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TTK Healthcare Ltd. Directors Report
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You can view full text of the latest Director's Report for the company.
Market Cap. (Rs.) 2086.27 Cr. P/BV 2.20 Book Value (Rs.) 671.58
52 Week High/Low (Rs.) 1699/1012 FV/ML 10/1 P/E(X) 3.26
Bookclosure 25/07/2023 EPS (Rs.) 452.72 Div Yield (%) 0.68
Year End :2022-03 

Your Directors have pleasure in presenting the 64th Annual Report together with the Audited Financial Statements for the financial year ended 31st March, 2022.

Sale / Transfer of Human Pharma Division:

In terms of the consent from the Members of the Company by means of a Special Resolution passed through Postal Ballot Process on 23rd April, 2022, the Human Pharma Division (Undertaking) of your Company stands transferred, as a going concern, on a slump sale basis, for a consideration of Rs.805 crores (subject to adjustment for working capital and other items that are customary in such transactions) to M/s BSV Pharma Private Limited (BSV), with effect from 9th May, 2022.

Consequently, in line with the Accounting Standard Ind AS 105, the results of your Company for the year under review were separately shown as "Profit / (Loss) from Continuing Operations" and "Profit / (Loss) from Human Pharma Operations held for sale in the subsequent year".

Financial Results:

2021-22

(Rs. in lakhs)

2020-21

(a) Continuing Operations

Profit before Depreciation & Tax Less: Depreciation Add: Exceptional Item - Profit on sale of land / Interest on Tax Refund Profit before Tax Less: Tax expense:

Current Tax

Tax relating to earlier years Deferred Tax

743.67

(110.96)

3,493.04

1,258.36

249.05

2,754.33

1,301.96

809.79

2,483.73

632.71

2,262.16

747.91

(1,964.81)

(199.11) (1,416.01)

Profit after tax from Continuing

Operations

1,851.02

3,678.17

(b) Human Pharma Operations held

for sale in the subsequent year

Profit before Tax

3,294.14

1,443.03

Less: Tax Expense

986.33

477.09

Profit after tax from Human

Pharma Operations held for sale

2,307.81

965.94

in the subsequent year

Profit after tax [(a) (b)]

4,158.83

4,644.11

Surplus Account:

Balance as per last Balance Sheet

16,771.09

12,645.18

Add: Profit for the year

4,158.83

4,644.11

Other Comprehensive Income for

the year (Net of Tax)

12.31

4,171.14

(94.29) 4,549.82

Total

20,942.23

17,195.00

Less: Dividend Paid

847.82

423.91

Net Surplus

20,094.41

16,771.09

Review of Performance:

During the year under review, the Revenue from Continuing Operations amounted to Rs.599.24 crores as against the previous year’s figure of Rs.476.06 crores, a growth of around 26%.

Pre-Tax Profit for the year stood at Rs.24.84 crores as against the previous year’s figure of Rs.22.62 crores.

(During the year under review, the Revenue from Human Pharma Operations held for sale in the subsequent year amounted to Rs.198.04 crores as against the previous year’s figure of Rs.160.47 crores, a growth of around 23%).

A detailed review is presented under the Section “Segmentwise Performance".

Dividend:

Your Directors are pleased to recommend a dividend of Rs.10/- (100%) per Equity Share of Rs.10/- each for the year ended 31st March, 2022. [Previous Year - Rs.6.00 (60%) per Equity Share of Rs.10/- each].

The dividend pay-out is in accordance with the Company’s Dividend Distribution Policy.

Share Capital:

The Paid-up Equity Share Capital as on 31st March, 2022 was Rs.1,413.03 lakhs. Your Company has not issued any shares with differential voting rights nor granted stock options nor sweat equity.

MANAGEMENT DISCUSSION AND ANALYSIS:

(A) Industry STRUCTURE AND Developments:

Though the performance during First Quarter was impacted due to the second wave of CoVID-19 pandemic, all the Businesses / Divisions have reported a smart recovery in the subsequent Quarters, thus closing the year with a healthy growth.

The Indian Pharmaceutical Market (IPM) currently valued at Rs.1,85,498 crores [Source: IQVIA MAT March 2022] grew by around 18%.

The growth was driven by volumes (9%), price revisions (5%) and new introductions (4%). Market growth is primarily driven by Respiratory (44%), Parenterals (39.8%), Anti-Infectives (35%) and Pain / Analgesics (21.6%).

(B) OPPORTUNITIES AND THREATS Opportunities:

• Your Company has the unique advantage of an exclusive network for distribution of FMCG / OTC products. This can be leveraged for launch of new products so as to ensure improved profitability and value creation through brand building.

• In view of the increasing spend by Pet parents on Pet / Companion Animals over the years, this segment of the Animal Welfare Division (AWD) offers good potential for growth.

• On Medical Devices front, the market continues to be dominated by imported medical devices / implants. Since your Company manufactures world class products and these are priced competitively, this segment provides opportunity for growth.

