ttk healthcare ltd share price Directors report


(Including Management Discussion and Analysis Report)

Your Directors have pleasure in presenting the 65th Annual Report together with the Audited Financial Statements for the financial year ended 31st March, 2023.

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.

Financial Results:

(Rs. in lakhs)

2022-23 2021-22
(a) Continuing Operations
Profit before Depreciation & Tax 7,444.20 3,493.04
Less: Depreciation 1,280.64 1,258.36
Add: Exceptional Item – Profit on
sale of land 249.05
Profit before Tax 6,163.56 2,483.73
Less: Tax expense:
Current Tax 1,741.03 743.67
Deferred Tax (44.26) (110.96)
1,696.77 632.71
Profit after tax from Continuing 4,466.79 1,851.02
Operations
(b) Discontinued Operations (Human
Pharma Undertaking)
Profit before Tax 77,643.92 3,294.14
Less: Tax Expense 18,139.42 986.33
Profit after tax from Discontinued 59,504.50 2,307.81
Operations
Profit after tax [(a)+(b)] 63,971.29 4,158.83
Surplus Account:
Balance as per last Balance Sheet 20,094.41 16,771.09
Add: Profit for the year 63,971.29 4,158.83
Other Comprehensive Income for
the year (Net of Tax) 24.73 12.31
63,996.02 4,171.14
Total 84,090.43 20,942.23
Less: Dividend Paid 1,413.03 847.82
Net Surplus 82,677.40 20,094.41

Review of Performance:

During the year under review, the Revenue from Continuing Operations amounted to Rs.725.11 crores as against the previous years figure of Rs.599.24 crores, a growth of around 21%. Pre-Tax Profit for the year from Continued Operations stood at Rs.61.64 crores as against the previous years figure of Rs.24.84 crores. The Pre-Tax Profit on Discontinued Operations (including profit on sale of Human Pharma Undertaking) amounted to Rs.776.44 crores.

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, 2023. [Previous Year - Rs.10.00 (100%) per Equity Share of Rs.10/- each]. The dividend pay-out is in accordance with the Companys Dividend Distribution Policy.

Share Capital:

The Paid-up Equity Share Capital as on 31st March, 2023 was Rs.1,413.03 lakhs. Your Company has not issued any shares with differential voting rights nor granted stock options nor sweat equity.

MANA MENT DISCUSSION AND ANALYSIS: GE (A) INDUSTRY STRUCTURE AND DEVELOPMENTS: y India was one of the fastest growing economies in the world and the GDP growth is estimated to be around 7% for 2022-23 and 6.5% for 2023-24, although significant challenges remain in the global environment. [World Bank / Economic Survey]. y The Company operates in more than one segment viz., Consumer Products, Animal Welfare Products, Medical Devices, Protective Devices (Male Contraceptives) and Foods. y FMCG categories like Deodorants and Male Contraceptives had a huge decline during CoVID-19 pandemic and these have witnessed decent recovery post-pandemic. y The Animal Welfare Market size is estimated to be around

Rs.7,000 crores, growing at around 9 – 10%. y Medical Devices Segment also reported smart recovery post-pandemic and the current trend is positive.

(B) OPPORTUNITIES AND THREATS

Opportunities: y 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. y 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. y 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. y 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. y The Central Governments 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. y Considering the size of the market for food products, the Foods Business of your Company has potential for growth, both in the domestic / overseas markets.

Threats: y 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.

(C) SEGMENTWISE PERFORMANCE:

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

A look at the performance of individual Business Segments:

Consumer Products Business:

The Consumer Products Division (CPD) reported a revenue from operations of Rs.241.27 crores (excluding Skore), with a growth of around 11%.

Woodwards Gripewater (WGW)

Post-pandemic, WGW faced a slowdown in key markets, more intensely in Tamil Nadu, from the second-half of the year and also witnessed enhanced competitor activities, particularly in the West Zone. Despite these challenges, the brand managed to more or less sustain the value sales.

As part of the initiatives to further strengthen the brand connect with the consumers, particularly the young mothers, a high-decibel media campaign across the country with enhanced focus on Tamil Nadu was undertaken during the second half of the year.

