GKB Ophthalmics Ltd Directors Report.

Dear Shareholders,

Your Directors have great pleasure in presenting before you the 37th Annual Report of the Company together with the Audited Annual Financial Statements of the Company for the year ended March 31, 2019.

FINANCIAL RESULTS:

The Companys financial performance for the year under review along with the previous year figures is given hereunder:

2018-19

2017-18

Revenue from Operations & Other Income

3,309.29

3,848.66

Profit/Loss before Financial Charges, Depreciation & Taxation

157.08

6.80

Less: Finance Charges

139.34

122.75

Less: Depreciation

343.13

158.16

Less: Deferred Tax

(47.54)

(16.57)

Profit/ ( Loss) for the year

(277.85)

(257.55)

Other Comprehensive Income ( Net of Taxes)

5.97

(7.87)

Total Comprehensive Income for the year

(271.88)

(265.42)

Balance from previous years

1,359.33

1,624.76

Balance carried forward

1,087.45

1,359.33

OPERATIONS:

During the year under review, the turnover of the Company was lower to the tune of Rs. 3,309.29 lakhs compared to Rs. 3,848.66 lakhs in the previous financial year. There was a net loss of Rs. 277.85 lakhs during the current financial year compared to a net loss of Rs. 257.55 lakhs during the previous financial year. As there was lack of demand for glass lenses, the Company had to switch on totally to manufacture of Plastic Lenses. As far as manufacturing of Plastic Lenses is concerned , there is stiff competition from China. Due to ongoing US – China Trade War, China is dumping their lenses more fiercely in Indian market, at lower than cost price. The Company is in the advanced stage of making a representation to the Central Government on imposing Anti – Dumping Duty.

DIVIDEND:

With the view to conserve the resources, your Directors regret their inability to recommend any dividend for the year 2018-19. No amount has been transferred to reserve for the financial year ended March 31, 2019.

SHARE CAPITAL:

The paid up equity share capital as on March 31, 2019 is Rs. 464.06 lakhs. The Share Capital of the company has been increased by Rs. 48.70 lakhs as the company has issued Equity shares to Non- Promoters and Non Promoter Groups, on preferential basis.

ISSUE OF SHARES ON PREFERENTIAL BASIS:-

The company has issued 6,50,000 equity shares of Rs 10 each on preferential basis. Out of which 4,87,000 equits shares were subscribed by Non- Promoters and Non- Promoter Groups, pursuant to a resolution passed by the shareholders in the Extra Ordinary General Meeting held on June 04, 2018. The total consideration received was Rs. 7.54 crores.

The in-principle approval from BSE Ltd., was received on July 13, 2018 and the shares were allotted within 15 days on July 27, 2018, in compliance with Chapter VII of SEBI (ICDR) Regulations, 2009. The issue price of the Shares was Rs. 155/- which included a premium of Rs. 145/- per share. The price was determined on the basis of a valuation report given by Statutory Auditor, MSKA & Associates, Chartered Accountants, appointed by the Audit Committee.

ISSUE OF EQUITY CONVERTIBLE WARRANTS:-

The Company has issued 7,50,000 Equity Convertible Warrants, on preferential basis to Promoters and Non- Promoters/ Non Promoter Groups, pursuant to a resolution passed by the shareholders on June 04, 2018. The issue price of the Warrant was Rs. 155/- which included a premium of Rs. 145/- per warrant out of which 25% of the consideration was received upfront, in compliance with Chapter VII of SEBI (ICDR) Regulations, 2009. The price was determined on the basis of a valuation report given by Statutory Auditor, MSKA & Associates, Chartered Accountants, appointed by the Audit Committee.

The total consideration received was Rs. 2.90 crores i.e. 25% of the total issue price. The warrants are issued to Promoters and Non- Promoters/ Non Promoter Groups. The Promoters have subscribed for 2,00,000 Warrants out of 7,50,000 Warrants and 5,50,000 Warrants are subscribed by Non- Promoters/ Non - Promoter Groups. The warrants may be converted into Equity Shares before the expiry of 18 months from the date of allotment of the Warrants, i.e. July 27, 2018, subject to receipt of remaining 75% of the issue price.

