(Including Management Discussion and Analysis Report)
Your Directors have pleasure in presenting the 60th Annual Report together with theAudited Financial Statements for the financial year ended 31st March 2018.
(Rs. in lakhs)
| ||2017-18 ||2016-17 |
|Profit before Depreciation & Tax ||4538.93 ||4109.34 |
|Less: Depreciation ||1524.22 ||1191.59 |
|Profit before Tax ||3014.71 ||2917.75 |
|Less: Provision for Tax || || |
|Current Tax ||1125.00 ||985.94 |
|Deferred Tax ||73.18 ||57.83 |
| ||1198.18 ||1043.77 |
|Profit after Tax ||1816.53 ||1873.98 |
|Surplus Account: || || |
|Balance as per last Balance Sheet ||8832.64 ||7633.44 |
|Add: Surplus pursuant to Merger ||746.18 || |
|Total ||9578.82 ||7633.44 |
|Add: Profit for the year ||1816.53 ||1873.98 |
|Other Comprehensive Income for the year (Net of Tax) ||40.09 ||(7.43) |
|Total ||11435.44 ||9499.99 |
|Less: Dividend Paid ||388.30 ||388.30 |
|Dividend Tax ||79.05 ||79.05 |
|Amount transferred to General Reserve || ||200.00 |
|Total ||10968.09 ||8832.64 |
Scheme of Amalgamation:
The Scheme of Amalgamation between TTK Protective Devices Limited and its Wholly OwnedSubsidiary TSL Techno Services Limited and your Company was sanctioned by the NationalCompany Law Tribunal (NCLT) Division Bench Chennai vide its Order dated 15th December2017 and the Appointed Date of the Scheme was 1st April 2012.
Consequent to the above the erstwhile TTK Protective Devices Limited has become aDivision of your Company and for operational convenience it has been named as"Protective Devices Division".
The figures for the year under review include the operations of the erstwhile TTKProtective Devices Limited (i.e.) Protective Devices Division.
Review of Performance:
During the year under review the Revenue from Operations amounted to Rs.577.55 croresas against the previous year's figure of Rs.527.81 crores a growth of around 9%. Onlike-to-like basis without considering the revenues of the Protective Devices Divisionthe Revenue from Operations of the Company was almost similar to that of the previousyear.
Pre-Tax Profit for the year stood at Rs.30.15 crores as against the previous year'sfigure of Rs.29.18 crores.
The performance was impacted during the First Quarter on the eve of the implementationof the Goods and Services Tax (GST) Regime by the Central Government. However there hasbeen a good recovery in the subsequent quarters resulting in a satisfactory performancefor the year as a whole. A detailed review is presented under the Section"Segmentwise Performance".
Your Directors are pleased to recommend a dividend of Rs.5.00 (50%) per Equity Share ofRs.10/- each for the year ended 31st March 2018. [Previous Year - Rs.5.00 (50%)per Equity Share].
During the year under review the Authorised Equity Share Capital of the Company hasbeen increased from Rs.10 crores to Rs.20 crores.
Your Company allotted 6364350 Equity Shares of Rs.10/- each fully paid-up to theShareholders of erstwhile TTK Protective Devices Limited pursuant to the Scheme ofAmalgamation sanctioned by the National Company Law Tribunal (NCLT) Division BenchChennai vide its Order dated 15th December 2017 in the ratio of 9 Equity Shares ofRs.10/- each fully paid-up of your Company for every 2 Equity Shares of Rs.10/- each fullypaid-up held by them in the erstwhile TTK Protective Devices Limited. These Equity Sharesshall rank for dividend voting and all other rights pari passu with the existing EquityShares of your Company.
Consequent to the above the Paid-up Equity Share Capital of the Company standsincreased from 7765983 Equity Shares of Rs.10/- each aggregating to Rs.776.60 lakhs to14130333 Equity Shares of Rs.10/- each aggregating to Rs.1413.03 lakhs. Your Companyhas not issued any shares with differential voting rights nor granted stock options norsweat equity.
MANAGEMENT DISCUSSION AND ANALYSIS:
(A) INDUSTRY STRUCTURE AND DEVELOPMENTS:
During the year 2017-18 the GDP growth was estimated at 6.6% as against the previousyear's growth of 7.1%.
The year 2017-18 witnessed a major economic policy development (i.e.) implementation ofGoods and Services Tax (GST) with effect from 1st July 2017. Though the GSTimplementation had its impact during the first-half of the year the overall domesticeconomic scenario towards later part of the year 2017-18 has shown signs of improvement ascompared to the previous year.
The Indian Pharmaceutical Market (IPM) currently valued at Rs.119386 crores [MATMarch 2018] grew by 5.7%.
The growth was driven by (i) growth in volume of existing brands (3.8%) and (ii) newintroductions (2.7%). However price revisions reported a negative trend (-0.8%). Marketwas driven by Chronic and Sub-Chronic Segments. Therapeutic segments like Anti-diabetic(11.6%) Derma (10.4%) and Vaccines (14.4%) reported double digit growth. (Source:Pharmatrac).
