ANNEXURE - I MANAGEMENTS DISCUSSION AND ANALYSIS REPORT
(A) INDUSTRY STRUCTURE AND DEVELOPMENT
According to a recent market study, 65% of the world population is affected by visual
disorders however only 26% currently have corrective equipment. It is estimated that 28%
of the Indian population requires some sort of vision correction. The market size for
ophthalmic lenses is approximately 900 million lenses each year. Your Company is engaged
in the manufacture and sale of hard resin (plastic) ophthalmic lenses. These lenses are
mainly exported overseas and sold partly in the domestic market.
The demand for eye glasses is driven by demographics, fashion and changing healthcare
practices. Aging population is increasing the demand for eye exams and glasses. Eye care
has evolved from age-related vision disorders to cosmetic concerns. Nowadays spectacles
are considered as personality enhancers and fashion accessories. Changing lifestyles and
activities that affect eyes have led to the increased use of tinted spectacle lenses,
progressive lenses and photo chromatic lenses.
(B) OPPORTUNITIES, THREATS, RISKS AND CONCERNS.
The Companys products have been enjoying consistently good brand image and loyalty
from the consumers for the past several years. There is a huge upside in the domestic
market due to continuous shift from glass to plastic. The ratio of glass to plastic in
India is 50:50 as compared to 10:90 in the rest of the world. Moreover, increased
awareness and spending capacity of an average Indian is on the rise which will hopefully
result in increased buying.
There is a huge demand for progressive lenses. The Company needs to tap into this
market with good designs and aggressive marketing. The company plans to introduce free
forming lenses as an addendum to the casting progressives. Free forming lenses gives the
Company an edge in the number of designs that we could offer.
The demand for lenses with high refractive index of 1.60 and 1.67 is picking up in the
domestic market. The Company with its imminent launch in both 1.60 and 1.67 index plans to
capitalize on these fast growing segments.
The Company has launched polarized lenses for the high-end segment and the youth with
good realizations.
The Company is looking forward to further tolling contracts with some major customers,
to ensure a steady capacity utilization and buffer against possible uncertainties at the
Market place.
Aggressive competition from major international brands and Chinese products will
continue to be the main challenge that the Company is facing. Photochromatic lenses from
leading multinationals and from better Chinese manufacturers are the largest threats to
our brand due to the perception gaining ground in many markets as product differentials
are whittling down.
Due to this reason, the Company is seeing a fall in photochromatic lens shipments. The
Company has developed on an alternative aggressively priced photo chromatic lens to fill
this increasing void, as our company is largely dependent on photochromatic lenses to
drive the bottom lines and any sudden fall in this segment could severely impact the
Company.
(C) SEGMENT WISE OR PRODUCT WISE PERFORMANCE:
The Company is engaged in the manufacturing of plastic ophthalmic lens, which is the
only segment in the Company. Hence, the results for the year under review pertain only to
this activity.
(D) OUT LOOK:
During the current financial year under review, the market for ophthalmic lenses
continues to felt the impact of worldwide economic slowdown although; the situation has
stabilized to a certain extent. However, as an insurance against the sluggish export
market, we will be focusing on the domestic market with renewed vigour to balance the
decline by ramping up volumes.
Barring the aforesaid deterrents, the company does not foresee any major threats to its
growth and market share in the coming years and the Company does not foresee any
technological obsolescence for its products. Overall, the export markets should be stable
and the Company expects a good upside in the domestic front. The road ahead is indeed
challenging both from within and at the market place. The Company has planned a special
focus to strengthen its marketing elements and build a strong brand. Other important
dimensions like quality and service levels will continue to get the attention from the
highest level of management.
With its productive capacities ramped up and a new 3 year union agreement in place, the
additional production will help to meet the growing demand for Techtran Export customers.
