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.

The company is engaged in the manufacture of Semi finished plastic lenses. The Glass lenses have now been replaced by plastic lenses as Glass Lenses are brittle and heavy to wear. Plastic lenses are organic lenses made by polymerisation of chemical mixtures consisting mainly of monomer mixed with an initiator. They 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.

There is a growing demand in India for high-quality, affordable spectacle lenses due to the significant rise in eyesight-related problems. Sedentary lifestyle, increasing literacy rate in India and developing countries, increased usage of mobile phones, laptops, television and pollution has resulted in significant rise in the number of people developing several 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. Higher life expectancy resulting in rising elderly population in India is also adding up to the demand for lenses. Various Government and Non Government Organizations are taking initiatives to spread awareness by launching educational campaigns to raise awareness about the treatment for various vision related ailments. As a result of this awareness, education and medical services, the demand for lenses is increasing.

The Ophthalmic lenses market in India is expected to grow significantly on account of rising living standards with higher disposable income and increased accessibility of Ophthalmic lenses in the market, which can be directly attributed to the countrys growing number of exclusive retail outlets. With the increasing population the use of ophthalmic lens is also increasing. The good service life of plastic lenses is contributing to 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

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 had made a representation to the Central Government to impose an Anti- Dumping Duty on the import of the plastic lenses into India , the status of the same is as under:

The Ministry of Finance (Department of Revenue), Government of India, vide its Notification No. 32/2022-Customs (ADD) dated December 27, 2022, in the matter of semi-finished lenses, falling under chapter heading 9001 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), imposed an anti-dumping duty effective for a period of five years on semi finished lenses originating or exported from China PR. However, the Company is of the opinion that the said Notification provides insufficient remedy to the issue of the industry and hence, the Company has gone for an appeal.

The International manufacturers of Plastic Lenses dominate the Indian ophthalmic lens market, making it difficult for domestic manufacturers to expand their businesses. Additionally, competition from low-cost and imported Lens is also hampering the growth of this market.

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

The Plastic Lens industry witnessed a massive slowdown in its progress as a result of the spread of Covid-19 pandemic across the globe. The industry got affected due to the disruptions in manufacturing and supply chain operations. With reduced footfall in optical stores, the demand for prescription eyeglasses and lenses experienced a temporary decline. The industry has evolved from the Pandemic stage and with Indias massive population and growing average life expectancy, the Company sees a huge potential for eyewear industry.

The Company has a normal capacity of producing 25,000 pieces of lenses per day with a installed capacity of manufacturing 35,000 lenses per day. The Company manufactured 48,29,409 pieces of lenses in the financial year ended 2023-24, which it is expecting to increase by 15% in the current financial year considering the demand for its lenses . The management has chalked out plans to achieve targeted sale of Rs. 37.00 Crores during the current financial year.

In the Annual General Meeting held on September 29, 2022, it was informed to the members that the Project, GSV Ophthalmics Private Limited had become financially unviable and that the Company is in the discussion of coming up with an alternate expansion plan internally or through the Company. The expansion plan is expected to be finalized in the coming months.

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.

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. The reports of the Internal Auditors are periodically reviewed by the Audit Committee.

During the year under review, the turnover from operations of the Company was higher to the tune of Rs. 3118.05 lakhs as compared to Rs. 2772.93 lakhs during the previous year. The Company reported a net loss of Rs.341.64 lakhs during the current financial year compared to a net loss of Rs. 288.12 lakhs incurred during the previous financial year.

The significant change in key financial ratios along with the explanation therefore, is provided in Note no. 53 of the Standalone Financials, which is a part of this Report.

The Return on Networth ratio for the financial year 2023-24, has decreased due to higher losses reported for financial year 2023-24.

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, 2024, was 162, out of which 148 employees are working for more than 10 years.