The “Make in India" and the “Atmanirbhar Bharat Abhiyaan" (Self-reliant India) initiatives by the Government of India would further enhance the growth prospects for this Segment and

provide further fillip to the indigenous manufacture of medical devices. These products also have export potential.

• The Central Government’s Medical Insurance Scheme -Ayushman Bharat being implemented to cover poor families is also likely to increase the number of treatment 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 your Company has potential for growth including branding / retail and export opportunities.

Threats:

• Considering the commodity nature of the current Foods Business, there is pressure on price realizations. Nevertheless, this is mitigated through enhanced focus on export markets and also launch of innovative and differentiated products. Further, efforts are also being made to convert part of the B2B business into branded / retail business.

(C) SEGMENTWISE PERFORMANCE:

Your Company is engaged in Animal Welfare Products, Consumer Products, Medical Devices, Protective Devices and Foods Businesses.

A look at the performance of individual Business Segments:

Human Pharma Division [Ethical Products Division (EPD) & Ventura Division] (since sold off)

The Human Pharma Division of your Company was dealing in Pharmaceutical formulations (Herbal and Allopathic) in various therapeutic segments and supplements, for human use.

During the year 2021-22, EPD and Ventura Divisions have registered a revenue from operations of Rs.198.04 crores, with a growth of around 23%.

Though there was some impact on the performance during First Quarter due to the second wave of CoVID-19 pandemic, the business improved gradually in the subsequent Quarters, thus resulting in a robust performance for the year as a whole.

During the year under review, two new products viz., Chirocyst DS and PCO 360 were launched under Ventura Division and the response was encouraging.

Animal Welfare Division (AWD)

The Animal Welfare Division of your Company deals in Pharmaceutical formulations in various therapeutic segments and feed supplements, for veterinary use.

During the year under review, Animal Welfare Division registered a revenue from operations of Rs.99.11 crores, with a growth of around 27%.

With top ten brands contributing significantly to the total sales, all the Sub-divisions under AWD (Bovianim, Gallus, Companim & Aquanim) have performed well.

OTO (Orcal-P - Tefroli - Ossomin) Group, the flagship brands

contributed in excess of 30% to the Division’s sales, with a double digit growth.

The strategy for the year 2022-23 would be to sustain the current momentum and to achieve a healthy growth from all Sub-divisions along with Institution and Export businesses.

Consumer Products Business:

The Consumer Products Division reported a revenue from operations of Rs.217.44 crores, with a growth of around 24%.

Woodward’s Gripewater (WGW)

During the year under review, Woodward’s Gripe Water (WGW) achieved an all-time high sales volume in excess of 4,50,000 cases, with a healthy growth.

The scaling up of key consumer-centric marketing activities such as Media, Digital Engagement and consumer activation enabled the brand to deliver a sustained volume month-on-month.

The strategy for the year 2022-23 would be (i) to sustain Southern markets by driving consumption increase; and (ii) to grow the NonSouth markets through appropriate promotional investments.

EVA

Despite the fact that the First Quarter was quite challenging for EVA as a brand due to CoVID-19 second wave, the brand demonstrated a very good resilience in the subsequent Quarters and reported a healthy growth over the previous year.

The new 360 Degree “Eva Special Happens” campaign with celebrity endorsement helped in increasing brand awareness and turnover during the said period. The brand was on constant communication across channels from Second Quarter onwards. The launch of limited edition in Fourth Quarter helped to create excitement and buzz amongst the consumers. Talc & Lip ranges too performed reasonably well.

The strategy for the year 2022-23 would be- (i) to further strengthen the brand communication “Eva Special Happens” and gain market share; (ii) to increase trials for the brand through relevant and effective marketing activations; (iii) to build stronghold in Modern Trade and e-Com channels; and (iv) to launch strategic brand extensions under fragrances and personal enhancement categories.

Skore

During the year under review, Skore brand has regained its momentum and managed to reach its pre-CoVID numbers and the overall growth was satisfactory.

Skore also saw good growth in its non-condom segment, aided by significant increase in India’s digital offtake, especially post pandemic.

On brand front, focus remained on innovation and disruption with the launch of a unique offering namely ‘Skore Nothing’, India’s thinnest flavoured condoms and carried out a Brand Campaign, which helped in generating good buzz and momentum for the brand.

The brand also focused on strengthening its e-Commerce sales with the help of a couple of exclusive e-Com launches as well as focus on Pleasure products. In 2021-22, skoreindia.com the Direct-to-Consumer (D2C) initiative too, started contributing well to the overall brand sales.

The strategy for 2022-23 would be (i) to drive distribution expansion; (ii) to further increase in the Skore retail reach in Tier-1 towns; (iii) to improve e-commerce sales through D2C channels and digital marketing initiatives; and (iv) to capture and own pleasure space in India through digital medium for the pleasure product range.

