5.1 FINANCIAL INSTRUMENTS Financial Risk Management

The Company’s business activities expose it to a variety of financial risks, namely liquidity risk, market risk and credit risk. The Company’s senior management has the overall responsibility for the establishment and oversight of the Company’s risk management framework. The key risks and mitigating actions are also placed before the Audit Committee of the Company. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

In the ordinary course of business, the Company is exposed to Market risk, Credit risk and Liquidity risk.

5.1.1 market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and commodity risk.

(a) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s short term debt obligations with floating interest rates.

If the interest rates had been 50 basis points higher or lower and all the other variables were held constant, the Company’s profit would be impacted by Rs. 6.10 lakhs in FY 2021-22 (Rs.3.77 lakhs in FY 2020-21).

(b) Foreign Currency Risk

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities which is very minimal.

(c) Commodity Price Risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the on-going purchase or continuous supply of raw materials. Therefore, the Company monitors its purchases closely to optimise the price.

5.1.2 Credit Risk

Credit Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration of risks.

Financial instruments that are subject to concentrations of credit risk principally consist of investments classified as loans and receivables, trade receivables, loans and advances, cash and cash equivalents, bank deposits and other financial assets amounting to Rs.35,200.27 lakhs (Previous year Rs.30,936.90 lakhs). None of the other financial instruments of the Company result in material concentration of credit risk.

The Company follows simplified approach for recognition of impairment loss allowance on trade receivables which do not contain a significant financing component.

The Company does not have significant credit exposure to any single customer. Concentration of credit risk to a single customer exceeding 10% of receivables in the FY 2021-22 is NIL. (FY 2020-21 - Rs.957.24 Lakhs ).

Bank Deposits include an amount of Rs.247.70 crores with two Indian Banks having high credit rating which are individually in excess of 10% of the total deposits of the entity as on March 31,2022. And None of the other financial instruments of the entity result in material concentration of credit risk.

5.1.3 Financial assets that are neither past due nor impaired

Cash and cash equivalents, financial assets carried at fair value are neither past due nor impaired. Cash and cash equivalents with banks has high credit-rating assigned by international and domestic credit-rating agencies. Financial assets carried at fair value are investments in Equity Shares. With respect to Trade receivables and other financial assets that are past due but not impaired, there are no indications as of March 31, 2022, that defaults in payment obligations will occur except as described in Note 3.7 on allowances for impairment of trade receivables. The Company does not hold any collateral for trade receivables and other financial assets. Trade receivables and other financial assets that are neither past due nor impaired relate to new and existing customers and counter parties with no significant defaults in past.

5.1.4 Trade Receivables

Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a detailed assessment and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

5.1.5 Financial Instruments and Cash Deposits

Credit risk from balances with banks and financial institutions is managed by the Company's treasury department in accordance with the Company’s policy. The cash surpluses of the Company are short term in nature and are invested in Fixed Deposit with Nationalized / Scheduled Commercial Banks. Hence, the assessed credit risk is low.

5.1.6 Liquidity Risk

The Company monitors its risk of shortage of funds using cash flow forecasting models. These models consider the maturity of its financial investments, committed funding and projected cash flows from operations. The Company’s objective is to provide financial resources to meet its business objectives in a timely, cost effective and reliable manner and to manage its capital structure. A balance between continuity of funding and flexibility is maintained through continued support from lenders and trade creditors.

During the year, the Company has made repayment of principal and interest on borrowings on or before due dates. The Company did not have any defaults of principal and interest as on the reporting date.

The table below summarises the maturity profile of the Company’s financial liability based on contractual undiscounted payment and financial assets based on contractual undiscounted receipts.

5.1.7 Financial Risk Management - Other Risk - Impact of CoVID-19

• Financial Assets measured at fair value amounting to Rs.1,513.47 lakhs and measured at amortised cost amounting to Rs.33,686.80 lakhs have been considered for the likelihood of increased credit risk and consequential default considering emerging situations due to CoVID-19.

• The financial assets carried at fair value by the Company are mainly investments in Equity Instruments and accordingly, any material volatility is not expected.

• Financial assets of Rs.28,328.78 lakhs as at March 31,2022 carried at amortised cost is in the form of cash and cash equivalents, bank deposits, earmarked balances with banks, interest accrued on bank deposits and others security deposits where the Company has assessed the counterparty credit risk.

• Trade receivables of Rs.5,358.02 lakhs as at March 31,2022 forms a significant part of the financial assets carried at amortised cost which is valued considering provision for allowance using expected credit loss method.

• The Company has specifically evaluated the potential impact with respect to certainty of collections from its customers.

• Since the Company closely monitors the financial strength of its customers & investments on a continuing basis and assesses actions such as changes in payment terms, no provision is deemed necessary.

(b) Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or

unobservable and consists of the following three levels:

Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

5.1.10 Capital Management:

The Company’s capital comprises Equity Share Capital, retained earnings and other equity attributable to equity holders. The primary objective of Company’s capital management is to maximize shareholders value. The Company manages its capital and makes adjustment to it in light of the changes in economic and market conditions. The Company does so by adjusting dividend paid to shareholders. The total Paid up Equity Share Capital as on March 31, 2022 is Rs.1413.03 lakhs (Previous Year: Rs.1413.03 lakhs).

