(including Management Discussion and Analysis Report)
Your Directors have pleasure in presenting the 62nd Annual Report togetherwith the Audited Financial Statements for the financial year ended 31st March2020.
| || ||(Rs. in lakhs) |
| ||2019-20 ||2018-19 |
|Profit before Depreciation & Tax ||3380.15 ||5392.80 |
|Less : Depreciation ||1437.67 ||1466.85 |
|Profit before Tax ||1942.48 ||3925.95 |
|Less : Tax expense || || |
|Current Tax ||585.00 ||1495.00 |
|Deferred Tax ||125.54 ||(6.42) |
| ||710.54 ||1488.58 |
|Profit after Tax ||1231.94 ||2437.37 |
|Surplus Account: || || |
|Balance as per last Balance Sheet ||12459.65 ||10968.08 |
|Add: Profit for the year ||1231.94 ||2437.37 |
|Other Comprehensive || || |
|Income for the year (Net of Tax) ||(194.67) ||(94.06) |
| ||1037.27 ||2343.31 |
|Total ||13496.92 ||13311.39 |
|Less: Dividend Paid ||706.51 ||706.51 |
|Dividend Distribution Tax ||145.23 ||145.23 |
| ||851.74 ||851.74 |
|Net Surplus ||12645.18 ||12459.65 |
Review of Performance:
During the year under review the Revenue from Operations amounted to Rs.645.77 croresas against the previous year's figure of Rs.627.88 crores a growth of around 3%.
Pre-Tax Profit for the year stood at Rs.19.42 crores as against the previous year'sfigure of Rs.39.26 crores.
A detailed review is presented under the Section "Segmentwise Performance".
Your Directors are pleased to recommend a dividend of Rs.3.00 (30%) per Equity Share ofRs.10/- each for the year ended 31st March 2020. [Previous Year - Rs.5.00(50%) per Equity Share].
The Paid-up Equity Share Capital as on 31st March 2020 was Rs.1413.03lakhs. Your Company has not issued any shares with differential voting rights nor grantedstock options nor sweat equity.
MANAGEMENT DISCUSSION AND ANALYSIS:
(A) INDUSTRY STRUCTURE AND DEVELOPMENTS:
Impact of CoVID-19:
Commencing from the second half of March 2020 CoVID-19 pandemic had emerged as a keyrisk to human health and caused significant economic turmoil which had an impact on theIndian and International business environment. Further extended lockdown conditions haveresulted in adverse impact on sales due to disruption in market openings supply chaindistributions etc. The impact of this pandemic on the future operations of the Companywould to a large extent depend on how it develops and its resultant impact on businesses.This would also determine whether India would be able to realize its projected GDP growthwhich was estimated at 5% (Previous year - 6%).
The Indian Pharmaceutical Market (IPM) currently valued at Rs.143738 crores [MATMarch 2020] grew by 9.8%.
The growth was driven by (i) growth in volume of existing brands (1.7%); (ii) newintroductions (2.73%); and (iii) price revisions (5.35%). While Acute Segment remainsdominant therapy in IPM the growth was driven by Chronic and Sub-Chronic segments.Therapeutic Segments like Urology (13.9%) Respiratory (13.2%) Cardiac (11.8%) andAnti-Diabetic (11.4%) reported healthy growth. (Source: Pharmatrac).
(B) OPPORTUNITIES AND THREATS:
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 thePharma/Medical Devices Businesses 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 so as to ensureimproved 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 hasrecently announced the "Atmanirbhar Bharat Abhiyaan" (Selfreliant India) whichwould provide further fillip to the indigenous manufacture of medical devices.
Due to the outbreak of CoVID-19 there would be emerging categories of hygieneproducts such as Sanitizers Hand wash liquids Disinfectants etc. and alsoformulations/supplements focusing on building immunity. Your Company being wellpositioned with its distribution network would take advantage of these emergingcategories by launching appropriate products.
The Government of India is extending its price control policy to cover medicaldevices in a phased manner. While this may be seen as a threat there is also anopportunity for domestic manufacturers like your Company as these products are likely towitness higher demand due to competitive pricing.
The Central Government is implementing a massive Medical Insurance Scheme tocover poor families and this initiative is also likely to increase the number of treatmentprocedures which would in turn improve the demand for medical implants viz. HeartValves 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.Further the increase in home cooking/frying due to CoVID-19 is also likely to generatemore demand for ready to cook/fry food products.