(B) OPPORTUNITIES AND THREATS: Opportunities:
Economic growth rising incidence of chronic diseases increase in healthcareaccess and expected growth in per capita income would drive further expansion of thehealthcare segment. Therefore there is opportunity for your Company to grow the PharmaBusiness further.
Your Company has the unique advantage of an exclusive network for distributionof FMCG / OTC products. This can be leveraged for launch of new products under own brandsso as to ensure improved profitability and value creation through brand building.
On Medical Devices the market continues to be dominated by imported medicaldevices / implants. Since your Company manufactures world class products and these arepriced competitively this segment provides opportunity for growth. The "Make inIndia" initiative by the Government would further enhance the growth prospect forthis Segment. These products also have export potential.
The Government of India is extending its price control policy to cover medicaldevices in a phased manner. In fact ceiling prices for Ortho Implants have already beenannounced and implemented with effect from 15th August 2017. While this may be seen as athreat there is also an opportunity for domestic manufacturers like your Company as theseproducts are likely to witness higher demand due to competitive pricing
The Central Government has also recently announced a massive Medical InsuranceScheme to cover poor families and this initiative is also likely to increase the number oftreatment procedures which would in turn improve the demand for medical implants viz.Heart Valves and Ortho Implants manufactured by your Company.
Considering the size of the market for food products the Foods Business of yourCompany has potential for growth including branding / retail and export opportunities.
The Product Patent Regime has restricted the access for Indian Pharma Companiesto the latest molecules which were earlier available. However there may be opportunitiesto launch products that are out of patents regimentation.
The Drugs Price Control may have an adverse impact on the sales / margins ofPharmaceutical Companies.
Banning of Fixed Dose Combinations (FDCs) restricted launch of new combinationswhich is likely to impact the overall size / growth of the market.
(C) SEGMENTWISE PERFORMANCE:
Your Company is engaged in Pharmaceuticals Consumer Products Medical Devices andFoods Businesses.
A look at the performance of individual Business Segments:
The Ethical Pharma Business of your Company deals in Pharmaceutical Formulations bothHerbal and Allopathic in various therapeutic segments.
Ethical Products Division (EPD) & Ventura Division
During the year 2017-18 EPD and Ventura Divisions registered a turnover of Rs.140.74crores a performance almost similar to that of last year. The performance would have beenbetter but for the introduction of GST which resulted in stockists drastically reducingtheir stockholdings thereby affecting sales. Further due to change in tax structure (onaccount of GST) there has been reduction in net sales value.
High attrition continues to be a cause of concern. During the year your Companystarted various Employee Engagement Programmes such as loyalty bonus etc. to increaseretention benefit of which is likely to accrue during this year.
Due to the disturbed market scenario on account of GST implementation new productlaunches were specifically deferred by your Company.
However steps have now been taken to launch 3 - 4 new products during the currentyear.
During 2018-19 the strategy is to introduce a few more new brands focus on highpotential existing brands to strengthen the position in Gynaecology and InfertilitySegments and to improve productivity / retention through continuous training andmotivation.
Animal Welfare Division (AWD)
During the year under review the Animal Welfare Division reported a sales turnover ofRs.51.59 crores with a growth of around 9% over the previous year.
But for Bovianim (Livestock) the other two sub-divisions Gallus (Poultry) and Companim(Pet) have reported a decent growth. The performance of the Division particularly that ofBovianim was impacted due to the constraints faced by the industry during the period ofGST implementation. Though the performance till August 2017 was quite sluggish itgathered momentum with healthy growth during the period September 2017March 2018resulting in an overall satisfactory performance.
The strategy for 2018-19 would be to ensure healthy growth through efficient KeyAccount Management focused promotion of Ossomin-Tefroli-Orcal-P (OTO) brandsintroduction of new products venturing into aqua segment geographical expansion etc.
Consumer Products Business:
The Division reported a turnover of Rs.184.29 crores with marginal decline in revenuedue to GST implementation. Further with the new tax structure under GST regime there hasalso been reduction in the net sales prices. Woodward's registered a volume growth of 1.2%despite losing momentum during the GST implementation period.
EVA had a challenging year with a decline of around 8% in turnover. However theperformance of base product EVA 125 ml is steady and has registered a growth of 3.4% involumes.
Despite the impact of GST implementation the homecare brand Good Home managed tomaintain almost the same revenues as that of the previous year. In the coming year yourCompany would be restructuring the Route-to-Market strategy to give a major thrust toemerging channels like Modern Trade and E-Commerce. Your Company would be reviving theemphasis on increasing distribution to focus on chemists & grocers' channels to drivegrowth.
Medical Devices Business:
Heart Valve Division
During the year under review the performance of Heart Valve Division has been quitesatisfactory with a turnover of Rs.18.81 crores. The initial response to therecently-launched Bi-Leaflet Valves manufactured by CardiaMed Netherlands has beensatisfactory and steps are being taken to scale up sales. Necessary regulatory clearanceshave been obtained for import and sale of Bio-Prosthetic Valves from a Brazilian Companyand the test marketing would commence shortly. Steps are also being taken for obtainingnecessary regulatory clearances for the commencement of clinical trials for the ImprovedHeart Valves and Vascular Grafts.
