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Opto Circuits (India) Ltd.

BSE: 532391 Sector: Others
NSE: OPTOCIRCUI ISIN Code: INE808B01016
BSE LIVE 19:40 | 19 Oct 7.03 0.11
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NSE 19:48 | 19 Oct 7.05 0.10
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OPEN 6.85
PREVIOUS CLOSE 6.92
VOLUME 34941
52-Week high 12.90
52-Week low 6.84
P/E
Mkt Cap.(Rs cr) 170
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 6.85
CLOSE 6.92
VOLUME 34941
52-Week high 12.90
52-Week low 6.84
P/E
Mkt Cap.(Rs cr) 170
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Opto Circuits (India) Ltd. (OPTOCIRCUI) - Director Report

Company director report

To

The Members

Your Board is pleased to present the 24th Annual Report on the business and operationsof Opto Circuits (India) Limited together with the financial statements of your Companyfor the financial period 1st April 2015 to 31st March 2016.

FINANCIAL HIGHLIGHTS:

OPTO CIRCUITS – STANDALONE

Rs in Lakhs

Particulars for the year-ended March 31st 2016 2015
TOTAL REVENUES 7667.51 14092.24
Expenditure 9422.80 16036.52
Profit before Depreciation (805.69) (19111.48)
Depreciation 949.60 972.80
Profit before Tax (1755.29) (20084.28)
Provision for Taxation 46.58 66.88
Profit for the year (1801.87) (20151.16)
Surplus carried to Balance Sheet (1801.87) (20151.16)

OPERATIONS - STANDALONE

Standalone Total Revenues was at Rs. 7667.51 lakhs for the Financial Year ended 31stMarch 2016 as against Rs. 14092.24 lakhs for the corresponding Financial Year ended March31 2015 a decline of 45.59 %. Standalone profit/ (loss) after tax for the Financial Yearended 31st March 2016 is at Rs. (1801.87) lakhs as against Rs.(20151.16) Lakhs for thecorresponding period Financial Year ended March 31 2015.

DIVIDENDS

Your Directors have not recommended any dividend for the year ended 31st March 2016.

TRANSFER TO RESERVES

An amount of Rs. (1801.87) lakhs is proposed to be retained in the Statement of Profitand Loss.

CHANGES IN SHARE CAPITAL.

There is no change in the Authorized Issued and Paid Up Share Capital of the Company.

DISCLOSURE REGARDING ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

During the year under review the Company has not issued Shares with DifferentialRights.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS:

During the year under review the Company has not issued Shares under Employee StockOptions.

DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES:

During the year under review the Company has not issued Sweat Equity Shares.

GROUP FINANCIAL HIGHLIGHTS:

OPTO CIRCUITS – CONSOLIDATED

Rs in Lakhs
Particulars for the year-ended March 31st 2016 2015
TOTAL REVENUES 34678.16 121191.72
Expenditure 30620.55 127270.08
Profit before Depreciation 4057.61 (6078.36)
Depreciation 4136.71 9455.28
Profit before Tax (79.10) (15533.64)
Provision for Taxation 114.91 171.28
Profit for the year (194.01) (15704.92)
APPROPRIATIONS
Proposed Dividend - -
Tax on Dividend - -
Minority Interest 48.63 (67.47)
Surplus carried to Balance Sheet (242.64) (15637.45)

OPERATIONS - CONSOLIDATED

Consolidated Revenue is at Rs. 34678.16 lakhs for the Financial Year ended 31st March2016 as against Rs. 121191.72 lakhs for the corresponding period of Financial Year 2015.Consolidated Profit after tax for the year ended 31st March 2016 is at Rs. (194.01) lakhsas against Rs. (15704.92) lakhs for the corresponding period of financial year 2015.Earnings per share for the year ended 31st March 2016 is at Rs. (0.10) (Basic).

