GKB Ophthalmics Ltd Management Discussions.

CAUTIONARY STATEMENT:

Certain statements made in this Management Discussion and Analysis Report describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from such expectation whether express or implied. Several factors that could make significant impact on the companys operations include global and domestic demand and supply conditions, input availability and prices, changes in Government regulations, tax laws, economic developments within the country and other factors.

i) Industry Structure and Developments:

There is no demand for Glass Lenses as they are brittle and deteriorate easily, therefore have now been replaced by plastic lenses. They are organic lenses made by polymerisation of chemical mixtures consisting mainly of monomer mixed with an initiator. Plastic Lenses have greater durability, good ultraviolet light resistance and are safe to use during any physical activity as there are less chances of breakage. Plastic Lenses are low weight as compared to glass lenses which makes them user friendly. Plastic Lenses can be tinted with colours which in turn make them very attractive. Now, new variants have been introduced by the industry being High Refractive Index lenses, which are thinner and lighter in nature.

Eyesight is a vital aspect of everyones life. Sedentary lifestyle, increasing usage of mobile phones, television and pollution has resulted in significant rise in the number of people suffering from vision-related ailments, requiring vision correction. With the increase in awareness, education and medical services, there is a big scope for increase in demand of lenses. There is an urgent need to promote investment in eye care industry.

ii) Opportunities and Threats:

The durability of plastic lenses is one of the key reasons for their high demand in the global market. The resurgence of Covid -19 pandemic, the resultant restrictons and the sluggish economic conditions all over the world has lowered the demand for lenses. However, lenses being a necessity, the company is expecting that the demand for its lenses shall pick up very soon. Relief measures by the Government are also expected to boost the economy affected because of the Pandemic.

The Companys business has been facing a stiff competition from China as Chinese are dumping lenses in India at a very lower price. The Company has made a representation to the Central Government to impose an Anti Dumping Duty on the import of the plastic lenses into India. The said application with the Central Government is under review.

iii) Segment wise or Product wise Performance:

The Company is engaged in the business of manufacturing semi-finished plastic lenses.

iv) Outlook :

It has been a year of challenges due to the ongoing corona virus pandemic. The shutting down of manufacturing units had adversely impacted the business of the Company during the first quarter of 2020. However, as the demand for lenses started increasing, the operations of the Company reached back to normalcy by the year end.

The resurgence of the pandemic in the month of April and May 2021, had again slowed down the progress. As the Company sells its products to the end customers who finish these lenses for the end consumers, the closure of optical shops in containment areas affect the demand for its products during lockdowns.

Presently, the company on an average manufactures 14,000 pieces per day of plastic lenses which it is expecting to increase during the current financial year, taking into consideration all the safety protocols provided by the Ministry of Home Affairs together with the directives issued by the State Government.

Further, the Company is taking all efforts to expedite and advance the date of pilot production of its Joint Venture Project, GSV Ophthalmics Private Limited.

v) Risks and Concerns:

We do not foresee any risks, except for foreign exchange fluctuations. Since the Company also depends on exports, the economic situation in exporting countries is likely to affect the performance of the Company.

vi) Internal Control Systems and their Adequacy:

The Company has developed adequate Internal Control Systems, commensurate to its size and business, which are aimed at achieving efficiency in operations, effective monitoring and optimum utilisation of resources. The Internal Audit is carried out by a firm of Independent Chartered Accountants, along with CFO of the Company. The reports of the Internal Auditors are periodically reviewed by the Audit Committee.

vii) Discussion on Financial Performance with respect to Operational Performance:

During the year under review, the turnover from operations of the Company declined to Rs. 2134.31 lakhs compared to Rs. 2556.17 lakhs in the previous financial year. However, the Company reported a net loss from operations of Rs. 247.92 lakhs only during the current financial year compared to a net loss of Rs. 407.19 lakhs incurred during the previous financial year.

viii) Material Developments in Human Resources/Industrial Relations front, including number of people employed :

The Ophthalmic lens industry is a labour intensive. Labour relations have been cordial with no interruption of manufacturing activities. The total number of permanent employees of the company as on March 31, 2021, was 180, out of which 152 employees are working for more than 10 years.