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Directors Report of TTK Healthcare Ltd.

Mar 31, 2013

The Directors have pleasure in presenting the 55th Annual Report together with the Audited Accounts for the financial year ended 31st March, 2013.

FINANCIAL RESULTS

(Rs. in lakhs) 2012-13 2011-12

Profit before Depreciation & Tax 2,434.14 2,590.59

Less: Depreciation 271.97 235.77

Profit before Tax 2,162.17 2,354.82

Less : Provision for Tax Current Tax 710.00 770.00

Deferred Tax 31.82 741.82 21.91 791.91

Profit after Tax 1,420.35 1,562.91

Surplus Account:

Balance as per last Balance Sheet 3,725.57 2,683.69

Add: Profit for the year 1,420.35 1,562.91

Total 5,145.92 4,246.60

Less: Proposed Dividend 310.64 310.64

Provision for tax on Dividend 52.79 50.39

Amount transferred to General

Reserve 145.00 160.00

Net Surplus 4,637.49 3,725.57

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.4.00 (40%) per Equity Share of Rs.107- each.

REVIEW OF PERFORMANCE

During the year under review. Revenue from Operations amounted to Rs.382.30 crores as against the previous year''s figure of Rs.353.74 crores, a growth of about 8%.

The overall performance of the Company was affected mainly due to the discontinuation of the distribution arrangement with TTK Protective Devices Limited (formerly TTK-LIG Limited) for Kohinoor / Durex brand of Condoms, consequent to the settlement reached between them and their overseas partners.

DEVELOPMENT OF STRATEGIC GROWTH PLAN

Your Company has engaged the services of M/s Bain & Co., a well known international firm of consultants for developing a Strategic Growth Plan for your Company to be implemented over the next 3-5 years. The Assignment is in progress and the final report would be ready during the Second Quarter of the current financial year.

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 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.

The Scheme would be effective after the approval of the Regulatory Authorities, Shareholders and the Hon''ble High Court of Judicature at Madras.

FINANCE

During the year under review, the total Secured and Unsecured borrowings from Banks stood at Rs.21.55 crores as against the previous year''s figure of Rs.17.55 crores. The increase is on account of higher utilization of Working Capital limits in the normal course of business.

FIXED DEPOSITS

As on 31st March, 2013, your Company was not holding any amount under Fixed Deposits Account.

EMPLOYEES

Your Directors wish to place on record their appreciation for the excellent services rendered by the Employees at all levels.

The particulars as required under Section 217(2A) of the Companies Act, 1956, are furnished in the Statement annexed hereto.

DIRECTORS

Mr R Srinivasan, Dr K R Srimurthy and Mr K Shankaran, Directors of the Company, retire by rotation and being eligible, offer themselves for re- appointment.

Mr K Vaidyanathan has been re-appointed as Executive Director of the Company for a further period of 2 years, with effect from 1st July, 2013.

AUDITORS

M/s Aiyar & Co. and M/s S Viswanathan, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment.

COST AUDITOR

M/s Geeyes & Co., Cost Accountants, A-3, III Floor, 56, 7th Avenue, Ashok Nagar, Chennai 600 083 have been appointed as Cost Auditor under Section 233B of the Companies Act, 1956 for the audit of the Cost Accounts relating to Pharmaceutical Formulations and Food Products manufactured by your Company, for the year 2012-13. The Cost Audit Report for the year ended 31st March, 2013 would be filed on or before the due date (i.e.) 27th September, 2013.

LISTING

Your Company''s shares are listed with -

- Madras Stock Exchange Limited, Chennai / (Regional Stock Exchange)

- BSE Limited, Mumbai

The Listing Fees have been paid for the financial year 2013-14.

CORPORATE GOVERNANCE

As per the provisions of the Listing Agreement, your Company has complied with the various requirements of the Corporate Governance Code.

A detailed Compliance Note on Corporate Governance is attached to this Report.

CONSERVATION OF ENERGY

The prescribed particulars under Section 217(1)(e) of the Companies Act, 1956, relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are furnished in the Annexure to this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm that—

- In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

- The accounting policies are consistently applied and reasonable, prudent judgements and estimates are made, so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that year.

- Proper and sufficient care has 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.

- These Annual Accounts have been prepared on a "going concern" basis. ACKNOWLEDGEMENT

Your Directors place on record their grateful thanks to the Bankers and Financial Institutions for their continued support and patronage.

For and on behalf of the Board

Place : Chennai T T JAGANNATHAN

Date : 27th May, 2013 Chairman

Registered Office:

No.6, Cathedral Road

Chennai 600 086


Mar 31, 2012

The Directors have pleasure in presenting the 54th Annual Report together with the Audited Accounts for the financial year ended 31st March, 2012.