Good Home

During the year under review, Good Home as a brand reported a healthy growth.

Aroma (Perfumed Air Freshener) has been a true standout during the year registering a significant growth. Despite intense competition, Unblox (Drain Cleaner) too delivered a healthy growth.

The launch of Sponge Wipes and Ultra-scrubbers widened the portfolio. Relaunch of Odour Remover in new packaging and positioning was another highlight for 2021-22.

The strategy for 2022-23 would be (i) to transform Good Home into a stronger brand by introducing new packaging and positioning; (ii) to build further volumes for Odour Remover, Aroma Air Fresheners, etc., (iii) to launch new products in Dish wash / Home Cleaning Agent Segments; and (iv) to focus on e-Com / Modern Trade to exploit the untapped potential.

Medical Devices Business:

Heart Valve Division

During the year under review, Heart Valve Division recorded a revenue from operations of Rs.17.18 crores, with a growth of around 30%.

There has been good improvement in the overall performance as compared to the previous year though the Division is yet to scale the pre-CoVID volumes.

The performance of Imported Cardiamed Bileaflet Valves was quite satisfactory.

Your Company signed an agreement for the manufacture and supply of cardiology products like PTCA Catheters and Coronary Stents. The product registration with the regulatory authorities is in progress.

The Single Centric Clinical Trials relating to new model TTK Chitra TC2 Titanium Valve is progressing at Sree Chitra Tirunal Institute of Medical Science and Technology (SCTIMST) with ten valves implanted as of now.

The focus for the year 2022-23 would be (i) to grow the volumes of TTK Chitra Valves; (ii) to gain further volumes through BiLeaflet Valves; (iii) to venture into the cardiology market; and (iv) to complete the Single Centric Clinical Trial of TC2 Titanium Valve.

Ortho Division

The Division recorded a turnover of Rs.33.73 crores, with a growth of around 150% over the previous year. Both the Knee and the Hip segments reported a healthy growth.

Though there was some challenge during First Quarter due to second wave of CoVID-19 pandemic, there has been significant improvement in the performance in the subsequent Quarters with the opening up of the pent-up demand.

The launch of Hip Replacement System has been expanded to more geographies and the response is encouraging.

Productivity improvements in manufacturing helped to increase production to a very significant level as compared to the previous year.

The strategy for the year 2022-23 would be (i) to expand the distribution and team footprint further in States mapped to potential; (ii) to build on relationships to improve market share; (iii) to strengthen sales performance in Revision and Hinge surgeries; (iv) to improve manufacturing productivity; and (v) to test launch the new Fixed Bearing Knee.

Protective Devices Business:

During the year under review, the Protective Devices Division delivered an impressive performance with a revenue from operations of Rs.133.26 crores (including Skore), a growth of around 41%.

Your Company has witnessed a good increase in productivity due to healthy order inflow, during the year.

In addition to supplying of Skore Brand of Condoms, your Company has also been supplying Condoms for a leading International Brand both for their India and Overseas requirements and has also won a contract for supply of Condoms to an International Agency till July 2023.

As in the past many years, your Company successfully went through the Quality Audits conducted by the British Standards Institution (BSI) for ISO Standards and CE Mark, South African Bureau of Standards for SABS Certification and SCS Global Services for Forest Stewardship Council Certification, as part of the continual assessment. Your Company is also being successfully audited for SEDEX and BSCI Standards by various agencies which are Social compliance requirements.

Your Company successfully retained all the certifications without any major or critical non-conformances and is also one of the prequalified supplier under WHO-UNFPA Pre-Qualification Scheme for Male Latex Condoms which is a requirement to supply products to reputed International Aid Agencies.

During the year under review, your Company had launched / supplied a few value added, innovative and differentiated products developed by your Company’s Research & Development Division. Some more products both in the condoms and lubes range are in the process of development and a few of those would be launched during 2022-23.

Your Company during the year has exported branded products to various countries and with new registrations being initiated by both Third Party Contractors and International Aid Agency and they would further enhance its export footprint to a few more countries during the year 2022-23.

The focus for the year 2022-23 would be (i) to develop and strengthen relationships with third party contract manufacturing customers for increasing the volumes; (ii) to work on cost optimization to be more competitive in the domestic and international bid businesses; and (iii) to increase the production output by strengthening the existing infrastructure and through automation, where feasible.

Foods Business:

During the year under review, Foods Division registered a revenue from operations of Rs.98.03 crores (Previous Year Rs.101.62 crores).

The turnover was marginally lower as compared to the previous year due to the impact of CoVID-19 and a steep increase in edible oil prices which reduced the demand for ready to fry products. Your Company being a pioneer in developing innovative products and concepts in this category has developed products for different applications like ready to salt roasting, hot air popping and mechanical popping considering future trend of healthy snacks and increasing oil prices. All these products have been developed at the R&D facility in Hosakote, Bengaluru.