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

During the year under review the Company continues to have Nine (9) directSubsidiaries. In accordance with Section 129(3) of the Companies Act 2013 the Companyhas prepared Consolidated Financial Statements of the Company and all its subsidiarieswhich forms part of the Annual Report. Further a statement containing the salientfeatures of the financial statement of our subsidiaries in the prescribed format AOC– 1 is appended as Annexure A to the consolidated financial statement and hence notrepeated here for the sake of brevity.

The Policy for determining material subsidiaries as approved may be accessed on theCompany’s website at the link:

http://www.optoindia.com/pdf/OCIL%20-%20Policy%20on%20Material%20Subsidiariesx.pdf

#MDStart#

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY OVERVIEW

Medical devices are an eminent part of the healthcare sector. The medical deviceindustry includes devices which simplify the prevention diagnosis and treatment ofdiseases and illnesses. The devices range from pacemakers dialysis machines tothermometers vital signs monitors and pulse oximetry sensors which are used in diverseprimary secondary and tertiary medical establishments. North America is the largestmarket accounting for over 40% followed by Europe and rest of the World. In rest of theWorld developing economies in particular China India Africa Middle East and Brazilhave been growth contributors over the past couple of years.

While an aging population chronic lifestyle diseases expansion of emerging marketsand advances in technology are expected to drive growth however there are certain factorswhich are considerably altering the healthcare demand and delivery landscape.

Companies in the industry need to adapt their R&D strategy. Policy on pricing andmechanics of their supply chain to strive in the changing regulatory clinical andbusiness landscape. Consequently companies will need to create technologies that helpreduce healthcare costs focus on the needs of the emerging markets and fit into thereimbursement patterns in developed economies.

The Indian medical device industry though in its nascent stages shows great potentialdue to its strong private healthcare system growing middle class with increasing incomelevels change in the disease profiles (lifestyle diseases) greater penetration of healthinsurance government focus on healthcare infrastructure development and rising awarenessof personal healthcare.

COMPANY OVERVIEW

Opto Circuits (India) Limited is an established global medical devices and technologygroup with a diversified product portfolio which is headquartered out of Bangalore India.Your Company along with its Subsidiaries are engaged in the design developmentmanufacture marketing and distribution of a range of medical products that are used byprimary secondary and tertiary healthcare establishments as well as in public accessfacilities such as schools fire stations policy offices in over 150 countries. YourCompany specializes in vital signs monitoring emergency cardiac care vascular treatmentsand sensing technologies. Your US FDA listed and CE marked products are manufactured inIndia Malaysia Germany and the United States.

Your Company’s interventional products include stents balloons both drug elutingand non-drug eluting and AV Shunts used for the treatment of coronary and peripheralarterial diseases as well as catheters and implants that are inserted in the human body.Your Company has proprietary technology with respect to the design and development ofthese products allowing us to Differentiate these from competing devices. Some of our wellknown brands in this segment are Dior Freeway E-Magic Plus and Genius Magic SiroPrime Freeway Shunt Balloon Catheter.

Your Company develops manufacture and market a broad range of advanced cardiacdiagnostic and therapeutic devices and state of the art patient monitoring systems. YourCompany's products include automated patient monitoring devices and services vital signsmonitors pulse oximeters and peripheral artery disease diagnostic equipment.

Your Company also sell a variety of related products and consumables and offer aportfolio of related training and key support services including the installationtraining monitoring and maintenance of our equipments which allow our customers tooptimize the usage of our products and provide us with recurring revenues on a contractedbasis. Some of our well known brands in this segment are Revo NCompass NGenuity PoetIQ etc.