Further, in order to increase trials and awareness, various initiatives such as retailers meet, distribution expansion, on-ground and digital activations, etc., were undertaken during the year. The strategy for 2023-24 would be (i) to build brand saliency and purchase intent through various promotional initiatives, expand consumer touch points especially in rural markets through ground level activations; and (ii) to strengthen the trust through PR and consumer outreach initiatives.

EVA

Despite category challenges especially on the aerosol segment during the year, EVA has shown remarkable resilience and reported a healthy growth. Your Company roped in celebrity Rashmika Mandanna as the new Brand Ambassador to further strengthen the brand positioning.

The new "Eva Special Happens" campaign with celebrity endorsement helped in increasing brand awareness and turnover during the year. The brand was on constant communication across different platforms throughout the year.

As part of the Look Special Range, the Lip Range with the revamped packaging was launched during the year and this had a positive impact for the brand.

BB Talc / Purse Perfume have also been launched during the last quarter in South Zone and the same will be scaled up to other regions during the current year. Few new products such as No Gas Deo, Roll on Deo, etc., are lined up for launch during the current year.

The strategy for the year 2023-24 would be- (i) to further strengthen the brand promise of "Special Happens" and gain market share through promotions featuring the new celebrity; (ii) to launch new products to penetrate market and gain share; and (iii) to increase trials for the brand through effective marketing activations.

Skore

During the year under review, Skore achieved its highest ever sales in terms of both, volume and value, with healthy growth. The non-condom segment too reported a healthy growth due to various digital initiatives.

A key highlight for the year was the launch of SKORE 4.0, an improved product offering, with new packaging and positioning. The "Change the Game" brand campaign which followed the launch, was successful in generating good momentum and buzz for the brand.

The strategy for the 2023-24 would be (i) to drive distribution expansion to grow the Condom Segment; (ii) to continue to drive the Non-Condom Segment in the digital space through new launches and also make inroads into general trade; and (iii) to build on the "Change the Game" campaign to keep up the momentum and gain market share.

Good Home

Good Home reported a consistent performance with a healthy growth, demonstrating a growing acceptance both at the trade and consumer levels.

The new packaging coupled with new positioning and the brand promise across its range were well received by the market. The strategy for the year 2023-24 would be (i) to grow the Aroma Air Freshener and Odour Remover Segments through enhanced focus and promotional investments; (ii) to expand the range through new fragrances and formats; (iii) to venture into new categories viz., Cleaning Agents and Cleaning Tools; and (iv) to focus on e-Com / Modern Trade to exploit the untapped potential.

Animal Welfare Business:

During the year under review, Animal Welfare Division (AWD) reported a sales turnover of Rs.106.26 crores, with a growth of around 7% over the previous year. Sustaining the high growth registered during the previous year was a challenge mainly due to huge attrition and also sluggish market conditions.

While Bovianim (Livestock) and Companim (Pet) have reported a decent growth. Gallus (Poultry) had a setback due to various external factors resulting in a marginal negative growth over the previous year. The recently launched Aquanim (Shrimp) has registered a healthy growth.

The strategy for 2023-24 would be (i) to restore double digit growth by focusing on all Sub-Divisions along with Institution and Exports businesses; and (ii) to work upon - People (Attrition control and retention), Products (New product launches and driving Ossomin-Tefroli-Orcal-P-Nutricell (OTON), the flagship brands of your Company) and Processes (Streamlining the processes across Divisions and driving core projects).

Medical Devices Business:

 

Heart Valve Division

During the year under review, Heart Valve Division recorded a revenue from operations of Rs.25.26 crores, with a growth of about 47%.

The imported CardiaMed Bi-Leaflet Valves reported an improved performance during the year, despite supply constraints from the overseas partner.

The test marketing of the PTCA Catheters would commence shortly.

The implantations under the Single Centric Clinical Trial of the TC2 Titanium valves covering around 40 patients have been completed at Sree Chitra Tirunal Institute of Medical Sciences and Technology (SCTIMST) and the report is awaited. The focus for the year 2023-24 would be (i) to grow the volumes of TTK Chitra Valves; (ii) to gain further volumes through Bi-Leaflet Valves; (iii) to introduce the PTCA Catheters in selected markets; and (iv) to complete the Single Centric Clinical Trial of TC2 Titanium Valve and work towards commencing the Multi-centric Clinical Trials.

