visiting team interacted with the key medical device manufacturers

within the Hsinchu Science Park Sahnghai Medical Zone, China. The team also visited and

gathered basic information about various scientific institutions including national nano device

lab, national radiation technology institute and institute for health research. Thus, your

company has ensured that the mandate given to it by the Andhra Pradesh Government has been

translated into action based on sound global infrastructure, although no such zone exists in

Asia.

PROJECT IMPLEMENTATION

The foundation stone at the site was laid by Honorable Chief Minister of Andhra Pradesh Shri

Chandrababu Naidu on August 19, 2016. The event was attended by the then Honorable Union

Minister of Urban Development, Housing & Urban Poverty Alleviation and Information and

Broadcasting, Govt. of India, Shri Venkaiah Naidu; Honorable Union Minister of Chemicals

and Fertilizers and Parliamentary Affairs, Govt. of India, Shri Ananth Kumar; Honorable

Minister for Health and Medical Education, Government of Andhra Pradesh, Dr. Kamineni

Srinivas, WHO Representative Mr Henk Benkedam, representatives of Indian medical device

industry and other notable personalities.

Your Company is providing prebuilt manufacturing units built in plots measuring 0.25 acres /

0.5 acres / 1.0 acres / 2.0 acres in size to interested manufacturers. The zone is offering world

class scientific facilities like gamma irradiation, biomaterials testing, EMI/EMC testing, 3D

printing, prototyping and rapid tooling, X-ray and CT Scan tube manufacturing etc. The

mandate given to your company for reducing the cost of manufacturing required that the

common scientific facilities which are high investment facilities be setup in Public Private

Partnership (PPP) mode. The service providers for each of these scientific facilities are being

selected by bidding process. Each of the service provider has to ensure that the facilities created

is operated and maintained as per the parameters indicated by your company. All such facilities

created would be operated by the service provider on revenue sharing basis, as mutually

decided upon on each case. The service providers for scientific facilities were finalized through

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the tendering process and contracts were signed with winning bidders on June 16th 2017. The

list of selected service providers is given below:

Common Scientific Facility Service Provider

3D Design, Prototyping and Rapid Tooling M/S Daksha Online Services Pvt Ltd

Gamma Irradiation M/S Microtrol Sterilisation Services Pvt.

Ltd.

EMI / EMC M/S TÜV Rheinland (India) Pvt. Ltd.

X-Ray Tube Manufacturing M/S CURA Healthcare Pvt Ltd

Central Warehousing M/S Balmer Lawrie Pvt Ltd

Biomaterial Testing M/S TÜV Rheinland (India) Pvt. Ltd.

The launch for bookings plots was opened to manufacturers on October 2nd 2016 at

Visakhapatnam.

In order to provide Design review, Value Engineering, Procurement and day to day

Construction supervision of the Park which would include Common Commercial Facilities

(CCF), Common Scientific Facilities (CSF), Common Social Support Facilities (CSSF) and

manufacturing units, a Project Management Consultancy (PMC) was also selected and

selection of contractor is in the process of tendering.

STUDY ON MEDICAL DEVICES SECTOR

The medical devices sector in India did not a have detailed study showcasing the state of the

industry. A report capturing vital statistics like import vs export data, current manufacturers in

India, product segments by consumption etc was not available. Your company in collaboration

with Department of Pharmaceuticals (DoP), Department of Industrial Policy & Promotion

(DIPP) and World Health Organization (WHO) carried out a study covering all such aspects

and the report of the study titled “Medical Device Manufacturing in India – A Sunrise” The

report gives a pen picture of the global and Indian medical device market, highlighting global

and Indian medical device market size, segments, growth factors for high demand in India,

existing and proposed device clusters in the country, import trend in Indian scenario and high

potential manufacturing segments in India.

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The high potential segments in India identified in the report were as follows:

Key Segment Sub-segment % of Import

dependency

% Share

of

Medical

Device

market

Overall

attractiveness for

Indian

Manufacturers to

invest in this

segment

Consumables

Cardiac Catheter, Other

needle, Syringe, Lab reagent,

Suture, Strips & cartridge,

Dialysers and Filters, cannula

35% 16% High

Dental

Product

Dental Implant, Artificial

teeth, Dental instruments 60% 3% Medium

Diagnostic

Imaging

X-Ray tubes, USG Probe,

Radiation beam delivery

system, Radiation generator

unit, CT Scan, MRI, PET

Scan, ALPHA, BTA/GMA

Radiation for other use in

radiography equipment

52% 30% Very High

IV

Diagnostics Lab reagent & accessories 67% 10% High

Orthopaedic

& Prosthetics

Artificial joints & joint

implants 62% 8% High

Others

Artificial dialysis apparatus

& haemodialyser,

defibrillator, Lithotripsy

equipment, ECHO, EEG,

ECG, anaesthesia equipment,

Laparoscope, endoscope

83% 24% Very High

Patient Aids Pacemaker, Hearing aid,

Cochlear implant, Stents 50% 9% Medium

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Your company is targeting manufacturing of such category of products, which are being

imported presently and provides a ready business opportunity. The current set of companies

who have agreed to manufacture at AMTZ cover all the high import categories.

REGULATORY APPROVALS

Your company has applied for all necessary regulatory clearances and approvals. Land transfer

from the Govt. of Andhra Pradesh to your company by execution of the conveyance deed on

August 18, 2016. The Environment Impact Assessment Report prepared by your company was

submitted for clearance by State Level Environment Impact Assessment Authority and the

competent authority has accorded prior environmental clearance to the project on July 10,

2017. Consent to Establish has been accorded on September 6, 2017 by the Andhra Pradesh

Pollution Control Board (APPCB).

BUSINESS REVIEW

Business development activity to attract investments to your company was undertaken through

multiple channels throughout the year. Individual client visits through direct communication

was one of the chief means adopted by your company and extensive efforts were made to

establish such direct contacts throughout the year. Investor meets wherein more than 10

investors/manufacturers interested in the medical device space could be garnered were

conducted across India and also abroad. The main agenda of these meets was to introduce the

core offering of your company and convert their interest into investments within the zone. A

total of eight investor meets were conducted since August 2016. Some of these meets were

conducted on the sidelines of large events related to the medical technology space, to interact

with a large set of potential investors.