FINANCIAL RESULTS

(Rs. in lakhs)

2011-12 2010-11

Profit before Depreciation & Tax 2,590.59 2,411.57

Less: Depreciation 235.77 197.13

Profit before tax 2,354.82 2,214.44

Less: Provision for tax

Current Tax 770.00 730.00

Deferred Tax 21.91 791.91

12.25 742.25

Profit after tax 1,562.91 1,472.19

Surplus Account:

Balance as per last Balance Sheet 2,683.69 1,722.53

Add: Profit for the year 1,562.91 1,472.19

Total 4,246.60 3,194.72

Less: Proposed Dividend 310.64 310.64 Provision for tax on Dividend 50.39 50.39 Amount transferred to General

Reserve 160.00 150.00

Net Surplus 3,725.57 2,683.69

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.4.00 (40%) per Equity Share of Rs.10/- each.

REVIEW OF PERFORMANCE

During the year under review, Revenue from Operations amounted to Rs.353.74 crores as against the previous year's figure of Rs.310.95 crores, a growth of about 14%.

FINANCE

During the year under review, the total Secured and Unsecured borrowings from Banks stood at Rs.17.55 crores as against the previous year's figure of Rs.12.41 crores. The increase is mainly on account of Working Capital borrowings availed to take care of the increased level of operations.

FIXED DEPOSITS

As on 31st March, 2012, your Company was not holding any amount under Fixed Deposits Account.

EMPLOYEES

Your Directors wish to place on record their appreciation for the excellent services rendered by the Employees at all levels.

The particulars as required under Section 217(2A) of the Companies Act, 1956, are furnished in the Statement annexed hereto.

DIRECTORS

Mr T T Jagannathan, Mr R K Tulshan and Mr J Srinivasan, Directors of the Company, retire by rotation and being eligible, offer themselves for re- appointment.

AUDITORS

M/s Aiyar & Co. and M/s S Viswanathan, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment.

LISTING

Your Company's shares are listed with -

- Madras Stock Exchange Limited, Chennai (Regional Stock Exchange)

- Bombay Stock Exchange Limited, Mumbai

The Listing Fees have been paid for the financial year 2012-13.

CORPORATE GOVERNANCE

As per the provisions of the Listing Agreement, your Company has complied with the various requirements of the Corporate Governance Code.

A detailed Compliance Note on Corporate Governance is attached to this Report.

CONSERVATION OF ENERGY

The prescribed particulars under Section 217(1)(e) of the Companies Act, 1956, relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are furnished in the Annexure to this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm that

- In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

- The accounting policies are consistently applied and reasonable, prudent judgments and estimates are made, so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that year.

- Proper and sufficient care has 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.

- These Annual Accounts have been prepared on a "going concern" basis.

ACKNOWLEDGEMENT

Your Directors place on record their grateful thanks to the Bankers and Financial Institutions for their continued support and patronage.

For and on behalf of the Board

Place: Chennai T T JAGANNATHAN

Date : May 22,2012 Chairman

Registered Office:

No.6, Cathedral Road Chennai 600 086


Mar 31, 2011

The Directors have pleasure in presenting the 53rd Annual Report together with the Audited Accounts for the financial year ended 31st March, 2011.

FINANCIAL RESULTS

(Rs. in lakhs)

2010-11 2009-10

Profit before Depreciation & Tax 2,411.57 1,732.03 Less: Depreciation 197.13 181.80

Profit before Tax 2,214.44 1,550.23

Less: Provision for tax

Current Tax 730.00 535.00

Deferred Tax 12.25 742.25 102.49 637.49

Profit after Tax 1,472.19 912.74

Balance brought forward from 1,722.53 1,227.79

previous year

Total 3,194.72 2,140,53

Appropriations:

Proposed Dividend 310.64 271.81

Provision for Tax on Dividend 50.39 46.19

Amount transferred to General 150.00 100.00

Reserve

Balance transferred to Balance 2683.69 1.722.53 Sheet

3,194.72 2,140.53

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.4.00 (40%) per Equity Share of Rs.10/- each.

REVIEW OF PERFORMANCE

During the year under review, your Company registered a sales turnover of Rs.310.30 crores as against the previous years turnover of Rs.252.43 crores, a growth of about 23%.