The focus for 2018-19 would be to grow the volumes of existing Heart Valve and to gainfurther volumes through Bi-Leaflet / Tissue Valves.
The Ortho Division reported an encouraging performance during the year under reviewwith a turnover of Rs.13.84 crores. In line with the steady increase in offtake theproduction capacity at the existing facility at Ambattur has been enhanced to meet theincreasing demand. In order to spearhead the growth plans of this Division a dedicatedSenior Resource has been recruited to head the operations.
Regulatory Affairs Team has been further strengthened to meet the requirements of ISOEU Medical Device Regulation & Indian Medical Device Rules 2017.
CE scope extension audit for Co-Cr Mobile Bearing Uncemented version meant for overseasmarkets has been completed and technical review is being carried out by the Notifying Body- DNV Norway.
Development of Cementless Hip Implant is in progress and is expected to be launchedduring this year.
The plan for 2018-19 would be to grow the Ortho Business through geographicalexpansion launch of new products increasing the support from the existing surgeons andadding new surgeons both in the domestic and permitted export markets.
Protective Devices Division
The National Company Law Tribunal (NCLT) Division Bench Chennai vide its Order dated15th December 2017 sanctioned the Scheme of Amalgamation between TTK Protective DevicesLimited and its Wholly Owned Subsidiary TSL Techno Services Limited and your Company.Consequent to the above the erstwhile TTK Protective Devices Limited has become aDivision of your Company and for operational convenience it has been named as"Protective Devices Division".
During the year under review the Division achieved a sales turnover of Rs.100.67crores. This Division operates in three segments of business viz.-(i) manufacturing andselling under Company's own Brand "SKORE"; (ii) supplies to Third Party Brandowners both in India and abroad as Contract Manufacturer; and (iii) supplies underDomestic and International Public Tenders.
The Division currently manufactures and supplies Condoms out of its factory inPuducherry and has its Research & Development facility at Chennai. Branded Condomsmarket has witnessed intense competition with the re-launch of competitive brands. SKOREreported a growth of around 8%. Portfolio mix with focus on SKORE Champion series hasaided the brand growth.
SKORE is now the No.2 brand in value terms in All India Urban markets. Your Company hasalso successfully launched a range of personal lubricants under the brand name SKOREduring the year under review. Your Company is pleased to report that Quality Audits aspart of the continual assessment were conducted by the British Standards Institution forISO and CE Mark by South African Bureau of Standards for SABS Certification and by SGSGlobal for Forest Stewardship Council Certification during the year and the Company hassuccessfully retained the certifications without any major or critical non-conformances.Your Company is also one of the pre-qualified suppliers under UNFPA / WHO PrequalificationScheme for Male Latex Condoms.
Your Company's R&D Centre is in the process of developing value added innovativeand differentiated products and these will help your Company in developing the businessfurther.
The focus for 2018-19 would be to grow the branded Condoms business through branddifferentiation / innovation; to develop relationship with Third Party Brand ContractManufacturing customers for increasing the volumes; and to work on cost optimization to bemore competitive in Bid Business.
During the year under review the Foods Division achieved a sales turnover of Rs.67.01crores with stagnant volumes.
Increase in the number of competitors has severely impacted the margins and the volumesof the trade business. In order to overcome this challenge your Company has been puttinga lot of thrust on other segments of business like exports and institutional businessapart from launching several new products.
The R&D Centre at Hosakote Bengaluru developed a number of new products during theyear under review and is working on many other products which would be launchedprogressively.
During the year under review your Company's Jaipur factory has been accredited withISO 22000:2005 certification. Both the Hosakote and Jaipur factories have also obtainedKOSHER certification and this will enable your Company to increase its footprint inoverseas markets. Total Productive Maintenance (TPM) is being successfully implemented inboth the factories.
The strategy for the current year would be to increase the capacity utilisation atJaipur facility through enhanced focus on domestic / institutional and export businessesand also to work on developing and launching innovative and differentiated products toimprove volumes.
In view of the above developments and initiatives the outlook for your Company as awhole for 2018-19 appears promising.
(E) RISKS AND CONCERNS:
The analysis presented in the Industry Scenario and Opportunities and Threats Sectionof this Report throws light on the important risks and concerns faced by your Company. Thestrategy of your Company to de-risk against these factors is also outlined in the saidSections.
(F) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
Your Company has necessary Internal Control Systems in place which is commensurate withthe size scale and complexity of its operations. Further your Company has retained theservices of an External Consultant for further strengthening the Internal FinancialControl System. The suggestions made by him in relation to various activities / areas suchas Properties Plant & Equipments Petty Cash Management Revenue recognition fromoperations Inventories Control & Valuation etc. have been implemented.
