(Including Management Discussion and Analysis Report)
Your Directors have pleasure in presenting the 61st Annual Report together with theAudited Financial Statements for the financial year ended 31st March 2019.
| || ||(Rs. in lakhs) |
| ||2018-19 ||2017-18 |
|Profit before Depreciation & Tax ||5392.80 ||4538.93 |
|Less : Depreciation ||1466.85 ||1524.22 |
|Profit before Tax ||3925.95 ||3014.71 |
|Less : Provision for Tax || || |
|Current Tax ||1495.00 ||1125.00 |
|Deferred Tax ||(6.42) ||73.18 |
| ||1488.58 ||1198.18 |
|Profit after Tax ||2437.37 ||1816.53 |
|Surplus Account: || || |
|Balance as per last Balance Sheet ||10968.08 ||8832.63 |
|Add: Surplus pursuant to Merger || ||746.18 |
|Total ||10968.08 ||9578.81 |
|Add: Profit for the year ||2437.37 ||1816.53 |
|Other Comprehensive Income for the year (Net of Tax) ||(94.06) ||40.09 |
| ||2343.31 ||1856.62 |
|Total ||13311.39 ||11435.43 |
|Less: Dividend Paid ||706.51 ||388.30 |
|Dividend Distribution Tax ||145.23 ||79.05 |
| ||851.74 ||467.35 |
|Net Surplus ||12459.65 ||10968.08 |
Review of Performance:
During the year under review the Revenue from Operations amounted to Rs.627.88 croresas against the previous year's figure of Rs.577.55 crores a growth of around 9%. Pre-TaxProfit for the year stood at Rs.39.26 crores as against the previous year's figure ofRs.30.15 crores.
A detailed review is presented under the Section "Segmentwise Performance".
Your Directors are pleased to recommend a dividend of Rs.5.00 (50%) per Equity Share ofRs.10/- each for the year ended 31st March 2019. [Previous Year - Rs.5.00 (50%) perEquity Share].
The Paid-up Equity Share Capital as on 31st March 2019 was Rs.1413.03 lakhs. YourCompany has not issued any shares with differential voting rights nor granted stockoptions nor sweat equity.
MANAGEMENT DISCUSSION AND ANALYSIS:
(A) INDUSTRY STRUCTURE AND DEVELOPMENTS:
During the year 2018-19 the GDP growth was estimated at 7.0% as against the previousyear's growth of 7.2%.
The Indian Pharmaceutical Market (IPM) currently valued at Rs.130506 crores [MATMarch 2019] grew by 9.6%.
The growth was driven by (i) growth in volume of existing brands (3.6%); (ii) newintroductions (2.4%); and (iii) price revisions (3.6%).
While Acute Segment remains dominant therapy in IPM the growth was driven by Chronicand Sub-Chronic segments. Therapeutic Segments like Anti-Diabetic (15%) Cardiac (13%)Derma (11%) and Neuro (10%) reported double digit growth . (Source: Pharmatrac).
(B) OPPORTUNITIES AND THREATS:
Economic growth rising incidence of chronic diseases increase inhealthcare access and expected growth in per capita income would drive further expansionof the healthcare 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 fordistribution of FMCG / OTC products. This can be leveraged for launch of new productsunder own brands so as to ensure improved profitability and value creation through brandbuilding.
On Medical Devices the market continues to be dominated by imported medicaldevices / implants. Since your Company manufactures world class products and these arepriced competitively this segment provides opportunity for growth. The "Make inIndia" initiative by the Government would further enhance the growth prospect forthis Segment. These products also have export potential.
The Government of India is extending its price control policy to covermedical devices in a phased manner. In fact ceiling prices for Ortho Implants werealready announced and implemented with effect from 15th August 2017. While this may beseen as a threat there is also an opportunity for domestic manufacturers like yourCompany as these products are likely to witness 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 ofyour Company has potential for growth including branding / retail and exportopportunities.