The 1st AMTZ Investors’ Summit held on August 19,2016 along with foundation ceremony

saw participation of representatives from Government Departments, Industry Associations,

Medical Device Manufacturers & Testing Laboratories and other Field Experts & Market

Analysts. The summit had interactive panel discussions with representatives from WHO,

School of International Biodesign (SIB), Association of Indian Medical Device Industry

(AiMeD), Andhra Chamber of Commerce, PHD Chamber of Commerce, World Association

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for Small & Medium Enterprises (WASME), Federation of Indian Chambers of Commerce &

Industry (FICCI) and other individual manufacturing representatives.

AMTZ’s first international investors meet was held on the sidelines of Medica, Germany on

November 15th, 2016. Medica is the world’s largest and most attended medical devices expo.

The investors meet was attended by a large number of delegates representing different

manufacturing companies from across the globe. The AMTZ project was applauded as a

pioneer effort, as one of its kind medical devices park. The response was very encouraging and

led to many fruitful conversations with potential investors.

AMTZ hosted an investors meet specifically for Chinese investors on December 9, 2016 which

was attended by a Chinese delegation comprising more than 30 investors to discuss investment

opportunities. The meet was Facilitated by co-chairman, Foreign Trade and Investment

Committee, PHD Chamber of Commerce and Industry Mr. Surinder Kalra. Senior management

led by Dr. Jitendar Sharma, Director & CEO, AMTZ and the Chinese delegation led by Co-

founder of SKK – JW Associates Jessie Wei discussed about the work and support available

for the medical devices manufacturers at the zone.

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The business development team of AMTZ also attended many conferences, events where

meetings with potential investors were held to further the cause of manufacturing medical

devices within the zone. A total of 15 manufacturers confirmed through booked units within

the zone in 2016-2017.

Details of Investor Meets done in 2016-17:

Sl.No. Event Name Date Location

1 1st AMTZ Investors Summit 19 August 2016 Visakhapatnam

2 Green investor Meet 2 October 2016 Visakhapatnam

3

Medical Electronics International

Collaborations & Financing for

Manufacturing in India

6 November 2016 Chandigarh

4 International Summit Medica, Germany 15 November

2016 Dusseldorf

5 Medical Electronics International

Collaboration 16 December 2016 Jaipur

6 Seminar on Medical & Electronics 6 January 2017 Chennai

7

14th National Conference & Technology

Exhibition on Indian Medical Devices &

Plastics Disposables / Implants Industry

2017”

17 March 2017 Ahmedabad

8 AMTZ Investors Meet 3 March 2017 Bengaluru

Your company was a key participant at many events connected with the healthcare industry.

The objective of attending these events was two-fold, 1) to drive awareness about the immense

growth opportunity that the medical device sector offers; 2) to encourage domestic

manufacturing by way of knowledge sharing about various government programs / initiatives

/ incentives. AMTZ also organized many major events in the medical technology space.

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Events attended by AMTZ in 2016-17

EVENT NAME DATE

Medicall, New Delhi September 2 & 3, 2016

7th Medic Today Expo, Visakhapatnam October 1 & 2, 2016

BRICS Summit, New Delhi October 13, 2016

Medica 2016, Düsseldorf, Germany November 14 to 17, 2016

India Medical Device 2017 & India Pharma 2017, Bengaluru February 11-13, 2017

IT ACTIVITIES

The official website of your company was launched on August 1, 2016 by Honourable Chief

Minister of Andhra Pradesh Shri Chandrababu Naidu. Keeping in line with the policy of AMTZ

to ease operations for manufacturers, online payment facility for bookings of manufacturing

units was also added by integrating Paytm. Any manufacturer can book a manufacturing unit

directly through the website of your company. To further enhance the website experience for

end users, a new and improved version was introduced on July 8, 2017.

MOUs

Your company entered into many MoUs with different organizations across the spectrum. The

idea behind each of these MoUs was to provide complete support to manufacturers in AMTZ

and enable them to succeed. MoUs have been completed with partners across Industry

Associations, technology providers, business advocacy groups, financial institutions etc.

Partners have been selected for the specific support that will be needed by manufacturers within

the zone.

Your company signed a Memorandum of Understanding (MoU) with the Quality Council of

India (QCI) for the promotion of Indian Certification for Medical Devices (ICMED) Scheme

in India, in order to significantly eliminate trading of sub-standard products or devices supply

chains of which are unknown. Developed in collaboration with AiMeD, QCI and NABCB,

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ICMED is a quality certification scheme for medical devices in the country with an aim to

enhance patient safety, and increase consumer protection, along with providing the much-

needed product credentials to manufacturers to instill confidence among buyers.

Society for Applied Microwave Electronics Engineering & Research (SAMEER), a research

and development laboratory of Ministry of Electronics and Information Technology (MeitY)

Govt. of India, entered into an MoU with AMTZ to transfer technology to industry for

commercialization which is backed by demand assurance by Govt. of Andhra Pradesh. This

MoU would ensure that innovations find proper commercialization channels and necessary

demand can be assured for the innovations to succeed.

AMTZ and Association of Indian Medical Device Industry (AiMeD) also entered into an MoU

on September 29, 2016, to jointly promote the Indian Medical Device Industry.

MoUs entered into by AMTZ during the year were:

Partner Agency Date of signing

Society for Applied Microwave Electronics Engineering & Research September 22, 2016

Association of Indian Medical Device Industry September 29, 2016

Andhra Chamber of Commerce December 30, 2016

Quality Council of India January 20, 2017

PARTNERSHIPS

AMTZ has also worked towards enabling other key support systems by empaneling partners

across technology transfer, human resources, quality and regulatory compliance, project

management, financial support. A manufacturer has the option to choose from these bouquet

of service providers for any of their requirements. AMTZ has done the basic due diligence to

ensure the partners are capable and competitive to support the manufacturers within the zone.

Andhra Pradesh MedTech Zone (AMTZ) joined the Global Medical Device Nomenclature

(GMDN) Agency as partners. This partnership will provide great value-addition to all the

manufacturers at AMTZ. GMDNs association with AMTZ will be an enabler for export and

global market access.