(E) FINANCIAL PERFORMANCE:

(Rs. in lakhs)

2010-11 2009-10

Sales 31,030.19 25,242.91

Less : Excise Duty relating to Sales 2.49 22.98

31,027.70 25,219.93

Other Income 505.59 376.90

Total Income 31,533.29 25,596.83

Goods Consumption 16,256.76 13,438.06

Expenses 12,692.74 10,252.34

Profit before Interest and 2,583.79 1,906.43

Depreciation

Interest 172.22 174.40

Depreciation 197.13 181.80

Profit before Tax 2,214.44 1,550.23

Less: Provision for Tax

Current Tax 730.00 535.00

Deferred Tax 12.25 102.49

Profit After Tax 1,472.19 912.74

Income:

Sales Turnover:

During the year under review, your Company registered a sales turnover of Rs.310.30 crores as against the previous years turnover of Rs.252.43 crores, a growth of about 23%.

Other Income:

The Other Income for the year under review was Rs.5.06 crores as compared to Rs.3.77 crores in the previous year. The increase is due to profit of Rs.92.65 lakhs made on the sale of privately placed Debentures with Citi Financial Consumer Finance India Ltd.

Expenditure:

Goods Consumption:

The goods consumption as a percentage of sales for the year works out to 52.39% as compared to 53.28% in the previous year. The reduction in goods consumption was mainly due to higher proportion of own branded products in the sales mix where the material cost as a percentage of sales is lower as compared to the traded lines.

Expenses:

- The increase in Salaries, Wages & Bonus, Contribution to PF & Other Funds and Gratuity & Superannuation was mainly on account of the annual increments and addition of factory / field manpower.

- The increase in Power and Fuel expenses was due to the commissioning of the new Fen Line at Foods Divisions factory at Hosakote.

- The increase in Repairs and Maintenance expenses was mainly on account of the repairs and maintenance activities undertaken at Ernakulam, Hyderabad and Delhi Offices and at Ortho and Foods Factories.

- The increase in Advertisements and Sales Promotion expenses represents higher sales promotional expenses incurred on various product categories of the Company and incentives paid to field staff.

- The increase in Travelling expenses was due to general increase in the fares, hotel tariffs and the increase provided in the daily allowances of the field staff and due to the increase in field staff strength.

- Donation represents the contribution made to Sri Venkateshwara Trust for extending educational and medical assistance to deserving people (Rs.25 lakhs) and to Bhuvana Foundation engaged in providing financial assistance for education and medical treatment to the under developed sections of the Society (Rs.10 lakhs).

- The Diminution in the value of Investment amounting to Rs.29.77 lakhs represents the reduction in the market value of Rs.100 lakhs invested in Kotak Indo World Infrastructure Mutual Fund (Kotak Mutual Fund).

The increase in the other heads of expenses was in line with the operations of the Company and the general inflation.

Fixed Assets:

The Net Fixed Assets stood at Rs.32.61 crores during the year under review as against the previous years Rs.24.00 crores.

The addition to Fixed Assets amounting to Rs.10.78 crores mainly represents the-

(i) Cost of the Project at Foods Division for commissioning the Snack Pellet (Pappad) Manufacturing Line from Italy including the cost of the civil and electrical infrastructure (Rs.885.13 lakhs);

(ii) Cost of the imported 4th Axis Machine for Ortho Division (Rs.37.04 lakhs); and

(iii) Amounts incurred for acquisition of Plant and Machinery, Vehicles, Computers, etc.

The Capital work-in-progress (Rs.4.78 crores) represents the cost of Pellet (Pappad) Manufacturing Line bought from M/s McFills Enterprises Pvt. Ltd., Ahmedabad which is under erection and the Civil and Electrical works carried out for the Project at the Foods Division during the year. This will be capitalized after completion of the Project.

Investments:

During the year under review, Investments stood at Rs.6.84 crores as compared to Rs.8.15 crores in the previous year. During the year under review -

(i) 500 Nos. Secured Redeemable Non-Convertible Debentures of Rs.1,00,000/- each, privately placed with Citi Financial Consumer

Finance (India) Ltd. were sold to Trust Capital Services (India) Pvt. Ltd. for a consideration of Rs.592.65 lakhs.

(ii) A sum of Rs.6 crores has been invested in 600 Nos. Secured Redeemable Non-Convertible Debentures of Rs.1,00,000/- each, issued by Citi Corp Finance (India) Ltd., on private placement basis.

(iii) A sum of Rs.2.02 crores invested in 20 Nos. Unsecured Redeemable Optionally Convertible Debentures of Rs.10,00,000/- each, privately placed with Kotak Securities Limited has been redeemed.

(iv) Provision of Rs.29.77 lakhs has been made in the books towards the diminution in the market value of Rs.1 crore invested in Kotak Indo World Infrastructure Fund (Kotak Mutual Fund) and subsequently, the said investment stands at Rs.70.23 lakhs.