The Product Patent Regime has restricted the access for Indian PharmaCompanies to the latest molecules which were earlier available. However there may beopportunities to 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 newcombinations which is likely to impact the overall size / growth of the market.
ConsideringthecommoditynatureofthecurrentFoodsbusiness there is pressure onprice realizations. Nevertheless this is mitigated through enhanced focus on exportmarkets and also launch of innovative and differentiated products. Further efforts arealso 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.
Ethical Products Division (EPD) & Ventura Division
During the year 2018-19 EPD and Ventura Divisions registered a turnover of Rs.152.87crores with a growth of around 9%.
In Ventura Division the flagship brand Lactare has reported a healthy growth. The newintroductions both in EPD and Ventura also added a decent volume to the topline.
Your Company is planning to bifurcate the Ventura Division into- (i) Ventura Gynaec; and (ii) Ventura Fertility with an appropriate addition of manpower so asto ensure adequate market coverage / penetration. This initiative is aimed atfurther strengthening your Company's position in Gynaecology and Infertility Segments.
EPD would continue to provide special focus on its flagship brand Ossopan so as togain a decent share / position in the Calcium Segment.
The strategy for the year 2019-20 for Pharma Business is to constantly work onimproving the people productivity to focus on existing brands that have good potentialand also to launch a few new brands to grow the business.
Animal Welfare Division (AWD)
During the year under review the Animal Welfare Division reported an encouragingperformance with a sales turnover of Rs.63.59 crores and a growth of around 23% over theprevious year.
All the three Divisions under AWD viz. Bovianim (Livestock) Gallus (Poultry) andCompanim (Pet) reported healthy growth. More importantly the flagship OTO Brands(Orcal-P Tefroli and Ossomin) of the Division too reported an impressive performance.During the current year your Company is also planning to launch a few aqua products underits new Division "Aquanim" on a test marketing basis.
The focus for the year 2019-20 would be to sustain the current momentum and to achievea healthy growth in all sub-divisions of AWD.
Consumer Products Business:
The Consumer Products Division reported a turnover of Rs.189.99 crores with a marginalgrowth.
The performance of Woodward's Gripewater (WGW) has been satisfactory with a growth ofaround 3% driven by enhanced promotional efforts like display contests consumer offersetc. 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 2019-20 would beto focus on consumption increase and also generating trials for the product.
During the year under review EVA reversed the negative trend and moved into thepositive zone.
EVA Deo had recently undergone an extensive packaging design revamping and the Brandhas been re-launched across the country. Similarly the packaging of EVA Talc is alsobeing revamped and the new packs would be launched during the year.
Under Deo Segment new format of Mini Deo was launched to drive off-takes and to builddistribution. Under the EVA Lip Care category Lip Balm reported a robust growth driven bythe new packaging design. Extensive investments are being made in new commercials andadvertising / sales promotional initiatives for growing the EVA brand.
During the year under review Skore brand reported a decent growth in volumes. Despitefacing huge competitive pressure Skore has maintained its position as No.2 brand involume terms. The strategy for the year 2019-20 would be to increase its reach amongst itsconsumers through distribution expansion and increasing brand awareness. Focus oninnovation and disruption would continue with a few new product launches.
This year would also witness Skore's foray into Sexual Wellness Portfolio with thelaunch of a few pleasure products and accessories.
During the year under review Good Home as a brand reported a healthy growth.
The focus for the year 2019-20 would be to launch a few more differentiated productsunder the range and also to focus on distribution expansion to build the requisitefranchise for the brand.
Medical Devices Business:
Heart Valve Division
During the year under review the performance of Heart Valve Division has been quitesatisfactory with a turnover of Rs.22.42 crores and a healthy growth. The performance waspartly aided by the improved demand generated for Heart Valves under the recently launchedMedical Insurance Scheme by the Government of India.