SUBSIDIARIES:

The Company has a Wholly Owned Subsidiary, namely, GKB Ophthalmics Products FZE, Sharjah, UAE. The Lens Company NJ, USA, is a Wholly Owned Subsidiary of GKB Ophthalmics Products FZE and a Step Down Subsidiary of the Company. The proposal for winding up of GKB Ophthalmics GmbH, is pending for approval with Reserve Bank of India, Mumbai.

On October 05, 2018, GSV Ophthalmics Private Limited has been incorporated and is a Wholly Owned Subsidiary of the Company. We are in the process of completing various formalities required for the project.

A statement under Section 129(3) of the Companies Act, 2013, containing salient features of the financial statement and performance of subsidiaries in Form AOC-1, is annexed with the Consolidated Financial Statements. In terms of Section 136(1)(a) of the Companies Act, 2013, the Audited Accounts of the subsidiaries are placed on website of the Company at www.gkb.net. A copy of the audited financial statements in respect of each of the subsidiaries will be made available to interested shareholders, upon a written request. The audited accounts of the subsidiaries are also available at the Registered Office of the Company, for inspection, during business hours.

TRANSFERS TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

The Ministry of Corporate Affairs has set up the Investor Education and Protection Fund for promotion of investor awareness and protection of investor interests. In terms of Section 124 of the Companies Act, 2013 and the rules made thereunder, the dividends in respect of the shares of the Company which have remained unpaid or unclaimed for seven consecutive years or more, are required to be transferred to IEPF.

The Company has not declared any dividend since 2010-11 and hence there are no unclaimed dividends to be transferred to IEPF from 2010-11, onwards.

ACCREDITION:

The Company has been accredited with ISO 9001:2015 by TUV SUD , South Asia Private Limited.

CHANGE IN PROMOTERS SHAREHOLDING:

The Company has allotted 4,87,000 Equity Shares of Rs. 155 each ( including a premium of Rs 145) on preferential basis to Non Promoters and Non Promoter Groups. Consequently, the Promoters shareholding has gone down to 48.41% from 54.08% and Public shareholding has gone up to 51.59% from 45.92%.

CHANGE IN NATURE OF BUSINESS, IF ANY:

There has been no change in the nature of business of the Company during the year 2018-19.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mr. Prakash V. Joshi will be retiring by rotation at the forthcoming AGM, pursuant to Articles of Association of the Company being eligible offers himself for re-appointment. Brief resume together with other relevant details of Mr. Prakash Joshi are given in Annexure to the Notice for the ensuing Annual General Meeting.

Mr. Christopher Hickman, Non-Executive Independent Director, resigned with effect from September 05, 2018, due to personal reasons. The Board places on record its appreciation for the guidance provided by him, during his tenure , as a Director of the Company. Mr. Gaurav Gupta, has relinquished the position of Non-Executive Director w.e.f. April 20, 2019. Mr. Prakash V. Joshi has relinquished the office of Executive Director and is now a Non-Executive Director w.e.f. February 01, 2019.

Mr. Noel Da Silva has ceased to be the Chief Financial Officer, Company Secretary and Key Managerial Personnel of the Company, with effect from March 31, 2019. Mr. Gurudas Sawant has been appointment as the Chief Financial Officer and Key Managerial Personnel of the Company and Ms. Pooja Bicholkar has been appointment as Company Secretary and Key Managerial Personnel of the company, both, with effect from April 01, 2019.

Pursuant to provisions of Section 2 (51) and Section 203 of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following are the Key Managerial Personnel (KMP) of the Company as on the date of this report:-

Sr. No.

Name of the KMP

Designation

1

Mr. K. G. Gupta

Managing Director

2

Mr. Gurudas Sawant

Chief Financial Officer

3

Ms. Pooja Bicholkar

Company Secretary

SEPARATE MEETING OF THE INDEPENDENT DIRECTORS:

In terms of Section 149 (8) read with Schedule IV, of the Companies Act, 2013, the Independent Directors held a Meeting on March 25, 2019, without the attendance of Non-Independent Directors and members of Management. All the Independent Directors were present at the meeting.

At this meeting, the Independent Directors:

1. Reviewed the performance of the Non-Independent Directors and the Board as a whole.

2. Reviewed the performance of Chairperson, taking into account the views of Executive Director and Non-Executive Directors.

3. Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

4. Discussed and decided about the familiarization of Independent Directors programme, conducted by the Company and also views of the Independent Directors on the familiarization programmes.

INDEPENDENT DIRECTORS DECLARATION

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 of the Companies Act, 2013 and provisions of the Listing Regulations, 2015, stating that they meet the criteria of independence, as provided therein. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act.

MEETINGS OF THE BOARD OF DIRECTORS:

During the year under review, eight Board Meetings were held. Further details are given in Corporate Governance Report, forming part of this Report. The maximum gap between two Board Meetings held during the year was not more than 120 days.

AUDIT COMMITTEE:

The composition of the Audit Committee and other details are given in Corporate Governance Report, which is part of this report.

NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of a director, relating to remuneration for directors, key managerial personnel as provided under section 178(3) of the Companies Act, 2013 and Listing Regulations, 2015.

The Remuneration Policy is stated in the Corporate Governance Report which is part of this report. Further details have been disseminated on the Companys website www.gkb.net

PERFORMANCE EVALUATION:

The Board evaluated the performance of the Board as a whole, Committees of the Board and the performance of individual directors including the Chairman of the Board pursuant to Regulation 17(10) of the Listing Regulations. The performance of the Board, Committees and individual Directors was evaluated by the Board seeking inputs from all the Directors. The Independent Directors also carried out the performance evaluation in terms of Part VIII of Schedule IV of the Companies Act, 2013, in their meeting held on March 25, 2019.

The details of the Performance Evaluation carried out is provided in the Corporate Governance Report which is a part of this report.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to provision of Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability hereby state and confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

b) that they have selected such accounting policies and applied them consistently and made judgements 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 end of financial year and of the Profit and Loss of the Company for that period;

c) that they have taken proper and sufficient care 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

d) that they have prepared the annual accounts on a going concern basis;

e) that they have laid down internal financial controls to be followed by the Company andyle=mso-spacerun: yes> that such internal financial controls are adequate and were operating effectively; and

f) that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS:

Pursuant to provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, in the 36th Annual General Meeting held on August 27, 2018, M/s. MSKA & Associates, Chartered Accountants (FRN 105047 W) were appointed as Statutory Auditors of the Company for a term of five years at such remuneration and out of pocket expenses, as may be decided by the Board of Directors of the Company. The Statutory Auditor to hold the office till the conclusion of the Annual General Meeting to be held in the year 2022-23.

AUDITORS REPORT:

The Auditors Report is unmodified and there are no qualifications, reservations or adverse remarks or disclaimers. In respect of the observation made by the Auditors in their report, the Boards response thereon is as follows:

(i) Paragraph 2 (g) (iii)

The Dividend for the financial year 2009-10 was paid to the shareholders by way of Dividend Warrants. Upon the Dividend Warrants becoming out of date/ Warrants not received/ misplaced by the shareholders, the Company had issued to the shareholders Demand Drafts in lieu of Dividend Warrants.

In terms of Circular no. SEBI/HO/MIRSD/DOP1/CIR/P/2018/73, of Securities and Exchange Board of India, dated April 20, 2018, Annexure , I (3), “Provisions with regard to payment of Dividend/ Interest/ Redemption”, the processing Bank shall ensure that any balances lying unpaid in Demand Draft Account, beyond the validity period of the instrument shall be cancelled and the Demand Draft amounts transferred earlier by the Bank in the said account shall be credited back immediately to the Unpaid Dividend Account of the Company .

The unclaimed dividend was lying with the Bank in their Stale Demand Draft Account. In November 2018, the processing Bank has sent us the list of 75 shareholders with balance aggregating to Rs. 25,842, who did not encash their Demand Draft. Thereafter, the Bank credited back only Rs. 12,822 out of Rs. 25,842 to Unpaid Dividend Account 2009-10, pertaining to 11 shareholders only, whose names also appear in the list of Stale Demand Draft account. Hence there is a duplication.

Further, as per the said SEBI circular, the Bank is required to submit to our Company the reconciled data which has not been received by the Company till date. The matter is being sorted out with the Bank and once the entire amount is credited to Unpaid Dividend Account, the same will be transferred to Investor Education and Protection Fund (IEPF).

(ii) Annexure B, vii (a) and (b) are self explanatory.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS:

There is no significant or material order passed by any Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.

