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:
Glass lenses have been used for different purposes so far. However,
there is no demand for Glass Lenses as they are brittle and heavy to wear, 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now been replaced by plastic lenses.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 can be easily
coated with various coatings such as the anti - reflective coatings depending upon the end
user requirements. Plastic Lenses are low weight as compared to glass lenses which makes
them user friendly. They can be tinted with colours that boosts their cost and in turn
makes 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 literacy rate in India and developing countries, rising usage of mobile phones,
laptops, television and pollution has resulted in significant rise in the number of people
developing several visual ailments and eyesight-related problems, such as myopia,
hypermetropia, and presbyopia which is contributing to the increase in demand for lenses
as an appropriate measure to prevent further damage. Various Government and Non Government
Organisations are taking initiatives to spread awareness about the treatment for various
vision related ailments. 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 good service life of plastic lenses is one of the key reasons for
their high demand in the global market. Apart from aiding in improving visual acuity,
Plastic Lenses are also being used in the eye safety equipment of firefighters and
military personnel as they are shatter resistant. Rising usage in medical devices,
consumer electronics and eye safety equipments is boosting the market growth.
The uncertainties associated with the Covid -19 pandemic, the mandatory
lockdowns imposed by the government of numerous countries, the resultant restrictions and
the sluggish economic conditions all over the world has lowered the demand for lenses. The
availability of contact lenses is also expected to slow down the growth of the plastic
lens market. 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.
India with its large population is one of the prominent markets for the
sales of plastic lenses. However, 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 :
The Plastic Lens industry witnessed a massive slowdown in its progress
as a result of the spread of Covid-19 pandemic across the globe. However, with the onset
of recovery, the demand for lenses started increasing, the operations of the Company
reached back to normalcy during the year.
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 affected
the demand for its products during lockdowns.
Presently, the company on an average manufactures 18,000 pieces per day
of plastic lenses which it is expecting to increase to 24,000 pieces by the end of
financial year 2022-23. The management has chalked out plans to achieve targeted sale of
Rs. 40 .00 Crores during the current financial year.
The JV Project, GSV Ophthalmics Private Limited, is being re-evaluated
because a lot of raw material costs (monomer from multinational companies, etc.,) has
increased significantly during the pandemic. However, selling prices from our own
competitors remain unchanged. The management of the Company and SOMO are in continuous
discussion about how to overcome this new challenging scenario.
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 increased to Rs. 2704.82 lakhs compared to Rs. 2134.31 lakhs in the previous
financial year. However, the Company reported a net loss from operations of Rs. 236.69
lakhs only during the current financial year compared to a net loss of Rs. 247.92 lakhs
incurred during the previous financial year.
The significant change in key financial ratios in percentage along with
the explanation therefore, are as under:
| Ratios |
F.Y. 2021-22 |
F.Y. 2020-21 |
| Debtor Turnover Ratio |
4.02 |
2.40 |
| Inventory Turnover Ratio |
2.23 |
1.70 |
| Return on Networth |
5.727 |
6.185 |
The Debtors turnover ratio indicates the effectiveness in collecting
accounts receivable. The Company is having a favorable ratio indicating efficiency in
processing credit. A high Inventory Turnover ratio indicates the ability to sell the goods
quickly and that there is considerable demand for products. The change in return on
networth is due to the loss reported for financial year 2021-22.
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, 2022, was 179, out of which 160
employees are working for more than 10 years.
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