Procter & Gamble Health Ltd Directors Report.

Your Directors have the pleasure of presenting the 54th Annual Report and the Audited Financial Statements of your Company for the Financial Year ended June 30, 2021.

FINANCIAL HIGHLIGHTS

(Rs in Lakhs)

Particulars 2020-21 2019-20
Income from Operations 100,873 135,586
Other Income 1,810 6,889
Profit before Interest, Depreciation and Tax 26,412 38,430
Depreciation/ Impairment 3,004 2,945
Profit before tax 23,328 35,485
Provision for Taxation (net) 5,648 10,077
Profit after tax 17,680 25,408
Appropriations:
Opening Reserve 53,226 116,797
Re-measurement gain/loss on defined benefit plan (net of tax) 42 (926)
Dividend (including tax on dividend) (38,178) (88,053)
Balance carried to the Balance Sheet 32,770 53,226
Earnings per share
- Basic (?) 107 153
- Diluted (?) 107 153

Note: Previous Financial Year 2019-20 was an eighteen months period hence figures reported are not comparable versus current Financial Year.

FINANCIAL YEAR

Your Companys Financial Year is July 1st to June 30th . DIVIDEND

Your Board of Directors are pleased to recommend a final dividend of Rs 130 per equity share, which includes a one-time special dividend of Rs 90 per equity share for the Financial Year ended June 30, 2021. This final dividend is subject to approval of the Members at the ensuing 54th Annual General Meeting of the Company.

BUSINESS PERFORMANCE

During the Financial Year ended June 30, 2021, your Company achieved a turnover of Rs 99,079 lakhs from operations as against a turnover of Rs 132,921 lakhs in the previous eighteen months financial period. After providing for taxes, net profit was Rs 17,680 lakhs.

Due to transition to new Financial Year period July- June, the current twelve months financials are not comparable versus last period of eighteen months. In spite of a challenging year impacted by COVID-19 pandemic, your Company closed the period with a Net Profit ratio of 17.5% of income from operations. Sustained growth in total income coupled with stringent expense management in the wake of COVID-19 pandemic, enabled your Company to achieve resilient growth in a challenging period. The detailed operational performance of your Company is provided in the Management Discussion and Analysis Report forming part of this report.

FINANCIAL RATIOS

Particulars 2020-21 2019-20 change (%)
Debtors turnover 13.0 11.2 16.5
Inventory turnover 8.0 7.3 9.4
Interest coverage ratio N.A. N.A. N.A.
Current ratio 3.5 3.9 -9.7
Debt equity ratio - - -
Operating profit margin 23% 26% -11.33
Net profit margin 17.5% 18.7% -6.5
Return on Networth 22% 20.8% 5.7

Note: Previous Financial Year 2019-20 was an eighteen months period hence figures reported are not comparable versus current Financial Year.

BUSINESS RESPONSIBILITY REPORT

A separate report on Business Responsibility has been appended as Annexure I to this Report.

CORPORATE SOCIAL RESPONSIBILITY

A brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the Financial Year are set out in Annexure II to this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. In compliance with requirements of Section 135 of the Companies Act, 2013, the Company has laid down a CSR Policy which is published on its website- https://www.pghealthindia.com/investors/.

ENVIRONMENTAL SUSTAINABILITY AND CONSERVATION OF ENERGY

Environmental sustainability is embedded in our Purpose, Values, Principles, and our business. Your Company is committed to improving lives, now and for generations to come by ensuring that our products, packaging and operations are safe for employees, consumers and the environment. We ensure by focusing on technologies, processes and improvements that matter for the environment.

Environment, Health and Safety encompasses the laws, rules, guidance and processes designed to help protect employees, the public and the environment from harm, further supported by group standards, current best approaches and audits at regular intervals. There is a systematic approach for complying with environmental regulations, such as managing waste water and air emissions. This also includes hazardous and other waste management at the Companys plant at Goa. The Goa plant ensured 100% compliance to management of waste water via continuous online monitoring of all legal parameters and hazardous waste management via last mile disposal to government authorized waste disposal vendors.

Your Company constantly strives to reduce energy consumption by taking energy saving initiatives across all our operations. These initiatives are not only limited to improvement in machinery but also optimization in the operations strategy.

In Financial Year 2020-21, some of the key initiatives taken at the Companys Goa plant in this direction were:

1. Improving energy efficiency by replacement of multiple old pumps and motors with state of art designs to reduce overall power consumption.

2. Boiler return condensate recovery to pre heat make up water and help reduce usage of fuel thus minimizing direct Green House Gases (GHG) footprint.

3. The utility team worked on optimization in consumption of power used in air compressors by carrying out compressed air demand studies and revamping the operating strategy.

4. Replacement of old conventional light fixtures with LED lights which require less maintenance as well as save electricity.

