TTK HEALTHCARE Directors Report

(Including Management Discussion and Analysis Report)


The Directors have pleasure in presenting the 59th Annual Report together with the Audited Financial Statements for the financial year ended 31st March, 2017.


Financial Results:


(Rs. in lakhs)
















































































































2016-17



2015-16



Profit before Depreciation & Tax





4,192.48



4,273.45



Less : Depreciation





1,186.57



720.71



Profit before Tax





3,005.91



3,552.74



Less : Provision for Tax









Current Tax



982.00





1,002.00



Deferred Tax



90.54



1,072.54



284.22 1,286.22



Profit after Tax





1,933.37



2,266.52



Surplus Account:









Balance as per last Balance Sheet





7,777.00



6,377.83



Add: Profit for the year





1,933.37



2,266.52



Total





9,710.37



8,644.35



Less: Proposed Dividend





388.30



388.30



Provision for tax on Dividend





79.05



79.05



Amount transferred to









General Reserve





200.00



400.00



Net Surplus





9,043.02



7,777.00



Review of Performance:


During the year under review, the Revenue from Operations amounted to Rs.532.73 crores as against the previous year''''s figure of Rs.518.86 crores, a growth of around 3%.


Pre-Tax Profit for the year stood at Rs.30.06 crores as against the previous year''''s figure of Rs.35.53 crores.


The overall performance was impacted due to external factors such as sluggish / negative growth in FMCG categories handled by your Company, regulatory / licensing issues in pharmaceutical business, demonetization, etc. and also internal issues like field force attrition.


A detailed review is presented under the Section “Segmentwise Performance”. Dividend:


Your Directors are pleased to recommend a dividend of Rs.5.00 (50%) per Equity Share of Rs.10 each for the year ended 31st March, 2017 [Previous Year - Rs.5.00 (50%) per Equity Share].


Share Capital:


The Paid-up Equity Share Capital as on 31st March, 2017 was Rs.776.60 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


During the year 2016-17, the GDP growth was estimated at 7.1% as against the previous year''''s growth of 7.9%.


The year 2016-17 witnessed two major economic policy developments-


(i) constitutional amendment making way for the implementation of Goods and Services Tax (GST); and (ii) demonetization of high value currency notes (Rs.1,000 & Rs.500) which was initiated to curb black money. Despite a slow start, the economic momentum picked up in the middle of the year. Though the demonetization impacted the momentum to some extent during the second-half of the year, the economy appears to be on the recovery path.


The Indian Pharmaceutical Market (IPM) currently valued at Rs.1,11,135 crores [MAT March 2017], grew by 10.3%.


The growth was driven by (i) growth in volume of existing brands (4.8%);


(ii) new introductions (3.3%); and (iii) price revisions (2.3%). Chronic Segment continues to grow faster than Acute Segment (11.9% vis-a-vis 8.6%). Therapeutic segments like anti-diabetic and derma reported healthy growth. (Source: Pharmatrac).


(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 Business further.


- Your Company has the unique advantage of an exclusive network for distribution of OTC products. This can be leveraged for launch of new products under own brands 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” initiative by the Government would further enhance the growth prospect for this Segment. These products also have export potential.


- 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.


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.


- The action by the Government for banning the Fixed Dose Combinations (FDCs) may also have its impact on the overall size / growth of the market.


(C) SEGMENTWISE PERFORMANCE:


Your Company is engaged in Pharmaceuticals, Consumer Products, Medical 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. Pharmaceuticals also include Woodward''''s Gripewater. Since this product is distributed through the Consumer Products Division of your Company, it is covered under the head Consumer Products Business.


Ethical Products Division (EPD) & Ventura Division


During the year 2016-17, EPD and Ventura Divisions registered a turnover of Rs.143.83 crores, with a marginal negative growth.


The performance was partly impacted due to regulatory constraints, political disturbances in Jammu & Kashmir and banning of Fixed Dose Combinations (FCDs) by the Central Government. Demonetization also had its impact on the performance of the business during the latter part of the year.


High attrition continues to be a cause of concern. Employee Engagement Programmes are being conducted to increase retention.