Relentless use of TPM and other measures have yielded in lowering operational cost and improving efficiency.

Focus is being given for manufacturing 2D die-cut products at Jaipur plant in order to make the lines more versatile and improve capacity utilization.

The strategy for the year 2022-23 would be (i) to further increase the capacity utilization at Jaipur facility through enhanced focus on domestic / institutional and export businesses; and (ii) also to work on developing and launching innovative and differentiated products to improve volumes / margins.

(D) OUTLOOK:

In view of the above developments and initiatives, the outlook for your Company as a whole for 2022-23, appears promising.

(E) RISKS AND CONCERNS:

The analysis presented in the Industry Scenario and Opportunities and Threats Section of this Report throws light on the important risks and concerns faced by your Company. The strategy of your Company to de-risk against these factors is also outlined in the said Sections.

(F) internal control SYSTEMS and THEIR ADEQUACY:

Your Company developed necessary Manuals / Standard Operating Procedures (SOPs) for effectively implementing the Internal Financial Control System. Accordingly, various Accounting and Reporting Policies have also been developed and implemented. Internal Audits are regularly conducted through In-house Audit

Department and also through External Audit Firms. The Reports are periodically discussed internally. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control system in your Company, its compliance with operating systems, accounting procedures and policies at all locations of your Company. Significant audit observations and corrective actions thereon are presented to the Audit Committee.

Frauds:

During the year under review, no fraud was reported by the Internal Auditors, Statutory Auditors, Cost Auditors and Secretarial Auditors.

(G) FINANCIAL Performance:

Consequent to the sale / transfer of the Human Pharma Division (Undertaking) of the Company, effective 9th May, 2022, the results of your Company for the year under review were separately shown as "Profit / (Loss) from Continuing Operations" and "Profit / (Loss) from Human Pharma Operations held for sale in the subsequent year, in line with the Accounting Standard Ind AS 105".

(Rs. in lakhs)

2021-22

2020-21

(a) Continuing Operations

Revenue from Operations (Net)

59,923.99

47,605.86

Other Income

1,633.06

993.47

Total Income

61,557.05

48,599.33

Cost of Materials Consumed

28,149.47

20,932.49

Employee Benefits Expense

10,284.24

9,369.79

Other Expenses

19,306.55

15,371.63

Profit before Finance Cost,

Depreciation & Exceptional Items

3,816.79

2,925.42

Finance Cost

323.75

171.09

Depreciation

1,258.36

1,301.96

Exceptional Item - Profit on sale of land /

Interest on Tax Refund

249.05

809.79

Profit before Tax

2,483.73

2,262.16

Less: Tax Expense

Current Tax

743.67

747.91

Tax relating to earlier years

-

(1,964.81)

Deferred Tax

(110.96)

(199.11)

Profit after tax from Continuing

Operations

1,851.02

3,678.17

(b) Human Pharma Operations held for

sale in the subsequent year

Profit before Tax

3,294.14

1,443.03

Less: Tax Expense

986.33

477.09

Profit after tax from Human Pharma

Operations held for sale in the

subsequent year

2,307.81

965.94

Profit after Tax [(a) (b)]

4,158.83

4,644.11

ANALYSIS OF PERFORMANCE:

• The revenue from Continuing Operations amounted to Rs.599.24 crores, with a growth of around 26% and the revenue from Human Pharma Operations held for sale in the subsequent year amounted to Rs.198.04 crores, with a growth of around 23%.

Though there was some impact on the performance during First Quarter due to the second wave of CoVID-19 pandemic, all the businesses improved gradually in the subsequent Quarters, thus resulting in a healthy growth.

• The increase in Other Income was mainly due to (i) increase in interest on Fixed Deposits (ii) interest on Tax refund and (iii) sale of scrap relating to Protective Devices Division.

• The increase in Employee Benefits Expense was mainly due to (i) regular annual increments / revision in packages; and (ii) provision made for the increase in the packages of Unionized Employees covered under Long Term Wage Settlement of Pharma Division.

• The increase in Power and Fuel expenses was due to higher production at Foods Division’s factories at Hosakote and Jaipur and also at Condoms factory at Puducherry.

• The increase in Advertisement & Sales Promotion expenses was mainly on account of the higher advertising and promotional activities undertaken relating to WGW, EVA, Good Home and Skore Brand of Condoms / Pleasure products range.

• The increase in Travelling & Conveyance was due to resumption of regular travel post-CoVID-19 pandemic.

• As per the Provisioning Policy relating to Bad and Doubtful Debts approved by the Audit Committee and the Board, a sum of Rs.32.02 lakhs (inclusive of Human Pharma Division) was provided for Bad and Doubtful Debts for the year 2021-22.

