TTK Healthcare Ltd Directors Report.

(Including Management Discussion and Analysis Report)

Your Directors have pleasure in presenting the 63rd Annual Report together with the Audited Financial Statements for the financial year ended 31st March, 2021.

Financial Results:

(Rs. in lakhs)
2020-21 2019-20
Profit before Depreciation,
Exceptional Item(s) & Tax 4,266.53 3,380.15
Less: Depreciation 1,371.13 1,437.67
Add : Exceptional Item - Interest on
Tax Refund 809.79
Profit before Tax 3,705.19 1,942.48
Less: Tax expense:
Current Tax 1,225.00 585.00
Tax relating to earlier years (1,964.81)
Deferred Tax (199.11) 125.54
(938.92) 710.54
Profit after Tax 4,644.11 1,231.94
Surplus Account:
Balance as per last Balance Sheet 12,645.18 12,459.65
Add: Profit for the year 4,644.11 1,231.94
Other Comprehensive Income
for the year (Net of Tax) (94.29) (194.67)
4,549.82 1,037.27
Total 17,195.00 13,496.92
Less: Dividend Paid 423.91 706.51
Dividend Distribution Tax 145.23
423.91 851.74
Net Surplus 16,771.09 12,645.18

Review of Performance:

During the year under review, the Revenue from Operations amounted to Rs.636.53 crores as against the previous years figure of Rs.645.77 crores, marginally lower than that of the previous year. Pre-Tax Profit for the year (including Interest on Tax Refund – Rs.809.79 lakhs) stood at Rs.37.05 crores as against the previous years figure of Rs.19.42 crores.

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

The Board of Directors of your Company, has decided not to transfer any amount to the Reserves for the year under review.

Dividend:

Your Directors are pleased to recommend a dividend of Rs.6/- (60%) per Equity Share of Rs.10/- each for the year ended 31st March, 2021. [Previous Year - Rs.3.00 (30%) per Equity Share].

As per SEBI Notification, the Company has formulated Dividend Distribution Policy, which was approved by the Board of Directors and was uploaded on Companys website at the following link https://ttkhealthcare.com/investorlist/policies/.

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, 2021 was Rs.1,413.03 lakhs. Your Company has not issued any shares with differential voting rights nor granted stock options nor sweat equity.

MANAGEMENT DISCUSSION AND ANALYSIS: (A) INDUSTRY STRUCTURE AND DEVELOPMENTS: Impact of CoVID-19:

The outbreak of the CoVID-19 pandemic since March 2020 and the ensuing lockdowns imposed across the country, though helped flatten the outbreak curve, affected the business operations. The health of the employees and workers became a priority; stoppage of operations and lower sales performance across businesses seriously impacted the First Quarter performance. However, from the Second Quarter, due to the opening of the economic activities across the nation, most businesses of your Company staged a smart recovery, resulting in a decent performance for the year as a whole. The second wave of CoVID-19 which started in March 2021 in some regions of the country, did not have a material impact on the performance during the year under review. However, its impact on the operations during the current year is not very clear as of now.

The Indian Pharmaceutical Market (IPM) currently valued at Rs.1,56,796.80 crores [Source: IQVIA MAT March 2021] grew by around 4%. The growth was driven by price revisions (4.3%) and new introductions (3.6%). However, the existing brands reported a negative growth of 3.6%, in volumes. Market growth is primarily driven by Vitamins / Minerals (10%), Anti-diabetics (8.7%), Neuro / CNS (9.7%) and Immunomodulators (7.6%).

(B) OPPORTUNITIES AND THREATS: Opportunities:

• Economic growth, rising incidence of chronic diseases, increase in healthcare access and expected growth in per capita income would drive further expansion of the healthcare segment. Therefore, there is opportunity for your Company to grow the Pharma / Medical Devices Businesses further.

• 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.

• On Medical Devices, the market continues to be dominated by imported medical devices / implants. Since your Company manufactures world class products and these are priced competitively, this segment provides opportunity for growth. The "Make in India" and the "Atmanirbhar Bharat Abhiyaan" (Self-reliant India) initiatives by the Government of India would further enhance the growth prospects for this Segment and provide further fillip to the indigenous manufacture of medical devices. These products also have export potential.

• Due to the outbreak of CoVID-19 pandemic, there would be emerging categories of hygiene products such as Sanitizer, Hand wash liquids, Disinfectants, etc., and also formulations /supplements focusing on building immunity. Your Company, being well positioned with its distribution network, would take advantage of these emerging categories by launching appropriate products. Few such products have already been launched.