Your Company is actively working on increasing its presence in the Bi-Leaflet Valve andthe Bio-Prosthetic Valve Segments both of which are showing good acceptance amongst theSurgeons. Further your Company is also evaluating various Interventional Cardiologyproducts like Angioplasty Catheters Angioplasty Balloons etc. to expand its currentportfolio. Your Company would commence the Single Centric Clinical Trials for the improvedHeart Valves after receipt of necessary regulatory clearances.
The focus for the year 2019-20 would be to grow the volumes of existing Heart Valve andto gain further volumes through Bi-Leaflet / Tissue Valves.
The Ortho Division had a high growth over previous year and recorded revenues ofRs.20.45 crores. The sales and distribution footprint has now been expanded to North Westand East India in line with the growth objectives.
The development and testing of Cementless Hip Implant has been completed and necessarymanufacturing licence has been recently obtained. The product would be launched during theyear 2019-20.
New line extensions to the Knee portfolio were developed to expand the scope ofbusiness and will be launched during the current financial year. Development of FixedBearing Knee is underway.
Your Company has successfully migrated from ISO 13485:2003 to ISO 13485:2016 version.
The strategy for 2019-20 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 Device Division has beensatisfactory with a turnover of Rs.103.13 crores. Your Company is pleased to report thatduring the year Quality Audits as part of the continual assessment were conducted by theBritish Standards Institution for ISO and CE Mark South African Bureau of Standards forSABS Certification and SCS Global Services for Forest Stewardship Council Certification.Your Company has successfully retained the certifications without any major or criticalnon-conformances. Your Company is also one of the pre-qualified Suppliers under UNFPA/WHOPre-qualification Scheme for Male Latex Condoms. Your Company's Research & DevelopmentDivision is in the process of developing various value added innovative anddifferentiated products a few of those will be launched during 2019-20. These will helpyour Company to develop its business further.
The focus for 2019-20 would be to grow the branded Condom business throughdifferentiated and innovative Condom variants and other allied products; to develop andstrengthen relationships with 3rd party contract manufacturing customers for increasingthe volumes; and to work on cost optimization to be more competitive in the domestic andinternational tender business.
During the year under review the Foods Division reported a turnover of Rs.74.70crores with a growth of around 11%. While there is improvement in volumes the marginswere under pressure due to increase in input costs of major raw materials like MaidaStarch etc. and also intense competition.
Your Company is therefore working on differentiation through innovative products andexport and institutional business initiatives apart from focusing on mid-sized fryers.
Your Company is test marketing retail packs in some of the towns in North and SouthIndia. Products launched are Mini Rice Pappad Potato based Pappad Corn Pappad andPanipuri Pappads. Based on the market response your Company would further expand intomore number of towns.
Your Company's R&D Centre at Hosakote has developed a few new products which havebeen launched in the market with good acceptance.
Your Company has recently obtained USFDA registration for its manufacturing facility atJaipur. The systematic implementation of TPM (Total Productive Maintenance) at both theJaipur and Hosakote plants has been helping in improving yield and productivity. Thestrategy for the year 2019-20 would be to increase the capacity utilization at Jaipurfacility through enhanced focus on domestic / institutional and export businesses and alsoto work on developing and launching innovative and differentiated products to improvevolumes / margins.
In view of the above developments and initiatives the outlook for your Company as awhole for 2019-20 appears promising.
(E) RISKS AND CONCERNS:
The analysis presented in the Industry Scenario and Opportunities and Threats Sectionof this Report throws light on the important risks and concerns faced by your Company. Thestrategy of your Company to de-risk against these factors is also outlined in the saidSections.
(F) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
Your Company 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. The Internal Audit Department monitorsand evaluates the efficacy and adequacy of internal control system in your Company itscompliance with operating systems accounting procedures and policies at all locations ofyour Company. Significant audit observations and corrective actions thereon are presentedto the Audit Committee.