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.
Considering the commodity nature of the current Foods Business there ispressure on price realizations. Nevertheless this is mitigated through enhanced focus onexport markets and also launch of innovative and differentiated products. Further effortsare also being made to convert part of the B2B business into branded/retail business.
(C) SEGMENTWISE PERFORMANCE:
Your Company is engaged in Pharmaceuticals Consumer Products Medical DevicesProtective Devices and Foods 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 and Food Supplements.
Ethical Products Division (EPD) & Ventura Division
During the year 2019-20 EPD and Ventura Divisions registered a revenue from operationsof Rs.159.75 crores with a growth of around 4%. Though the performance till February 2020was satisfactory huge drop in sales during March 2020 due to CoVID-19 has impacted theoverall growth for the year as a whole. However the Division maintained itsprofitability.
Your Company had bifurcated the Ventura Division into- (i) Ventura - Gynaec; and (ii)Ventura - Fertility. While this initiative has strengthened your Company's position inGynaecology and Infertility segments it has taken more time than what was originallyestimated for stabilization due to the initial teething issues.
During the year under review the newly launched products such as Jessica QF (a novelpregnancy supplement) Sensipreg SR (progesterone) Erafos (Fosfomycin) and Pufer (aHaematinic) also delivered a satisfactory performance.
The strategy for the year 2020-21 for Pharma Business is to constantly work onimproving the people productivity to focus on existing/key brands that have goodpotential and also to launch a few new brands to grow the business.
Animal Welfare Division (AWD)
During the year under review the Animal Welfare Division registered a revenue fromoperations of Rs.71.46 crores with a growth of around 12%. The growth would have beenhigher but for the impact of CoVID-19 during the month of March 2020. Institutionalcomponent also added a decent share to the overall revenue from operations.
While the Divisions under AWD viz. Bovianim (Livestock) and Companim (Pet) reportedhealthy growth Gallus (Poultry) had a setback during the second half of the year underreview due to the volatility and soaring prices of poultry feed raw materials. Furtherdue to bird-flu incidences in certain parts of the country there was a reduced demand inconsumption of meat and egg which has hampered the business heavily.
The initial response for the launch of six products under the newly established AquaDivision is promising.
Major focus for the year 2020-21 is to bounce back with Gallus business and to improveperformance of low performing territories thereby reaching a healthy growth for the yearfor all the subdivisions of AWD.
Consumer Products Business:
The Consumer Products Division reported a revenue from operations of Rs.181.33 croresmarginally lower than the previous year's figure.
Woodward's Gripewater (WGW)
During the year under review the Woodward's Gripewater (WGW) witnessed a decline involumes as compared to the previous year. However with the reckoning of the impact of therevision in the prices WGW had more or less maintained its value.
Your Company has recently started engaging the New Age Digital Mothers through onlineinitiatives and this is helping your Company to convey the product benefits and usagealongside building the advocacy for the brand.
The strategy for the year 2020-21 would be to focus on consumption increase in wellpenetrated markets with a new TVC emphasizing on "3-time a day" consumption andto initiate various Consumer Connect Programs like Van promotion with the presence ofdoctors Hospital sampling etc. to recruit new Moms into this category. Also there areplans to scale up the digital initiatives to build trust and brand awareness among new ageMoms.
During the year under review EVA as a brand reported a decline both in value andvolume compared to the previous year.
The packaging of the EVA Deodorant was fully revamped with a two tone colour scheme andalso complete change in the graphics of the pack. This new pack was launched in March2019 with good promotional support. While the response was reasonably good the relaunchexpectations on the brand were not fully met as the consumers' preference was better forthe single colour old pack. This has impacted both the volumes/profitability. Consideringthe feedback from the trade and the field team it has been decided to go back to theoriginal pack without any change.
The performance of EVA Talc and Winter care products such as Lip Drench Chapsticetc. was satisfactory. The launch of revamped pack for EVA Talc is expected to addfurther volumes to the brand.
The objective for the year 2020-21 is to- (i) regain the consumers' confidence andbuild volumes; (ii) make a strong foothold in the market; (iii) achieve dominant position;and (iv) build robust product portfolio.
