Your Companys management believes that it has been objective
& prudent in making estimates and judgements relating to the financial statements
& believes that these financial statements are a fair representation of your
Companys operations and profits for the year. To survive and thrive, in a sector in
constant transition, suture makers need to transform themselves. Analysts are of the view
that "globalization" is no longer a matter of choice and suture businesses
long-term success depends on it. The businesses that ride the next wave of growth will be
those that understand the trends and refine their strategies, business models and
portfolios according to a truly Indian mindset.
- Industry structure and developments
The global surgical sutures market is witnessing steady growth
primarily due to the increasing number of surgical procedures performed globally. The
favourable reimbursement scenario for a number of surgical procedures and the launch of
advanced sutures are further contributing to the growth of this market. However, the
presence of alternative wound care management products and the growing preference for
minimally invasive surgeries are some of the factors expected to limit the growth of this
market to a certain extent. The Company registered sales of Rs. 5,265.53 lakhs in the
financial year ended March 31, 2023 and net profit after tax of Rs.100.20 Lakhs. The
technical functioning of the manufacturing facility as indicated by the above-mentioned
results, the capacity utilisations was quite satisfactory and production levels has
selectively improved as required.
Based on type, the market has been segmented into absorbable and
non-absorbable sutures. In 2017, absorbable suture accounted for the largest share of the
market and is expected to maintain its position during the forecast period. This can be
attributed to the ability of the suture to provide temporary support to wound until it
heals significantly. Furthermore, it is cost effective as it dissolves in the body after a
certain period. Non-absorbable sutures are majorly used on skin wound closure where
stitches can be removed after few weeks or in a stressful internal environment where
absorbable sutures are unable to fulfil the requirement. Special silk, stainless steel
wires, synthetics polypropylene, polyester, and nylon are the major material used for
non-absorbable sutures. Based on the type of filament, the sutures market has been
segmented into monofilament and multifilament sutures. Multifilament accounted for the
maximum market share due to its greater strength, more flexibility, and pliability.
Increased number of complicated surgeries, availability of more products, and high cost
over monovalent sutures are likely to drive the segment in the coming years. Based on
application, the surgical sutures market is divided into ophthalmic surgery,
cardiovascular surgery, orthopaedic surgery, neurological surgery, and others.
Cardiovascular surgery accounted for the largest market share and is expected to expand at
the fastest CAGR during the forecast period. This can be attributed to the increasing
incidence rate of cardiovascular diseases and technological advancements in diagnostics,
imaging, and surgical tools. The others segment includes gynaecology and obstetrics
surgery, urology, gastrointestinal surgery, general surgery, and oral surgery. The
increasing number of obese population and rise in the number of womens health issues
are likely to drive this segment significantly over the forecast period. Asia Pacific is
expected to grow at a rapid pace over the forecast period owing to the introduction of
technologically advanced products due to investment by market players in this region, high
volume of surgeries, and growing consumer disposable income levels. China, Japan, and
India are the major markets in the Asia Pacific region. Increasing medical tourism is
another key factor for the rise in the number of surgical procedures and thereby sutures
market in the region. Finished goods prices witnessed a sudden drop. Thankfully, due to
your companys wide range of products and through an optimum mix of inventory
management and buying strategy, we could withstand this shock, and this partially impacted
the profit margins during the year.
Quality
We have been able to create a consistent and credible track record
of excellence due to our determined efforts to sustain world-class infrastructure and
quality standards. We are continuously delivering and exceeding the expectations of our
surgeons. We follow the philosophy of ‘Quality for all patients and Surgeons.
Across all our manufacturing sites, we have put in place quality systems that cover all
areas of business processes — from supply chain to medical device delivery — to
ensure consistent quality, efficiency and safety of products. Regular audit programmes
validate our attempts to deliver consistent quality. Quality risk management procedures
are established and followed for internal audits, failure inquiries and implementation of
permanent corrective measures. Our quality management systems are continually monitored,
evaluated, and upgraded to meet evolving industry regulations and best practices. We
continue to strengthen the quality process with the implementation of digitisation and
Quality Management System (QMS) tools. The use of these tools enables us to keep pace with
the growing number of processes and documentation in R&D and manage compliance and
risk efficiently. Your Company has been consistently meeting the Quality Objectives of ISO
9001:2015, ISO 13485:2016, WHO-GMP, ISO 45001:2018 and medical devices are in conformity
to medical device directives 93/42/EEC, Medical Device Rules, 2017.