The Companys strategy is to first create a strong marketing team and do aggressive
branding building of both the Company and its products. The Company has identified that
one of the key product lines to achieve this goal will be the progressives lenses since
they will not only add to the bottom line but are a natural progression to slowly replace
the age old "Bi-focals". Its umbrella brand VARTEK is now given fresh fill up
with newer and contemporary Point of sales and In store merchandise elements. This surely
has caught the eye balls of both the end customers and equally importantly of the eye care
professionals (optical retails stores and their management). The Company is aggressively
pursuing new technologies like polarizing lenses which is addressed to the niche high end
markets especially the youth both in exports and domestic markets. We have set up a state
of the art manufacturing facility within the existing factory to manufacture niche
products like MR-8, MR-7 and Polarised lenses.
Techtran Ophthalmics Private Limited referred as TOPL, a subsidiary of the Company
currently has 11 surfacing laboratories that are operational. All the laboratories are
equipped with state of the art CNC machines along with hard coating equipment. Besides,
TOPL has launched a programme to upgrade some of the existing labs by installing free form
and AR Coating machines which will greatly increase the profitability.
(E) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has an extensive system of internal controls to ensure that all of its
assets are safeguarded and protected against loss from unauthorized use or disposition,
and that transactions are authorized, recorded and reported correctly. The Company has
engaged the services of an independent firm of Chartered Accountant to carry out the
internal audit and ensure that recording and reporting are adequate and proper, the
internal controls exist in the system and that sufficient measures are taken to update the
internal control system. The Company is aimed at implementing an internal control system
that is geared towards achieving efficiency in operations, optimum utilization of
resources, effective monitoring and compliance with all applicable laws and regulations.
(F) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The financial performance during the year under reference has been sluggish in terms of
sales. Your company has produced 8,21,520 lenses during the current financial year and
sold 8,77,848 lenses as compared to the production of 14,77,421 lenses and sales of
14,82,174 lenses in 2013-2014.
The export sales went down by Rs. 865 Lakhs while the domestic sales went down by Rs.
220 Lakhs over the previous year. The net sales have decreased by about Rs. 1060 Lakhs
over the previous year.
(G) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING
NUMBER OF PEOPLE EMPLOYED.
As on March 31, 2015 the company had 239 permanent employees at its manufacturing
plants and administrative office. The company recognizes the importance of human value and
believes that the quality of its employees is the key to its success. It is committed to
providing necessary human resource development and training opportunities to equip them
with necessary skills, which enables them to adapt to contemporary technological
advancements and ensures that proper encouragement both moral and financial is extended to
employees to motivate them.
Employee relations during the year continued to be cordial and your company is
committed to maintaining good relations.
(H) RISKS & CONCERNS AND RISK MITIGATION
The Company has a robust and well-structured risk management system in place. The
company is responsible for and ensures Effective Risk Management including risk
identification and mitigation. A team of professionals are given responsibility of each
location to analyze risk and assess the potential concerns and address the same to
mitigate the risks. The Company has a systematic risk identification and mitigation
framework in place, there are certain business risks, which are external and intrinsic to
the company. Over these risks the company has very little control. Some of these include a
general downturn in market demand conditions, escalation in raw material prices/ Risk of
Forex fluctuations and changes in regulatory frameworks in India and elsewhere.
CAUTIONARY STATEMENT:
Statements in the managements discussion and analysis report, which seek to describe
the companys objectives, projections, estimates, expectations or predictions may be
considered to be "forward looking statements" and are stated as required by
applicable laws and regulations. Actual results could differ from those expressed or
implied. Many factors including global and domestic demand-supply conditions, prices,
raw-materials availability, technological changes, changes in government regulations and
policies, tax laws and other statutes may affect the actual results, which can be
different from what the Directors envisage in terms of future performance and outlook.
|
On behalf of the Board of |
|
Techtran Polylenses Limited |
| Place: Hyderabad |
Dr. Jayaram Chigurupati |
| Date : 11/08/2015 |
Chairman |
+91-9892691696