Your Company has introduced a couple of line extensions under Ossopan brand so as to strengthen the Calcium Segment. Similarly, a couple of new products were added to further strengthen the Infertility Segment under the Ventura Division.


The strategy for 2017-18 is to focus on high potential brands to consolidate the position in Gynaecology and Infertility Segments and concurrently, work towards reducing attrition and improving the field force productivity through training and motivation.


Animal Welfare Division (AWD)


During the year under review, the Animal Welfare Division reported a sales turnover of Rs.47.68 crores, with a growth of 7% over the previous year.


All the three sub-divisions viz., Bovianim (Cattle), Gallus (Poultry) & Companim (Pet Animals) reported decent growth. However, the growth was subdued partly on account of the adverse impact of demonetization in the second-half of the year.


Although drought like situation in a few key States also decelerated the momentum, the Division continues to harp on optimizing customer coverage, focused product promotion and improved field operational effectiveness.


The strategy for 2017-18 would be to ensure a healthy growth through focused promotion of core brands, introduction of new products, significant improvement in customer coverage, optimum efficiency in field operations, geographical expansion, etc.


Consumer Products Business:


The Division reported a turnover of Rs.242.95 crores, with a growth of about 3% during the year under review, in a challenging economic environment, especially during the second-half of the year.


Woodward''''s continued its growth across all territories especially with the Northern markets registering a strong growth during the summer season. Deodorants, as a category, declined this year in volumes by about 7%. Consequently, EVA too had a very challenging year and declined by 9.6% in turnover. However, the base product EVA Deospray 125ml is fairly steady and maintained its volumes.


Condoms market grew by a marginal 1.6% and Skore increased its turnover by about 17%, propped up by a price increase and the launch of its premium variants - “SKORE CHAMPION”.


This brand signed off with Dwayne Bravo and Chris Gayle as Brand Ambassadors and maintained its market share of about 9.5%.


The Homecare brand Good Home grew by 11% during the year.


Medical Devices Business:


Heart Valve Division


Your Company''''s Heart Valve Division reported a sales turnover of Rs.15.83 crores during the year under review, with a growth of around 16%.


Though there was growth in off take in select geographies, the Division continues to be impacted due to stiff competition from imported valves. Nevertheless, efforts are made to further increase the volumes.


The initial response to the test marketing initiative of the Bi-Leaflet Valves manufactured by CardiaMed, Netherlands is encouraging and the distribution would be scaled up during the current year.


Under an arrangement with a Brazilian Company, the distribution of Bio-Prosthetic Valves would commence during the second-half of 2017-18. The Vascular Graft and the Improved Heart Valve devices are ready for clinical trials, awaiting appropriate regulatory approvals, which are expected to be received during the financial year 2017-18.


Ortho Division


Ortho Division reported a sales turnover of Rs.9.78 crores, during the year under review, with a growth of around 10%.


The sales team has been further strengthened to cover Non-South markets with addition of Managers / Product Specialists.


The Division received the renewal of ISO 9001:2008 / ISO 13485:2003 and CE Certification from DNV, Norway.


With the renewal of CE marking, efforts on exports front would be recommenced.


Considering the dominant market share enjoyed by Fixed Bearing Knee in the overall knee market, efforts are also directed towards developing a Posterior Stabilized Fixed Bearing Knee, in collaboration with appropriate technology partners.


Considering the capacity constraints at the existing facility at Ambattur, it is also proposed to set up a state-of-the-art manufacturing facility for Orthopaedic Implants at Chennai.


Foods Business:


During the year under review, the Foods Division achieved a sales turnover of Rs.69.56 crores, with a growth of 15%.


The capacity utilization at the new manufacturing facility at Jaipur has been gradually improving.


Your Company''''s sales and distribution network has been further strengthened so as to handle the additional volumes available from the Jaipur facility.


Apart from this, fair amount of business development activities were initiated in order to tap export and institutional businesses which are expected to yield results in the coming years.