- Opportunities and Threats
The surgical industry depends largely on new surgical applications
and surgeries. In the last few years, the increase in the allocation of funds for such
purposes has been on the increase and as such the opportunity of growth in surgical items
is unlimited. However, there exists untapped potential in the nursing home sector. The
Company has arrangement / understanding with various distribution markets and sell various
items which are required in the nursing home market. The Company continued to mitigate the
risk of this volatility by effecting payments towards
our imports out of our Export Earnings as much as possible and by
taking adequate cover. To negate the impact of competition, our competitors have for long
been dumping their medical devices / products in the Indian market at low prices. The
possibility of competitors pursuing an irrational pricing approach cannot be ruled out.
This may create pressure on our margins. Sentiment-driven currency changes can also impact
domestic prices and profitability. The country is expecting a normal monsoon this year,
any shortfall may lead to fall in the rural demand thereby unfavourably impacting some
patients / user segments.
- Product Performance
The overall growth of business in the country has not been upto the
desired levels because of restricted funding. However, in view of unrestricted imports,
competition, sales and profitability of the Company has been affected.
- Outlook
During the current financial year there has been a slight
improvement in the market conditions resulting in an increase in despatches and
satisfactory sales price realisations. It is expected that this trend will continue.
Further, slow growth rate of the Indian economy has been projected and the Company expects
its growth to be slow.
- Risks and Concerns
Your Company has from its inception been conscious and has
regularly evaluated the risks and threats that control it and converted these threats into
opportunities to its best advantage. The management believes that your Companys
business is subject to a number of risks. Many of the components of the regulatory regime
are established or articulated by the relevant regulatory authorities, including Food and
Drug Administration. The Risk Management in your Company has been functioning effectively
and has been contributing to the mitigation of the risks that would have otherwise
impacted our Company.
- Internal control systems and their adequacy
Your Company has a proper and adequate system of internal controls
to ensure that all assets are safeguarded and protected against loss from unauthorised use
or disposition and that transaction are authorised, recorded and reported correctly. The
Audit Committee of the Board of Directors regularly reviews the findings of the internal
auditors, adequacy of internal controls, financial controls, compliance with the
accounting standards, as well as recommends to the Board, the adoption of the quarterly
and annual results of the Company and appointment of auditors. The Audit Committee also
reviews the related party transactions, entered by the Company during each quarter.
Further, the Secretarial Auditors review on periodical basis through their own systems and
check list the compliances part with respect to the Companies Act, 2013 and SEBI (LODR)
Regulations, 2015, as amended and other SEBI regulations as may be applicable to the
Company.
- Discussion on financial performance with respect to operational performance
The Financial Statements comply in all material aspects with Indian
Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the
‘Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant
provisions of the Act. The Company remains a zero-debt company. The Company had also
approached CRISIL Limited for review of its existing ratings, which had assigned CRISIL
A3+ for its Non-Fund based Bank Facilities. The Companys performance about the
domestic sales volumes, remained reasonable for the year on account of slight slowdown and
competition experienced at domestic surgeries in medical industry. On the export business
front, despite stiff competition, your company successfully exported to strategic accounts
with wide range of products and thus achieved a healthy growth. By a combination of a
better product mix helped by speciality products and continual improvement in the
efficiency of operations the Company has managed to keep its operating margins at
reasonable levels for all the four quarters, although during second half the EBIDTA
levels, dropped due to slowdown, falling prices and some legacy input costs on account of
our inevitable coverage of 2-3 months.