(G) FINANCIAL PERFORMANCE:
| || ||(Rs. in lakhs) |
| ||2018-19 ||2017-18 |
|Revenue from Operations (Net) ||62788.36 ||57754.65 |
|Other Income ||775.35 ||757.47 |
|Total Income ||63563.71 ||58512.12 |
|Cost of Materials Consumed ||26259.06 ||24159.34 |
|Employee Benefits Expense ||13070.09 ||12011.55 |
|Other Expenses ||18503.86 ||17329.37 |
|Profit before Finance Cost and Depreciation ||5730.70 ||5011.86 |
|Finance Cost ||337.90 ||472.93 |
|Depreciation ||1466.85 ||1524.22 |
|Profit before Tax ||3925.95 ||3014.71 |
|Less: Provision for Tax || || |
|Current Tax ||1495.00 ||1125.00 |
|Deferred Tax ||(6.42) ||73.18 |
|Profit after Tax ||2437.37 ||1816.53 |
ANALYSIS OF PERFORMANCE:
The increase in employee benefits expense was mainly due to regular annualincrements / revision in packages and addition of employees.
Bad Debts Written Off during the year under review amounted to Rs.26.85lakhs: Pharma Division - Rs.17.21 lakhs; Consumer Products Division - Rs.3.29 lakhs; HeartValve Division - Rs.0.22 lakhs; Ortho Division - Rs.4.80 lakhs; and Foods Division -Rs.1.33 lakhs.
All the other expenses are in line with the increased level of operations.
The additions to Fixed Assets mainly include the following: (i) Constructionof Building at Ortho Division Rs. 20.09 lakhs (ii) Purchase of Plant and Machineryrelating to-
|Pharma Division ||Rs. 22.99 lakhs |
|Ortho Division ||Rs. 56.90 lakhs |
|Protective Devices Division ||Rs. 156.73 lakhs |
|Foods Division Hosakote ||Rs. 1.69 lakhs |
|Foods Division Jaipur ||Rs. 0.72 lakhs |
|(iii) Purchase of Computers relating to- || |
|Pharma Division ||Rs. 27.03 lakhs |
|Ortho Division ||Rs. 4.21 lakhs |
|Protective Devices Division ||Rs. 10.44 lakhs |
|Foods Division Hosakote ||Rs. 5.19 lakhs |
|Foods Division Jaipur ||Rs. 3.25 lakhs |
|(iv) Purchase of Patterns & Dies relating to- || |
|Pharma Division ||Rs. 18.12 lakhs |
|Ortho Division ||Rs. 6.68 lakhs |
The decrease in Secured Borrowings is on account of the repayment of loansavailed from Corporation Bank against the Fixed Deposits at the Protective DevicesDivision.
(H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:
Your Company believes people are key to its success and is constantly seeking toupgrade its HR systems and talent pool. As part of overall HR strategy your Company hascontinued to drive the Balanced Score Card (BSC) initiatives Total Productive Maintenance(TPM) at manufacturing units Performance Management Systems Leadership Developmentinitiatives and attractive retention schemes for field staff in order to enhanceworkforce productivity and corporate performance. During the year your Company has alsomade significant efforts to automate HR processes and presently recruitment andperformance management modules have been made online. To further motivate the workforceyour Company has institutionalized an attractive performance-based variable pay for SeniorManagement Staff as well as rewards and recognition programmes such as Star Awards XtraMile Awards Trail Blazer Awards and Corporate Excellence Awards.
As on 31st March 2019 the employee strength was 2312. (Previous Year - 2244).
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 moved the On-Premise Oracle E-Business Suite application toOracle Cloud. Similarly the mail server has also been moved to Cloud. The migration ofthe Protective Devices Division's operations into Oracle E-Business Suite application isin the final stage of completion.