The Company’s overall strategy remains unchanged from previous year.

The Company sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments.

The funding requirements are met through a mixture of equity, internal fund generation and short term borrowings.

The Company’s policy is to use short-term and long-term borrowings to meet anticipated funding requirements. The Company monitors capital on the basis of debt to equity ratio and its gearing ratio is as below:

D) Other Legal Cases:

(i) There are certain pending matters / litigations including labour matters before certain forums and the likely impact of these are not ascertainable or quantifiable at this stage.

(ii) Condoms were included for the first time under Drugs (Prices Control) Order, 2013 (DPCO 2013). National Pharmaceuticals Pricing Authority (NPPA) under Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India, by way of Notification No.SO 3348 dated 5^th November 2013, fixed ceiling prices for sale of condoms. The Company challenged inclusion of Condoms under DPCO 2013 and also the methodology for arriving at the Ceiling Prices for Condoms by a writ petition in the Hon’ble High Court of Madras. During 2015-16, the Hon’ble High Court of Delhi and Madras ruled that Condoms are drugs but fixation of ceiling for condoms is impermissible under law as the strengths and dosage for condoms are not specified in the first schedule of DPCO 2013. The Government of India filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court. The Company also filed SLP before Hon’ble Supreme Court against some points of the order of the Hon’ble High Court of Madras. Financial impact, if any, based on the outcome of the pending case is not quantifiable and hence not provided for in the books.

(B) Defined Benefit Plan:

The Employees’ Gratuity Fund Scheme managed by a Trust is a Defined Benefit Plan.

The Company operates a defined benefit plan (the Gratuity plan) covering eligible employees, which provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment.

The Company pays Gratuity to employees who have completed five years of Service with the Company at the time of resignation / Superannuation. The Company has its own scheme for payment of Gratuity. The employees who are eligible for payment of Gratuity will be paid based on Company Scheme or as per Gratuity Act, which ever is beneficial to the employees. As per Gratuity Act, Gratuity is paid at the rate of 15 days of last drawn salary for every completed year of service.

The Gratuity liability amount is contributed to approved Gratuity Fund maintained by the Life Insurance Corporation of India for Gratuity payment to the employees. The Gratuity fund has been approved by the Income Tax Authorities. The liability in respect of Gratuity and other post employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees’ services.

The entire funds relating to Gratuity is being managed by Life Insurance Corporation of India.

Investment risk:

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. When there is a deep market for such bonds; if the return on plan asset is below this rate, it will create a plan deficit. Currently, for these plans, investments are made in gratuity fund maintained by the Life Insurance Corporation of India. Interest risk:

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s investments.

Longevity risk:

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk:

The present value of the defined benefit plan liability is calculated by reference to the future salary of plan participants. As such, an increase in salary of the plan participants will increase the plan’s liability.

The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate and expected salary increase. The sensitive analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The discount rate indicated above reflects the estimated timing and currency of benefit payments. It is based on the yields / rates available on applicable Government bonds as on the current valuation date.

Escalation Rate is based on the Company's past revision trends and management's estimate of future salary increases.

Attrition Rate considered is the Management's estimate based on the past long-term trend of employee turnover in the Company.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the Projected Unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

The above mentioned figures include Human Pharma Division related amounts.

Implementation of the Code on Social Security 2020 , which is likely to impact the contributions by the Company towards Provident Fund, Gratuity and other related areas has been deferred by the Government beyond April 1, 2021. However, the Company had made an initial assessment based on the draft rules and had provided a sum of Rs 350 lakhs in the previous year towards the expected impact to its employee benefit expenses. The Company intends to do an actuarial valuation towards this liability at the appropriate time and provide for the balance, if any. Expecting the Code to be enacted in the coming Financial Year, the amount provided in the previous year is included under ‘Provisions - Current’. Refer Note 3.18.

5.5.B Exceptional Item

(i) Exceptional Items relating to FY 2021-22: In September, 2021, the Company sold land admeasuring 4.595 acres held by it at Perungudi Village, Tirunelveli District, Tamilnadu on which the Company earned a profit of Rs.249.05 lakhs.

(ii) Exceptional Items relating to FY 2020-21: The Company’s claim in respect of tax benefits due to adjustment of unabsorbed losses and depreciation of the erstwhile TTK Protective Devices Limited and TSL Techno Services Limited which merged with the Company w.e.f. 1^st April, 2012, (shown as Contingent Asset in earlier years), was allowed. The Company received the revised assessment orders in the previous FY 2020-21 and the refund received was accounted as follows:

a) Rs.809.79 lakhs towards Interest on Tax Refund received was treated as Exceptional Income; and

b) Balance Refund received (net of provisions of Rs 999.74 lakhs considered necessary) of Rs.1,964.81 lakhs was accounted as Tax Refund relating to earlier years.

1. Segments have been identified in line with the Accounting Standard on Segment Reporting (IndAS-108) considering the organisation structure and the differential risks and returns of these segments.