Summary of the financial performance of the Company is presented below:
Rs. in Lakhs
| For the year ended March
31 |
2023 |
2022 |
| Net Profit before Depreciation & Taxation |
276.75 |
260.10 |
| Less : Depreciation |
129.96 |
152.65 |
| Provision for Deferred Taxation |
1.17 |
4.51 |
| Provision for Taxation / Written Off |
56.53 |
40.23 |
| Net Profit/(Loss) |
88.59 |
62.71 |
| Add : Balance from Last Year |
2477.39 |
2414.68 |
| Prior Period Profit adjustments |
- |
- |
| Less : Appropriation |
0.00 |
0.00 |
| Transfer to Reserves Profit / (Loss) carried to
Balance Sheet |
2565.98 |
2477.39 |
During the year under review, the Company achieved a profit before tax
of Rs. 146.29 lakhs as compared to Rs. 107.45 lakhs in 2021 - 2022. Pursuant to the SEBI
(LODR), (Amendment), Regulations, 2018, the key financial ratios viz., Debtors
Turnover, Inventory Turnover, Operating Profit Margin (%), Net Profit
(%) and Return on Net Worth do not exceed the threshold of 25 % or more as compared to the
immediately preceding financial year.
- Material Development in Human Resources & Industrial Relation
Significant efforts have also been made to further strengthen the
Companys Performance by the Management. The employee strength of the Company as on
March 31, 2023 was 255. Talented and skilled manpower is an important enabler for a
Company to grow and maintain competitiveness. Human resources are considered as most
important and valuable assets of your Company. Focus was kept on acquisition, retention
and development of necessary skilled manpower keeping in view our current operations
requirement as well as the future business expansion and growth plans, particularly the
Murbad, Thane plant. Innovative incentive schemes are designed and implemented as a
motivational and retention strategy. Company continues to conduct employee trainings
across several functions pertaining to technical, behavioural / general, health safety and
environment and ISO standards. ‘Managerial Skill Development training programs
are conducted to enhance the soft skills of potential managers. A regular employee
performance evaluation system is in place to evaluate the individual performances as well
as determining their development needs and future potential. Your company has complied
with all the regulations pertaining to Factory, Labour and other applicable laws and very
cordial Industrial Relations are maintained with the employees. The Management strives to
maintain a climate of openness, fairness, equality and respect for individuals leading to
industrial harmony, mutual trust and teamwork. Industrial relations at the plant of the
Company remained cordial during the year 2021 - 2022 under review. Refer to Annexure E of
Directors Report.
- Details of significant changes (i.e. change of 25% or more as compared to the
immediately previous financial year) in key financial ratios, along with detailed
explanations therefore, including:
| Ratio |
Ratio as on
|
Comments
|
|
2023
|
2022
|
| Debtors Turnover |
1.73
|
1.45 |
Increased sales and better collection has
resulted in impr0vement of ratio |
| Inventory Turnover Ratio |
0.15
|
0.08 |
Reduction in closing stock of Finished goods has
resulted in the improvement in the ratio |
| Interest Coverage Ratio |
- |
- |
Our company does not have any outstanding debt. |
| Current Ratio |
2.04
|
2.20 |
|
| Debt Equity Ratio |
0.19
|
0.22 |
Improvement in debt Equity Ratio is due to
repayment of debt & increase in other equity resulting from current year profit. |
| Debt Service Coverage Ratio |
3.21
|
3.19 |
The improvement is due repayment of debt. |
| Return on Equity Ratio |
2.85
|
1.35 |
Reduction in closing stock of Finished goods has
resulted in the decrease in the ratio |
| Net Capital Turnover Ratio |
1.17
|
1.08 |
Increase in turnover has led to better
performance |
| Net Profit Ratio |
0.02
|
0.01 |
Reduction in closing stock of Finished goods has
resulted in the decrease in the ratio |
- Details of any change in Return on Net Worth as compared to the immediately previous
financial year along with a detailed explanation thereof.
The net worth of our company has improved to Rs.3108.40 in
comparison to prior year of Rs.3019.82. Your Company recorded 18.52% growth in the
financial year 2022 - 2023 in comparison to prior year.