INTERNAL FINANCIAL CONTROL:

As per Section 134 (5) (e) of the Companies Act, 2013, read with Rule 8 (viii) of Companies (Accounts) Rules, 2014, the Board has laid the Internal Financial Control to be followed by the Company and that such Internal Financial Controls are adequate and are operating effectively. As per Section 143(3)(i) of the Companies Act, 2013, a report issued by M/s. MSKA & Associates, Statutory Auditors of the Company is attached with their Independent Auditors Report, which is self explanatory.

RISK MANAGEMENT POLICY:

The Company from time to time identifies and assesses the various business risks and mitigates these risks by determining a response strategy. There are no potential business risk which in the opinion of the board threaten the existence of the Company.

PRATICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:

Particulars of loans, guarantees given and investments made during the year as required under Section 186 of the Companies Act, 2013 and Schedule V of the Listing Regulations are given in the notes to financial statements.

RELATED PARTY TRANSACTIONS:

All transactions entered into with related parties, pursuant to Section 188 of the Companies Act, 2013 and Regulation 23 of Listing Regulations, during the year were at arms length basis and in ordinary course of business. Therefore, disclosure in Form AOC-2, is not required.

The Company has formulated a policy on materiality of related party transactions and on dealing with related party transactions in terms of Regulation 23(1) of Listing Regulations. The Board of Directors of the Company has approved and adopted a policy on related party transactions and the same has been uploaded on Companys website (http://gkb.net/en/wp-content/uploads/Accounts/Related-party-transactions-policy.pdf)

EXTRACT OF ANNUAL RETURN:

A copy of the annual return has been placed on the website of the company and the web address is www.gkb.net

CORPORATE GOVERNANCE:

A separate section on Corporate Governance practices followed by the Company, together with certificate from the Practising Company Secretary confirming compliance, Management Discussion and Analysis Report and Declaration regarding compliance of Code of Conduct by Board Members and Senior Management Personnel forms the part of this annual report.

SECRETARIAL AUDIT:

As per provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Ms. Girija Nagvekar, Practising Company Secretary, for the financial year ended March 31, 2019, forming part of this Annual Report, is annexed herewith as Annexure - I. The Secretarial Audit Report is self-explanatory and requires no comments.

CORPORATE SOCIAL RESPONSIBILITY:

Provisions of Section 135 of the Companies Act, 2013, and Rules made thereunder, regarding Corporate Social Responsibility are not applicable to the Company.

INSURANCE:

The Company has taken adequate insurance covers for its properties and insurable interest.

PERSONNEL:

The relations between the employees and the management, during the year, have been cordial.

MATERIAL CHANGES AND COMMITTMENTS :

There are no material changes and commitments, affecting the financial position of the company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

PARTICULARS UNDER SECTION 197(12) AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

(i) the ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Name

Ratio

Mr. K. G. Gupta, Managing Director

22:1

Mr. Prakash V. Joshi, Executive Director*

5:1

* Prakash Joshi, the Executive Director was designated as Non-executive Director w.e.f. February 01, 2019.

(ii) (a) the percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

Name

Percentage

Mr. K. G. Gupta, Managing Director

0%

Mr. Prakash V. Joshi, Executive Director

NA

Mr. Noel da Silva, CFO & Company Secretary**

5.27%

**Mr. Noel Da Silva, Chief Financial Officer and Company Secretary and Key Managerial Personnel relinquished his position with effect from March 31, 2019

(ii)(b) The Non-Executive Directors of the Company are entitled to sitting fees within the limits approved by the Board of Directors and shareholders. The details of remuneration of Directors are provided in the Corporate Governance Report.

(iii) the percentage increase in the median remuneration of employees in the financial year : 9.21%

(iv) the number of permanent employees on the rolls of Company : 192

(v) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

Average percentage increase made in the salaries of employees other than the managerial personnel in the last financial year i.e. 2018-19 was 11.41% whereas the increase in the managerial remuneration for the same financial year was 1.32%.

(vi) comparison of each remuneration of the Key Managerial against the performance of the Company:

The remuneration of the Managing Director was within the minimum remuneration as per Schedule V, Part II and Section II of the Companies Act, 2013.