• Bad Debts written off during the year under review, amounted to Rs.18.39 lakhs, comprising-

(Rs. in lakhs)

Pharma Division (including AWD) 9.82

Ortho Division 3.72

Foods Division 3.31

Consumer Products Division 1.54

• The increase in Legal and Consultancy charges was mainly on account of the CE re-certification fees relating to Ortho Division consequent to the change from Medical Devices Directives (MDD) to Medical Devices Regulations (MDR) and the retainership fees paid to various media / digital agencies with regard to the consumer brands and pleasure products.

• All the Other Expenses are in line with the increased level of operations.

(H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES /

INDUSTRIAL Relations Front:

Human Resources:

During the year 2021-22, your Company continued to emphasize on the safety and health of employees in view of the CoVID-19 pandemic, with a constant focus on the safety protocols, in line with the regulations announced by the various Government Agencies.

During the year, your Company completed the Leadership Advancement Program (LEAP) for the second level managers on advanced leadership and managerial skills and prepared

them to take up higher responsibilities. Also started a similar program for the third level Managers.

Through the i-learn online training platform, your Company has provided training to around 250 employees on development of soft skills.

Your Company has also continuously identified and rewarded the employees and teams that have demonstrated the pursuit of excellence in the areas of marketing, customer focus, innovation, business process transformation, etc., through R&R Programs such as Xtra Mile, Trail Blazer and Corporate Excellence Awards.

As on 31st March, 2022, the employee strength was 2,588 (Previous Year - 2,485).

• Industrial Relations:

The industrial relations during the year under review continued to be cordial.

Your Company entered into a 3-year Wage Settlement (effective 1st January, 2021) with the Workers’ Union of the Foods Division, Hosakote.

The Directors place on record their sincere appreciation for the services rendered by employees at all levels.

(I) information TECHNOLOGY:

Your Company has upgraded the Oracle ERP Application from 12.1.3 to 12.2.10 and Oracle Database from Oracle 12C to Oracle 19C.

During the year under review, your Company has automated Key HR Processes such as the Recruitment and Performance Management System. Your Company has initiated a project titled FAST FORWARD for Ortho Division to automate the end-to-end process of invoicing / inventory management.

(J) FUTURISTIC STATEMENTS:

This analysis may contain certain statements, which are futuristic in nature. Such statements represent the intentions of the Management and the efforts being put in by them to realize certain goals. The success in realizing these goals depends on various factors, both internal and external. Therefore, the investors are requested to make their own independent judgments by taking into account all relevant factors before taking any investment decision.

(K) KEY FINANCIAL RATIOS:

Particulars

2021-22

2020-21

Change

%

Remarks

Debtors Turnover Ratio

12.34

9.28

32.97

F

Mainly because of the significantly improved performance both in terms of Revenue from Operations and profitability and effective management of Receivables / Inventories, during the year under review.

Inventory Turnover Ratio

4.25

3.55

19.72

F

Interest Coverage Ratio

16.73

15.65

6.90

F

Current Ratio

2.06

1.99

3.52

F

Operating Profit Margin (%)

7.03

5.48

28.28

F

Debt Equity Ratio

(%)

7.22

6.90

4.64

A

Marginally higher due to higher availment of Working Capital Facilities from Banks.

Net Profit Margin

(%)

5.22

7.30

(28.49)

A

During the previous year, the Net Profit was higher mainly due to the reversal of tax provisions relating to earlier years. Consequently, the net profit for the year under review was lower, resulting in reduction in these ratios.

Return on Net Worth (%)

14.14

18.08

(21.79)

A

F - Favourable; A - Adverse

Above figures include Human Pharma Division held for sale in the subsequent year.

DISCLOSURES UNDER THE COMPANIES ACT, 2013 AND THE RULES MADE THEREUNDER:

(a) Annual Return:

Annual Return (Form MGT-7) for the year 2021-22 was made available on the Company’s website at the following link https:// ttkhealthcare.com.

(b) number of meetings of the Board:

The Board of Directors met 5 (Five) times during the year 202122. The details of the Board Meetings and the attendance of the Directors are provided in the Report on Corporate Governance.

(c) Corporate Social Responsibility (CSR) Committee:

The Corporate Social Responsibility (CSR) Committee consists of Mr T T Raghunathan as Chairman, Mr K Shankaran, Dr (Mrs) Vandana R Walvekar and Mr Girish Rao as Members. Mr S Kalyanaraman is the Secretary to the Committee.

The Corporate Social Responsibility (CSR) Policy enumerating the CSR activities to be undertaken by your Company, in accordance with Schedule VII to the Companies Act, 2013 was recommended to the Board and the Board adopted the same. The said policy was also made available on the Company’s website at the following link https://ttkhealthcare.com/investorlist/policies/.

The Annual Report under CSR Activities is annexed to this Report as Annexure-1.

The details relating to the meeting(s) convened, etc., are furnished in the Report on Corporate Governance.