Internal Audits are regularly conducted through In-house Audit Department and alsothrough External Audit Firms. The Reports are periodically discussed internally. TheInternal Audit Department monitors and evaluates the efficacy and adequacy of internalcontrol system in your Company its compliance with operating systems accountingprocedures and policies at all locations of your Company. Significant audit observationsand corrective actions thereon are presented to the Audit Committee.
(G) FINANCIAL PERFORMANCE:
(Rs. in lakhs)
| ||2017-18 ||2016-17 |
|Revenue from Operations ||57754.65 ||52780.55 |
|Other Income ||757.47 ||572.75 |
|Total Income ||58512.12 ||53353.30 |
|Cost of Materials Consumed ||24159.34 ||24343.96 |
|Employee Benefits Expense ||10898.71 ||8799.47 |
|Other Expenses ||18442.21 ||15789.04 |
|Profit before Finance Cost and Depreciation ||5011.86 ||4420.83 |
|Finance Cost ||472.93 ||311.49 |
|Depreciation ||1524.22 ||1191.59 |
|Profit before Tax ||3014.71 ||2917.75 |
|Less: Provision for Tax || || |
|Current Tax ||1125.00 ||985.94 |
|Deferred Tax ||73.18 ||57.83 |
|Profit after Tax ||1816.53 ||1873.98 |
ANALYSIS OF PERFORMANCE: y The performance for the year under review includes theoperations of TTK Protective Devices Limited which merged with your Company. The previousyear's figures represent the performance of the Company on a standalone basis. Hence thesefigures are not comparable. y Revenue from Operations registered a growth of around9%. On like-to-like basis without considering the revenues of the Protective DevicesDivision the Revenue from Operations of the Company was almost similar to that of theprevious year. y During the year under review Other Income stood at Rs.757.47lakhs as against the previous year's figure of Rs.572.75 lakhs. The increase mainlyrelates to Interest on Fixed Deposits held by the erstwhile TTK Protective DevicesLimited. y Goods Consumption as a percentage of Revenue from Operations for theyear works out to 41.83% as against the previous year's figure of 46.12%. The decrease wasmainly due to SKORE brand of Condoms which was hitherto a trading line now becoming OwnBranded Goods consequent to the amalgamation of TTK Protective Devices Limited with theCompany. y The increase in employee benefits expense was mainly due to regularannual increments / revision in packages and addition of employees pursuant to Merger.
y Bad Debts Written Off during the year under review amounted to Rs.67.37 lakhs:Pharma Division - Rs.24.99 lakhs; Consumer Products Division - Rs.2.73 lakhs; Heart ValveDivision - Rs.3.74 lakhs; Ortho Division - Rs.15.51 lakhs; and Foods Division - Rs.20.40lakhs. y The increase in other expenses are due to amalgamation of TTK ProtectiveDevices Limited with the Company and are in line with the level of operations. yThe additions to Fixed Assets mainly include the following: (i) Purchase of Plantand Machinery relating to-
Pharma Division Rs.14.49 lakhs;
Foods Division Jaipur Rs.31.73 lakhs;
Ortho Division Rs.63.23 lakhs; and
Protective Devices Division Rs.44.83 lakhs.
(ii) Purchase of Computers relating to-
Pharma Division Rs.26.40 lakhs; and
Ortho Division Rs.3.00 lakhs. y As per the Scheme of Amalgamation aSpecial Contingency Reserve of Rs.20 crores was created out of the General Reserve of theCompany to meet the re-organisation expenditure and crystallization of any contingentliabilities of the erstwhile TTK Protective Devices Limited. Out of this a sum of Rs.8.99crores (Rs.5.88 crores net of deferred tax) was utilized towards expenses incurred onVoluntary Retirement Scheme relating to the erstwhile TTK Protective Devices Limitedwhich merged with the Company.
(H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT: HumanResources:
Your Company attaches significant importance to continuous upgradation of HumanResources for achieving the highest levels of efficiency customer satisfaction andgrowth.
As part of the overall HR Strategy initiatives such as Balanced Score Card (BSC)Total Productive Maintenance (TPM) Performance Management Processes etc. have beenimplemented to enhance employee productivity and corporate performance. Senior Managementteam has been strengthened by inducting experienced professionals from the industry acrossbusinesses and corporate functions apart from implementing leadership development forinternally groomed managers. Further your Company continues to place emphasis on regulartraining programs to enable continuous improvement of employee capabilities. Severalattractive initiatives have been implemented to improve employee engagement and to controlfield staff attrition.
As on 31st March 2018 the employee strength was 2244. (Previous Year - 1853).The increase was due to amalgamation of TTK Protective Devices Limited with your Company.
The industrial relations during the year under review continued to be cordial. TheDirectors place on record their sincere appreciation for the services rendered byemployees at all levels.
Your Company entered into a long term wage settlement with the Workers' Union of theFoods Division Hosakote and this will be in force for a period of four years from 1stJanuary 2017 to 31st December 2020.
(I) INFORMATION TECHNOLOGY:
Your Company successfully deployed GST Module in Oracle E-Business Suite across allDivisions of the Company Pan India. Your Company is in the process of exploringstate-of-the-art Cloud hosting of Oracle E-Business Suite applications.