The state-of-the-art R&D Centre of the Foods Division at Hosakote is engaged in developing value-added / innovative and differentiated products like Lentil, Dal, Quinoa, Vegetable based Pappads (Pellets), so as to gain volumes and also to improve the overall profitability.


Your Company is implementing Total Productive Maintenance (TPM) at both the Hosakote and Jaipur factories, in order to improve its operational efficiencies.


(D) OUTLOOK:


In view of the above developments and initiatives, the outlook for your Company as a whole for 2017-18 appears promising.


(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 derisk against these factors is also outlined in the said Sections.


(F) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:


Your Company has necessary Internal Control Systems in place which is commensurate with the size, scale and complexity of its operations. Further, your Company has retained the services of an External Consultant for developing the necessary manuals / SOPs for effectively implementing the Internal Financial Control System and this would be finalized and implemented shortly. 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.


(G) FINANCIAL PERFORMANCE:


(Rs. in lakhs)





























































































2016-17



2015-16



Revenue from Operations (Gross)



53,292.43



51,909.51



Less : Excise Duty relating to Sales



19.33



22.96



Revenue from Operations (Net)



53,273.10



51,886.55



Other Income



572.75



559.21



Total Income



53,845.85



52,445.76



Cost of Materials Consumed



24,324.63



22,927.14



Employee Benefits Expense



8,810.85



8,141.85



Other Expenses



16,206.40



16,770.59



Profit before Finance Cost and Depreciation



4,503.97



4,606.18



Finance Cost



311.49



332.73



Depreciation



1,186.57



720.71



Profit before Tax



3,005.91



3,552.74



Less: Provision for Tax







Current Tax



982.00



1,002.00



Deferred Tax



90.54



284.22



Profit after Tax



1,933.37



2,266.52



ANALYSIS OF PERFORMANCE:


- Revenue from Operations registered a growth of around 3% as against the previous year''''s figure of around 7%, with a Profit before tax of Rs.30.06 crores. (Previous year''''s Pre-Tax Profit - Rs.35.53 crores).


- During the year under review, Other Income stood at Rs.572.75 lakhs as against the previous year''''s figure of Rs.559.21 lakhs. The increase was mainly on account of profit of Rs.83.70 lakhs made on sale of 1,000 Listed, Rated, Secured, Redeemable, Index-Linked, Non-Convertible Debentures of face value of Rs.1,00,000 each.


- Goods Consumption as a percentage of Revenue from Operations for the year works out to 45.66% as against the previous year''''s figure of 44.19%. The increase is due to higher proportion of Traded Goods (Condoms) vis-a-vis Own Branded Goods in the product mix and lower net realizations from Foods Division due to price reduction.


- The increase in employee benefits expense was due to regular annual increments / revision in packages.


- The increase in Power and Fuel expenses was mainly on account of the increase in production at the manufacturing facility of the Foods Division at Jaipur.


- The increase in R&D expenses represents the expenses incurred for various research and developmental activities undertaken at the Pharma / Foods Divisions of your Company for the development of new formulations / recipes / products.


- Depreciation was higher on account of the full year depreciation charged in respect of assets capitalized during the latter part of last year at the new manufacturing facility at Jaipur.


- The details of additions to Fixed Assets are as below:


(i) At Foods Division''''s manufacturing facility at Jaipur:


- construction of Buildings (Rs.14.07 lakhs);


- purchase of Plant & Equipments (Rs.42.59 lakhs); and


- purchase of Furniture and Fittings (Rs.11.14 lakhs).


(ii) At Foods Division''''s manufacturing facility at Hosakote:


- construction of Buildings (Rs.12.94 lakhs); and


- purchase of Plant & Equipments (Rs.89.98 lakhs).


(iii) At Foods Division''''s R&D facility at Hosakote:


- construction of Buildings (Rs.18.34 lakhs);


- purchase of Plant & Equipments (Rs.13.77 lakhs); and


- purchase of Lab Equipments (Rs.30.01 lakhs);


(iv) Purchase of Vehicles and Computers (Rs.63.19 lakhs);


- During the year under review, your Company made an investment of Rs.3.40 lakhs in M/s Renew Wind Power (AP) Private Limited, in connection with purchase of wind power, by way of subscription to the issue of 3,400 Equity Shares of face value of Rs.10 each at a price of Rs.100 per Equity Share. Subsequently, 2,500 Equity Shares were transferred to M/s Renew Wind Power (Karnataka Three) Private Limited at a price of Rs.100 each, thus holding the balance 900 Equity Shares of Rs.10 each (Rs.0.90 lakhs) as on 31st March, 2017.