During the year under review Skore brand delivered a satisfactory performance. Thebrand faced a big setback in the month of March 2020 due to country wide lockdown that ledto a meagre growth in terms of value for the year 2019-20.
Skore brand was successfully extended with pleasure aids like Orgasmic Gel for womenVibrating Rings as well as Pheromone Activating Spray for men.
The strategy for the year 2020-21 would be to increase its reach amongst its consumersthrough distribution expansion and increasing brand awareness. Focus on innovation anddisruption would continue with a few new product launches. To ride on the improvedawareness about health and hygiene your Company proposed to launch intimate hygienewipes. The brand will focus on strengthening the e-commerce channel with few exclusivelaunches and also focus on pleasure products.
During the year under review Good Home as a brand reported a decent growth andwitnessed launch of a few new products with differentiated offering. These products havebeen well received.
While Drain Cleaner Room Freshener and Scrubbers registered a decent growth AirFreshener Block and Odour Remover reported a decline.
The recently launched anti-bacterial Scrubber is expected to add volumes to the brand.
Your Company is also planning to launch a few germs protection products such as HandSanitizers etc. and also relaunch some of the key products under Good Home Brand in newpackaging so as to reflect its modern and House of Good Home' philosophy.
The focus for the year 2020-21 would be to uplift the brand imagery build consumerconnect/trust and confidence to grow the Brand further.
Medical Devices Business:
Heart Valve Division
During the year under review the performance of Heart Valve Division has been quitesatisfactory with a revenue from operations of Rs.23.90 crores and a decent growthdespite the impact of CoVID-19 in the last quarter.
The performance was partly aided by the continued demand for Heart Valves under therecently launched Medical Insurance Scheme by the Government of India.
Your Company is actively working on increasing its presence in the Bi-Leaflet ValveSegment which is showing good acceptance amongst the Surgeons.
As a strategic initiative your Company has recently signed up an agreement with theOverseas Manufacturer for direct import and distribution of Bi-Leaflet Valves and effortswould be stepped up to build a decent volume in the coming months.
Your Company would commence the Single Centric Clinical Trials for the improved HeartValves after receipt of necessary regulatory clearances and the first human trial isexpected during the year 2020-21.
The focus for the year 2020-21 would be to grow the volumes of TTK Chitra Heart Valvesand to gain further volumes through BiLeaflet valves.
During the year under review Ortho Division recorded a revenue from operations ofRs.21.33 crores with a moderate growth.
Expanded into new markets. Healthy growth achieved in new markets in East North andWest. While Southern markets contributed significantly to the revenue from operations ithas reported decline in volumes.
Line extensions to Knee portfolio (Hinge Knee) helped to penetrate into new segments inexisting and new markets.
Hip Replacement portfolio (Cemented and Uncemented Hip Replacements) would be launchedacross the country in 2020-21. The new Hip Implants are coated with the state-of-the-artworld class technology by a leading Coating Company in Italy. Additional capacity is beingcreated to support manufacture of new products.
The strategy for 2020-21 would be to continue expansion into new geographies growrevenues from new products such as Hip range and Knee portfolio extensions and exploreexport opportunities.
Protective Devices Business:
During the year under review the performance of Protective Devices Division has beensatisfactory with a revenue from operations of Rs.99.74 crores. This could have beenbetter but for the closure of the facilities during last 2 weeks of March 2020 due tocountry wide lockdown to manage the outbreak of CoVID-19 pandemic.
Your Company was able to secure an export contract with a reputed international aidagency and the supplies under this contract commenced during the last Quarter of 2019-20.
As in the past many years your Company successfully went through the Quality Auditsconducted by the British Standards Institution (BSI) for ISO and CE Mark South AfricanBureau of Standards for SABS Certification and SCS Global Services for Forest StewardshipCouncil Certification as part of the continual assessment.
Your Company successfully retained all the certifications without any major or criticalnon-conformances and is also one of the prequalified Suppliers under WHO-UNFPAPre-Qualification Scheme for Male Latex Condoms.
During the year under review your Company had launched various value added innovativeand differentiated products developed by your Company's Research & DevelopmentDivision. Some more products are in the process of development and a few of those will belaunched during 2020-21.
These will help your Company to develop its business further.