STRENGTHS OF YOUR COMPANY

One of the biggest competitive advantage is the propriety technology developed by ourin-house teams which gives us control over features and intellectual property costs ofdevices and helps minimize our dependence on third party technologies. The focus onresearch and development activities has enabled us to develop devices which we believe aretechnologically superior to other devices available in the market. Your Company'sdiversified product portfolio across invasive and non-invasive caters to the needs ofprimary secondary and tertiary care establishments is well balanced and includestechnologies that command high profit margins and also allows to achieve sales anddistribution synergies coupled with economies of scale. The global distribution network issupported by a large team of third-party distributors and highly qualified internationalteam of sales personnel spread across Europe United States and other parts of the world.Your Company's extensive distribution sales and service network allows to be closer toend-users and enables us to be more responsive to market demand. Your Company has been inthe medical devices business since 1992 and have established long- standing relationshipswith physicians general practitioners and specialists clinics and hospitals. FurtherYour Company believes that our long- term relationships and the quality of our customerbase is a key strength that enables us to expand our business and operations.

BUSINESS PERFORMANCE ANALYSIS CONSOLIDATED

The Company reported consolidated Sales of 347 Crores in Financial Year 2015-16 adecline of 71% over Rs 1212 Crores reported in Financial Year 2014-15. The decline issales can be attributed to partly the hostile takeover of CSC reported elsewhere causingCSC not to be a Subsidiary of Opto Circuits (India) Limited hence the entire revenues ofCSC were not taken into this year’s revenues combined with and a softening ofEuropean Markets and overall economic slowdown. Further Opto Eurocor Healthcare Limitedand the Standalone entity were entities that witnessed a significant decrease in revenuesthereby contributing to the overall decline in consolidated revenues.

The Company reported a net loss of Rs. 2.4 Crores in Financial Year 2015-16 which apartfrom being caused by the revenue decrease was also impacted by the hostile takeover of CSCas detailed below.

The loan liability of Cardiac Science Corporation by secured lender DBS Bank Limitedwas sold by them to Aurora Capital through its Subsidiary CFS.

The Shares of Criticare Systems Inc had also been pledged to DBS for additional linesgranted by them to DBS. CFS has filed Chapter XI of the US Bankruptcy Code in USBankruptcy Courts in the Western District of Wisconsin of Cardiac Science Corporation tofacilitate Debt Restructuring and to protect itself from miscellaneous creditors. OptoCircuits (India) Limited and Opto Cardiac Care Limited as owners of Cardiac ScienceCorporation are seeking appropriate legal recourse to protect the rights of theShareholders.

Your Directors are fighting the legal battle against this hostile takeover which maytake some time but are confident that it will be to the benefit of your Company and alsoto Shareholders.

STANDALONE

The standalone Company reported Sales of Rs. 76.67 Crores in Financial Year 2015-16 adecline of 47.54% over 146.14 Crores reported in Financial Year 2014-15. The Companyreported a net loss of Rs. 18.01 Crores in the Financial Year 2015-16 being a_ected by thedecreased sales.

Your Company continues efforts to win more customers and a bigger pie of the existingbusiness to improve the overall performance.

RESULTS OF OPERATIONS STATEMENT OF PROFIT AND LOSS – STANDALONE

The following table sets forth selected financial data from our audited standaloneStatement of profit and loss the component of which are also expressed as a percentage ofour total income for the periods indicated: Rs in Lakhs

Particulars for the year ended March 31st 2016 % of Total Income 2015 % of Total Income
INCOME
Sales 7667.15 100.00 14614.32 103.70
Other Income 0.36 0.00 (522.08) (3.70)
TOTAL 7667.51 100.00 14092.24 100.00
EXPENDITURE
Manufacturing Expenses 3311.16 - 7373.71 -
Increase/Decrease in WIP&FG 144.79 - 31.35 -
Net Manufacturing Expenses 3455.95 45.07 7405.07 52.55
Administrative & Selling Expenses 1865.57 24.33 1877.05 13.32
Financial Expenses 3151.68 41.10 5781.61 41.03
Depreciation 949.60 12.38 972.80 6.90
Exceptional Items - - 18140.00 128.72
TOTAL 9422.80 122.89 34176.52 242.52
Profit before Tax (1755.29) (22.89) (20084.28) (142.52)
Provision for Taxation 46.58 0.61 66.88 0.47
Profit after Tax (1801.87) (23.50) (20151.16) (142.99)

INCOME

Total Turnover

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Sales 7667.15 14614.32
Other Income 0.36 (522.08)
Total Income 7667.51 14092.24

OTHER INCOME

Other Income which was Rs.(522.08) lakhs in FY 2015 has an income of 0.36 lakhs in FY2016. Major components of other income comprise of income/loss from foreign exchangefluctuations.