In Financial Year 2021-22, your Company aspires to take these savings even further to reduce its carbon footprint by another 10% and take measures with active participation from employees on energy conservation. Alongside, the Goa plant aims to source 25% of its energy from renewable/clean energy source via 2MW onsite land mounted powerplant. TECHNOLOGY ABSORPTION AND RESEARCH & DEVELOPMENT

Your Company has the advantage of availing advanced technology and upgradation thereof from The Procter & Gamble Company, USA and its subsidiaries (Procter & Gamble group). This is an unmatched competitive advantage that helps the Company deliver strong business results.

Your Company benefits from the Procter & Gamble groups research and development efforts and activities across the globe, including India. Technology absorption and adaptation is a continuous process. The products manufactured and sold by the Company are a result of the imported technology received on an ongoing basis. Initiatives are constantly undertaken for innovation of products, new product development, improvement of packaging, enhancement of product quality and application of best information technology to automate, simplify and generate efficiencies in various business processes.

The Company, having ongoing access to cutting- edge technology, derives benefits such as product development, consistent superior product quality, process efficiencies, cost effectiveness and energy efficiency.

(Rs in Lakhs)

Expenditure on R&D* 2020-21 2019-20
Capital 3 375
Recurring 393 661
Total 396 1,036
Total R&D expenditure as a percentage of total turnover 0.40% 0.78%

* The aforesaid R&D expense does not include people costs.

Note: Previous Financial Year 2019-20 was an eighteen months period hence figures reported are not comparable versus current Financial Year.

FOREIGN EXCHANGE EARNINGS & OUTGO

The details of foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 and Rule 8(3) of the Companies (Accounts) Rules, 2014 are mentioned below:

(Rs in Lakhs)

For the Financial Year ended June 30, 2021 For the Financial Year ended June 30, 2020
Foreign Exchange earnings 13,312 21,750
Foreign Exchange outgo 14,622 22,897

Note: Previous Financial Year 2019-20 was an eighteen months period hence figures reported are not comparable versus current Financial Year.

RELATED PARTY TRANSACTIONS

The Company has formulated a policy on related party transactions for the purposes of review and approval of related party transactions. The policy on related party transactions as approved by the Board is uploaded on the Companys website - https:// www.pghealthindia.com/investors/.

All related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of Audit Committee is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arms length.

There were no material related party transactions entered into by the Company during Financial Year 2020-21. All related party transactions entered during the Financial Year were in the ordinary course of business and on arms length basis. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable to your Company.

PUBLIC DEPOSITS

Your Company has not accepted any public deposits from the public or the members of the Company during the Financial Year 2020-21.

PARTICULARS OF LOANS, AND GUARANTEES GIVEN OR INVESTMENTS MADE

Your Company has neither given any loans or guarantees nor made any investments during the Financial Year 2020-21.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules thereunder. The Company has ensured a wide dissemination of the Policy and have conducted various awareness program at all locations of the Company. The Company has constituted an Internal Complaints Committee. During the Financial Year, no complaints with allegations of Sexual Harassment were filed with the Company.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 134(5) of the Companies Act, 2013, your Directors confirm that, to the best of their knowledge and belief:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) Such accounting policies have been selected and applied consistently and judgments and estimates made 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 and of the profit of the Company for that period;

(c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The annual accounts have been prepared on a going concern basis;

(e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with certificate from a Practicing Company Secretary thereon, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed and forms part of this Report.

NUMBER OF MEETINGS OF THE BOARD

Five (5) meetings of the Board were held during the Financial Year 2020-21. For details of the meetings of the Board and its Committees, please refer to the Corporate Governance section of the Annual Report.

ANNUAL RETURN

The annual return as required under Section 92(3) of the Companies Act, 2013 and Rule 12 of the

Companies (Management and Administration) Rules, 2014 is available on the website of the Company, which can be accessed at https://www.pghealthindia. com/investors/.

MANAGEMENT & PERSONNEL

The strength of business and resilience, particularly in this year due to COVID-19 pandemic and multiple economic headwinds in the country, demonstrates the core strength of our employees to stay innovative, reality based and influence the course of business. Financial Year 2020-21 was a year of unprecedented challenges, yet our focus on delivering superiority, fueled by productivity via an empowered organization helped us deliver business results in these tough times.

The statement of disclosure of remuneration under Section 197 of the Companies Act, 2013 and Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as Annexure III to this Report.

The information as per Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. As per the provisions of first proviso to Section 136(1) of the Companies Act, 2013, the Report and Financial Statements are being sent to the Members of the Company excluding the statement of particulars of employees under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at investorgrievance.im@ pg.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Ms. Preeti Bishnoi ceased to be the Company Secretary and Compliance Officer of the Company effective June 30, 2021. Ms. Zeal Shah has been appointed as Compliance Officer of the Company effective July 1, 2021 and as the Company Secretary of the Company effective August 26, 2021.

Mr. Sujay Wasan, Non-executive Director resigned from directorship effective September 23, 2021. The Board places on record its appreciation for contributions of Mr. Wasan during his tenure of directorship on the Board of the Company.