• The Government of India is extending its price control policy to cover medical devices in a phased manner. While this may be seen as a threat, there is also an opportunity for domestic manufacturers like your Company as these products are likely to witness higher demand due to competitive pricing.

• 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.

• Considering the size of the market for food products, the Foods Business of your Company has potential for growth including branding / retail and export opportunities. Further, the increase in home cooking / frying due to CoVID-19 is also likely to generate more demand for ready to cook / fry food products.

Threats:

• The Product Patent Regime has restricted the access for Indian Pharma Companies to the latest molecules which were earlier available. However, there may be opportunities to launch products that are out of patents regimentation.

• The Drugs Price Control may have an adverse impact on the sales / margins of Pharmaceutical Companies.

• Stringent regulatory requirements with reference to Fixed Dose Combinations (FDCs) restricted launch of new combinations which is likely to impact the overall size / growth of the market.

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

(C) SEGMENTWISE PERFORMANCE:

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

A look at the performance of individual Business Segments:

Pharmaceutical Business:

The Ethical Pharma Business of your Company deals in Pharmaceutical Formulations both Herbal and Allopathic, in various therapeutic segments and Food Supplements.

Ethical Products Division (EPD) & Ventura Division

Though the year 2020-21 started on a very challenging note due to the CoVID-19 pandemic, there has been smart recovery from the Second Quarter. This has resulted in a decent performance from the Pharma Business, for the year as a whole.

During the year under review, EPD and Ventura Divisions registered a revenue from operations of Rs.160.47 crores, with a growth of around 1%. During the year under review, the newly launched products such as Bilbay M (Antihistamine) and Ossopan Active (Immunity booster) strengthened your Companys position in Respiratory and GP/CP segments, respectively.

The strategy for the year 2021-22 for Pharma Business is to - (i) further strengthen the position amongst Gynaecologists and Infertility specialists; (ii) focus on flagship brands such as Ossopan (Calcium supplements) and Lactare (Galactagogue) and key brands under the Infertility (CCQ, Evaserve and Carni Q) and Respiratory (Levokast) Segments; and (iii) establish new brands namely Sensipreg (Progesterone), Erafos (Urinary antibiotic) and Jessica QF (Folate supplement). Also constantly focus on improving the people productivity through training and developmental initiatives.

Animal Welfare Division (AWD)

During the year under review, the Animal Welfare Division registered a revenue from operations of Rs.77.97 crores, with a growth of around 9%. AWD too had a challenging First Quarter due to the CoVID-19 pandemic.

While the Divisions under Animal Welfare Business viz., Bovianim (Livestock) and Companim (Pet) reported robust growth, Gallus (Poultry) had a setback throughout the year due to the impact of the pandemic followed by bird flu outbreak in few areas. The new Division Aquanim had surpassed a sale of Rs.1 crore during the first year of its operation.

Major focus for the year 2021-22 is to relentlessly work on achieving a healthy growth in sales. As part of this initiative, the field strength has been expanded to improve the coverage and reach. The strategic drivers for the year would be to significantly grow the flagship brands viz. Ossomin, Tefroli and Orcal-P (the OTO Group) and to take the Companim and Aquanim Divisions to the next level in sales. New product launches are also planned to supplement these efforts.

Consumer Products Business:

The Consumer Products Division reported a revenue from operations of Rs.174.85 crores, marginally lower than that of the previous year.

Woodwards Gripewater (WGW)

During the year under review, the Woodwards Gripewater (WGW) crossed the milestone of Rs.100 crores in sales with a healthy growth. Despite the pandemic and loss of sales in seasonal markets in the First Quarter, WGW bounced back and registered an annual volume growth of around 2%, due to optimal brand investments and allied marketing activities.

To stay relevant to New Age Moms and to recruit them into this category, it is planned to continue and scale-up the key consumer-centric marketing activities such as Media, Digital Engagement and Consumer activation.

The strategy for the year 2021-22 would be to focus on consumption increase in well penetrated markets of South and build the Non-South markets via trial generation activities.

EVA

During the year under review, the performance of EVA as a brand was significantly impacted due to the pandemic and the consequent closure of cosmetic stores etc., in the first-half of the year. The ‘Deodorants", as a category itself, was going through a challenging time.