The focus for 2020-21 would be to grow the branded Condom business throughdifferentiated and innovative products; to develop and strengthen relationships with thirdparty contract manufacturing customers for increasing the volumes; and to work on costoptimization to be more competitive in the domestic and international bid businesses.
During the year under review the Foods Division reported a revenue from operations ofRs.87.74 crores with a healthy growth both in volume and value.
There were challenges in terms of pricing and margins due to steady increase in some ofthe input costs and competition. Distribution was further expanded and more new marketswere opened up.
Your Company's R&D Centre at Hosakote developed several new products out of whichfive were launched in the market. The R&D team is continuously working with differentcustomers and developing innovative products for different applications like ready-to-microwave hot air popping and mechanical popping considering the future trend forhealthy snacks. Several projects pertaining to cost optimization of the existing productsare in the pipeline.
The capacity utilization of the Jaipur factory has significantly increased during theyear under review. The new high capacity cooker extruder (HTE 210) imported from Italy waserected and the same would be commissioned during the second quarter of the current year.This new cooker extruder would further increase the capacity and capability of the Jaipurfactory.
There was a moderate improvement in Productivity Quality Cost Reduction DeliverySafety and Moral (PQCDSM) objective of the factories by implementing Total ProductiveMaintenance (TPM).
The strategy for the year 2020-21 would be to further increase the capacity utilizationat Jaipur facility through enhanced focus on domestic/institutional and export businessesand also to work on developing and launching innovative and differentiated products toimprove volumes/margins.
Due to the CoVID-19 outbreak the situation remains volatile with the trajectory of thevirus undetermined evolving hot spot geographies the success of containment measuresuncertain the severity and duration of resulting economic crisis and the extent ofstructural damage unknown. There are many unknowns today and hence the near-term outlookis extremely uncertain. Our immediate focus remains on safety of our people protectingsupply lines serving demand and optimizing cost and cash.
Despite the near-term ambiguity the Company remains confident of the medium tolong-term growth prospects considering the various categories of products your Companydeals in. Although the current situation is much more uncertain than normal the Companyis confident about its ability to manage the immediate crisis and come out of itsuccessfully.
(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 developed necessary Manuals/Standard Operating Procedures (SOPs) foreffectively implementing the Internal Financial Control System with the help of anexternal consultant. Accordingly various Accounting and Reporting Policies have also beendeveloped and 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) |
| ||2019-20 ||2018-19 |
|Revenue from Operations (Net) ||64576.78 ||62788.36 |
|Other Income ||877.54 ||775.35 |
|Total Income ||65454.32 ||63563.71 |
|Cost of Materials Consumed ||26002.12 ||26259.06 |
|Employee Benefits Expense ||14394.10 ||13070.09 |
|Other Expenses ||21351.10 ||18503.86 |
|Profit before Finance Cost and ||3707.00 ||5730.70 |
|Depreciation || || |
|Finance Cost ||326.85 ||337.90 |
|Depreciation ||1437.67 ||1466.85 |
|Profit before Tax ||1942.48 ||3925.95 |
|Less: Tax expense || || |
|Current Tax ||585.00 ||1495.00 |
|Deferred Tax ||125.54 ||(6.42) |
|Profit after Tax ||1231.94 ||2437.37 |
ANALYSIS OF PERFORMANCE:
Revenue from operations grew by around 3% for the year as a whole. While mostbusinesses were reporting decent performance till February 2020 there has been seriousdisruption across businesses during the second half of March 2020 due to the outbreakCoVID-19 pandemic and the consequent lockdowns. This has affected the overall performanceof the Company for the Fourth Quarter and the Year as a whole. Further the reduction inprofitability was partly on account of the less than expected performance from therelaunch of EVA Deo despite higher investments towards brand promotion.
The increase in employee benefits expense was mainly due to
(i) regular annual increments/revision in packages (ii) addition of employees inVentura Division as part of expansion and (iii) wage settlement/one time ex-gratia paymentto the permanent workmen of Protective Devices Division (PDD).
The increase in Power and Fuel expenses was due to higher production at FoodsDivision's factories at Hosakote and Jaipur and also on account of increase in watercharges relating to PDD's Factory at Puducherry.
The increase in Repairs and Maintenance was mainly on account of the maintenanceand upkeep activities carried out at the Central Warehouse at Chennai and also at thefactories of Foods and Heart Valve Divisions.