Ortho Division

Ortho Division reported an impressive performance with a revenue from operations of Rs.46.60 crores and a growth of around 38%. This was made possible by all round improvement in sales across geographies, recovery of lost sales due to pandemic and strong market relationships. The strategy of expanding team footprint and distribution in line with market potential has yielded the desired results.

Effective regional leadership too helped to further strengthen the market relationships and to build customer confidence resulting in improved volumes. Deeper penetration in Revision and Hinge Knee Segments enabled the segment to report robust growth.

Hip Replacement Segment also picked up pace during the year, with a decent revenue. The business growth was well supported by the manufacturing team with higher production, faster production cycles and reduced turnaround time from various vendors and suppliers.

The strategy for the year 2023-24 would be (i) to focus on improving sales productivity in currently operating markets; (ii) to strengthen the team to penetrate deeper in the markets; (iii) to continue the footprint and distribution expansion in identified markets; (iv) to initiate test launch of the Fixed Bearing Knee; and (v) to expand the Hip Replacement Portfolio with the introduction of ceramic heads, through a technical tie-up with CeramTec, Germany.

Protective Devices Business:

During the year under review, the Protective Devices Division delivered a robust performance with a revenue from operations of Rs.193.86 crores (including Skore), with a growth of around 45%. Due to healthy inflow of orders, your Company has recommenced the manufacturing operations at the Virudhunagar facility and the said facility has also been approved by International Aid Agency for supply of products to them.

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 and retained all the certifications without any major or critical non-conformances. Your Company is also one of the pre-qualified suppliers under WHO-UNFPA Pre-Qualification Scheme for Male Latex Condoms which is a requirement to supply products internationally to the reputed international aid agencies.

During the year under review, your Company has launched the improved Skore 4.0 version with a new packaging and also added lubricants to the range. Few more products are under development. The focus for the year 2023-24 would be (i) to grow the branded Condom business through differentiated and innovative products; (ii) to develop and strengthen relationships with third party contract manufacturing customers for increasing the volumes; (iii) to work on cost optimization to be more competitive in the bid businesses; and (iv) to increase the output efficiently by developing new infrastructure and by addition of high-speed machines at designated positions.

Foods Business:

During the year under review, Foods Division had a sales turnover of Rs.111.51 crores, with a growth of 14%. In terms of the bottom line, it was a very challenging year as there was constant escalation in the prices of input materials due to a partial crop failure and export of wheat. Your Companys R&D Centre developed a number of new products and product extensions, a few of them were scaled up and launched. Your Company continues to work on developing micro pellets with different bases for thermo mechanical popping considering the future trend of healthy snacks with lesser oil content.

Steps are also initiated for manufacturing 2D die cut products / Micro pellets at Jaipur facility in order to make the manufacturing lines more versatile and increase capacity utilisation.

The strategy for the year 2023-24 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:

Since the Company would be making significant soft investments in certain Consumers Brands during 2023-24, the same would result in transient pressure on the operating margins. But for this, considering the above developments and initiatives, the outlook for your Company as a whole for 2023-24, appears positive.

(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:

(Rs. in lakhs)

2022-23 2021-22
(a) Continuing Operations
Revenue from Operations 72,511.03 59,923.99
Other Income 4,833.17 1,633.06
Total Income 77,344.20 61,557.05
Cost of Materials Consumed 34,777.50 28,149.47
Employee Benefits Expense 12,338.20 10,284.24
Other Expenses 22,260.41 19,306.55
2022-23 2021-22
Profit before Finance Cost, Depreciation
& Exceptional Items 7,968.09 3,816.79
Finance Cost 523.89 323.75
Depreciation 1,280.64 1,258.36
Exceptional Item Profit on sale of land 249.05
Profit before Tax 6,163.56 2,483.73
Less: Tax Expense
Current Tax 1,741.03 743.67
Deferred Tax (44.26) (110.96)
Profit after tax from Continuing
Operations 4,466.79 1,851.02
(b) Discontinued Operations
Profit before Tax 77,643.92 3,294.14
Less: Tax Expense 18,139.42 986.33
Profit after tax from Discontinued
Operations 59,504.50 2,307.81
Profit after Tax [(a)+(b)] 63,971.29 4,158.83