On the positive side, the original single colour packs reintroduced based on trade and consumer feedback, received encouraging response and the overall consumers / retailers acceptance has been good. There has been a decent improvement in the performance of EVA Deodorants in the second-half of the year. The performance of talc and winter-care products too was in line with expectations.

The strategy for the year 2021-22 is to - (i) gain share of voice by aggressive digital presence, TV commercials and media; (ii) rationalize and build robust product portfolio; (iii) build strong hold in MT Channels and e-Comm platforms; and (iv) plan limited edition launches to keep the excitement and buzz amongst the consumers.

Skore

During the year under review, the performance of Skore brand was significantly impacted due to CoVID-19 pandemic. Though there was a significant drop in sales in top 15 towns, there was a decent increase in sales through e-Commerce Channels for the brand, thus reducing the overall negative impact.

The strategy for the year 2021-22 would be to - (i) increase the shelf space in the top towns; (ii) strong retail activation plan for "Skore Cool" during the summer season; (iii) expand thin condom portfolio by launching a few more variants; (iv) do brand campaign to generate and get momentum for the brand; and (v) focus on strengthening the e-Commerce Channel with exclusive launches and pleasure products.

Good Home

During the year under review, Good Home as a brand reported a moderate growth, driven by good performance from Eastern markets.

Launch of Germ Protection Range has been a positive initiative for the brand. Scrubbers, Aroma and Drain Cleaner too performed well.

The focus for the year 2021-22 would be to further strengthen the distribution and build visibility for the existing products and to launch differentiated and innovative products to grow the brand.

Medical Devices Business:

Heart Valve Division

During the year under review, Heart Valve Division recorded a revenue from operations of Rs.13.20 crores, significantly lower than the previous year. The performance of this Division was severely impacted due to the pandemic. Heart Valve Replacement Surgery, being an elective one, the patients and the hospitals were postponing the procedure considering the safety of both the patients and the hospital employees. Most of the Government Hospitals were converted into CoVID Centres and regular surgeries were suspended except emergency cases. This has affected the overall performance of the Division for the year as a whole, though there has been some improvement in the second-half of the year.

Your Company has signed an agreement with an Overseas Manufacturer for direct import and distribution of Bi-Leaflet Valves and has recently received the regulatory clearance for the import. Your Company is in the final stages of signing an agreement for the manufacture and supply of cardiology products like PTCA Catheters and Coronary Stents. These products are expected to be launched during the first-half of the financial year 2021-22. Your Company has received the required regulatory clearances for the Single Centric Clinical Trials relating to new model TTK Chitra TC2 Titanium Valve and the first lot of Valves has been handed over to the clinical site. The first human trial is expected during the first-half of 2021-22.

The focus for the year 2021-22 would be to - (i) grow the volumes of TTK Chitra Valves; (ii) gain further volumes through Bi-Leaflet Valves; and (iii) venture into the cardiology market.

Ortho Division

During the year under review, Ortho Division recorded a revenue from operations of Rs.13.53 crores, significantly lower than the previous year. The CoVID-19 pandemic seriously impacted the Joint Replacement business across the country, due to reluctance of the patients to get admitted, Joint Replacement being an elective procedure. All markets except North declined over the previous year.

However, February and March, 2021 saw some revival in business as patient confidence returned. Since the surgeries are only postponed, it is hoped, that the pent-up demand would materialize into business in the coming months.

Hip Replacement Products (Uncemented and Cemented implants) were launched in the second-half of the year, in select markets. The response is encouraging and since launch, your Company has performed more than 100 surgeries. Line extensions in the Hinge Knee Range is gaining traction and helping penetration in more markets.

Regulatory clearances were obtained for the manufacture of additional sizes of Cementless Hip Implants, CoCr Hinge Knee with Wedges and Bipolar implants. Implementation of 5S activities under TPM initiative just started.

The strategy for 2021-22 would be to - (i) continue the expansion into new geographies; (ii) grow revenues from new products such as Hip range and Knee portfolio extensions; and (iii) explore export opportunities.

Protective Devices Business:

During the year under review, the performance of Protective Devices Division has been satisfactory, with a revenue from operations of Rs.94.57 crores (including Skore), marginally lower than the previous years figure. This would have been better but for the closure of the facility / limited operations with restricted manpower during the month of April and May 2020 due to the outbreak of CoVID-19 pandemic.

Your Company was able to extend the arrangement with the International Aid Agency for another 3 years and have also signed a new contract with another reputed International Aid Agency to supply products from July 2020 to June 2023.