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List of Empaneled Agencies:

Service Empanelled Partner (as on September 30, 2017)

Technology Transfer

1mg

Empiezo IT Solutions

Mazumdar Shaw Medical Foundation

Operon Strategist

PC Process

SahaManthran Pvt. Ltd.

Regulatory Services

Hibiscus Consulting

Meshayu Consultants Pvt. Ltd

Technology Enablement

Cerner Healthcare Solutions

IZiel Healthcare

Marksman Healthcare Solutions

National Hub for Healthcare Instrumentation

Development

Media Partners

BMJ

eLets Technomedia Pvt. Ltd.

Medgate Today

Industry Associations

Andhra Chamber of Commerce

Association of Indian Medical Device Industry

GMDN Agency

India Angel Network

PHD Chamber of Commerce and Industry

Quality Council of India

United Asia

World Association for Small and Medium Enterprises

Financial and Specialized

Insurance

BIORx

HDFC Bank

NTrust Insurance Broking Services

Paytm

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POLICY FACILITATION

As part of the larger objective of making India a global player in medical devices, AMTZ

through its CEO has been actively interacting with industry and Government organizations, to

suggest and pursue policy and process interventions needed for the growth of the industry.

Your Company is a regular invitee added to the mailing list of various Central Government

Departments like Department of Pharmaceuticals, Department of Bio-Technology, Department

of Industrial Policy & Promotion, Department of Commerce etc.

AMTZ has been authorized by Ministry of Health and Family Welfare (MoHFW), Govt. of

India to setup a dedicated help desk for understanding and smooth implementation of Medical

Device Rules, 2017. The help desk would facilitate information on changes of medical devices

rules to manufacturers like licensing authorities and functions of notified body, manufacture of

medical devices for sale and distribution, import and labelling of medical devices, clinical

investigation of medical device and clinical performance evaluation of IVD’s, import or

manufacture medical device which does not have predicative device, duties of medical device

officer, medical device testing officer and notified body, registration of laboratory for carrying

out test for evaluation.

Department of Industrial Promotion Policy (DIPP) seeks comments/views from AMTZ on all

matters relating to investment policies and also on bilateral meetings held with countries like

USA/EU etc., where medical technology is highly evolved. AMTZ had opportunities for

supporting DIPP in addressing matters relating to trade facilitation with global leaders.

AMTZ is a front bencher when it comes to stakeholder meetings held by Department of

Pharmaceuticals (DOP). Inputs relating to interventions needed for drafting of Medical Devices

Policy, Process facilitation, import substitution measures etc., were provided to DOP on regular

basis.

Department of Biotechnology (DBT) is a core government arm for promotion of research and

development of Biotechnology as also healthcare matters in general. AMTZ was closely

associated with DBT in matters relating to medical technology interventions. Creation of

Kalam Institute of Health Technology was born out of interactions held by AMTZ at the level

of Principal Scientific Advisor in Government of India and Secretary DBT.

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EXPORTS

The Company has no export income during the year under report.

FUTURE OUTLOOK

Our company plans to complete receive all pending regulatory approvals during the year 2017-

2018. Construction for phase 1 will commence and manufacturing units will be handed over

as and when they become ready. AMTZ will focus on generating greater awareness about its

offering through greater interactions with investors through more international investor meets,

participation at industry events and by building a strong digital presence. With the

strengthening of the Business Development Team, your company is intensely working on

connection with industry stakeholders across the globe and more than 40 manufacturers have

confirmed booking till September 2017.

Our company will empower its employees through programs intended to drive continuous

learning at the work place. Initiatives to enhance work-life balance like yoga classes has also

been introduced in 2017-18.

KALAM INSTITUTE OF HEALTH TECHNOLOGY

Kalam Institute of Health Technology (KIHT) has been setup at AMTZ in July 2017 under the

auspices of Department of Bio-Technology, Government of India, to facilitate technology

transfer, market access and R&D support. KIHT will facilitate focused research on critical

components pertaining to medical devices by supporting institutions involved with R&D,

industry, policy makers and knowledge repositories.

Atal Innovation Mission (AIM) is Government of India’s endeavour to promote a culture of

innovation and entrepreneurship. Niti Aayog supports creation of incubators for promoting

start-ups and aspiring innovators in various sectors through funding to Atal Incubation centers

created under AIM. AMTZ has proposed for creation of an Atal Incubation center for medical

technology innovators, as a pioneer initiative in the country. This center would facilitate

budding innovators to have an enabling environment in the AMTZ premises comprising of

business planning, industry partners, scientific community etc.

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MoUs were signed with MedikaBazaar, National Productivity Council (NPC), Board of

Radiation and Isotope technology, United Asia and Indian Institute of Technology Bombay in

FY 2017-18 and your company endeavors to associate with key stakeholders during 2017-18

also.

SAFETY, HEALTH AND ENVIRONMENT

Your Directors have always laid great emphasis on Environment, Safety(EHS) and pollution

EHS and Pollution control responsibilities is fundamental to Company’s value. As the

Company is committed to remain a company of its own class, measurable improvements in

environment, health, safety and pollution aspects in relation to our services & operations

remains our key focus.

Company undertakes constant and persistent efforts to upgrade environmental performance

and is putting its best efforts to satisfying the relevant norms of the pollution control authorities

so effectively that it meets not only the legal parameters but also meets the Company’s stringent

internal standards.

FINANCIAL INFORMATION OF THE SUBSIDIARIES

Your Directors are to report that the Company does not have any subsidiary company.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

No material changes and commitments have occurred affecting the financial position of the

Company after March 31, 2017 till the date of this report.

Govt of AP vide GO Rt No. 412 dt. 17-07-2017issued a budget release order for Rs. 30 crores

as part of Administrative Sanction from the Dept. of Health, Medical & Family Welfare, Govt.

of AP to your Company towards towards development of infrastructure and meeting the

operational needs of the Company.

Your Company had moved a proposal to the Department of Commerce, Government of India,

seeking funding for setting up of four testing laboratories, under the Scheme of TIES of that

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Department and another proposal to Ministry of Electronics and Information Technology

(MeitY) separately for creation of X-ray/CT scan tube manufacturing facilities. Most of these

have been approved and two are under process of evaluation.