2. Details of products included in each of the Segments are as below :

(a) Animal Welfare (earlier included in Pharmaceuticals Segment) include products for Veterinary use.

(b) Consumer Products comprise of marketing and distribution of EVA Range of Cosmetics, Woodward’s Gripe Water, Good Home range of Scrubbers, Air Freshners, etc., (Own Brands)

(c) Medical Devices comprise manufacturing and marketing of Artificial Heart Valves, Orthopaedic Implants, etc.

(d) Protective Devices comprise manufacturing and marketing of Male Contraceptives and other allied products.

(e) Foods comprise of manufacturing and marketing of Food Products.

(f) “Others” include Printing and Publishing of Maps and Atlases.

(g) Human Pharma (earlier included in Pharmaceutical Segment) include products for Human use.

3. The segment-wise revenue, results, assets and liabilities figures relate to respective amounts directly identifiable to each of the segments. The unallocable expenditure includes expenses incurred on common services at the corporate level and also those expenses not identifiable to any specific segment.

5.15 Deferred Revenue Income

During the financial year 2019-20, the Company had received grant in the nature of exemption of custom duty on import of Machineries amounting to Rs.170.36 lakhs with certain conditions related to export of goods under Export Promotion Capital Goods (EPCG) Scheme of Government of India. This waiver had been treated as Government Grant in the books as per Ind-AS 20, wherein the Company had shown the amount of waiver as a Deferred Income Liability that will be taken to Statement of Profit and Loss on a systematic basis over the period within which the Company has to fulfil the export obligations. Management is confident of fulfilling the export obligation, through exports from Jaipur and Hosakote within the prescribed time lines.

Grant-In-Aid: The Company has entered into a Grant-in-aid Letter Agreement (GLA) with Biotechnology Industry Research Assistance Council (BIRAC) for the project titled “Pilot Clinical Investigation of Rigid Tilting Disc TTK Chitra - Titanium Heart Valve Model TC2 - the next version of the highly successful TTK - Chitra Heart Valve, Model TC1”. The main objectives of this project are (i) to manufacture 100 Nos. of valves for the clinical trial; and (ii) to complete the clinical trial involving 40 patients and the follow-up of valve performance, as per the study plan and submission of the final Pilot Study Clinical Investigation Report to BIRAC. The duration of the project is 24 months from date of acceptance of GLA and the total project cost is Rs.291.08 lakhs.

The Company had purchased Fixed Assets amounting to Rs.40.31 lakhs using funds received from BIRAC which was accounted as Deferred Revenue Income. Depreciation on the above assets for the year amounting to Rs.21.89 lakhs and Revenue Expenditure amounting to Rs.31.86 lakhs have been recognized as Subsidy Received and included in Other Operating Income. Deferred Revenue Income of Rs.18.42 lakhs (after depreciation) is shown, as on 31^st March, 2022. (P.Y. Rs.10.35 lakhs).

5.16 The second wave of CoVID-19 and the extended lockdown during the First Quarter of the financial year 2021-22 impacted the business of the Company. However, considering the ongoing vaccination drive and other sustainable actions taken by the Management, both with reference to the environment and its employees’ health, the impact has been minimal.

5.17 Disclosure in Relation to Undisclosed Income

During the year, the Company has not surrendered or disclosed any income in the tax assessments under the Income Tax Act, 1961 (such as search or survey or any other relevant provisions of the Income Tax Act, 1961). Accordingly, there are no transactions which are not recorded in the books of accounts.

5.18 Disclosure of Transactions with Struck off Companies

The Company has reviewed transactions to the extent of information available for the purpose of identifying transactions with struck off Companies. Based on the above, there are no transaction with Struck off Companies in the current financial year.

5.19 Disclosure requirements as notified by MCA pursuant to amended Schedule III

Nothing to report against the following disclosure requirements as notified by MCA pursuant to amended Schedule III:

(a) Crypto Currency or Virtual Currency

(b) Benami Property held under Benami Transactions (Prohibition) Act, 1988 (45 of 1988)

(c) Registration of charges or satisfaction with Registrar of Companies

(d) Relating to borrowed funds:

(i) Wilful defaulter

(ii) Utilisation of borrowed funds & share premium

(e) Loans to Related Parties

(f) Investments/advances through intermediaries

(g) Effect of scheme of arrangement

(h) Compliance with number of layers

(i) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with understanding that intermediary shall -

(i) Directly to indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries); or

(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(j) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding party) with the understanding (Whether recorded in writing or otherwise) that the Company shall -

(i) Directly to indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the funded party (Ultimate Beneficiaries); or

(ii) Provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

5.20 Events occurring after balance sheet date

On 23^rd May, 2022, the Board of Directors of the Company have proposed a dividend of Rs.10/- per share for the year ended 31^st March, 2022, subject to the approval of Shareholders at the 64^th Annual General Meeting. If approved, this would result in cash outflow of Rs.1,413.03 lakhs.

5.21 Approval of Financial Statements

The Financial Statements were approved for issue by the Board of Directors on May 23, 2022.