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

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

During the year under review, your Company had launched a few value added, innovative and differentiated products developed by your Companys R&D Team. Some more products are under development and a few of this will be launched during 2021-22. Your Company has seen a steady increase in productivity due to the improved order situation and has maintained its quality as a result of which regular orders are received from International Aid Agencies.

Your Company during the year has exported branded products to various countries and with new registrations being arranged by the Third Party customers, your Company would be able to export to a few more countries during the year 2021-22.

The focus for 2021-22 would be to - (i) grow the branded Condom business through differentiated and innovative products; (ii) develop and strengthen relationships with third party contract manufacturing customers for increasing the volumes; (iii) work on cost optimization to be more competitive in the domestic and international bid businesses; and (iv) increase the production output by further strengthening the existing infrastructure and through addition of high-speed machines at the designated places in the production process.

Foods Business:

During the year under review, the Foods Division reported a revenue from operations of Rs.101.62 crores, with a robust growth. Your Companys R&D Centre at Hosakote developed five new product extensions and launched them commercially. The R&D team is continuously working on tweaking recipes and shapes of the existing products for better marketing appeal, customer satisfaction and cost optimization. It is also working on developing products for different applications considering the evolving trend of healthy snacks.

The production capacity at your Companys facility at Jaipur stands enhanced with the commissioning of the new high capacity cooker (HTE 210) and now this factory has become more versatile and can produce a number of new products.

In spite of the challenges faced due to CoVID-19 pandemic, the initiatives undertaken relating to (a) reduction in expenses; (b) improvement in operational efficiencies; and (c) improved net realizations brought down the losses of the Division and generated a decent cash profit.

The strategy for the year 2021-22 would be to further increase the capacity utilization at Jaipur facility through enhanced focus on domestic / institutional and export businesses and also to work on developing and launching innovative and differentiated products to improve volumes / margins.

(D) OUTLOOK:

Given the unrelenting spread of the second wave of pandemic and the large-scale impact on the lives of the people, the near-term outlook for the Indian economy is uncertain impacting the growth prospects. There are many unknowns today and hence, the near-term outlook is extremely uncertain. The immediate focus remains on safety of people, protecting supply lines, serving demand and optimizing cost and cash.

Despite the near-term ambiguity, the Company remains confident of the medium to long-term growth prospects considering the various categories of products your Company deals in. Although the current situation is much more uncertain than normal, the Company is confident about its ability to manage the immediate crisis and come out of it successfully.

(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 with the help of an external consultant. 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 Audit Department monitors and evaluates 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 Statutory Auditors, Cost Auditors and Secretarial Auditors.

(G) FINANCIAL PERFORMANCE:

(Rs. in lakhs)
2020-21 2019-20
Revenue from Operations (Net) 63,652.79 64,576.78
Other Income 1,000.01 877.54
Total Income 64,652.80 65,454.32
Cost of Materials Consumed 25,173.77 26,002.12
Employee Benefits Expense 16,007.53 14,394.10
Other Expenses 18,982.59 21,351.10
Profit before Finance Cost, Depreciation and
Exceptional Item(s) 4,488.91 3,707.00
Finance Cost 222.38 326.85
Depreciation 1,371.13 1,437.67
Exceptional Item - Interest on Tax Refund 809.79
Profit before Tax 3,705.19 1,942.48
Less: Tax expense
Current Tax 1,225.00 585.00
Tax relating to earlier years (1,964.81)
Deferred Tax (199.11) 125.54
Profit after Tax 4,644.11 1,231.94

ANALYSIS OF PERFORMANCE: y The Revenue from Operations amounted to Rs.636.53 crores, marginally lower than that of the previous year. y Despite the serious disruption across businesses during the First Quarter due to the outbreak of CoVID-19 pandemic and the consequent lockdowns, most of the businesses have performed well during the remaining part of the year, resulting in a decent performance for the year as a whole. y The increase in Profit before Tax was partly on account of interest of Rs.8.09 crores received on Tax Refund.

y The increase in Employee Benefits Expense was mainly due to- (i) payment of one-time ex-gratia to the employees; (ii) higher outflow towards Gratuity; (iii) provision made for the increase in packages of Pharma Field Staff covered under Long Term Wage Settlement; and (iv) the provision made for the Gratuity liability that may accrue upon implementation of the Code on Social Security, 2020. y Due to the disruption caused by the CoVID-19 pandemic, most of the expenses were lower as compared to the previous year:

There has been reduction in Power and Fuel expenses due to lower production, particularly at Heart Valve and Ortho factories.