DIVIDEND

As the Company has just commenced its business activity, your Directors are not

recommending any dividend on the share capital of the company for the financial year ended

31st March, 2017.

TRANSFER TO RESERVES

The Company has not transferred any amount to the Reserves during the financial year.

CHANGE IN THE NATURE OF BUSINESS

Your Directors are to report that there has been no material change in the nature of Business

carried on by the Company during the year under review.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS / COURTS /

TRIBUNALS

There are no significant and Material Orders passed by Regulators or Courts or Tribunals

impacting the going concern status and Company’s operations in future.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

Your Directors are to report that there are no companies which have become or ceased to be

subsidiaries or Joint Ventures or Associate Companies during the year under review.

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SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

The Company has no subsidiaries and as such not required to prepare consolidated financial

statements of company and subsidiaries.

DEPOSITS

Your Company has not accepted any deposits within the meaning of Section 73 of the

Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, during

the year under report.

STATUTORY AUDITORS

Your Directors are to report that the Controller and Auditor General of India, appointed M/s S.

R. Garimella & Co., Chartered Accountants, as the Statutory Auditors of the Company for the

FY 2016-17. The same firm has been retained by CAG for the Financial Year 2017-18 from

the conclusion the 1st Annual General Meeting until the conclusion of 2nd Annual General

Meeting at the remuneration fixed by the Board of Directors/ Controller and Auditor General

of India.

AUDITOR’S REPORT

Your Directors are to report that Statutory Auditors have made unqualified opinion in their

report and it is self-explanatory.

SHARE CAPITAL

Your Directors are to report that the Company has not issued and allotted any kind of securities

except the Equity Shares to the Subscribers of Memorandum, during the year under report.

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EXTRACTS OF ANNUAL RETURN

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the

Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT

9 as a part of this Annual Report is attached as Annexure -1

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN

EXCHANGE OUTGO

The particulars prescribed under clause (m) of sub section (3) of Section 134 of the Companies

Act, 2013 read with rule 8 (3) of the Companies (Accounts) Rules, 2014 are given hereunder:

A. Conservation of Energy & Technology Absorption: Not Applicable

B. Foreign Exchange Outgo & earnings: Nil

CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY

As the Company has not met with the prescribed criteria, Section 135 of the Companies

Act 2013 pertinent to CSR is not applicable.

BOARD MEETINGS

During the year, the Board of Directors of your Company met three times. The dates of

meetings are 06.05.2016, 27.08.2016 and 15.03.2017.

COMMITTEES

Audit Committee: Not Applicable

Nomination and Remuneration Committee: Not Applicable

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VIGIL MECHANISM

The company is not required to establish Vigil Mechanism in terms of Rule 7 of The

Companies (Meetings of Board and its Powers) Rules, 2014.

INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial controls with reference to the Financial

Statements. Such controls have been assessed during the year taking into consideration the

essential components of internal controls stated in the Guidance Note on Audit of Internal

Financial Controls over Financial Reporting issued by The Institute of Chartered Accountants

of India. Based on the results of such assessment carried out by management, no reportable

material weakness or significant deficiencies in the design or operation of internal financial

controls was observed. Nonetheless your Company recognizes that any internal control

framework, no matter how well designed, has inherent limitations and accordingly, regular

audit and review processes ensure that such systems are reinforced on an ongoing basis.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company is committed to provide a safe and conducive work environment to its

employees. During the year under review, your Directors further state that during the year

under review, there were no cases filed pursuant to the Sexual Harassment of Women at

Workplace (Prevention, Prohibition and Redressal) Act, 2013.

RIGHT TO INFORMATION

Your Company has made the Vice President (Admn) as the nodal CPIO under the RTI Act.

The CEO is designated as the appellate authority. There were no applications received under

the Act during 2016-17.

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PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The Company has not given any loans or guarantees and not made investments in terms of the

provision of Section 186 of the Companies Act, 2013.

RELATED PARTY TRANSACTIONS

Your Directors draw attention of the members to Notes to Accounts forming part of financial

statement which sets out related party disclosures. All contracts / arrangements / transactions

entered by the Company during the financial year with related parties were in the ordinary

course of business and on an arm’s length basis and all the transactions are in conformity with

sections 184, 188 and other provisions of the Companies Act, 2013.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors state:

(i) that in the preparation of the annual accounts, the applicable accounting standards had

been followed along with proper explanation relating to material departures;

(ii) that 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 or

loss of the Company for that period;

(iii) that they had taken proper and sufficient care was taken for the maintenance of adequate

accounting records in accordance with the provisions of the Companies Act, 2013, for

safeguarding the assets of the Company and for preventing and detecting fraud and other

irregularities;

(iv) That they had prepared the annual accounts on a going concern basis.

(v) That they had devised proper systems to ensure compliance with the provisions of all

applicable laws and that such systems were adequate and operating effectively.

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EMPLOYEES’ PARTICULARS IN TERMS OF SECTION 134 READ WITH RULES

THEREWITH OF THE COMPANIES ACT, 2013

There are no employees falling within the purview of Section 197 of the Companies Act, 2013

read with rule 5 (2) of the Companies (Appointment and Remuneration of Managerial

Personnel) Rules, 2014 of the Companies Act, 2013.

RISK MANAGEMENT POLICY

The Board obtains periodical updates on identified risks, depending upon the nature, quantum

and likely impact on the business.

ACKNOWLEDGEMENT

The Board expresses its appreciation of the continued co-operation, assistance, guidance and

support extended by the Government of Andhra Pradesh, Government of India, Company’s

Bankers, various State and Central Government Authorities, Stake Holders, Local Authorities

and most importantly to the manufacturers, technology partners and scientific service providers

who have come to AMTZ to get established, thereby fulfilling the mandate of the company.

The Board also records its deep appreciation of the creditable services rendered and unstinted

support and co-operation extended by the Company’s Consultants at all levels.