ANA YS L IS OF PERFORMANCE: y The revenue from Continuing Operations amounted to Rs.725.11 crores, with a growth of around 21% . y The increase in Other Income was mainly due to increase in interest on Fixed Deposits made from the sale proceeds of Human Pharma Division. y The increase in Employee Benefits Expense was mainly due to regular annual increments / revision in packages and welfare expenses. y The increase in Finance Cost was due to the interest paid on Income Tax amounting to Rs.228.66 lakhs pertaining to earlier years. y The increase in Power and Fuel expenses was due to higher production at Foods Divisions factories at Hosakote and Jaipur and also at Condoms factory at Puducherry and recommencement of production at Virudhunagar facility. y The increase in Repairs and Maintenance was mainly due to major maintenance work undertaken at PDD Virudhunagar factory prior to the recommencement of operations and also the maintenance activities undertaken at the Foods and Ortho factories. y 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 and also on the online portal LoveDepot.com. y The increase in Travelling & Conveyance expenses was due to resumption of regular travel post-CoVID-19 pandemic. y Bad Debts written off during the year under review, amounted to

Rs.40.99 lakhs, comprising -

(Rs. in lakhs)

Ortho Division 20.90
Animal Welfare Division 11.63
Consumer Products Division 3.92
Heart Valve Division 3.79
Foods Division 0.75

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

(H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT: y Human Resources:

During the year 2022-23, your Company started implementing a few key features of Agile HR which include programmes for people and team development, employee engagement and empowerment, etc. The leadership and managerial skill development programme titled LEAP-3 for third-line managers was successfully completed. Top 100 high potential talents at all levels across the organization were identified for an intense individual development initiatives as part of the succession planning / towards building a robust talent pipeline.

Your Company has partnered with Harappa Thriversity Learning Platform to provide cognizant, behavioural and soft skill e-learning to all employees and promote a continuous learning culture.

The entire HR Operational processes, right from recruitment to final settlement have been automated through the Companys Human Capital Management Intranet Portal.

Your Company has also continuously identified and rewarded the employees and teams that have demonstrated the pursuit of excellence in the areas of Marketing and Customer focus, Innovation and Quality, Business Process Transformation, etc., through R&R Programs such as Xtra Mile, Trail Blazer and Corporate Excellence Awards.

As on 31st March, 2023, the employee strength was 1,294 (Previous Year - 2,513). y Industrial Relations:

The industrial relations during the year under review continued to be cordial. The Directors place on record their sincere appreciation for the services rendered by employees at all levels.

(I) INFORMATION TECHNOLOGY:

During the year, your Company has automated several functions of Finance and Accounts by developing custom applications using Oracle Apex and integrating with Oracle EBS.

A project has just been initiated to automate the Distributor Management System (DMS) and Sales Force Automation (SFA) for the Consumer Products Division.

Your Company started the rolling out of the project titled "FAST FORWARD" in a phased manner, covering the end-to-end management of inventory replenishment / invoicing at Ortho Division.

Your Company launched a number of mobile applications covering order booking / invoicing / inventory verification, etc.

(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 judgements by taking into account all relevant factors before taking any investment decision.

(K) KEY FINANCIAL RATIOS:

Particulars 2022-23 2021-22

Change %

Remarks
Trade Receivables Turnover Ratio 9.09 12.34 (26.34) A Increase in receivables.
Inventory Turnover Ratio 4.13 4.25 (2.82) A
Interest Coverage Ratio 29.53 40.21 (26.56) A Increase in interest cost due to higher utilisation of working capital limits.
Current Ratio 5.06 2.06 145.63 F Increase in Current Assets due to higher Term Deposits from the sale proceeds of Human Pharma Division made during the year.
Operating Profit Margin (%) 4.39 7.03 (37.55) A Lower operating profit due to sale of Human Pharma Undertaking (Interest on Term Deposits made from the sale proceeds, being Non-operating income, not considered).
Debt Equity Ratio 0.03 0.07 (59.61) F Increase in Shareholders Equity was due to higher profits made during the year (which include profit from Slump sales)
Net Profit Margin (%) 7.35 5.24 39.85 F Increase in Net Profit
Return on Net Worth (%) 8.62 14.14 (39.04) A Increase in Equity was due to higher profits made during the year (which include profit from Slump sales) resulting in lower RoE