Due to the restrictions relating to travel / field work, the Travelling and Conveyance Expenses were lower.

Though your Company has incurred adequate Advertisement and Sales Promotion Expenses for its consumer brands, the Sales Promotion expenses relating to Pharma Business such as samples, gifts, etc., were lower due to the reduction in doctor visits by the field force. y The increase in Repairs and Maintenance expenses was mainly on account of the major maintenance work undertaken at the Foods Divisions factories at Hosakote and Jaipur. y Bad Debts Written Off during the year under review, amounted to Rs.27.59 lakhs, comprising-

Pharma Division (including AWD) Rs.9.64 lakhs;
Consumer Products Division Rs.3.63 lakhs;
Ortho Division Rs.8.09 lakhs; and
Foods Division Rs.6.23 lakhs.

y As per the Provisioning Policy relating to Bad and Doubtful Debts approved by the Audit Committee and the Board, a sum of Rs.111.60 lakhs was provided for Bad & Doubtful Debts. y The reduction in Capital Work-in-progress was due to the capitalization of the Cooker Extruder (HTE 210) at Foods Factory at Jaipur upon commissioning (Rs.858.26 lakhs). y The additions to Fixed Assets mainly include the following:

(Rs. in lakhs)
(i) Construction of Building at-
Foods Division – Hosakote 2.36
Protective Devices Division 1.64
(ii) Purchase of Plant and Machinery relating to-
Foods Division, Jaipur (Including Capitalization of HTE 210 Cooker) 872.31
Protective Devices Division 42.10
Pharma Division 16.32
Foods Division, Hosakote 1.50
(iii) Purchase of Computers relating to-
Pharma Division 26.52
Protective Devices Division 6.21
Foods Division, R&D 1.10
Foods Division, Hosakote 0.60
(iv) Purchase of Patterns & Dies relating to-
Pharma Division 29.19
(v) Motor Car – Lease relating to-
Pharma Division 17.55
Protective Devices Division 13.37

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

During the year 2020-21, your Company laid great emphasis on the safety and health of employees in view of the CoVID-19 pandemic, with a constant focus on the safety protocols, in line with the regulations announced by the various Government Agencies. In order to ensure business continuity, arrangements were made to enable employees to work from home, while safe transport arrangements were made to employees whose physical presence was necessary for handling the essential operations. Regular and periodic communications were made by the Management to ensure everyone is updated and engaged with the ongoing situation and the plans of your Company. The crisis also brought forth the commitment and camaraderie amongst the staff to keep the operations going and customer service against all odds. Several exceptional efforts by staff were actively identified and rewarded through the internal Reward & Recognition programs. Your Company has also initiated the Excellence Award Programs and identified and rewarded the teams that had demonstrated pursuit of excellence in the arena of marketing, customer focus, innovation and business process transformation.

The crisis also provided a window of opportunity to upgrade the employees and several online trainings were conducted with regard to product knowledge, customer management, etc. During the year, your Company also rolled out the Leadership Advancement Program (LEAP) to train key second-level managers on advanced leadership and managerial skills and prepare them to take up higher responsibilities in the future.

As on 31st March, 2021, the employee strength was 2485 (Previous Year - 2515).

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:

Your Company has implemented Automation processes at depots with respect to Oracle E-Business Suite to increase the transaction efficiency and to reduce the manual interventions. Your Company is in the process of automating key HR processes such as Recruitment, Onboarding and Performance Management System. Your Company has migrated the Open KM, a Document Management Software in Protective Devices Division from On-premise to Cloud.

During the year under review, your Company has upgraded the Oracle Data Base successfully from 11.2.0.4 to 12.1.0.2. Your Company has also availed the services of an external consulting firm to develop a comprehensive Digitalization Roadmap, to be implemented in phases over the next three years.