(J) FUTURISTIC STATEMENTS:
This analysis may contain certain statements which are futuristic in nature. Suchstatements represent the intentions of the management and the efforts being put in by themto realize certain goals. The success in realizing these goals depends on various factorsboth internal and external. Therefore the investors are requested to make their ownindependent judgments by taking into account all relevant factors before taking anyinvestment decision.
DISCLOSURES UNDER THE COMPANIES ACT 2013 AND THE RULES MADE THEREUNDER: (a) Extract ofAnnual Return:
Extract of Annual Return (Form MGT-9) is enclosed as Annexure-1. (b) Number ofMeetings of the Board:
The Board of Directors met 4 (four) times during the year 2017-18. The details of theBoard Meetings and the attendance of the Directors are provided in the Report on CorporateGovernance.
(c) Corporate Social Responsibility (CSR) Committee:
The Corporate Social Responsibility (CSR) Committee consists of Mr T TRaghunathan as Chairman Mr K Shankaran Dr (Mrs) Vandana R Walvekar and Mr Girish Rao asMembers. Mr S Kalyanaraman is the Secretary of the Committee. The Corporate SocialResponsibility (CSR) Policy enumerating the CSR activities to be undertaken by yourCompany in accordance with Schedule VII to the Companies Act 2013 was recommended to theBoard and the Board adopted the same. The said policy was also made available on theCompany's website www.ttkhealthcare.com.
The Annual Report under CSR Activities is annexed to this Report as
The details relating to the meetings convened etc. are furnished in the Report onCorporate Governance.
(d) Composition of Audit Committee:
The Audit Committee consists of Mr Girish Rao as Chairman Mr B N Bhagwat Mr KShankaran and Mr S Balasubramanian as Members. Mr S Kalyanaraman is the Secretary of theCommittee. More details on the Committee are given in the Report on Corporate Governance.
(e) Related Party Transactions:
During the year under review no transaction of material nature has been entered intoby your Company with its promoters the directors or the key managerial personnel or theirrelatives etc. that may have a potential conflict with the interests of your Company.
All related party transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basisfor the transactions which are repetitive in nature. A statement giving details of thetransactions entered into with the related parties pursuant to the omnibus approval sogranted is placed before the Audit Committee and the Board of Directors for theirapproval / ratification on a quarterly basis.
During the year under review your Company renewed the contracts entered into with M/sT T Krishnamachari & Co. in respect of the following:
|Nature of the Contract ||Licence Agreement ||C&FA Agreement |
|Duration of the Contract ||Renewed for a further period of five years from 1st November 2017 to 31st October 2022. ||Renewed for a further period of five years from 9th August 2018 to 8th August 2023. |
|Particulars of the Contract or Arrangement ||For using the ttk monogram in relation to the goods manufactured outsourced from third parties marketed traded distributed etc. and for other business activities of the Company. ||For availing the Clearing and Forwarding Agent services of M/s T T Krishnamachari & Co. |
|Material Terms of the Contract or Arrangement including the value if any. ||Half-a-percent (1/2%) of the Net Sales Value of the Company plus applicable taxes and levies ||3% of the Net Sales Value of the Company plus applicable taxes and levies |
|Manner of determining the pricing and other commercial terms both included as part of Contract and not considered as part of the Contract. ||M/s T T Krishnamachari & Co. popularly known as TTK have been in business of various consumer and pharmaceutical products and has been marketing and distributing such products for several decades and earned a wide reputation and created a strong image and awareness in the minds of the public. They are the owners of the copyright in the artistic work ttk monogram having secured the registration of the said copyright vide Registration No.A-39006/83 under the Copyright Act 1957. Use of the ttk monogram on the products of the Company is of immense help to establish these products all these years. Considering the reputation enjoyed by the ttk monogram and the advantages available to the Company by the use thereof the consideration proposed to be paid are quite reasonable and fully justified. ||M/s T T Krishnamachari & Co. popularly known as TTK have been in marketing and distribution services for nearly 90 years and have established reputation all over India. They have warehousing and modern infrastructural facilities with Computers in various locations ideal for providing C&F services. Considering the products handled the services rendered the quantum of goods handled and the employment of qualified personnel in the operation and also the responsibilities cast upon them the C&FA charges @ 3% of net sales is quite reasonable and fully justified. |
|Interested Directors ||Mr T T Jagannathan Chairman and Mr T T Raghunathan Executive Vice Chairman are interested as Partners of M/s T T Krishnamachari & Co. ||Mr T T Jagannathan Chairman and Mr T T Raghunathan Executive Vice Chairman are interested as Partners of M/s T T Krishnamachari & Co. |
The Register of Contracts containing the details of the transactions in whichdirectors / key managerial personnel are interested is placed before the Audit Committee/ Board regularly.