FOR AND ON BEHALF OF THE BOARD ANDHRA PRADESH MEDTECH ZONE

LIMITED

Sd/- Sd/-

(Dr. POONAM MALAKONDAIAH) (Dr. JITENDAR KUMAR SHARMA)

Chairperson Managing Director & Chief Executive Officer

Place: Amaravati

Date : October 27, 2017

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INDEPENDENT AUDITOR’S REPORT

To

The Members of Andhra Pradesh MedTech Zone Limited

1. We have audited the accompanying financial statements M/s Andhra Pradesh

MedTech Zone Limited (‘the Company’), which comprise the Balance Sheet as at

31st March 2017, the statement of profit and loss for the year ended, statement of cash

flows for the year ended and a summary of significant accounting policies and other

explanatory information.

Management’s Responsibility for the Financial Statements

2. The Company’s Board of Directors is responsible for the matters stated in section 134(5)

of the Companies Act, 2013 (‘the Act”) with respect to the preparation and presentation

of these financial statements that give a true and fair view of the financial position,

financial performance and cash flows of the Company in accordance with the accounting

principles generally accepted in India including the Accounting Standards specified

under section 133 of the Act.

3. This responsibility also includes maintenance of adequate accounting records in

accordance with the provision of the Act for safeguarding the assets of the Company

and for preventing and detecting frauds and other irregularities; selection and application

of appropriate accounting policies; making judgements and estimated that are

reasonable and prudent; and design, implementation and maintenance of adequate

internal financial controls, that were operating effectively for ensuring the accuracy and

completeness of the accounting records, relevant to the preparation and presentation of

the financial statements that give a true and fair view and are free from material

misstatement, whether due to fraud or error.

Auditor’s Responsibility

4. Our responsibility is to express an opinion on these financial statements based on our

audit.

5. We have taken into account the provisions of the Act, the accounting and auditing

standards and matters which are required to be included in the audit report under the

provisions of the Act and Rules made there under.

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6. We conducted our audit in accordance with the Standards on Auditing specified under

section 143(10) of the Act. Those standards required that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free from material misstatement.

7. An audit involves performing procedures to obtain audit evidence about the amounts

and disclosures in the financial statements. The procedures selected depend on the

auditor’s judgement, including the assessment of the risks of material misstatement of

the financial statements, whether due to fraud or error. In making those risk assessments,

the auditor considers internal financial control relevant to the Company’s preparation of

the financial statements that give a true and fair view in order to design audit procedures

that are appropriate in the circumstances. An audit also includes evaluation the

appropriateness of the accounting polices used and the reasonableness of the accounting

estimates made by the Company’s Directors as well as evaluating the overall

presentation of the financial statements.

8. We believe that the audit evidence we have obtained sufficient and appropriate to

provide a basis for our audit opinion on the financial statements.

Opinion

9. In our opinion and to the best of our information and according to the explanations given

to us, the aforesaid financial statements give the information required by the Act in the

manner so required and give a true and fair view in conformity with the accounting

principles generally accepted in India, of the state of affairs of the company as at 31st

March 2017 and its loss for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by

the Central Government of India in terms of sub section (11) of section 143 of the Act,

we give in the Annexure A, a statement on the matters specified in the paragraph 3 and

4 of the order.

2. As required by section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best

of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the

Company so far as it appears from our examination of those books:

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(c) The balance sheet, the statement of profit and loss and the cash flow statement dealt

with by this report are in agreement with the books of account:

(d) In our opinion, the aforesaid financial statements comply with the Accounting

Standards specified under section 133 of the Act.

(e) With respect to the adequacy of the internal financial controls over financial

reporting of the company and the operating effectiveness of such controls, refer to

our separate report on Annexure B

(f) With respect to the other matters to be included in the Auditor’s Report in

accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014, in our

opinion and to the best of our information and according to the explanations given

to us:

i. The Company has disclosed the impact of pending litigations on its financial

position in its financial statements.

ii. The Company did not have any long-term contracts including derivate

contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor

Education and Protection Fund by the Company.

3. The Company has provided requisite disclosures in the financial statements as to holdings as

well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th

December, 2016. Based on audit procedures and relying on the management representation we

report that the disclosures are in accordance with books of account maintained by the Company

and as produced to us by the Management - Refer Note –15

10. As required under section 143(5) of the Act, following are the observations on directions

issued by the Comptroller and Auditor-General of India.

a. The company has clear title for free hold land.

b. The company has not waived/write off of debts /loans/ interest etc.

c. (1) The company do not hold any inventories lying with third parties

(2) (a) During the year, the company has received land to the extent of 204.46 Acres

situated at Sy. No. 480/2 in Nadupuru (V), Peddagantyala (M), Visakhapatnam

District for the purpose of establishment of Andhra Pradesh Medical Technology

Park.

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(b) The above-mentioned land was transferred at free of cost by District Medical &

Health Department of Andhra Pradesh vide conveyance deed dt. 18th August, 2016,

subject to payment of ex-gratia to encroachers by the company.

(c) The conveyance deed was executed vide memo No.295254/H2/2016 of Andhra

Pradesh State Government dt.17th August, 2016.

(d) In addition to above the company received the following grants

Date: September 11, 2017

Place of Signature: Visakhapatnam (Camp) Sd/-

For S. R. Garimella & Co.,

Chartered Accountants

FRN :000891S

Sd/-

Garimella Someswara Rao

Partner

M No. 028660

Nature of Grant Received Amount (in Rs.)

Amount directly paid to District Collector Visakhapatnam for the purpose of

paying compensation towards lands acquired in the name of AMTZ

25,00,00,000.00

Grant Received as a part of Administrative Sanction made by Department of

Health, Medical and Family Welfare, Government of Andhra Pradesh vide

GORT No. 264 dt.09.06.2016

2,96,00,000.00

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ANNEXURE - A TO THE AUDITORS’ REPORT

The Annexure referred to in Independent Auditor’s report to the members of the Company on the

financial statements for the year ended 31st March 2017, we report that:

(i) a) The Company has maintained proper records showing full particulars including quantitative

details and situation of fixed assets.

b) The Company has conducted physical verification of all its fixed assets during the year and no

material discrepancies were noticed on such verification. In our opinion, this periodicity of physical

verification is reasonable having regard to the size of the company and the nature of its assets.

c) According to the information and explanations given by the management, the title deeds of

immovable properties included in tangible assets are held in the name of the Company.