Inventories:

During the year under review, there had been increase in Inventories from Rs.22.83 crores to Rs.26.83 crores, due to higher build-up of inventories as a pro-active measure in Gripewater, Condoms, EVA and Good Home range of Home care products, anticipating demands.

Sundry Debtors:

There had been an increase in Sundry Debtors from Rs.22.50 crores to Rs.32.48 crores. The increase is in line with the growth in sales particularly in the last quarter of the year under review and that there were no major overdue outstandings.

Cash and Bank Balances:

During the year under review, there had been an increase in cash and bank balances from Rs.49.34 crores to Rs.60.81 crores representing mainly the increase in the fixed deposits with banks.

Loans and Advances:

During the year under review, there had been an increase in Loans and Advances from Rs.21.27 crores to Rs.28.54 crores, which mainly represents the payment of advance income-tax of Rs.7.92 crores.

The reduction in Electricity and Other Deposits was due to (i) refund of the pre-deposit from the Commercial Tax Department in connection with the classification dispute relating to Foods Division (Rs.90.14 lakhs); and (ii) the refund of rental deposits (Rs.20 lakhs). The increase in Advance for Others represents the increase in accrued interest on Fixed Deposits.

Current Liabilities:

During the year under review, there had been increase in the Current Liabilities from Rs.53.74 crores to Rs.75.17 crores. The increase in Creditors for Others includes the amounts payable to M/s Fen, Italy and M/s McFills Enterprises Pvt. Ltd., Ahmedabad for capital purchases amounting to Rs.201.11 lakhs and the increase in Security Deposits from stockists by Rs.87.13 lakhs. The increase in creditors for goods and expenses is in line with increased level of activities.

(F) INTERNAL CONTROL SYSTEMS:

Your Company has necessary Internal Control Systems in place. Internal Audits are regularly conducted through In-house Audit Department and through External Auditors. The reports are periodically discussed and corrective measures are taken.

The scope of audit covered the operations at various Branches / Depots / C&FA locations and also the functional areas at Factory / Head Office.

(G) INFORMATION TECHNOLOGY:

The Oracle ERP System is functioning satisfactorily. To improve the speed / efficiency of the system, it was decided to switch over from single-node processing to multi-node processing. This concept had been successfully tested using hired servers and subsequently, orders were placed for multi-node servers. The new servers would be commissioned during the First Quarter of the current year.

(H) 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, training programmes were organized for employees at all levels through both internal and external faculties.

As on 31st March, 2011, the employee strength was 1478.

(I) 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.

FINANCE

During the year under review, the total Secured and Unsecured borrowings stood at Rs.12.41 crores as against the previous years figure of Rs.14.28 crores. During the year under review, your Company repaid the Short Term Loan of Rs.8 crores availed from Corporation Bank.

FIXED DEPOSITS

As on 31st March, 2011, your Company was not holding any amount under Fixed Deposits Account.

EMPLOYEES

Your Directors wish to place on record their appreciation for the excellent services rendered by the Employees at all levels.

The particulars as required under Section 217(2A) of the Companies Act, 1956, are furnished in the Statement annexed hereto.

DIRECTORS

Dr K R Srimurthy, Mr B N Bhagwat and Mr K Shankaran, Directors of the Company, retire by rotation and being eligible, offer themselves for re- appointment.

Mr K Vaidyanathan has been re-appointed as Excutive Director of the Company for a further period of 2 years, with effect from 1st July, 2011.

Mr T T Ragunathan has been re-appointed as Excutive Vice Chairman of the Company for a further period of 5 years, with effect from 1st November, 2011.

AUDITORS

M/s Aiyar & Co. and M/s S Viswanathan, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for re-appointment.

LISTING

Your Companys shares are listed with -

- Madras Stock Exchange Limited, Chennai (Regional Stock Exchange)

- Bombay Stock Exchange Limited, Mumbai

The Listing Fees have been paid for the financial year 2011-12.

CORPORATE GOVERNANCE

As per the provisions of the Listing Agreement, your Company has complied with the various requirements of the Corporate Governance Code.

A detailed Compliance Note on Corporate Governance is attached to this Report.

CONSERVATION OF ENERGY

The prescribed particulars under Section 217(1)(e) of the Companies Act, 1956, relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are furnished in the Annexure to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm that—

- In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

- The accounting policies are consistently applied and reasonable, prudent judgements and estimates are made, so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that year.

- Proper and sufficient care has 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.

- These Annual Accounts have been prepared on a "going concern" basis.

ACKNOWLEDGEMENT

Your Directors place on record their grateful thanks to the Bankers and Financial Institutions for their continued support and patronage.



For and on behalf of the Board

T T JAGANNATHAN Chairman

Place: Chennai Date : 24th May, 2011

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