(d) Composition of Audit Committee:

The Audit Committee consists of Mr Girish Rao as Chairman, Mr K Shankaran, Mr S Balasubramanian and Mr V Ranganathan as Members. Mr S Kalyanaraman is the Secretary to the Committee. 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 into by your Company with its Promoters, the Directors or the Key Managerial Personnel or their relatives, 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 Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are repetitive in nature. A statement giving details of the transactions entered into with the related parties, pursuant to the omnibus approval so granted, is placed before the Audit Committee and the Board of Directors for their approval / ratification on a quarterly basis.

The Register of Contracts containing the details of the transactions, in which Directors / 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 Committee, adopted a policy on Related Party Transactions, to regulate the transactions between your Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. The Policy as approved by the Board is uploaded on the Company’s website at the following link https://ttkhealthcare.com/ investorlist/policies/.

Form AOC-2 containing the details of Related Party Transactions is annexed as Annexure-2 to this Report.

(f) Corporate Governance:

Your Company has complied with the various requirements of the Corporate Governance Code 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) Business Responsibility Report:

In accordance with the provisions of SEBI (LODR) Regulations, 2015 and on the basis of market capitalization as on 31st March, 2022, the Business Responsibility Report forms part of this Annual Report. (Page No.35)

(h) Risk management:

Your Company has developed and implemented a Risk Management Policy which includes identification of elements of risk, if any, which in the opinion of the Board, may threaten the existence of the Company.

Your Company has a Risk Identification and Management Framework appropriate to the size of your Company and the environment in which it operates.

Your Company constituted a Risk Management Group (RMG) with due representations from each of the Businesses / Functions of your Company to effectively implement the Risk Management Framework and to address the key risks.

The meetings of the RMG were convened periodically, in order to have detailed interactions / discussions with the Members / Risk Owners on the various risks identified and the status of the mitigation plans.

The Risk Management Committee was constituted on 27th May, 2021, in accordance with the SEBI (LODR) (Second Amendment) Regulations, 2021 notified on 5th May, 2021 and during the year two meetings were held on 12th July, 2021 and 20th October, 2021. The Company retained the services of a well-known consulting firm and they made a detailed presentation to the Risk Management Committee on the methodology adopted for arriving at the various risks after due interactions with the Business / Functional Heads and the Risk Owners and also the updation of the Risk Register.

The Risk Management Committee was updated on the outcome of the RMG Meetings held during the year.

The Audit Committee and the Board were also periodically updated on the outcome of the Risk Management Committee Meetings and on the key risk areas and its mitigation plans. The Risk Management Framework was also periodically reviewed by the Audit Committee and the Board.

(i) Directors and Key Managerial Personnel:

There are no changes in the composition of the Board of Directors during the year.

None of the Directors are disqualified from being appointed or holding office as Directors, as stipulated under Section 164 of the Companies Act, 2013.

Certificate of Non-disqualifications of Directors from the Practicing Company Secretary is furnished under Report on Corporate Governance. (Page No.53)

(i) Reappointment of Directors:

Mr R K Tulshan, liable to retire by rotation at the ensuing

Annual General Meeting and being eligible, offers himself for

reappointment. The Board recommends his reappointment.

(ii) Statement on Declaration by the Independent Directors of the

Company:

All the Independent Directors of your Company have given -

• Declarations under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and the Rules made thereunder and also Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015.

• Confirmation of compliance with the Code for Independent Directors prescribed under Schedule IV to the Act and the Company's Code of Conduct for Directors and Senior Management Personnel.

•y Further, they have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge the duties with an objective independent judgement and without any external influence.

• The terms and conditions of appointment of the Independent Directors are posted on the Company's website at the following link https://ttkhealthcare.com/wp-content/ uploads/2019/09/ Terms-and-Conditions-of-Appointment-of-Independent-Directors-2.pdf.

(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, Wholetime Director & Secretary [Company Secretary]; and

• Mr B V K Durga Prasad, President - Finance [Chief Financial Officer (CFO)].

(iv) Performance Evaluation of the Board, its Committees, Chairperson, Non-Independent Directors 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 Committees, Chairperson and Non-Independent Directors were carried out during the year under review by the Independent Directors and the evaluation of the Independent Directors were carried out by the entire Board of Directors excluding the Director being evaluated during the year under review. More details on the same are given in the Report on Corporate Governance.

(v) Policy on Directors’ Appointment and Remuneration:

Your Company adopted a Policy relating to selection, appointment, remuneration and evaluation of Directors and Senior Management Personnel. The said Policy is posted on the Company’s website at the following link https://ttkhealthcare.com/investorlist/policies/.

(j) Auditors:

(i) Statutory Auditor’s and their Report:

Reappointment of Auditors:

M/s PKF Sridhar & Santhanam LLP was appointed as Statutory Auditors of the Company, for a term of 5 years, to hold office from the conclusion of the 59th Annual General Meeting till the conclusion of 64th Annual General Meeting. The Board of Directors at their meeting held on 23rd May, 2022, based on the recommendation of the Audit Committee, considered and recommended to the Members of the Company, the reappointment of M/s. PKF Sridhar & Santhanam LLP, Chartered Accountants (Firm Registration No.003990S/S200018), as Statutory Auditors, for a further term of five consecutive years, to hold office from the conclusion of the 64th Annual General Meeting till the conclusion of the 69th Annual General Meeting.