The increase in Advertisement and Sales Promotion was mainly on account of thehigher advertising and promotional activities undertaken relating to WGW (Rs.572.09lakhs) EVA (Rs.132.95 lakhs) and Skore Brand of Condoms/Pleasure products range(Rs.546.22 lakhs).
The increase in Travelling & Conveyance was due to revision in the dailyallowances payable to the field staff and expansion of field force at Ventura Division.
Loss on impairment mainly relates to the impaired Multitrack Packing Machine(Rs.41.19 lakhs) at PDD.
Bad Debts Written Off during the year under review amounted to Rs.51.34 lakhscomprising-
|Pharma Division (including AWD) - ||Rs.37.45 lakhs; |
|Consumer Products Division - ||Rs.3.28 lakhs; |
|Heart Valve Division - ||Rs.0.51 lakhs; |
|Ortho Division - ||Rs.1.94 lakhs; and |
|Foods Division - ||Rs.8.16 lakhs. |
The R&D expenses mainly include the expenses incurred for the development ofthe Fixed Bearing Knee.
Profit on sale of assets was mainly relating to the sale of old Generator(Rs.13.98 lakhs) at PDD and CNC Lathe Machine (Rs.9.80 lakhs) at Ortho Division.
The increase in Capital Work-in-progress represents the cost of the cookerextruder (HTE 210) installed at Foods Factory at Jaipur. The same will be capitalizedimmediately upon commissioning.
The increase in Inventories was mainly on account of lower sales in the month ofMarch 2020 due to the outbreak of CoVID-19 pandemic and the consequent lockdown.
Deferred Revenue Income represents the custom duty exemption availed inconnection with the import of cooker extruder for Foods Division's Factory at Jaipur andthe corresponding amount was added to the asset in line with Ind AS 20.
The additions to Fixed Assets mainly include the following:
|(i) Construction of Building at- || |
|Foods Division - Hosakote ||Rs. 23.08 lakhs |
|Ortho Division ||Rs. 22.90 lakhs |
|(ii) Purchase of Plant and Machinery relating to- || |
|Protective Devices Division ||Rs. 96.51 lakhs |
|Pharma Division ||Rs. 77.03 lakhs |
|Ortho Division ||Rs. 47.86 lakhs |
|Foods Division Hosakote ||Rs. 3.95 lakhs |
|Foods Division R&D ||Rs. 3.12 lakhs |
|(iii) Purchase of Computers relating to- || |
|Pharma and Consumer Products Divisions ||Rs. 17.52 lakhs |
|Protective Devices Division ||Rs. 12.95 lakhs |
|Foods Division Hosakote ||Rs. 2.41 lakhs |
|Ortho Division ||Rs. 1.83 lakhs |
|Foods Division Jaipur ||Rs. 0.49 lakhs |
|(iv) Purchase of Patterns & Dies relating to- || |
|Consumer Products Division ||Rs. 63.50 lakhs |
|Ortho Division ||Rs. 9.95 lakhs |
|(v) Motor Car - Lease relating to- || |
|Pharma and Consumer Products Divisions ||Rs. 122.43 lakhs |
|Foods Division Hosakote ||Rs. 15.28 lakhs |
|Ortho Division ||Rs. 10.00 lakhs |
(H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT:
During the year your Company as part of HR Strategy had focused on employeeengagement and productivity leadership development and automation of processes. YourCompany has continued to drive the Balanced Score Card (BSC) initiatives and TotalProductive Maintenance (TPM) at manufacturing units in order to enhance workforceproductivity and corporate performance.
Your Company's Human Resources Department has successfully automated the Recruitmentprocesses and the Performance Management System. In addition to the regular trainingprovided to new recruits the Company had provided intense training to frontline managersand select front-line staff to improve productivity. The Company has also embarked on aleadership development journey with the launch of Leadership Advancement Program (LEAP2)in order to build the succession pipeline over the next 2-5 years.
The online Performance Management System built on the philosophy of the Balanced ScoreCard (BSC) has been rolled out to align people to strategy and Company's performance. Allstaff and managers at our major offices and factories have been trained on the system. Theonline Human Resource Management System (HRMS) enables automation of the recruitmentprocess enabling faster processing of hiring and joining formalities.