EXPENDITURE

NET MANUFACTURING EXPENSES

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Manufacturing Expenses 2657.31 6386.88
Less: (Inc)/Dec in WIP & Finished Goods 144.79 31.35
Factory Expenses 653.85 986.83
Total Expenses 3455.95 7405.06
Total Expenses as % of Income 45.07% 52.55%

Factory expenses of Rs. 653.85 Lakhs in FY 2016 vs 986.83 Lakhs in FY 2015 is due todecrease in expenses towards Research & Development.

ADMINISTRATIVE AND SELLING EXPENSES

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Administrative Expenses 746.34 705.14
Staff Expenses 977.96 1006.96
Selling Expenses 141.28 164.94
Total Expenses 1865.58 1877.05
Total Expenses as % of Income 24.33% 13.32%

FINANCIAL EXPENSES

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Financial charges 3151.68 5781.61
TOTAL 3151.68 5781.61
Total Expenses as % of Income 41.10% 41.03%

In FY 2016 financial expenses largely comprised interest cost on working capital.

PROFIT BEFORE DEPRECIATION INTEREST AND TAX (PBDIT)

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Profit before Depreciation Interest & Tax 2345.99 (13329.87)
Profit before Depreciation Interest & Tax as % of Total Income 30.60% -94.59%

NET PROFIT AFTER TAX

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Net Profit after Tax (1801.87) (20151.16)
Net Profit after Tax as % of Total Income -23.50% -142.99%

BALANCE SHEET- STANDALONE

Rs in Lakhs

Particulars As at March 31 2016 As at March 31 2015
EQUITY AND LIABILITIES
Share Holders Funds
(a) Share Capital 24231.94 24231.94
(b) Reserve and Surplus 102465.09 104266.96
126697.03 128498.90
Non -Current Liabilities
(a) Long Term Borrowings - 387.50
- 387.50
Current Liabilities
(a) Short- term borrowings 64789.34 86907.16
(b) Trade payables 22784.22 11777.84
(c )Other Current Liabilities 11444.82 14756.20
(d) Short-term provisions 125.25 93.77
99143.63 113534.97
Total 225840.66 242421.37
ASSETS
Non-Current Assets
(a) Fixed Assets
(i) Tangible assets 8498.49 9491.43
(ii) Intangible assets 10210.43 -
18708.92 9491.43
(b) Non-current investments 38166.45 38166.46
(c) Deferred tax assets (net) 5.95 35.00
38172.40 38201.46
Current Assets
(a) Inventories 28098.68 34165.16
(b) Trade Receivables 59977.61 64599.91
(c ) Cash and Cash Equivalents 276.05 175.75
(d) Short-term-loans and advances 80599.79 95779.76
(e) Other current assets 7.21 7.90
168959.34 194728.48
Total 225840.66 242421.37

NET WORTH

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Share Capital 24231.94 24231.94
Reserves & Surplus 102465.09 104266.96
Net Worth 126697.03 128498.90

LOAN FUNDS

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Short Term Borrowings 64789.34 86907.16
Long Term Borrowings 775.00 1756.51
Total Loan Funds 65564.34 88663.67

FIXED ASSETS

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Total Net Block 18708.92 9491.43

RAW MATERIAL INVENTORY

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Raw Materials & Consumables 19203.69 25125.37
Number of days to Sales 914 628

FINISHED GOODS AND WORK IN PROCESS

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Finished Goods and Work-in process 8894.99 9039.78
Number of days to sales 423 226

DEBTORS

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Debtors 59977.61 64599.91
Number of days to Sales 2855 1613

Delay in receiving payments from distributors in Europe & Asia because ofdifficult market conditions has increased the debtors’ days.