(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 ||2018-19 ||2017-18 ||Change || |
| || || ||% || |
|Debtors Turnover Ratio ||8.56 ||9.88 ||(13.36) ||A |
|Inventory Turnover Ratio ||4.85 ||4.66 ||4.07 ||F |
|Interest Coverage Ratio ||12.62 ||7.37 ||71.23 ||F |
|Current Ratio ||1.73 ||1.49 ||16.11 ||F |
|Debt Equity Ratio (%) ||12.18 ||21.64 ||(43.72) ||F |
|Operating Profit Margin (%) ||7.89 ||7.37 ||7.06 ||F |
|Net Profit Margin (%) ||3.88 ||3.15 ||23.17 ||F |
|Return on Net Worth (%) ||10.40 ||8.28 ||25.60 ||F |
F - Favourable; A - Adverse.
All the key financial ratios indicate an improved performance during theyear under review as compared to the previous year except Debtors Turnover Ratio. Thelower Debtors Turnover Ratio is mainly on account of the higher quantum of receivables /credit terms relating to the institutional customers of Ortho Division.
The improvement in other ratios is mainly on account of higher profitabilityrepayment of amount borrowed from bank against fixed deposits at Protective DevicesDivision and consequential lower interest cost.
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 2018-19. The detailsof the Board Meetings and the attendance of the Directors are provided in the Report onCorporate Governance.
(c) Corporate Social Responsibility (CSR) Committee:
The Corporate Social Responsibility (CSR) Committee consists of Mr T TRaghunathan as Chairman Mr K Shankaran Dr (Mrs) Vandana R Walvekar and Mr GirishRao as Members. Mr S Kalyanaraman is the Secretary of the Committee. The CorporateSocial Responsibility (CSR) Policy enumerating the CSR activities to be undertaken by yourCompany in accordance with Schedule VII to the Companies Act 2013 was recommended to theBoard and the Board adopted the same. The said policy was also made available on theCompany's website www.ttkhealthcare.com.
The Annual Report under CSR Activities is annexed to this Report as 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 B N Bhagwat Mr KShankaran and Mr S Balasubramanian as Members. Mr S Kalyanaraman is the Secretary of theCommittee. More details on the Committee are given in the Report on Corporate Governance.
(e) Related Party Transactions:
During the year under review no transaction of material nature has been entered intoby your Company with its promoters the Directors or the key managerial personnel or theirrelatives etc. that may have a potential conflict with the interests of your Company.All related party transactions are placed before the Audit Committee as also the Board forapproval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis forthe 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 their approval/ ratification on a quarterly basis.
During the current year your Company- (i) renewed the contract entered into with M/sPharma Research and Analytical Laboratories (PRAAL); and (ii) appointed Mr T T Sriram asSenior Manager Foods Division who is the son of Mr T T Raghunathan Executive ViceChairman of the Company. The relevant details are provided below:
|Particulars ||M/s PRAAL ||Mr T T Sriram |
|Nature of the Contract ||Agreement for availing Analytical and Testing Services ||Appointment Mr T T Sriram as Senior Manager in the Foods Division of the Company. |
|Parties to the Contract ||Contract between the Company and M/s Pharma Research and Analytical Laboratories a Partnership Firm || |
|Duration of the Contract ||Renewed for a further period of five years from 1st July 2019 to 30th June 2024. || |
|Particulars of the Contract or Arrangement ||For availing the analytical and testing services for various products / materials manufactured / out-sourced / dealt with by the Company. || |
|Material Terms of the Contract or Arrangement including the value if any. ||Rs.8.50 lakhs p.m. for the 1st year and for subsequent years 15% increase p.a. over the previous year's fees plus applicable taxes and levies. ||Remuneration not exceeding Rs.15 lakhs per annum on cost-to-company basis. |
|Manner of determining the pricing and other commercial terms both included as part of Contract and not considered as part of the Contract. ||M/s Pharma Research & Ana- lytical Laboratories (PRAAL) owns a Government recog- nized Testing and Analytical Laboratory and the samples of various raw materials packing materials finished products etc. of the Company are tested in their laboratory. ||The package offered to Mr T T Sriram is in line with his educational qualifications and experience the responsibilities to be handled by him and also the packages of the other employees in the similar cadres working in the Company. |
| ||On an average around 500 samples are tested by M/s PRAAL every month. || |
| ||Considering the charges generally levied by the outside laboratories for these analytical tests the monthly fee proposed is quite reasonable and fully justified. || |
| ||Further the annual increase of 15% in the fee is mainly to take care of the increase in the- (i) overheads; (ii) staff cost as analytical jobs are skilled and highly manpower intensive; and (iii) price of consumables. || |
|Interested Directors ||Name of the Interested Director as ||Name of the Director ||Interested as |
| ||Mr T T Jagannathan Partner ||Mr T T Jagannathan ||Brother's |
| ||Chairman ||Chairman ||son |
| ||Mr T T Raghunathan Wife is a ||Mr T T Raghunathan ||Son |
| ||Executive Vice Partner Chairman ||Executive Vice Chairman || |
The Register of Contracts containing the details of the transactions in whichDirectors / key managerial personnel are interested is placed before the Audit Committee/ Board regularly.