To improve the engagement level of employees and to strengthen the internal employerbranding your Company has initiated several employee initiatives such as TTK Quiz Whize-Voice i-Appreciate and team and sports events. Your Company has also rolled out acomprehensive Rewards & Recognition program including Star Awards (annual salesachievement awards) the Xtra Mile Award (Employee of the Month) Trail Blazer Awards(bi-annual awards) and the Corporate Excellence Awards (Annual Awards).
As on 31st March 2020 the employee strength was 2515 (Previous Year -2312).
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.
(I) INFORMATION TECHNOLOGY:
Your Company successfully migrated Protective Devices Division operations to OracleE-Business Suite in the beginning of the financial year 2019-20. During the year underreview the Oracle EBS Control Review was carried out by an External Consulting Firm andtheir suggestions are under implementation. Your Company has also finalized theInformation Security Policy and the same is being implemented in a phased manner.
(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.
(K) KEY FINANCIAL RATIOS:
|Particulars ||2019-20 ||2018-19 ||Change % || |
|Debtors Turnover Ratio ||8.21 ||8.56 ||(4.09) ||A |
|Inventory Turnover Ratio ||4.10 ||4.85 ||(15.46) ||A |
|Interest Coverage Ratio ||6.94 ||12.62 ||(45.01) ||A |
|Current Ratio ||1.74 ||1.73 ||0.58 ||F |
|Debt Equity Ratio (%) ||12.63 ||12.18 ||3.69 ||A |
|Operating Profit Margin (%) ||4.38 ||7.89 ||(44.49) ||A |
|Net Profit Margin (%) ||1.91 ||3.88 ||(50.77) ||A |
|Return on Net Worth (%) ||5.22 ||10.40 ||(49.81) ||A |
F - Favourable; A - Adverse
The lower Inventory Turnover Ratio was mainly on account of the higher inventoryholding as on 31st March 2020 because of lower sales in March 2020 due tooutbreak of CoVID-19 pandemic.
The other ratios viz. Interest Coverage Ratio Operating Profit Margin NetProfit Margin and Return on Net Worth were impacted due to lower profit as compared to theprevious year.
DISCLOSURES UNDER THE COMPANIES ACT 2013 AND THE RULES MADE THEREUNDER:
(a) Extract of Annual Return:
Extract of Annual Return (Form MGT-9) is enclosed as Annexure-1.
(b) Number of Meetings of the Board:
The Board of Directors met 4 (four) times during the year 2019-20. 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 T Raghunathan asChairman Mr K Shankaran Dr (Mrs) Vandana R Walvekar and Mr Girish Rao as Members. Mr SKalyanaraman is the Secretary to the Committee.
The Corporate Social Responsibility (CSR) Policy enumerating the CSR activities to beundertaken by your Company in accordance with Schedule VII to the Companies Act 2013 wasrecommended to the Board and the Board adopted the same. The said policy was also madeavailable on the Company's website www.ttkhealthcare.com.
The Annual Report under CSR Activities is annexed to this Report as Annexure-2.
The details relating to the meeting(s) 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 K Shankaran Mr SBalasubramanian and Mr V Ranganathan as Members. Mr S Kalyanaraman is the Secretary to 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 contract entered into with M/sPackwell Packaging Products Limited. The relevant details are provided below:
|Nature of the Contract ||Agreement for availing packing services. |
|Parties to the Contract ||Contract between the Company and M/s Packwell Packaging Products Limited. |
|Duration of the Contract ||Renewal for a further period of five years from 1st January 2020 to 31st December 2024. |
|Particulars of the Contract or Arrangement ||For availing packing services. |
|Material Terms of the Contract or Arrangement including the value if any. ||Not exceeding Rs.100 lakhs per annum plus applicable taxes. |
|Manner of determining the pricing and other commercial terms both included as part of Contract and not considered as part of the Contract. ||The rates are worked out and agreed mutually considering the relevant factors and are comparable to the prevailing market rates. |
|Interested Directors ||Name of the Director ||Interested as |
| ||Mr T T Jagannathan Chairman ||Members |
| ||Mr T T Raghunathan Executive Vice Chairman ||holding more than 2% |
The Register of Contracts containing the details of the transactions in whichDirectors/key managerial personnel are interested is placed before the AuditCommittee/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 containing the details of Related Party Transactions is annexed as Annexure-3to 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 this Annual 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 and management framework appropriate to the sizeof your Company and the environment in which it 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 identified andthe status of the mitigation plans.