F - Favourable; A - Adverse

DISCLOSURES UNDER THE COMPANIES ACT, 2013 AND THE RULES MADE THEREUNDER: (a) Annual Return:

Annual Return (Form MGT-7) for the year 2022-23 was made available on the Companys website at the following link: https:// ttkhealthcare.com/investorlist/annual-return/

(b) Number of Meetings of the Board:

The Board of Directors met 5 (Five) times during the year 2022-23. 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 Companys 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.

During the year under review, your Company renewed the contract entered into with M/s T T Krishnamachari & Co., a Partnership Firm, for using the ttk monogram. The relevant details are provided below:

(a) Nature of the Contract License Agreement
Duration of the Contract Renewal for a further period of five years from 1st November, 2022 to 31st October, 2027.
Particulars of the Contract or Arrangement For using the ttk monogram in relation to the goods manufactured, outsourced from third parties, marketed, traded, distributed, etc., and for other business activities of the Company.
(b) Material Terms of the Contract or Arrangement including the value, if any. Half-a-percent ( %) of the Net Sales Value of the Company, plus applicable taxes and levies.
(c) Any advance paid or received for the Contract or Arrangement, if any. NIL
(d) 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 T T Krishnamachari & Co., popularly known as TTK, have been in business of various consumer and pharmaceutical products and has been marketing and distributing such products for several decades and earned a wide reputation and created a strong image and awareness in the minds of the public.
They are the owner of the copyright in the artistic work ttk monogram, having secured the registration of the said copyright vide Registration No.A-39006/83 under the Copyright Act, 1957.
Use of the ttk monogram on the products of the Company is of immense help to establish these products all these years. Considering the reputation enjoyed by the ttk monogram and the advantages available to the Company by the use thereof, the charges proposed to be paid are quite reasonable and fully justified.
(e) Whether all factors relevant to the Contract have been considered, if not, the details of factors not considered with the rationale for not considering those factors Yes
(f) Any other information relevant or important for the Board to take a decision on the proposed transaction NIL
(g) Interested Directors (as on the date of the Board Meeting i.e. 23 rd May, 2022) Mr T T Jagannathan, Chairman and
Mr T T Raghunathan, Executive Vice
Chairman are interested as Partners of M/s T T Krishnamachari & Co.

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 Companys 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 and Sustainability Reporting:

In accordance with the provisions of Regulations 34(2)(f) of the SEBI (LODR) Regulations, 2015 and on the basis of market capitalization (one amongst the Top 1,000 Companies) as on 31st March of every financial year, the Business Responsibility and Sustainability Report forms part of this Annual Report. [Page No.33]

(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. The Risk Management Group (RMG) with due representations from each of the Businesses / Functions of the Company has been meeting periodically and have detailed interactions / discussions with the Members / Risk Owners on the various risks identified and the status of the mitigation plans.

During the year, the RMG met four times on 6th May, 2022, 20th September, 2022, 27th December, 2022 and 20th March, 2023 and reviewed / discussed the various key risks and the status of the mitigation plans.

The Risk Management Committee (RMC), during the year, met three times on 11th April, 2022, 7th October, 2022 and 20th March, 2023. The Risk Management Committee was updated on the outcome of the RMG Meetings held during the year. Further, the duly updated Risk Register highlighting the various key risks and the status of their mitigation plans was placed before the Committee in their meetings and the Committee reviewed the same. Based on the recommendations of the RMC, the services of M/s Deloitte have been engaged for updating the Risk Register and also to clearly identify the risks in terms of its probability of occurrence and its impact as in case of some risks though the probability of occurrence would be very low but the impact could be significant. They would also classify the various risks into High, Medium and Low.