(J) FUTURISTIC STATEMENTS:

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

(K) KEY FINANCIAL RATIOS:

Particulars 2020-21 2019-20 Change %
Debtors Turnover Ratio 9.28 8.21 13.03 F
Inventory Turnover Ratio 3.55 4.10 (13.41) A
Interest Coverage Ratio 15.65 6.94 125.50 F
Current Ratio 1.99 1.74 14.37 F
Debt Equity Ratio (%) 6.90 12.63 (45.37) F
Operating Profit Margin (%) 5.48 4.38 25.11 F
Net Profit Margin (%) 7.30 1.91 282.20 F
Return on Net Worth (%) 16.74 5.22 220.69 F

F - Favourable; A - Adverse y The lower Inventory Turnover Ratio was mainly on account of the higher inventory holding as at the beginning and end of the year, considering the CoVID-19 uncertainties. y The other ratios viz., Interest Coverage Ratio, Operating Profit Margin, Net Profit Margin and Return on Net Worth have shown improvement due to better operational performance / profitability.

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

Annual Return (Form MGT-7) 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 4 (four) times during the year 2020-21. 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.

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 Report:

In accordance with the provisions of SEBI (LODR) Regulations, 2015 and on the basis of market capitalization as on 31st March, 2021, the Business Responsibly Report forms part of this Annual Report. (Page No.38)

(h) Risk Management:

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

Your Company has a Risk Identification and Management Framework appropriate to the size of your Company and the environment in which it operates. Your Company constituted a Risk Management Group (RMG) with due representations from each of the Businesses / Functions of your Company to effectively implement the Risk Management Framework and to address the key risks.

The meetings of the RMG were convened periodically, in order to have detailed interactions / discussions with the Members / Risk Owners on the various risks identified and the status of the mitigation plans. In order to further sharpen / strengthen the Risk Identification and Management Framework which was originally developed and implemented in 2015 and also to identify new risks and the mitigation plans, the services of M/s Deloitte Haskins and Sells LLP were retained for this purpose. Based on their Report, an updated Risk Register has been developed.

The Members / Risk Owners at the meetings of the RMG discussed in detail the updated Risk Register and arrived at the preliminary mitigation plans in January 2021 and recently fine-tuned and updated the same.

The detailed Report of the RMG incorporating the update on the various risks identified and the mitigation plans in respect thereof are periodically placed before the Audit Committee and the Board, for their discussions and record. Further, as per the SEBI (LODR) (Second Amendment) Regulations, 2021, notified on 5th May, 2021, the top 1,000 listed entities, determined on the basis of market capitalization, as at the end of the immediate previous financial year, is mandatorily required to constitute the Risk Management Committee.

Since your Company falls in the list of top 1,000 listed entities, based on market capitalization as on 31st March, 2021, the Board of Directors in their meeting held on 27th May, 2021 constituted the Risk Management Committee, in accordance with the provisions of SEBI (LODR) Regulations, 2015.

(i) Directors and Key Managerial Personnel:

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

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

Certificate of Non-disqualifications of Directors from the Practicing Company Secretary is furnished under Report on Corporate Governance. (Page No.55)

(i) Appointment / Reappointment of Directors:

Mr T T Jagannathan, liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment.

Since Mr T T Jagannathan would be attaining the age of 75 years during this term, it is also proposed to obtain the approval of the Shareholders by means of a Special Resolution, in accordance with the Regulation 17(1A) of the SEBI (LODR) Regulations, 2015.

The current contractual term of appointment of Mr T T Raghunathan as Executive Vice Chairman of the Company expires on 31st October, 2021. The Board of Directors, based on the recommendation of the Nomination and Remuneration Committee, in their meeting held on 27th May, 2021 reappointed him for a further term of five years, effective 1st November, 2021, subject to the approval of the Members. Consequent to his reappointment as Executive Vice Chairman, effective 1st November, 2021, he would continue to occupy the position of the Chief Executive Officer (CEO) (Key Managerial Personnel) of the Company.

Further, since Mr T T Raghunathan, would be attaining the age of 70 years during his proposed term, approval of the Members is sought by means of a Special Resolution for him to continue to hold the office till the expiry of the said term (i.e.) till 31st October, 2026, in accordance with the provisions of Section 196 of the Companies Act, 2013 and the Rules made thereunder read with Schedule V to the Companies Act, 2013.

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

All the Independent Directors of your Company have given -

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

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

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

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

(iii) Key Managerial Personnel (KMP):

The following managerial personnel are Key Managerial Personnel (KMP):

Mr T T Raghunathan, Executive Vice Chairman [Chief Executive Officer (CEO)];

Mr S Kalyanaraman, Wholetime Director & Secretary [Company Secretary]; and

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

(iv) Performance Evaluation of the Board, its Committees, Chairperson, Non-Independent Directors and Independent Directors:

In compliance with the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, the performance evaluation of the Board as a whole, its Committees, Chairperson and Non-Independent Directors were carried out during the year under review by the Independent Directors and the evaluation of the Independent Directors were carried out by the entire Board of Directors excluding the Director being evaluated during the year under review. More details on the same are given in the Report on Corporate Governance.