The detailed Report of the RMG incorporating the update on the various risks identifiedand the mitigation plans in respect thereof are periodically placed before the AuditCommittee and the Board for their discussions and record.
In order to further sharpen/strengthen the Risk Identification and Management frameworkwhich was originally developed and implemented in 2015 and also to identity new risks andthe mitigation plans the services of M/s Deloitte were retained for this purpose. Basedon their Report the new Risk Register has been developed along with the preliminarymitigation plans.
(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.
Certificate of Non-disqualifications of Directors from the Practising Company Secretaryis furnished under Report on Corporate Governance. (Page No.53)
(i) Appointment/Reappointment of Directors:
Mr K Shankaran liable to retire by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment. The Board recommends hisreappointment.
The Board seeks the approval of the members for the-
Reappointment of Mr S Balasubramanian as Independent Director for a furtherterm of 5 years with effect from 27th March 2020; and
Reappointment of Mr N Ramesh Rajan as Independent Director for a further termof 5 years with effect from 3rd February 2021.
(ii) Retirement of Directors:
Mr B N Bhagwat Independent Director of the Company retired with effect from 22ndAugust 2019.
(iii) 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 Rules made thereunder and alsoRegulation 16(1 )(b) of the SEBI (LODR) Regulations 2015. Further they have alsoconfirmed that they are not aware of any circumstance or situation which exist or may bereasonably anticipated that could impair or impact their ability to discharge the dutieswith an objective independent judgement and without any external influence.
The terms and conditions of appointment of the Independent Directors are posted on theCompany's website www.ttkhealthcare.com.
(iv) 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 Wholetime Director & Secretary [Company Secretary]; and
Mr B V K Durga Prasad President - Finance [Chief Financial Officer (CFO)].
(v) Performance Evaluation of the Board its Committees Chairperson Non-IndependentDirectors and Independent Directors:
In compliance with the provisions of the Companies Act 2013 and the SEBI (LODR)Regulations 2015 the performance evaluation of the Board as a whole its CommitteesChairperson and Non-Independent Directors were carried out during the year under review bythe Independent Directors and the evaluation of the Independent Directors were carried outby the entire Board of Directors excluding the Director being evaluated during the yearunder review. More details on the same are given in the Report on Corporate Governance.
(vi) 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 websitewww.ttkhealthcare.com.
(i) Statutory Auditor's and their Report:
The Shareholders at the 59th Annual General Meeting held on 4thAugust 2017 appointed M/s PKF Sridhar & Santhanam LLP as Statutory Auditors of theCompany for a term of five years to hold office from the conclusion of the 59thAnnual General Meeting till the conclusion of the 64th Annual General Meetingsubject to ratification at every Annual General Meeting in accordance with the provisionsof Section 139 and other applicable provisions if any of the Companies Act 2013 and theRules made thereunder.
Pursuant to notification of the Companies (Amendment) Act 2017 on 7th May2018 the first proviso to Section 139 relating to the ratification of appointment ofStatutory Auditors by the members at every General Meeting was omitted. Consequently theratification of appointment of M/s PKF Sridhar & Santhanam LLP as Statutory Auditorsis not required.
Auditor's Report for the year ended 31st March 2020:
The Auditor's Report to the Shareholders for the year under review does not contain anyqualifications.
(ii) Cost Auditors and Cost Audit Report:
Appointment for the year 2020-21:
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 2020-21:
(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 orTrading of Medical 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 2020-21 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 of the said appointment would be given to the Central Government vide FormCRA-2.
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 provisions of Section 148 of the Companies Act 2013 and the Rules madethereunder the ratification of the members is sought by means of an Ordinary Resolutionfor the remuneration of Rs.5 lakhs plus applicable taxes and levies and reimbursement oftravel and out-of-pocket expenses incurred in connection with the audit payable to M/sGeeyes & Co. Cost Auditors under Item No.6 of the Notice convening the AnnualGeneral Meeting.