Further, your Company, during the year, had sold off 1,000 Listed, Rated, Secured, Redeemable, Index-Linked, Non-Convertible Debentures of face value of Rs.1,00,000 each, at a consideration of Rs.1,083.70 lakhs.


- The decrease in Other Current Liabilities was mainly due to


(i) repayment of term loan of Rs.15 crores availed from Commonwealth Bank of Australia; and (ii) reduction in expenses payable, particularly the sales promotional expenses as there was significant reduction in promotional spend during the last quarter, post-demonetization.


- The reduction in Short Term Loans and Advances was mainly on account of adjustment of advances paid to suppliers for supply of goods and services, upon supply.


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


Human Resources:


Your Company attaches significant importance to continuous upgradation of Human Resources for achieving the highest levels of efficiency, customer satisfaction and growth.


As part of the overall HR Strategy, initiatives such as Balanced Score Card (BSC), Total Productive Maintenance (TPM), etc., have been implemented to enhance employee productivity and corporate performance. Further, extensive trainings have been provided to enable continuous improvement of employee capabilities. Succession planning has also been commenced for Senior Management Staff. HR representatives met MSRs as part of the employee engagement activities and to reduce attrition.


As on 31st March, 2017, the employee strength was 1853. (Previous Year - 1817).


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:


E-Reporting System has been fully implemented in the Pharma Division of your Company. Plans are also underway to implement Oracle Apex so as to provide interface between the Oracle ERP and the Online Reporting Module in order to ensure seamless integration of information and easy access by the sales force. Online reporting for field staff in Ortho Division has just commenced.


(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.


DISCLOSURES UNDER THE COMPANIES ACT, 2013 AND THE RULES MADE THEREUNDER:


(a) Extract of Annual Return:


Extract of Annual Return (Form MGT-9) is enclosed as Annexure-1.


(b) Number of Meetings of the Board:


The Board of Directors met 4 (four) times during the year 2016-17. 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 of 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 Company''''s website www.ttkhealthcare.com. The Annual Report under CSR Activities is annexed to this Report as Annexure-2.


The details relating to the meetings 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 B N Bhagwat, Mr K Shankaran and Mr S Balasubramanian as Members. Mr S Kalyanaraman is the Secretary of 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 Company''''s website www.ttkhealthcare.com. Form AOC-2 containing the details of Related Party Transactions is annexed as Annexure-3 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) 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 your 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.


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.


(h) Directors and Key managerial Personnel:


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


(i) Appointment / Re-appointment of Directors:


Mr R K Tulshan and Mr S Kalyanaraman, liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board recommends their reappointment.


(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 SEBI (LODR) Regulations, 2015. The terms and conditions of appointment of the Independent Directors are posted on the Company''''s website www.ttkhealthcare.com


(iii) Key managerial Personnel (KmP):


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


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


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


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


(iv) Performance Evaluation of the Board, its Committees and the Directors:


In compliance with the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, the performance evaluation of the Board was carried out during the year under review. More details on the same are given in the Report on Corporate Governance.


(v) Remuneration Policy:


Your Company adopted a Policy relating to selection, remuneration and evaluation of Directors and Senior Management. The said Policy was hosted on the Company''''s website www.ttkhealthcare.com.


(i) Auditors:


(i) Auditors and their Report: y Appointment of Auditors:


M/s Aiyar & Co. and M/s S Viswanathan LLP were appointed by the Shareholders at the 56th Annual General Meeting held on 22nd August, 2014, as Statutory Auditors of the Company, for a term of three years, to hold office from the conclusion of the 56th Annual General Meeting till the conclusion of the 59th Annual General Meeting, in accordance with the provisions of Section 139 and other applicable provisions, if any, of the Companies Act, 2013 and the Rules made there under.