(v) Policy on Directors Appointment and Remuneration:

Your Company adopted a Policy relating to selection, appointment, remuneration and evaluation of Directors and Senior Management Personnel. The said Policy is posted on the 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, the Statutory Auditors of your Company have carried out the Audit for the year ended 31st March, 2021.

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

(ii) Cost Auditors and Cost Audit Report: y Appointment for the year 2021-22:

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 2021-22:

Under Regulated Sectors:

Drugs and Pharmaceuticals.

Under Non-Regulated Sectors:

Male Contraceptives under Rubber and Allied Products;

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

The Board of Directors, on the recommendation of the Audit Committee, appointed M/s Geeyes & Co. as Cost Auditors of your Company, for the financial year 2021-22 and fixed their remuneration at Rs.5 lakhs plus applicable taxes and levies and reimbursement of travel and out-of-pocket expenses incurred in connection with the audit. Necessary intimation of the said appointment would be given to the Central Government vide Form CRA-2.

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

The Audit Committee also received a Certificate from the Cost Auditors certifying their independence and 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 of 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.6 of the Notice convening the Annual General Meeting.

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

Cost Audit Report for the year 2019-20:

The Cost Audit Report for the financial year ended 31st March, 2020 was filed in Form CRA-4 vide SRN R52962552 dated 3rd September, 2020 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 2020-21. The Report of the Secretarial Auditor in Form MR-3 is annexed to this Report as Annexure-3. The Report does not contain any qualification or reservation or adverse remarks.

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

Your Company has transferred a sum of Rs.8.08 lakhs during the financial year 2020-21 to the Investor Education and Protection Fund established by the Central Government, in compliance with Sections 123 – 125 of the Companies Act, 2013. The said amount represents the unclaimed dividends for the year ended 31st March, 2013, 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, as amended, your Company transferred 22,389 Equity Shares of Rs.10/- each fully paid-up, in respect of which the dividends relating to the year 2012-13, remained unclaimed / unpaid for a period of seven consecutive years or more, to the Demat Account of the IEPF Authority held with CDSL on 25th September, 2020.

y Year wise amount of Unpaid / Unclaimed Dividends lying in the Unpaid Account as on 31st March, 2021 and the due dates of transfer:

Financial Year ended Dividend Declared on Due date of Transfer Unpaid / Unclaimed Amount as on 31.03.2021 (in Rs.)
31.03.2014 22.08.2014 26.09.2021 7,64,012.00
31.03.2015 07.08.2015 11.09.2022 8,33,648.00
31.03.2016 05.08.2016 08.09.2023 9,78,855.00
31.03.2017 04.08.2017 04.09.2024 10,03,940.00
31.03.2018 09.08.2018 14.09.2025 6,82,043.07
31.03.2019 09.08.2019 12.09.2026 6,00,705.52
31.03.2020 11.09.2020 14.10.2027 3,56,187.56

y Details of the Nodal 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 / 24671022
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, 2021, 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:

There were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., 31st March, 2021 and the date of this Report.

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

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

(t) Whistle Blower Policy:

In accordance with the provisions of Section 177(9) of the Companies Act, 2013 and the Rules made thereunder and also the SEBI (LODR) Regulations, 2015, your Company established a vigil mechanism termed as Whistle Blower Policy, for Directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the 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 Vice 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 Practicing 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.17.60 crores as on 31st March, 2021. (Previous Year - Rs.28.13 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 has paid the Listing Fees for the financial year 2021-22.

(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 2020-21, there were no complaints. Further, adequate awareness programmes were also conducted for the employees of your Company.

(z) 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 explanation relating to material departures;

• Appropriate accounting policies had been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2021 and of the Profit of the Company for that period;

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

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

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

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

• Issue of equity shares with differential rights as to dividend, voting or otherwise.

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

Acknowledgement:

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

General:
Your Directors state that no disclosure or reporting is required in
respect of the following items as there were no transactions on these
For and on behalf of the Board
Place : Chennai T T JAGANNATHAN
Date : May 27, 2021 CHAIRMAN
Registered Office:
No.6, Cathedral Road
Chennai 600 086