The Board of Directors of your Company on the recommendation of the Audit Committeeadopted a policy on Related Party Transactions to regulate the transactions between yourCompany and its Related Parties in compliance with the applicable provisions of theCompanies Act 2013 and the SEBI (LODR) Regulations 2015. The Policy as approved by theBoard is uploaded on the Company's website www.ttkhealthcare.com.
Form AOC-2 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 identifiedand the status of the mitigation plans. The detailed Report of the RMG incorporating theupdate on the various risks identified and the mitigation plans in respect thereof areperiodically placed before the Audit Committee and the Board for their discussions andrecord.
(h) Directors and Key Managerial Personnel:
None of the Directors are disqualified from being appointed or holding office asDirectors as stipulated under Section 164 of the Companies Act 2013.
Certificate of Non-disqualifications of Directors from the Practising Company Secretaryis furnished under Report on Corporate Governance. (Page No.50)
(i) Appointment / Re-appointment of Directors:
Mr R K Tulshan liable to retire by rotation at the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment. The Board recommends his reappointment.
The Board seeks the approval of the Members for the Re-appointment of Dr (Mrs) VandanaR Walvekar and Mr Girish Rao as Independent Directors for a further term of 5 yearswith effect from 22nd August 2019; Appointment of Mr V Ranganathan as IndependentDirector for a term of 5 years with effect from 1st June 2019; and Appointment of Mr SKalyanaraman as Wholetime Director for a term of 5 years with effect from 1st June2019.
(ii) Statement on Declaration by the Independent Directors of the Company:
All the Independent Directors of your Company have given declarations under Section149(7) of the Companies Act 2013 that they meet the criteria of independence as laid downunder Section 149(6) of the Companies Act 2013 and the 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 andconditions of appointment of the Independent Directors are posted on the Company's websitewww.ttkhealthcare.com.
(iii) Key Managerial Personnel (KMP):
The following managerial personnel are Key Managerial Personnel (KMP):
Mr T T Raghunathan Executive Vice Chairman [Chief Executive Officer (CEO)];
Mr S Kalyanaraman Director & Wholetime Secretary [Company Secretary]; and
Mr B V K Durga Prasad Senior Vice President Finance [Chief FinancialOfficer (CFO)].
(iv) 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.
(v) Remuneration Policy:
Your Company adopted a Policy relating to selection remuneration and evaluation ofDirectors and Senior Management. The said Policy is posted on the Company's websitewww.ttkhealthcare.com.
(i) Statutory Auditor's and their Report: y The Shareholders at the 59th AnnualGeneral Meeting held on 4th August 2017 appointed M/s PKF Sridhar & Santhanam LLP asStatutory Auditors of the Company for a term of five years to hold office from theconclusion of the 59th Annual General Meeting till the conclusion of the 64th AnnualGeneral Meeting subject to ratification at every Annual General Meeting in accordancewith the provisions of Section 139 and other applicable provisions if any of theCompanies Act 2013 and the Rules made thereunder.