The assignment is in progress and M/s Deloite would be presenting their observations / suggestions in due course.

The Audit Committee and the Board of Directors periodically review the outcome of the Risk Management Committee meetings.

(i) Directors and Key Managerial Personnel:

During the year under review the following changes occurred: (1) Mr T T Jagannathan, Chairman resigned from the Board, with effect from 9th September, 2022.

(2) Dr T T Mukund was appointed as an Additional Director by the Board of Directors, with effect from 9th September, 2022 and subsequently appointed as a Director by the Shareholders of the Company, with effect from 9th September, 2022 through Postal Ballot process. (3) Mr T T Raghunathan was elected as the Executive Chairman, with effect from 9th September, 2022.

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 Practising Company Secretary is furnished under Report on Corporate Governance. [Page No.69]

(i) Reappointment of Directors:

Mr K Shankaran, 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 – yyDeclarations 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. yyConfirmation of compliance with the Code for Independent Directors prescribed under Schedule IV to the Act and the Companys Code of Conduct for Directors and Senior Management Personnel. yyFurther, 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. yyThe terms and conditions of appointment of the Independent Directors are posted on the Companys website at the following link https://ttkhealthcare.com/wp-content/ uploads/2019/09/ID-Terms-and-Conditions.pdf.

(iii) Key Managerial Personnel (KMP):

The following managerial personnel are Key Managerial Personnel (KMP): yyMr T T Raghunathan, Executive Chairman [Chief Executive Officer (CEO)]; yyMr S Kalyanaraman, Wholetime Director & Secretary [Company Secretary]; and yyMr 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. [Page No.56]

(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 Companys website at the following link https://ttkhealthcare. com/investorlist/policies/.

(j) Auditors:

(i) Statutory Auditors and their Report:

M/s PKF Sridhar & Santhanam LLP was appointed as Statutory Auditors of the Company, for a further term of 5 years, to hold office from the conclusion of the 64th Annual General Meeting till the conclusion of 69th Annual General Meeting.

M/s PKF Sridhar & Santhanam LLP, the Statutory Auditors of your Company have carried out the Audit for the year ended 31st March, 2023. yyAuditors Report for the year ended 31st March, 2023:

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

(ii) Cost Auditors and Cost Audit Report: yyAppointment for the year 2023-24:

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 2023-24:

Under Regulated Sectors:

y Drugs and Pharmaceuticals.

Under Non-Regulated Sectors:

y Male Contraceptives under Rubber and Allied Products;

y 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 2023-24 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 has already been 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 arms 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.4 of the Notice convening the Annual General Meeting.

The Cost Audit Report for the year ended 31st March, 2023 would be filed on or before the due date (i.e.) 27th September, 2023 or within 30 days from the date of submission of the said Report to the Board, whichever is earlier. yyCost Audit Report for the year 2021-22:

The Cost Audit Report for the financial year ended 31st March, 2022 was filed in Form CRA-4 vide SRN F22266126 dated 19th August, 2022 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 2022-23. 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. However, it contains an observation relating to Regulation 19(1) of the SEBI (LODR) Regulations, 2015 reproduced below: During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc., except it was observed that the Nomination

& Remuneration Committee (NRC) was required to be reconstituted w.e.f. 01.01.2022 in terms of Regulation 19(1) of the SEBI (LODR) Regulations, 2015, amended vide SEBI (LODR) (Third Amendment) Regulations, 2021 dated 03.08.2021. Though the NRC was reconstituted w.e.f. 01.01.2022, due to rounding off interpretation, it was considered to be not in compliance with Regulation 19(1) of SEBI (LODR) Regulations, 2015. Upon receipt of SOP Notice from BSE & NSE, the Company has promptly reconstituted the NRC w.e.f. 24.05.2022 and paid the fine to the Stock Exchanges. Further, the Company has also submitted an application for waiver of the fine levied by the Stock Exchanges, as it was purely due to an interpretation issue and is awaiting its order.