The Board of Directors of your Company on the recommendation of the Audit Committeeadopted a policy on Related Party Transactions to regulate the transactions between yourCompany and its Related Parties in compliance with the applicable provisions of theCompanies Act 2013 and the SEBI (LODR) Regulations 2015. The Policy as approved by theBoard is uploaded on the Company's website www.ttkhealthcare.com. Form AOC-2 containingthe details of Related Party Transactions is annexed as Annexure-3 to this Report.
(f) Corporate Governance:
Your Company has complied with the various requirements of the Corporate GovernanceCode under the provisions of the Companies Act 2013 and as stipulated under the SEBI(LODR) Regulations 2015. A detailed Report on Corporate Governance forms part of thisAnnual Report.
(g) Risk Management:
Your Company has developed and implemented a Risk Management Policy which includesidentification of elements of risk if any which in the opinion of the Board maythreaten the existence of your Company. Your Company has a risk identification andmanagement framework appropriate to the size of your Company and the environment in whichit operates.
Your Company constituted a Risk Management Group (RMG) with due representations fromeach of the Businesses / Functions of your Company to effectively implement the RiskManagement Framework and to address the key risks.
The meetings of the RMG were convened periodically in order to have detailedinteractions / discussions with the Members / Risk Owners on the various risks identifiedand the status of the mitigation plans. The detailed Report of the RMG incorporating theupdate on the various risks identified and the mitigation plans in respect thereof areperiodically placed before the Audit Committee and the Board for their discussions andrecord.
(h) Directors and Key Managerial Personnel:
None of the Directors are disqualified from being appointed or holding office asDirectors as stipulated under Section 164 of the Companies Act 2013.
(i) Appointment / Re-appointment of Directors:
Mr T T Jagannathan and Mr K Shankaran liable to retire by rotation at the ensuingAnnual General Meeting and being eligible offer themselves for re-appointment. The Boardrecommends their reappointment.
The Board seeks the approval of the Members for Mr B N Bhagwat Dr (Mrs) Vandana RWalvekar and Mr S Balasubramanian who have attained the age of 75 years to continue tohold office as Independent Directors of the Company till the current tenure of theirrespective appointments in line with Regulation 17(1A) of the SEBI (LODR) (Amendment)Regulations 2018.
(ii) Statement on Declaration by the Independent Directors of the Company:
All the Independent Directors of your Company have given declarations under Section149(7) of the Companies Act 2013 that they meet the criteria of independence as laid downunder Section 149(6) of the Companies Act 2013 and the SEBI (LODR) Regulations 2015. Theterms and conditions of appointment of the Independent Directors are posted on theCompany's website www.ttkhealthcare.com.
(iii) Key Managerial Personnel (KMP):
The following managerial personnel are Key Managerial Personnel (KMP):
Mr T T Raghunathan Executive Vice Chairman [Chief Executive Officer (CEO)];
Mr S Kalyanaraman Director & Wholetime Secretary [Company Secretary]; and
Mr B V K Durga Prasad Senior Vice President Finance [Chief Financial Officer(CFO)].
(iv) Performance Evaluation of the Board its Committees and the Directors:
In compliance with the provisions of the Companies Act 2013 and the SEBI (LODR)Regulations 2015 the performance evaluation of the Board was carried out during the yearunder review. More details on the same are given in the Report on Corporate Governance.
(v) Remuneration Policy:
Your Company adopted a Policy relating to selection remuneration and evaluation ofDirectors and Senior Management. The said Policy is posted on the Company's website www.ttkhealthcare.com.
(i) Statutory Auditor and their Report:
y The Shareholders at the 59th Annual General Meeting held on 4th August 2017appointed M/s PKF Sridhar & Santhanam LLP as Statutory Auditors of the Company for aterm of five years to hold office from the conclusion of the 59th Annual General Meetingtill the conclusion of the 64th Annual General Meeting subject to ratification at everyAnnual General Meeting in accordance with the provisions of Section 139 and otherapplicable provisions if any of the Companies Act 2013 and the Rules made thereunder.
Pursuant to notification of the Companies (Amendment) Act 2017 the first proviso toSection 139 relating to the ratification of appointment of Statutory Auditors by theMembers at every general meeting was omitted vide notification dated 7th May 2018.Consequently the ratification of appointment of M/s PKF Sridhar & Santhanam LLP asStatutory Auditors is not required.
y Auditor's Report for the year ended 31st March 2018:
The Auditor's Report to the Shareholders for the year under review does not contain anyqualifications.