A brief profile of M/s. PKF Sridhar & Santhanam LLP is provided below:

? The Firm has been in existence from 1978, initially as a Partnership Firm and presently as a Limited Liability Partnership. They are one of the leading Professional Service Providers with Global experience.

? Has 23 partners as of now and has over 700 people - Directors with global exposures, Professionals

from multifarious disciplines and Staff with international assignments.

? Has its Head Office at Chennai and has offices in four cities, viz., Mumbai, New Delhi, Bengaluru and Hyderabad.

? Is a member of PKF - a Global Network of Independent Accounting Firms and an exclusive member of India.

? The Firm has a very impressive list of clients across multiple industry verticals.

? The firm has been peer reviewed in 2019. Also, as a part of the “Forum of Firms”, an association of international networks of accounting firms that perform audits of financial statements that are or may be used across national borders, the firm maintains international quality control standards.

? The Firm uses technology, data analytics and audit software in conducting audits.

Their appointment, if made, will be in accordance with the provisions of the Companies Act, 2013, the Chartered Accountants Act, 1949 and the Rules and Regulations made thereunder. They also satisfy the criteria provided under Section 141 of the Companies Act, 2013 and are not disqualified under the said Acts.

Accordingly, a Resolution seeking Members’ approval for the appointment of M/s PKF Sridhar & Santhanam LLP, as Statutory Auditors of the Company is included under Item No.4 of the Notice convening the Annual General Meeting.

Auditors’ Report for the year ended 31st March, 2022:

The Auditors’ Report to the Shareholders for the year under review does not contain any qualifications.

(ii) Cost Auditors and Cost Audit Report:

• Appointment for the year 2022-23:

Pursuant to Section 148 of the Companies Act, 2013 and the Rules made thereunder, the Cost Records of your Company shall be audited for the following product categories, for the financial year 2022-23:

? Under Regulated Sectors:

• Drugs and Pharmaceuticals.

? Under Non-Regulated Sectors:

• Male Contraceptives under Rubber and Allied Products;

• Heart Valves and Orthopaedic Implants under Production, Import and Supply or Trading of Medical Devices.

The Board of Directors, on the recommendation of the Audit Committee, appointed M/s Geeyes & Co., as Cost Auditors of your Company, for the financial year 2022-23 and fixed their remuneration at Rs.5 lakhs plus applicable taxes and levies and reimbursement of travel and out-of-pocket expenses incurred in connection with the audit. Necessary intimation of the said appointment would be given to the Central Government vide Form CRA-2.

M/s Geeyes & Co., have confirmed that their appointment is within the limits prescribed under Section 141 of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under the said Section.

The Audit Committee also received a Certificate from the Cost Auditors certifying their independence and arm’s length relationship with your Company.

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made thereunder, the ratification by the Members is sought by means of an Ordinary Resolution for the remuneration of Rs.5 lakhs plus applicable taxes and levies and reimbursement of travel and out-of-pocket expenses incurred in connection with the audit, payable to M/s Geeyes & Co., Cost Auditors, under Item No.7 of the Notice convening the Annual General Meeting.

The Cost Audit Report for the year ended 31st March, 2022 would be filed on or before the due date (i.e.) 27th September, 2022 or within 30 days from the date of submission of the said Report to the Board, whichever is earlier.

• Cost Audit Report for the year 2020-21:

The Cost Audit Report for the financial year ended 31st March, 2021 was filed in Form CRA-4 vide SRN T38122982 dated 27th August, 2021 with the Central Government.

(iii) Secretarial Auditor and Secretarial Audit Report:

The Board had appointed M/s A K Jain & Associates, Practising Company Secretaries, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2021-22. The Report of the Secretarial Auditor in Form MR-3 is annexed to this Report as Annexure-3. The Report does not contain any qualification or reservation or adverse remarks.

(k) Investor Education and Protection Fund (IEPF):

• Transfer of Unclaimed Dividends to IEPF, during the year under review:

Your Company has transferred a sum of Rs.7,64,164 during the financial year 2021-22 to the Investor Education and Protection Fund established by the Central Government, in compliance with Sections 123 - 125 of the Companies Act, 2013. The said amount represents the unclaimed dividends for the year ended 31st March, 2014, which were lying unclaimed 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 (Accounting, Audit, Transfer and Refund)

Rules, 2016, your Company transferred 12,672 Equity Shares of Rs.10/- each fully paid-up, in respect of which the dividends relating to the year 2013-14, remained unclaimed / unpaid for a period of seven consecutive years or more, to the Demat Account of the IEPF Authority held with CDSL on 29th September, 2021.