The term of office of the said Statutory Auditors expires at the conclusion of the ensuing 59th Annual General Meeting.


The Board places on record its appreciation for the valuable services rendered by M/s Aiyar & Co. and M/s S Viswanathan LLP, during their tenure as the Statutory Auditors of your Company. The Board of Directors at their meeting held on 30th May, 2017, based on the recommendation of the Audit Committee, at their meeting held on 29th May, 2017, considered and recommended to the Members of the Company, the appointment of M/s. PKF Sridhar & Santhanam LLP, Chartered Accountants (Firm Registration No.003990S / 200018), as Statutory Auditors in the place of the retiring Auditors, for a term of five years, to hold office from the conclusion of the 59th Annual General Meeting till the conclusion of 64th Annual General Meeting, subject to ratification by the members at every Annual General Meeting.


A brief profile of M/s. PKF Sridhar & Santhanam LLP is provided below:


- The firm has been in existence from 1978, initially as a Partnership Firm and presently as a Limited Liability Partnership.


- The firm has 20 partners as of 1st January, 2017 and has over 350 people in the firm, across its offices.


- The firm has its Head Office at Chennai and has offices in six cities in all, viz., Chennai, Mumbai, New Delhi, Bangalore, Hyderabad and Coimbatore.


- The firm has been peer reviewed in 2016. Also, as a part of the "Forum of Firms”, an association of international networks of accounting firms that perform audits of financial statements that are or may be used across national borders, the firm maintains international quality control standards.


Their appointment, if made, will be in accordance with the provisions of the Companies Act, 2013, the Chartered Accountants Act, 1949 and the Rules and Regulations made there under. They also satisfy the criteria provided under Section 141 of the Companies Act, 2013 and are not disqualified under the said Acts.


Accordingly, a Resolution seeking members'''' approval for the appointment of M/s PKF Sridhar & Santhanam LLP, as Statutory Auditors of the Company is included under Item No.5 of the Notice convening the Annual General Meeting.


- Auditors’ Report for the year ended 31st march, 2017:


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


(ii) Cost Auditor and Cost Audit Report:


- Appointment for the year 2017-18:


Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Records of your Company relating to “Drugs and Pharmaceuticals” are required to be audited, for the year 2017-18.


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 2017-18 and fixed their remuneration at Rs.3,50,000 plus applicable taxes and levies and reimbursement of travel and out-of-pocket expenses incurred in connection with the audit.


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 arm''''s 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.3,50,000 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, 2017 would be filed on or before the due date (i.e.) 27th September, 2017.


-Cost Audit Report for the year 2015-16:


The Cost Audit Report for the financial year ended 31st March, 2016 was filed on 29th August, 2016 vide SrN G10152601 on the website of the Ministry of Corporate Affairs.


(iii) Secretarial Auditor and Secretarial Audit Report:


The Board had appointed Mr R Balasubramaniam, Company Secretary in Whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2016-17. The Report of the Secretarial Auditor in Form MR-3 is annexed to this Report as Annexure-4. The Report does not contain any qualification or reservation or adverse remarks.


(j) Transfer to Investor Education and Protection Fund:


Your Company has transferred a sum of Rs.5.28 lakhs during the financial year 2016-17 to the Investor Education and Protection Fund established by the Central Government, in compliance with Section 205C(2) of the Companies Act, 1956. The said amount represents the unclaimed dividends for the year ended 31st March, 2009, which were lying unclaimed with your Company for a period of seven years from the due date of payment.


(k) Disclosure under Schedule V (F) of the SEBI (LODR) Regulations, 2015: Your Company does not have any Unclaimed Shares issued in physical form pursuant to Public Issue / Rights Issue.


(l) 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-5 to this Report.


(m) 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-6.


(n) Subsidiary Company:


Your Company does not have any Subsidiary.


(o) Deposits:


As on 31st March, 2017, your Company was not holding any amount under Fixed Deposit Account.