(ii) As the company is in the pre-operative stage of business and the company do not hold any inventory

during the year under audit. Therefore, the said clause is not applicable to the Company.

(iii) The Company has not granted any loans, secured or unsecured to Companies, Firms, Limited

Liability Partnerships or other parties covered in the register maintained under section 189 of the

Companies Act 2013.

(iv) As the company has not granted any loans, secured or unsecured to Companies, Firms, Limited

Liability Partnerships or other parties covered in the register maintained under section 189 of the

Companies Act 2013, paragraph 3(iv) of the Order is not applicable to the company.

(v) The company has not accepted any deposits from the public.

(vi) The Central Government has not prescribed the maintenance of cost records under section 148(1) of

the Act, for any of the business activities carried by the Company.

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(vii) (a) According to the information and explanations given to us and on the basis of our examination

of the records of the Company, amounts deducted/accrued in the books of account in respect of

undisputed statutory dues including provident fund, income tax, sales tax, value added tax, service

tax, cess and other material statutory dues have been regularly deposited during the year by the

company with appropriate authorities.

(b)According to the information and explanations given to us, no undisputed amounts payable in

respect of provident fund, income tax, sales tax, value added tax, service tax, cess and other material

statutory dues were in arrears as at 31st March 2017 for a period of more than six months from the

date they became payable except Service Tax Payable on Reverse Charge Basis on Services

provided by Director to the extent of Rs. 45,500.00

(c) According to the information and explanations given to us, there are no statutory dues which are

under dispute.

(viii) In our opinion and according to the information and explanations given to us, the Company has not

defaulted in the repayment of dues to banks and financial institutions. The Company does not have

any loans or borrowings from government or debenture holders during the year.

(ix) The company did not raise any money by way of initial public offer or further public offer (including

debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the Order is not

applicable.

(x) According to the information and explanations give to us, no material fraud by the Company or its

officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations give to us and based on our examination of the

records of the Company, the managerial remuneration has been paid or provided in accordance with

the requisite approvals mandated by the provisions of section 197 read with Schedule V of the

Companies Act.

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(xii) In our opinion and according to the information and explanations given to us, the Company is not a

Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the

records of the Company, transactions with the related parties are in compliance with sections 177

and 188 of the Act where applicable and details of such transactions have been disclosed in the

financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us and based on our examination of the

records of the Company, the Company has not made any preferential allotment or private placement

of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the

records of the Company, the Company has not entered into non-cash transactions with directors or

persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act

1934.


Place of Signature: Visakhapatnam (Camp) Sd/-



FRN :000891S

Sd/-


Partner

M No. 028660

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ANNEXURE - B TO THE AUDITORS’ REPORT

Report on the Internal Financial Controls under Clause (i) of the Sub section 3 of the section 143

of the Companies Act, 2013(“the Act”)

We have audited the internal financial controls over financial reporting of M/s ANDHRA PRADESH

MEDTECH ZONE LIMITED (the company) as of 31st March 2017 in conjunction with our audit of

the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls

based on the internal control over financial reporting criteria established by the company considering

the essential components of internal control stated in the Guidance Note on Audit of Internal Financial

Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These

responsibilities include the design, implementation and maintenance of adequate internal financial

controls that were operating effectively for ensuring the orderly and efficient conduct of its business

including adherence to company’s 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 information as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial

reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit

of Internal Financial Controls over Financial Reporting (the Guidance Note) and the standard of

auditing, issued by ICAI and deemed to be prescribed under section 143(10) if the Companies Act,

2013, to the extent applicable to an audit of internal financial controls both applicable to an audit of

Internal Financial Controls and both issued by the institute of Chartered Accountants of India. Those

standards and the guidance note require that we comply with ethical requirements and plan and perform

the audit to obtain reasonable assurance about whether adequate internal financial controls over

financial reporting was established and maintained and if such controls operated effectively in all

material respects.

Our audit involved performing procedures to obtain audit evidence about the adequacy of the internal

financial controls system over financial reporting included obtaining an understanding of internal

financial controls over financial reporting, assessing the risk that a material weakness exists and testing

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and evaluation the design and operating effectives of internal control based on the assessed risk. The

procedures selected depend on the auditor’s judgement including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting principles. A

company’s internal financial control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the

transactions and dispositions of the assets of the company:(2) provide reasonable assurance that the

transactions are recorded as necessary to permit preparation of financial statements in accordance with

generally accepted accounting principles and the receipts and expenditures of the company are being

made only in accordance with authorisations of management and directors of the company and : (3)

provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition , use

or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial reporting

Because of the inherent limitations of internal financial controls over financial reporting including the

possibility of collusion or improper management override of controls material misstatements due to

error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial

control over financial reporting may become inadequate because of changes in conditions or that the

degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion , the company has in all material respects and adequate internal financial controls system

over financial reporting and such internal financial controls over financial reporting were operating

effectively as at 31st march 2017 based on other internal control over financial reporting criteria

established by the Company considering the essential components of internal control stated ion the

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Guidance Note on Audit of Internal Financial Controls Over Financial reporting issued by the Institute

of Chartered Accountants of India.


Place of Signature: Visakhapatnam (Camp)

Sd/-



FRN :000891S

Sd/-


Partner

M No. 028660

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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA ON

THE FINANCIAL STATEMENTS FOR THE YEAR 2016-17

The Comptroller and Auditor General of India (CAG) conducted a supplementary audit

pursuant to Section 143(6)a of the Companies Act, 2013 on the financial statements of the

Company for the financial year 2016-17 and communicated their comments vide Lr. No. PAG

(Audit)/ AP/ES/D2/AA/AMTZ/2017-18/189 dated April 24, 2018.

The Management has provided their response against each of the CAG comments/ observations

below and also convened a board meeting and an extraordinary general meeting on May 16,

2018 to take note of the same.

CAG observations and Management response on the audit observations:

Sl.

No. CAG Observations/ Comments Management Response

1. Balance Sheet

II. Assets

1. Non-Current Assets

(a) Fixed Assets

(iii) Capital Work-in-Progress (9) - Rs.34020661

(iv)

Capital Work in progress includes tender related expenses of

Rs.2172310/-. Company has earned an income of Rs.700000/-

on the sale of tender applications which was disclosed under the

Other Income.