(ii) Cost Auditor and Cost Audit Report:
y Enhancement of Scope of Cost Audit for the year 2017-18:
Your Company appointed M/s Geeyes & Co. for conducting audit of the Cost Recordsof the Company for the financial year 2017-18 relating to "Drugs andPharmaceuticals" under Regulated Sectors as the overall annual turnover of theCompany from all its products during the immediately preceding financial year exceeded thethreshold limit Rs.50 crores and also the aggregate turnover of the individual product orproducts for which cost records are required to be maintained exceeded the threshold limitof Rs.25 crores. Consequent upon the amalgamation of TTK Protective Devices Limited withthe Company the Male Contraceptives manufactured by the Protective Devices Division ofthe Company come under the purview of Cost Audit under the Non-Regulated Sector under theProduct category "Rubber and Allied Products; including products regulated by theRubber Board constituted under the Rubber Act 1947 (XXIV of 1947)" under CTA Heading4014 as the overall annual turnover of the Company from all its products during theimmediately preceding financial year exceeded Rs.100 crores and also the aggregateturnover of the individual product or products for which cost records are required to bemaintained exceeded the threshold limit of Rs.35 crores. Further the Heart Valves and theOrthopaedic Implants manufactured by your Company too would come under the purview of CostAudit under the Non-Regulated Sector under the product category "Production Importand Supply or Trading of Medical Devices" under CTA Heading 9021 since the aggregateturnover of the individual product or products for which cost records are required to bemaintained exceeded the threshold limit of Rs.35 crores.
The existing Cost Auditors of the Company M/s Geeyes & Co. had expressed theirwillingness for conducting the cost audit in addition to Drugs and Pharmaceuticals underRegulated Sectors also for the product categories (i) Rubber and its Allied Productsviz. Male Contraceptives; and (ii) Medical Devices viz. Heart Valves and OrthopaedicImplants under the Non-Regulated Sectors for the financial year 2017-18. Accordinglyyour Company included the above two product categories within the scope of the audit ofthe existing Cost Auditors M/s Geeyes & Co. for the financial year 2017-18 and alsosent necessary intimation to the Central Government. The remuneration of Rs.3.50 lakhs perannum plus applicable taxes and levies and out-of-pocket expenses incurred in connectionwith the audit payable to the Cost Auditors was already ratified by the Shareholders intheir meeting held on 4th August 2017.
y Appointment for the year 2018-19:
Pursuant to Section 148 of the Companies Act 2013 and the Rules made thereunder theCost Records of your Company shall be audited for the following product categories forthe financial year 2018-19: (a) Under Regulated Sectors:
Drugs and Pharmaceuticals.
(b) Under Non-Regulated Sectors:
Male Contraceptives under Rubber and Allied Products;
Heart Valves and Orthopaedic Implants under Production Import and Supply or Trading ofMedical Devices.
The Board of Directors on the recommendation of the Audit Committee appointed M/sGeeyes & Co. as Cost Auditors of your Company for the financial year 2018-19 andfixed their remuneration at Rs.5 lakhs plus applicable taxes and levies and reimbursementof travel and out-of-pocket expenses incurred in connection with the audit. Necessaryintimation has also been given to the Central Government.
M/s Geeyes & Co. have confirmed that their appointment is within the limitsprescribed under Section 141 of the Companies Act 2013 and have also certified that theyare free from any disqualifications specified under the said Section.
The Audit Committee also received a Certificate from the Cost Auditors certifying theirindependence and arm's length relationship with your Company. Pursuant to the provisionsof Section 148 of the Companies Act 2013 and the Rules made thereunder the ratificationof the Members is sought by means of an Ordinary Resolution for the remuneration of Rs.5lakhs plus applicable taxes and levies and reimbursement of travel and out-of-pocketexpenses incurred in connection with the audit payable to M/s Geeyes & Co. CostAuditors under Item No.8 of the Notice convening the Annual General Meeting.
The Cost Audit Report for the year ended 31st March 2018 would be filed on or beforethe due date (i.e.) 27th September 2018 or within 30 days from the date of submission ofthe said Report to the Board whichever is earlier.
y Cost Audit Report for the year 2016-17:
The Cost Audit Report for the financial year ended 31st March 2017 was filed on 2ndSeptember 2017 vide SRN G51927648 on the website of the Ministry of Corporate Affairs.
(iii) Secretarial Auditor and Secretarial Audit Report:
The Board had appointed Mr R Balasubramaniam Company Secretary in Wholetime Practiceto carry out Secretarial Audit under the provisions of Section 204 of the Companies Act2013 for the financial year 2017-18. The Report of the Secretarial Auditor in Form MR-3 isannexed to this Report as Annexure-4. The Report does not contain any qualificationor reservation or adverse remarks.
(j) Transfer to Investor Education and Protection Fund:
y Unclaimed Dividends for the year ended 31st March 2010:
Your Company has transferred a sum of Rs.6.04 lakhs during the financial year 2017-18to the Investor Education and Protection Fund established by the Central Government incompliance with Sections 123 - 125 of the Companies Act 2013. The said amount representsthe unclaimed dividends for the year ended 31st March 2010 which were lying unclaimedwith your Company for a period of seven years from the due date of payment.
y Transfer of Shares to the Demat Account of the IEPF Authority:
In accordance with the Investor Education and Protection Fund Authority (AccountingAudit Transfer and Refund) Rules 2016 and as amended from time to time your Companytransferred 72067 Equity Shares of Rs.10/- each fully paid-up in respect of which thedividends relating to the year 2008-09 remained unclaimed / unpaid for a period of sevenconsecutive years to the Demat Account of the IEPF Authority held with CDSL on 27thNovember 2017 and 29th November 2017.