(k) Investor Education and Protection Fund (IEPF): y Transfer of Unclaimed Dividends to IEPF, during the year under review:

Your Company transferred a sum of Rs.8,19,279.50 during the financial year 2022-23 to the Investor Education and Protection Fund established by the Central Government, in compliance with Sections 123 to 125 of the Companies Act, 2013. The said amount represents the unclaimed dividends for the year ended 31st March, 2015, which were lying unclaimed with your Company for a period of seven years from the due date of payment. y 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 7,199 Equity Shares of Rs.10/- each fully paid-up, in respect of which the dividends relating to the year 2014-15, remained unclaimed / unpaid for a period of seven consecutive years or more, to the Demat Account of the IEPF Authority held with CDSL on 28th September, 2022 and 3rd October, 2022. y Year wise amount of Unpaid / Unclaimed Dividends lying in the Unpaid Account as on 31st Ma rch, 2023 and the due dates of transfer:

Financial Year ended Dividend Declared on Due date of Transfer Unpaid / Unclaimed Amount as on 31.03.2023 (in Rs.)
31.03.2016 05.08.2016 08.09.2023 9,48,900.00
31.03.2017 04.08.2017 04.09.2024 9,74,570.00
31.03.2018 09.08.2018 14.09.2025 6,51,803.07
31.03.2019 09.08.2019 12.09.2026 5,69,815.52
31.03.2020 11.09.2020 14.10.2027 3,38,991.20
31.03.2021 20.08.2021 21.10.2028 5,93,799.55
31.03.2022 03.08.2022 03.09.2029 8,35,277.59

y D etails of theNodal Officer

Name of the Nodal Officer : Mr S Kalyanaraman
Designation : Wholetime Director & Secretary
Address : TTK Healthcare Limited No.6, Cathedral Road Chennai 600 086
Telephone : 044 – 28116106 / 28113804
E-mail ID : skr@ttkhealthcare.com

(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, 2023, 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 was transferred, as a going concern, on a slump sale basis, to M/s BSV Pharma Private Limited, with effect from 9th May, 2022.

Delisting Proposal:

The Company received the Initial Public Announcement dated 5th April, 2023 from M/s Inga Ventures Private Limited, Manager to the Delisting Offer, vide their communication dated 5th April, 2023 under Regulation 8 of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 (the Delisting Regulations), for and on behalf of the Promoters of the Company viz., Mr T T Jagannathan, Mr T T Raghunathan and M/s T T Krishnamachari & Co., represented by its Partners - Mr T T Jagannathan, Mr T T Raghunathan, Mrs Latha Jagannathan, Mrs Bhanu Raghunathan, Mr T T Mukund, Mr T T Lakshman, Mr T T Venkatesh and Mr T T Sriram made to the Public Shareholders, expressing their intention to- (a) acquire all the Equity Shares that are held by the Public Shareholders, either individually or collectively together with other members of the Promoter Group, as the case may be; and (b) consequently, voluntarily delist the Equity Shares from the Stock Exchanges where the Equity Shares are presently listed (i.e.) BSE Limited (BSE) and National Stock Exchange of India Limited (NSE), by making a delisting offer in accordance with the Delisting Regulations.

Accordingly, the Board of Directors in their meeting held on 20th April, 2023 accorded their approval for the delisting proposal and to conduct the Postal Ballot process for obtaining the approval of the Shareholders by means of a Special Resolution by way of e-Voting.

(s) Significant and 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 Companys 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 Chairman, in exceptional cases.

The Whistle Blower Policy was also hosted on the Companys 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.25.53 crores as on 31st March, 2023. (Previous Year – Rs.20.38 crores).

(x) Listing of Equity Shares:

Your Companys 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 2023-24.

(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 2022-23, 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-y In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanations relating to material departures; y Appropriate accounting policies had been selected and applied consistently and made judgements 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, 2023 and of the Profit of the Company for that period; y 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; y The Annual Accounts had been prepared on a going concern basis; y 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 y 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: y Issue of Equity Shares with differential rights as to dividend, voting or otherwise. y 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.

For and on behalf of the Board T T RAGHUNATHAN

Registered Office: No.6,

Cathedral Road Chennai 600 086

Executive Chairman

Place: Chennai

Date : May 23, 2023