As the tender applications pertain to the Project and the income

earned through the sale of tender applications should be

adjusted to the Project cost.

Instead of adjusting the income to the Project, Management had

disclosed it under other income, which resulted in overstatement

of Capital Work in Progress, and Other Income by Rs.700000/-

.

The Management has

noted the observation.

Required incorporation

of advice shall be

included in the

financial statements.

of 42

2. Notes forming part of the financial statements

Note No. 1 - Corporate Information

In the above note, Management had mentioned that AMTZ was

promoted as Special Purpose Vehicle (SPV) Government of

Andhra Pradesh under Health Medical and Family Welfare

Department to develop a 270 acres zone dedicated for Medical

Device Manufacturing.

Audit noticed that as per Conveyance Deed executed on 18th

August 2016, between District Medical & Health Department

and Andhra Pradesh MedTech Zone Limited, that land

measuring 204.46 acres only were registered in the name of

Andhra Pradesh MedTech Zone Limited, Visakhapatnam.

Further G.O.Ms No.272 dated 01.07.2016 clearly stated that

Government land to an extent of Ac.204.46 cts was transferred

in favour of Medical & Health Department for establishment of

Medical Technology Manufacturing Park. As on Balance sheet

date only 204.46 acres of land were registered in the name of

AMTZ.

Hence, a clear and proper disclosure of quantum of land

registered/ transferred in the name of the Company is to be made

in the notes forming part of the financial statements.

The Management has



of advice shall be

included in the


3. Notes forming part of the financial statements

Note No. 4: Reserves and Surplus

In the above note, Management has stated that Company was

approved grant of Rs.50 crore by the State Government of

Andhra Pradesh vide its GO No.1760 and 1761 dated

23.07.2016 of which an amount of Rs.25 crore was directly

disbursed by the Government towards the payment of

compensation to existing land owners for the purpose of

acquisition of land in the name of Andhra Pradesh MedTech

Zone Limited. An amount of Rs.2.96 crore was received

directly by the company during the financial year 2016-17.

Audit noticed that out of the above grants, an amount of

Rs.100000 has been considered as an initial authorized share

capital (G.O.No.29 dated 30.03.2016). However, the respective

disclosure has not been made in the notes forming part of the


Hence, the Notes to the financial statements in respect of

Government Grants need to be rectified accordingly.

The Management has



of advice shall be

included in the


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BALANCE SHEET AND P&L A/C

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CASH FLOW STATEMENT FOR THE YEAR 2016-2017


STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2017

(Amount in Rs.)

Particulars For the year ended March 31, 2017

A

CASH FLOW FROM OPERATING

ACTIVITIES:

Net Profit/(Loss) before tax & Extraordinary

items (47,77,425)

Adjustments for :

Depreciation/ Amortisation 4,58,180

Loss/(Profit) on sale/write off of Fixed

Assets/CWIP (17,487)

Other Non Current Liabilites 2,52,172

Operating Profit before Changes in Assets and

Liabilities {Sub Total - (i)} (40,84,560)

(Increase) / Decrease in Assets and Liabilities :

(i) Inventories -

(ii) Trade receivables -

(iii) Loans and Advances and Other Assets (10,65,068)

(v) Liabilites and Other Payables 2,53,81,629

Sub Total - (ii) 2,43,16,561

Cash Generated from Operations (i) + (ii) 2,02,32,001

Less : Direct Taxe refund / (paid) -

Net Cash from Operating Activities ( A ) 2,02,32,001

B

CASH FLOW FROM INVESTING

ACTIVITIES:

Purchase of Fixed Assets (incl. Capital Work in

Progress / excluding interest capitalised)

(3,65,24,275)

Sale of Fixed Assets 95,874

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Net Cash Flow generated from / (used in)

Investing Activities (B) (3,64,28,401)

C

CASH FLOW FROM FINANCING

ACTIVITIES:

Issue of Shares 1,00,000

Government Grants 2,96,00,000

Net Cash Flow generated from / (used in)

Financing Activities ( C ) 2,97,00,000

Net Increase / (Decrease) in Cash and Cash

Equivalents (A + B + C) 1,35,03,600

Opening Balance of Cash and Cash

Equivalents -

Cash and Cash Equivalents

Cash on hand -

Cheques Awaiting Deposit -

With Scheduled Banks:

- On Current Accounts -

- On Non-operative Current

Accounts -

-

Closing Balance of Cash and Cash Equivalents

Cash and Cash Equivalents

Cash on hand 2,146

Cheques Awaiting Deposit -

With Scheduled Banks:

- On Current Accounts 1,33,01,454

- On Fixed Deposits 2,00,000

1,35,03,600

Net Increase / (Decrease) in Cash and Cash

Equivalents 1,35,03,600

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Notes

i) The above Cash Flow Statement has been prepared under the 'Indirect Method' in accordance

with AS - 3 Cash Flow Statements

ii) Figures in brackets are outflows / deductions.

iii) Cash and cash equivalents represent bank

balances.

iv) Investing and Financing activities which donot

have direct impact on cash flows are excluded as

per AS -3 Cash Flow Statements

For and on behalf of the Board

Sd/-

Sd/-

For S.R Garimella & Co., Dr. Smt Poonam Malakondaiah, IAS

Chartered Accountants Chairperson & Managing Director

Registration No. 000891S DIN - 07488397

Sd/-

Garimella Someswara Rao Dr. Jitendar Kumar Sharma

Partner - M No 028660 Director, CEO

DIN - 07486991

Place: Visakhapatnam


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NOTES TO THE FINANCIAL STATEMENTS FOR THE

YEAR ENDED 31ST MARCH 2017

1. Corporate Information

Andhra Pradesh MedTech Zone Limited (AMTZ/the “Company”) was promoted as a

Special Purpose Vehicle (SPV) company by the Government of Andhra Pradesh under

Health Medical and Family Welfare Department to develop a 270 Acre zone dedicated for

Medical Device Manufacturing. The objective behind this ‘One-Stop- Solution’ is not

only to reduce the cost of manufacturing up to 40% or to just simplify the end-to-end

operations but also to reduce the import dependency, which is presently around

75%. AMTZ envisions to put India on the global map of high-end medical equipment

production and make healthcare products affordable and accessible not only for India but

for world at large.