- Economic Environment
Indias economy has received a boost from various factors,
such as the presence of a young and tech-savvy population and a strong emphasis on
innovation. Despite facing headwinds from global geopolitical events, the economy is
anticipated to grow 6.3% for the current fiscal year FY24, as per the World Bank. The
government has taken steps to improve healthcare access, with initiatives like the
Ayushman Bharat programme, which aims to provide free healthcare insurance coverage to
more than 500 million people, and the National Health Stack, which aims to create a
unified digital healthcare system across India. These measures are expected to fuel the
economys growth and contribute to better health outcomes for the population. Your
Company outperformed from the previous year in its operations. Keeping our surgeons and
patients as our top-most priority and delivering high quality medical devices and other
products & services on a sustained basis, your Company recorded 18.52% growth in the
financial year 2022 - 2023 in comparison to prior year.
- Research and Development
The Company has achieved the following through Research and Development:
- Development of new value-added Medical Devices and other products.
- Process improvements resulting in better yields and further improvement in Quality of
Medical Devices and other products.
- Energy Conservation
Regular studies are carried out to ascertain the quantitative
energy consumption patterns, variances are analysed and corrective actions taken. The
Company is continuously working towards further improvements in energy consumption levels.
- Health, Safety and Environment
During the period under review, medical check-up of all regular
employees has been carried out. All requirements pertaining to pollution control,
environmental protection and safety have been complied with. Employees have been trained
to observe the guidelines relating to safety, health and environment.
- Companys Philosophy on Code of Governance
Philosophy of your Company on Corporate Governance envisages the
attainment of the highest levels of transparency, accountability and equity, in all facets
of its operations. Your Company believes that all its operations and actions must serve
the underlying goal of enhancing overall shareholder value, over a sustained period of
time.
- Cautionary Note
The Statements made in this report are forward-looking and are made
on the basis of certain assumptions and expectations of future events. The Company cannot
guarantee that these forward-looking statements will be realized, though they are set out
based on anticipated results and management plans. The Companys actual results,
performance or achievements are subject to risk, uncertainties and even inaccurate
assumptions, which could thus differ materially from those projected in any such forward
looking statements. The Board of Directors of the Company assumes no responsibility in
respect of the forward-looking statements mentioned herein, which may differ in future on
account of subsequent developments, events or otherwise and the Company is under no
obligation to publicly update any forward-looking statements on the basis of subsequent
developments, information, future events or otherwise.
- Cautionary Note regarding Forward-Looking Statements
Forward-looking statements do not relate strictly to historical or
current facts and reflect managements assumptions, views, plans, objectives and
projections about the future. Forward-looking statements may be identified by the use of
words such as "plans," "expects," "will,"
"anticipates," "estimates" and other words of similar meaning in
conjunction with, among other things: discussions of future operations; expected operating
results and financial performance; impact of planned acquisitions and dispositions; the
Companys strategy for growth; product development; regulatory approvals; market
position and expenditures. Because forward-looking statements are based on current
beliefs, expectations and assumptions regarding future events, they are subject to
uncertainties, risks and changes that are difficult to predict and many of which are
outside of the Companys control. Investors should realize that if underlying
assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, the
Companys actual results and financial condition could vary materially from
expectations and projections expressed or implied in its forward-looking statements.
Investors are therefore cautioned not to rely on these forward-looking statements. Risks
and uncertainties include, but are not limited to:
- Risks Related to Medical Device / Product Development, Market Success and Competition
in reputational, competitive, operational or other business harm as well
as financial costs and regulatory action;
Investors also should carefully read the Risk Factors described in this
Annual Report for a description of certain risks that could, among other things, cause the
Companys actual results to differ materially from those expressed in its forward-
looking statements. Investors should understand that it is not possible to predict or
identify all such factors and should not consider the risks described above and in to be a
complete statement of all potential risks and uncertainties. The Company does not
undertake to publicly update any forward-looking statement that may be made from time to
time, whether as a result of new information or future events or developments.
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