The Board of Directors, on the recommendation of the Nomination & Remuneration Committee, have appointed Dr. Elizabeth Desmond, as an Additional (Non-Executive) Director, effective September 24, 2021, to hold office upto the ensuing 54th Annual General Meeting. It is proposed to appoint Dr. Elizabeth Desmond as a Non-Executive Director of the Company, liable to retire by rotation, at the ensuing 54th Annual General Meeting.

Mr. Aalok Agrawal, Director, retires by rotation and being eligible, offers himself for re-appointment at the ensuing 54th Annual General Meeting.

Brief profiles and details of the Directorships of Directors proposed to be appointed and re-appointed as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are contained in the Notice convening the ensuing 54th Annual General Meeting of the Company.

The Independent Directors of your Company have given declarations to your Company stating that they meet the criteria of independence as mentioned under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board is of the opinion that all the Independent Directors of the Company possess integrity, have relevant expertise and experience and fulfill the conditions specified under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

None of the Non-Executive Directors serve as an Independent Director on more than seven listed Companies and none of the Executive Directors serve as an Independent Director on any listed Company.

During the Financial Year, none of the Directors and key managerial personnel of the Company had any material pecuniary relationship or transactions with the Company.

POLICIES

Your Company has adopted policies on related party transactions, corporate social responsibility, vigil mechanism, nomination and remuneration, materiality of events and dividend distribution, which are available on the website of the Company at https://www.pghealthindia.com/investors/.

AUDITORS

The Shareholders at their 50th Annual General Meeting (AGM) held on May 31, 2017 had approved the appointment of M/s. Haribhakti & Co. LLP, Chartered Accountants (ICAI Firm Registration No.: 103523W/ W100048), as statutory auditors of the Company, to hold office from the conclusion of the 50th AGM upto the conclusion of the 55th AGM. The Report given by the Statutory Auditors on the financial statements of the Company for the Financial Year ended June 30, 2021 is part of the Report. There has been no qualification, reservation or adverse remark given by the Auditors in their Report.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Secretarial Audit has been carried out by Dholakia & Associates LLP, Company Secretaries, for the Financial Year ended June 30, 2021. There were no qualifications, reservation or adverse remarks given by Secretarial Auditors of the Company. The Secretarial Audit report has been appended as Annexure IV.

SECRETARIAL STANDARDS

During the Financial Year, your Company has complied with the mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

COST AUDIT

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Central Government has prescribed cost audit of the accounts to be maintained by your Company. M/s. Joshi Apte & Associates, Cost Accountants carried out the cost audit for applicable business during the Financial Year 2020-21. The Board of Directors has re-appointed M/s Joshi Apte & Associates, Cost Accountants for the Financial Year 2021-22. The Cost Audit Report for the Financial Year ended June 30, 2021 will be filed within prescribed timelines.

A resolution for ratification of the remuneration payable to the Cost Auditor for the Financial Year 2021-22 is included in the Notice of the ensuing 54th Annual General Meeting.

MATERIAL ORDERS PASSED BY THE REGULATORS AND COURTS

During the Financial Year under review, no regulator or court has passed any significant and/or material orders impacting the going concern status of the Company and its future operations.

In 2016, the National Pharmaceutical Pricing Authority (NPPA) passed an order against the Company, for pricing one of its products at an amount higher than the applicable ceiling price during a limited period between 2006 and 2009. Consequently, the Company was, at that time, asked to pay a sum of Rs 1,168 lakhs on account of overpricing, plus an interest thereon. The Company has challenged the said order before the Honble Delhi High Court. Currently, the matter is pending before this Court.

The abovementioned matter was considered material by the Company. Accordingly, necessary disclosures to stock exchanges had been made. The Company has also made a provision of Rs 580 lakhs in its accounts for any liability which may arise as a result of the outcome in the abovementioned matter.

VIGIL MECHANISM AND WHISTLE BLOWER POLICY

In terms of the provisions of Section 177(9) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has implemented a vigil mechanism. The Company provides protection to employees and business associates reporting unethical practices and encourages employees to report genuine concerns or grievances such as unethical behaviour, actual or suspected fraud or violation of the Companys code of conduct or ethics policy. The Audit Committee oversees the vigil mechanism and number of cases reported alongwith the status report and action taken (if any) are reported to the Committee. Whistleblower complaints and their redressal are discussed at each Audit Committee meeting of the Company. No employee has been denied access to the Audit Committee. The Vigil Mechanism is available on the Companys website at https://www.pghealthindia. com/investors/.

ACKNOWLEDGEMENT

Your Directors place on record its deep appreciation for the co-operation and support of the Government authorities, healthcare professionals, distributors, wholesalers, retailers, suppliers, clearing and forwarding agents, business associates, bankers, consumers, employees and shareholders and look forward to their continued support on the journey ahead.

On behalf of the Board of Directors
Mumbai S. N. Talwar
August 26, 2021 Chairman