2. Significant Accounting Policies

a) Basis of preparation of financial statement

i) The financial statements are prepared under historical cost convention in accordance

with Generally Accepted Accounting Principles in India (Indian GAAP), Accounting

Standards notified under Section 133 of the Companies Act, 2013 (the Act) read with

Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the

Companies Act, 2013. In accordance with first proviso to Section 129 (1) of the Act

and Schedule III to the Act, the terms contained in the enclosed financial statements are

in accordance with the Accounting Standards.

ii) These are the Company’s first financial statements since incorporation.

(b) Use of estimates:

i) Necessary estimates and assumptions that affect the amounts reported in the financial

statements and notes thereto are made during the reporting period and difference

between the actual and the estimates are recognised in the period in which the results

materialise.

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(c) Inventories:

i) Inventories are measured at the lower of cost and net realisable value.

ii) The cost of inventories is based on the first-in first-out principle, and includes

expenditure incurred in acquiring the inventories, production or conversion costs and

other costs incurred in bringing them to their existing location and condition. In the

case of manufactured inventories, cost includes an appropriate share of production

overheads based on normal operating capacity.

iii) Net realisable value is the estimated selling price in the ordinary course of business,

less the estimated costs of completion and selling expenses.

(d) Tangible And Intangible Assets

a. Tangible assets are stated at cost net of accumulated depreciation / amortization.

b. Cost of Software directly identified with hardware is capitalised along with the cost

of hardware. Application software is capitalised as Intangible Asset.

(e) Depreciation / Amortisation

a. Depreciation on fixed assets is provide on WDV method. In accordance with

requirements prescribed under Schedule II of Companies Act, 2013, the company

has assessed the estimated useful lives of fixed assets and has adopted the useful

lives and residual value as prescribed in Schedule II.

b. In line with the provisions of Schedule II of the Companies Act 2013, the company

depreciates significant components of the main asset based on the individual useful

life of those components.

c. Intangible Assets – Application Software are normally amortised over a period of

four years, or over its useful life, whichever is earlier.

(f) Construction Period Expenses On Projects

Related expenditure (including temporary facilities and compensation expenses)

incurred during construction period in respect of plan projects and major non-plan

projects are capitalised.

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(g) Government Grants

Grants received from Government in nature of Promotors’ Interest are transferred to

Capital Reserve under Reserves and Surplus in accordance with Accounting Standard

-12. Assets purchased of such government grants are capitalised and shown in the Gross

Value of Fixed Assets.

Grants received against revenue items are recognised as income.

(h) Revenue:

• Goods Sold/ Services rendered

During the current year, the company has not recognised any revenue from operations

as it is still in the Pre –Operative stage. The proposed Medical Devices Manufacturing

Park is in Construction / Development Phase.

• Others:

i) Empanelment fee is recognised on accrual basis.

ii) Interest Income, if any, is recognised on time proportionate basis.

iii) Non-Refundable Tender Application fee is recognised as miscellaneous income on

Receipt Basis.

(i) Employee Benefits:

The company has engaged professionals on consultancy basis. Therefore, the company

has no Post Employment benefit plans and long-term benefit plans.

Short Term Benefits are paid to such personnel in the form of Consultation Fee after

statutory deduction as applicable. Other reimbursable expenses are charged off to

revenue and those attributable to Construction / development of the project are

classified as Capital Work in Progress and are capitalised on recognition of such Assets.

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(j) Foreign currency

i) Transactions in foreign currencies are translated to functional currencies of Company

at exchange rates at the dates of the transactions.

ii) Foreign currency differences arising on retranslation are recognised in the statement of

profit and loss.

iii) Non-monetary items that are measured in terms of historical cost in a foreign currency

are translated using the exchange rate at the date of the transaction.

(k) Provisions

A provision is recognised when there is a present obligation as a result of a past event

and it is probable that an outflow of resources will be required to settle the obligation

in respect of which a reliable estimate can be made.

(l) Impairment of Assets

i) The Entity assesses at each balance sheet date whether there is any indication that an

asset may be impaired. If any such indication exists, the Entity estimates the

recoverable amount of the asset. If such recoverable amount of the asset or the

recoverable amount of the cash generating unit to which the asset belongs is less than

its carrying amount, the carrying amount is reduced to its recoverable amount. The

reduction is treated as an impairment loss and is recognised in the Income &

Expenditure account. If at the balance sheet date there is an indication that if a

previously assessed impairment loss no longer exists, the recoverable amount is

reassessed and the asset is reflected at the recoverable amount subject to a maximum

of depreciated historical cost.

(m) Income Tax:

i) Provision for current tax is made in accordance with the provisions of the Income Tax

Act,1961.

ii) Deferred tax is recognised in respect of temporary differences between the carrying

amounts of assets and liabilities for financial reporting purposes and the amounts used

for taxation purposes.

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iii) A deferred tax asset is recognised for unused tax losses, tax credits and deductible

temporary differences, to the extent that it is probable that future taxable profits will be

available against which they can be utilised. Deferred tax assets are reviewed at each

reporting date and are reduced to the extent that it is no longer probable that the related

tax benefit will be realised.

(n) Finance Income and Finance Costs

i) Finance income comprises interest income on funds invested, dividend income. Interest

income is recognised as it accrues in the statement of profit and loss, using the effective

interest method.

ii) Finance costs comprise interest expense on borrowings, unwinding of the discount on

provisions, impairment losses recognised on financial assets. Borrowing costs that are

not directly attributable to the acquisition, construction or production of a qualifying

asset are recognised in the statement of profit and loss using the effective interest

method.

(o) Earnings per share

i) Basic earnings per share are calculated by dividing the net profit or loss for the period

attributable to equity shareholders (after deducting preference dividends, if any, and

attributable taxes) by the weighted average number of equity shares outstanding during

the period.

andhra pradesh medtech zone limited · jitendar kumar sharma) date october 27, 2017 managing...

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