The Cost Audit Report for the year ended 31st March 2020 would be filed onor before the due date (i.e.) 27th September 2020 or within 30 days from thedate of submission of the said Report to the Board whichever is earlier.
Cost Audit Report for the year 2018-19:
The Cost Audit Report for the financial year ended 31st March 2019 wasfiled in Form CRA-4 vide SRN H85796597 dated 29th August 2019 with the CentralGovernment.
(iii) Secretarial Auditor and Secretarial Audit Report:
The Board had appointed M/s A K Jain & Associates Practising Company Secretariesto carry out Secretarial Audit under the provisions of Section 204 of the Companies Act2013 for the financial year 2019-20. The Report of the Secretarial Auditor in Form MR-3 isannexed to this Report as Annexure-4. The Report does not contain any qualification orreservation or adverse remarks.
(j) Investor Education and Protection Fund (IEPF):
Transfer of Unclaimed Dividends for the year ended 31st March 2012to IEPF:
Your Company has transferred a sum of Rs.8.35 lakhs during the financial year 2019-20to 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 2012 which were lyingunclaimed with your Company for a period of seven years from the due date of payment.
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 as amended your Company transferred 13937Equity Shares of Rs.10/- each fully paid-up in respect of which the dividends relating tothe year 2011-12 remained unclaimed/unpaid for a period of seven consecutive years ormore to the Demat Account of the IEPF Authority held with CDSL on 16thOctober 2019.
Year wise amount of Unpaid/Unclaimed Dividends lying in the Unpaid Account as on31st March 2020 and the due dates of transfer:
|Financial Year ended ||Dividend Declared on ||Due for Transfer on ||Unpaid/Unclaimed Amount as on 31.03.2020 (in Rs.) |
|31.03.2013 ||25.07.2013 ||30.08.2020 ||821888.00 |
|31.03.2014 ||22.08.2014 ||26.09.2021 ||774728.00 |
|31.03.2015 ||07.08.2015 ||11.09.2022 ||846425.50 |
|31.03.2016 ||05.08.2016 ||08.09.2023 ||993050.00 |
|31.03.2017 ||04.08.2017 ||04.09.2024 ||1018645.00 |
|31.03.2018 ||09.08.2018 ||14.09.2025 ||696233.07 |
|31.03.2019 ||09.08.2019 ||12.09.2026 ||615325.52 |
Details of the Nodal Officer
|Name of the Nodal Officer ||: Mr S Kalyanaraman |
|Designation ||: Wholetime Director & Secretary |
|Address ||: TTK Healthcare Limited |
| ||No.6 Cathedral Road |
| ||Chennai 600 086 |
|Telephone ||: 044-28116106/24671022 |
|E-mail ID ||: email@example.com |
(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) Subsidiary Company:
Your Company does not have any Subsidiary.
As on 31st March 2020 your Company was not holding any amount under FixedDeposit Account.
(p) Loans Guarantees and Investments under Section 186 of the Companies Act2013:
During the year under review your Company had not given any loan provided anyguarantee and made any investment under Section 186 of the Companies Act 2013.
(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) Compliance Certificate:
Certificate from the Practising Company Secretary regarding compliance of conditions ofCorporate Governance is furnished as Annexure - 7 to this Report.
(t) Secretarial Standards:
Your Company complies with all applicable mandatory Secretarial Standards issued by theInstitute of Company Secretaries of India.
Your Company has banking arrangements with Union Bank of India (formerly CorporationBank) Bank of Baroda and HDFC Bank Limited and availed various working capital facilitiesamounting to Rs.28.13 crores as on 31st March 2020.
(v) 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 paid the Listing Fees for the financial year 2020-21.
(w) 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 requiredto set up an Internal Complaints Committee to look into complaints relating to sexualharassment at workplace of any woman employee.
Your Company has adopted a policy for prevention of Sexual Harassment of Women atWorkplace and constituted an Internal Complaints Committee (ICC) with an NGO as one of itsMembers. During the year 2019-20 there were no complaints. Further adequate awarenessprogrammes were also conducted for the employees of your Company.
(x) 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 March2020 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.
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:
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.
| ||For and on behalf of the Board |
|Place: Chennai ||TTJAGANNATHAN |
|Date : July 22 2020 ||CHAIRMAN |
|Registered Office: || |
|No.6 Cathedral Road || |
|Chennai 600 086 || |