(p) Loans, Guarantees and Investments under Section 186 of the Companies Act, 2013:


During the year under review, your Company had not given any loan and provided any guarantee under Section 186 of the Companies Act, 2013. During the year under review, your Company made an investment of Rs.3.40 lakhs in M/s Renew Wind Power (AP) Private Limited, in connection with purchase of wind power, by way of subscription to the issue of 3,400 Equity Shares of face value of Rs.10 each at a price of Rs.100 per Equity Share. Subsequently, 2,500 Equity Shares were transferred to M/s Renew Wind Power (Karnataka Three) Private Limited at a price of Rs.100 each, thus holding the balance 900 Equity Shares of Rs.10 each (Rs.0.90 lakhs) as on 31st March, 2017.


Your Company, during the year under review, had sold off 1,000 Listed, Rated, Secured, Redeemable, Index-Linked, Non-Convertible Debentures of face value of Rs.1,00,000 each, at a consideration of Rs.1,083.70 lakhs.


(q) Significant and Material Orders passed by the Regulators or 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.


(r) Whistle Blower Policy:


In accordance with the provisions of Section 177(9) of the Companies Act, 2013 and the Rules made there under 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 Company''''s 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 / Executive Vice Chairman in exceptional cases.


The Whistle Blower Policy was also hosted on the Company''''s website www.ttkhealthcare.com.


During the year under review, your Company had not received any complaint.


(s) Scheme of Amalgamation:


The Board of Directors in their meeting held on 30th April, 2013 approved the Scheme of Amalgamation of TTK Protective Devices Limited (TTKPD) (formerly known as TTK-LIG Limited) and its Wholly Owned Subsidiary TSL Techno Services Limited (TSL) with your Company, the appointed date being 1st April, 2012.


Under the Scheme, the Shareholders of TTKPD would be entitled for 9 Equity Shares of Rs.10 each fully paid-up of your Company for every 2 Equity Shares of Rs.10 each fully paid-up held by them in TTKPD. No shares would be allotted to the Shareholders of TSL as its value having been considered as part of the valuation of TTKPD.


Your Company obtained necessary No Objection from the Stock Exchanges and also the approval of the Shareholders for the Scheme of Amalgamation.


Your Company filed necessary petition with the Hon''''ble High Court of Judicature at Madras for obtaining its sanction for the said Scheme of Amalgamation.


Consequent to the constitution of the National Company Law Tribunal (NCLT), petitions relating to compromises, arrangements and amalgamations, etc., would henceforth be dealt with by this Tribunal. Accordingly, your Company''''s petition relating to Scheme of Amalgamation stands transferred to NCLT and its sanction is awaited.


Your Directors have also extended the time limit of the Scheme upto 31st March, 2018.


Necessary entries will be made in the books of accounts upon sanction of the Scheme.


(t) Finance:


Your Company availed a Term Loan of Rs.20 crores from Commonwealth Bank of Australia in the year 2013-14. As per the terms of sanction, the first installment of Rs.2 crores was repaid in December, 2014, the second installment of Rs.3 crores in December, 2015 and during the year under review, the last installment of Rs.15 crores was paid in July, 2016.


(u) Listing of Equity Shares:


Your Company''''s shares are listed with-


- BSE Limited (BSE), Mumbai; and


- National Stock Exchange of India Limited (NSE), Mumbai.


The Listing Fees have been paid for the financial year 2017-18.


(v) Obligation of your Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:


In order to prevent sexual harassment of women at workplace, a legislation - 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 has constituted an Internal Complaints Committee (ICC) with an NGO as one of its Members. During the year 2016-17, there were no complaints. Further, adequate awareness programmes were also conducted for the employees of your Company.


(w) Directors’ Responsibility Statement:


As required under Section 134(3)(c) of the Companies Act, 2013, your Directors hereby confirm that-


- 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 financial year ended 31st March, 2017 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.


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:


- 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.


For and on behalf of the Board


Place : Bengaluru T T JAGANNATHAN


Date : May 30, 2017 CHAIRMAN


Registered Office:


No.6, Cathedral Road


Chennai 600 086

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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