Since there were no underlying shares in respect of which dividends relating to theyear 2009-10 remained unclaimed / unpaid for a period of seven consecutive years noshares were due for transfer to the Demat Account of the IEPF Authority.
(k) Disclosure under Schedule V(F) of the SEBI (LODR) Regulations 2015:
Your Company does not have any Unclaimed Shares issued in physical form pursuant toPublic Issue / Rights Issue.
(l) Conservation of Energy:
The prescribed particulars under Rule 8(3) of the Companies (Accounts) Rules 2014relating to conservation of energy technology absorption foreign exchange earnings andoutgo are furnished in Annexure-5 to this Report.
(m) Particulars of Employees:
The information required under Section 197 of the Companies Act 2013 and the Rulesmade thereunder are annexed to this Report as Annexure-6. (n) SubsidiaryCompany:
Your Company does not have any Subsidiary.
As on 31st March 2018 your Company was not holding any amount under Fixed DepositAccount.
(p) Loans Guarantees and Investments under Section 186 of the Companies Act 2013:
During the year under review your Company had not given any loan and provided anyguarantee under Section 186 of the Companies Act 2013. During the year under review yourCompany made an investment of Rs.2.50 lakhs in M/s Renew Wind Power (AP) Private Limitedin connection with purchase of wind power by way of transfer from Renew Wind Power(Karnataka Three) Private Limited 2500 Equity Shares of face value of Rs.10/- each at aprice of Rs.100 per Equity Share thus totally holding 3400 Equity Shares of Rs.10/- each(Rs.3.40 lakhs) as on 31st March 2018 and the same has been classified as Deposits in theFinancial Statements in line with Ind AS.
(q) Significant and Material Orders passed by the Regulators or Courts:
There are no significant and material orders passed by the Regulators / Courts whichwould impact the going concern status of your Company and its future operations.
(r) Whistle Blower Policy:
In accordance with the provisions of Section 177(9) of the Companies Act 2013 and theRules made thereunder and also the SEBI (LODR) Regulations 2015 your Company establisheda vigil mechanism termed as Whistle Blower Policy for directors and employees to reportconcerns about unethical behaviour actual or suspected fraud or violation of theCompany's Code of Conduct or Ethics Policy which also provides for adequate safeguardsagainst victimization of director(s) / employee(s) who avail of the mechanism and alsoprovide for direct access to the Corporate Governance Officer / Chairman of the AuditCommittee and the Executive Vice Chairman in exceptional cases.
The Whistle Blower Policy was also hosted on the Company's websitewww.ttkhealthcare.com.
During the year under review your Company had not received any complaint.
(s) Listing of Equity Shares:
Your Company's shares are listed with-
BSE Limited (BSE) Mumbai; and
National Stock Exchange of India Limited (NSE) Mumbai.
Your Company obtained listing and trading approval from-
BSE Limited (BSE) Mumbai vide their communication No.DCS/ AMAL/TP/ST/6625/ 2018-19dated 13th April 2018; and
National Stock Exchange of India Limited (NSE) Mumbai vide their communicationNo.NSE/LIST/2016/16073 dated 12th April 2018; for 6364350 Equity Shares of Rs.10/- eachfully paid-up allotted on 2nd March 2018 to the Shareholders of the erstwhile TTKProtective Devices Limited pursuant to the sanctioned Scheme of Amalgamation.
Your Company paid the Listing Fees for the financial year 2018-19.
(t) Obligation of your Company under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013:
In order to prevent sexual harassment of women at workplace a legislation - The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 wasnotified on 9th December 2013. Under the said Act every Company is required to set up anInternal Complaints Committee to look into complaints relating to sexual harassment atworkplace of any woman employee.
Your Company has adopted a policy for prevention of Sexual Harassment of Women atWorkplace and has constituted an Internal Complaints Committee (ICC) with an NGO as one ofits Members. During the year 2017-18 there were no complaints. Further adequateawareness programmes were also conducted for the employees of your Company.
(u) Directors' Responsibility Statement:
As required under Section 134(3)(c) of the Companies Act 2013 your Directors herebyconfirm that
In the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;
Appropriate accounting policies had been selected and applied consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year 31st March2018 and of the Profit of the Company for that period;
Proper and sufficient care had been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
The Annual Accounts had been prepared on a going concern basis;
The Internal Financial Controls had been laid down to be followed by theCompany and that such Internal Financial Controls are adequate and were operatingeffectively; and
In order to ensure compliance with the provisions of all applicable laws propersystems had been devised and that such systems were adequate and operating effectively.
Issue of equity shares with differential rights as to dividend voting orotherwise.
Issue of shares (including Sweat Equity Shares and ESOS) to employees of theCompany under any scheme.
Your Directors place on record their grateful thanks to the Bankers Customers Vendorsand Members for their continued support and patronage.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
| ||For and on behalf of the Board |
|Place : Chennai ||T T JAGANNATHAN |
|Date : May 29 2018 ||CHAIRMAN |
|Registered Office: || |
|No.6 Cathedral Road || |
|Chennai 600 086 || |