• Year wise amount of Unpaid / Unclaimed Dividends lying in the Unpaid Account as on 31st March, 2022 and the due dates of transfer:

Financial year ended

Dividend Declared on

Due date of Transfer

Unpaid /

Unclaimed Amount as on 31.03.2022 (in Rs.)

31.03.2015

07.08.2015

11.09.2022

8,23,428.50

31.03.2016

05.08.2016

08.09.2023

9,57,910.00

31.03.2017

04.08.2017

04.09.2024

9,82,250.00

31.03.2018

09.08.2018

14.09.2025

6,58,543.07

31.03.2019

09.08.2019

12.09.2026

5,77,165.52

31.03.2020

11.09.2020

14.10.2027

3,42,921.20

31.03.2021

20.08.2021

21.10.2028

6,02,126.40

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 / 28113804

E-mail ID : skr@ttkhealthcare.com

• Details of the Nodal Officer

(l) Disclosure under Schedule V(F) of the SEBI (LODR) Regulations, 2015:

Your Company does not have any Unclaimed Shares issued in physical form pursuant to Public Issue / Rights Issue.

(m) Conservation of Energy:

The prescribed particulars under Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, are furnished in Annexure-4 to this Report.

(n) Particulars of Employees:

The information required under Section 197 of the Companies Act, 2013 and the Rules made thereunder are annexed to this Report as Annexure-5.

(o) Subsidiary Company:

Your Company does not have any Subsidiary.

(p) Deposits:

As on 31st March, 2022, your Company was not holding any amount under Fixed Deposit Account.

(q) Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013:

During the year under review, your Company had not given any loan, provided any guarantee and made any investment under Section 186 of the Companies Act, 2013.

(r) material Changes and Commitments affecting the financial position:

The Human Pharma Division (Undertaking) of your Company stands transferred, as a going concern, on a slump sale basis, for a consideration of Rs.805 crores (subject to adjustment for working capital and other items that are customary in such transactions) to M/s BSV Pharma Private Limited, with effect from 9th May, 2022. In terms of the Business Transfer Agreement dated 21st March, 2022, the Company received 74% of the consideration, subject to adjustments for working capital, in cash and the balance 26% of the consideration in the form for Equity Shares in M/s BSV Pharma Private Limited.

(s) Significant & material orders passed by the Regulators/Courts:

There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of your Company and its future operations.

(t) Whistle Blower Policy:

In accordance with the provisions of Section 177(9) of the Companies Act, 2013 and the Rules made thereunder and also the SEBI (LODR) Regulations, 2015, your Company established a vigil mechanism termed as Whistle Blower Policy, for Directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct or Ethics Policy, which also provides for adequate safeguards against victimization of director(s) / employee(s) who avail of the mechanism and also provide for direct access to the Corporate Governance Officer / Chairman of the Audit Committee and the Executive Vice Chairman, in exceptional cases.

The Whistle Blower Policy was also hosted on the Company’s website at the following link https://ttkhealthcare.com/investorlist/ policies/.

During the year under review, your Company had not received any complaint.

(u) Compliance Certificate:

Certificate from the Practising Company Secretary regarding compliance of conditions of Corporate Governance is furnished as Annexure-6 to this Report.

(v) Secretarial Standards:

Your Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

(w) Finance:

Your Company has banking arrangements with Union Bank of India (formerly Corporation Bank), Bank of Baroda and HDFC Bank Limited and availed various working capital facilities amounting to Rs.20.38 crores as on 31st March, 2022. (Previous Year - Rs.17.60 crores).

(x) 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 2022-23.

(y) 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 Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 was notified on 9th December, 2013. Under the said Act, every Company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at workplace of any woman employee.

Your Company has adopted a policy for prevention of Sexual Harassment of Women at Workplace and constituted an Internal Complaints Committee (ICC) with an NGO as one of its Members. During the year 2021-22, there were no complaints. Further, adequate awareness programmes were also conducted for the employees of your Company.

(z) Disclosure relating to Loans and Advances to Firms / Companies in which Directors are interested by name and amount:

During the year under review, your Company did not provide any loans / advances, to any Firms / Companies in which Directors are interested.

Directors’ Responsibility Statement:

As required under Section 134(3)(c) of the Companies Act, 2013, your Directors hereby confirm that-

• In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

• Appropriate accounting policies had been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2022 and of the Profit of the Company for that period;

• Proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• The Annual Accounts had been prepared on a going concern basis;

• The Internal Financial Controls had been laid down, to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

• In order to ensure compliance with the provisions of all applicable laws, proper systems had been devised and that such systems were adequate and operating effectively.

General:

Your Directors state that no disclosure or reporting is required in respect of the following 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 or otherwise.

• Issue of shares (including Sweat Equity Shares and ESOs) to employees of the Company under any Scheme.

Acknowledgement:

Your Directors place on record their grateful thanks to the Bankers, Customers, Vendors and Members for their continued support and patronage.


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