Pursuant to notification of the Companies (Amendment) Act 2017 on 7th May 2018 thefirst proviso to Section 139 relating to the ratification of appointment of StatutoryAuditors by the Members at every General Meeting was omitted. Consequently theratification of appointment of M/s PKF Sridhar & Santhanam LLP as StatutoryAuditors is not required.
Auditor's Report for the year ended 31st March 2019:
The Auditor's Report to the Shareholders for the year under review does not contain anyqualifications.
(ii) Cost Auditors and Cost Audit Report: y Appointment for the year 2019-20:
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 2019-20: (a) Under Regulated Sectors:
Drugs and Pharmaceuticals.
(b) Under Non-Regulated Sectors:
Male Contraceptives under Rubber and Allied Products;
Heart Valves and Orthopaedic Implants under Production Import and Supply or Trading ofMedical Devices.
The Board of Directors on the recommendation of the Audit Committee appointed M/sGeeyes & Co. as Cost Auditors of your Company for the financial year 2019-20 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 provisionsof Section 148 of the Companies Act 2013 and the Rules made thereunder the ratificationof the Members is sought by means of an Ordinary Resolution for the remuneration of Rs.5lakhs plus applicable taxes and levies and reimbursement of travel and out-of-pocketexpenses incurred in connection with the audit payable to M/s Geeyes & Co. CostAuditors under Item No.8 of the Notice convening the Annual General Meeting.
The Cost Audit Report for the year ended 31st March 2019 would be filed on or beforethe due date (i.e.) 27th September 2019 or within 30 days from the date of submission ofthe said Report to the Board whichever is earlier.
Cost Audit Report for the year 2017-18:
The Cost Audit Report for the financial year ended 31st March 2018 was filed in FormCRA-4 vide SRN H06571053 dated 3rd September 2018 with the Central Government.
(iii) Secretarial Auditor and Secretarial Audit Report:
The Board had appointed Mr R Balasubramaniam Company Secretary in Wholetime Practiceto carry out Secretarial Audit under the provisions of Section 204 of the Companies Act2013 for the financial year 2018-19. The Report of the Secretarial Auditor in Form MR-3 isannexed to this Report as Annexure-4. The Report does not contain any qualificationor reservation or adverse remarks.
(j) Transfer to Investor Education and Protection Fund: y Unclaimed Dividends for theyear ended 31st March 2011:
Your Company has transferred a sum of Rs.7.53 lakhs during the financial year 2018-19to the Investor Education and Protection Fund established by the Central Government incompliance with Sections 123 125 of the Companies Act 2013. The said amountrepresents the unclaimed dividends for the year ended 31st March 2011 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 13874Equity Shares of Rs.10/- each fully paid-up in respect of which the dividends relating tothe year 2010-11 remained unclaimed / unpaid for a period of seven consecutive years ormore to the Demat Account of the IEPF Authority held with CDSL on 28th September 2018.
(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 2019 your Company was not holding any amount under Fixed DepositAccount.
(p) Loans Guarantees and Investments under Section 186 of the Companies Act 2013:
During the year under review your Company had not given any loan 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.
(u) 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 2019-20.
(v) 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 TheSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013was notified on 9th December 2013. Under the said Act every Company is required to setup an Internal Complaints Committee to look into complaints relating to sexual harassmentat 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 2018-19 there were no complaints. Further adequate awarenessprogrammes were also conducted for the employees of your Company.
(w) 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 accountingstandards had 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 March2019 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 ofthe following items as there were no transactions on these items during the year underreview:
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 : Bengaluru ||T T JAGANNATHAN |
|Date : May 30 2019 ||CHAIRMAN |
|Registered Office: || |
|No.6 Cathedral Road || |
|Chennai 600 086 || |