(vii) the key parameters for any variable component of remuneration availed by the directors :

Mr. K. G. Gupta, Managing Director is entitled to commission not exceeding 1% of the net profit of the Company computed in the manner laid down under the Act as may be determined by the Board. Due to net loss, no commission was paid to him for the year under review. None of the other Directors are paid any remuneration except sitting fees and traveling expenses for attending Board and Committee Meetings.

(viii) the ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year : N.A.

(xi) affirmation that the remuneration is as per the remuneration policy of the Company : The remuneration is as per the Remuneration Policy of the Company.

PARTICULARS OF EMPLOYEES:

None of the employees is covered under Section 197 of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

As per Listing Regulations, Management Discussion and Analysis Report is attached to this report.

FINANCE:

The Company has availed fresh term loan from State Bank of India of Rs. 220.00 lakhs during the financial year ended March 31, 2019. Total Fund based exposure of the Company with the Banks was to the tune of Rs. 1120.00 lakhs. Total Non-Fund based exposure of the Company with the Banks was to the tune of Rs. 610.00 lakhs

PUBLIC DEPOSITS

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public deposits was outstanding as on 31st March 2019.

CREDIT RATING:

CRISIL Limited – the credit rating agency, has assigned the credit rating of “CRISIL B/Stable (Re-affirmed)” to the long-term Bank facilities availed by the Company and credit rating of “CRISIL A4 (Re-affirmed)” to the short-term Bank facilities availed/proposed by the Company.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has in place a Vigil Mechanism. It provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct policy and the same has been posted on the Companys website www.gkb.net.

REPORTING OF FRAUD BY AUDITORS:

During the year under review, no offense involving fraud has been committed against the Company by its employees or officers of the Company in terms of Section 143(12) of the Companies Act, 2013.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (Prevention, Prohibition and Redressal) Act, 2013.

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal ) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

During the year under review no complaints were received.

RESUME OF HEALTH & SAFETY PERFORMANCE OF THE FACTORY:

In terms of Section 90 B (5) (d) of the Goa Factories Rules, 1985, the Company has a Occupational Health, Safety and Environment Policy, through which every employee is made responsible for the observance of the measures designed to prevent accidents, damage to property, occupational ill- health and avoidable environmental pollutants.

Safety & Health :- For the safe work environment, Hazard Identification & Risk Assessment workshops and training programme were conducted for the employees on First Aid procedure and Behavioural Safety Programme, programme on Occupational Safety, Health & Environment, etc. with a view to equip them to recognize the hazards and risks associated with a given task and take preemptive action. Also, the Annual event via Safety Week Celebrations was celebrated from (04-10 March 2019) for Statutory requirements under Factories Act and familiarization course in General Fire Fighting was organised.

Audit - Occupational Safety & Health Audit, and Internal Electrical Safety Audit was conducted to assess potential fire hazards in the factory set-up and to provide assurance on the implementation and effectiveness of these system and processes. The company has organized the medical check-up, health consultation and counselling during the period from June 2018 till September 2018.

Environment: - The Company has been focusing on achieving environmental standards with go green philosophy. The plant is certified with ISO 9001:2015 which is upgraded from ISO 9001:2008 from the previous year. The plant has continued their efforts for water conservation. Licenses under Pollution control are periodically renewed under Air, Water and Hazard Waste Management. The process of Solid waste management disposal is on regular basis through Mumbai Waste Management Ltd., Taloja in Maharashtra.

OTHER DISCLOSURES:-

1) The consolidated financial statement is also being presented in addition to the standalone financial statement of the company.

2) The maintenance of cost records is not applicable to the Company as per the amended Companies (Cost Records and Audit) Rules, 2014, prescribed by the Central Government under Section 148(1) of the Companies Act, 2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Particulars required to be disclosed under the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 are annexed herewith as Annexure – II and forms an integral part of this report.

ACKNOWLEDGEMENT:

Your Directors wish to acknowledge and are grateful for the excellent support received from all levels, customers, vendors, regulatory authorities, bankers, shareholders and all other stakeholders. Your Directors recognize and appreciate the hard work and efforts put in by all the employees of the Company and their contribution to the progress of the Company in a very challenging environment.

For and on behalf of the Board of Directors

K. G. Gupta

Place

: Mapusa - Goa.

Chairman and Managing Director

Date

: May 30, 2019

DIN : 00051863