CURRENT LIABILITIES

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Trade payables 22784.22 11777.84
Other current liabilities 10669.82 13387.19
Short-term provisions 125.25 93.77
Total Current Liabilities 33579.29 25258.80
Number of days to sales 1599 631

Previous year's figures have been regrouped /reclassified wherever necessary tocorrespond with the current year's classification / disclosure.

STATEMENT OF PROFIT & LOSS - CONSOLIDATED

Rs in Lakhs

Particulars for the year ended March 31st 2016 % of Total Income 2015 % of Total Income
INCOME
Sales 31297.65 90.25% 118711.79 97.95%
Other Income 3380.51 9.75% 2479.93 2.05%
TOTAL 34678.16 100.00% 121191.72 100.00%
EXPENDITURE
Cost of materials consumed 16805.05 65517.72
Increase/Decrease in W I P & Finished Goods 293.44 (391.49)
Net Manufacturing Expenses 17098.49 49.31% 65126.23 53.74%
Employee benefit expense 5279.50 15.22% 13679.67 11.29%
Financial Cost 4366.33 12.59% 14350.99 11.84%
Depreciation/Amortization 4136.71 11.93% 9455.28 7.80%
Other Expenses 8236.89 23.75% 15973.19 13.18%
Exceptional Items (868.57) -2.50% 18140.00 14.97%
Extraordinary Items (3492.08) -10.07% - 0.00%
TOTAL 34757.27 100.23% 136725.36 112.82%
Profit for the year before Tax (79.11) -0.23% (15533.64) -12.82%
Provision for Taxation 114.90 0.33% 171.28 0.14%
Profit After Tax (194.01) -0.56% (15704.92) -12.96%

INCOME

TOTAL TURNOVER

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Sales 31297.65 118711.79
Other Income 3380.51 2479.93
Total Income 34678.16 121191.72

EXPENDITURE

MANUFACTURING EXPENSE

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Manufacturing Expenses 16805.05 65517.72
Less: (Inc)/Dec in WIP & Finished Goods 293.44 (391.49)
Total expense 17098.49 65126.23
Total expense as % of Income 49.31% 53.74%

DEPRECIATION & AMORTISATION

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Depreciation & Amortization 4136.71 9455.28
Total 4136.71 9455.28
Depreciation & Amortization as % of Income 11.93% 7.80%

STAFF & OTHER EXPENSE

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Staff Expenses 5279.50 13679.67
Other Expenses 8236.89 15973.19
Total 13516.39 29652.86
Total expense as % of Income 38.98% 24.47%

FINANCIAL EXPENSES

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Financial Charges 4366.33 14350.99
Total 4366.33 14350.99
Financial expense as % of Income 12.59% 11.84%

NET PROFIT

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Net Profit after Tax (194.01) (15704.92)
Net Profit as % of Income -0.56% -12.96%

PROFIT BEFORE DEPRECIATION INTEREST AND TAX (PBDIT)

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Profit before Depreciation Interest & Tax 8423.93 8272.63
PBDIT as % of Income 24.29% 6.83%

CASH PROFIT AFTER TAX

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Cash Profit after Tax 3942.70 (6249.64)
Cash profit after Tax as % of Income 11.37% -5.16%

BALANCE SHEET- CONSOLIDATED

Particulars As at March 31 2016 As at March 31 2015
EQUITY AND LIABILITIES
(a) Share Capital 24231.94 24231.94
(b) Reserves and Surplus 144599.50 171006.52
168831.44 195238.46
Minority Interest 1818.54 1903.23
Non-Current Liabilities
(a) Long-term borrowings 6848.13 1848.86
(b) Deferred tax liabilities (Net) - -
(c) Long term provisions 60.48 271.66
6908.61 2120.52
Current Liabilities
(a) Short-term borrowings 102754.82 135399.30
(b) Trade payables 29489.54 26573.11
(c) Other current liabilities 9028.63 58685.99
(d) Short-term provisions 2418.15 5486.27
143691.14 226144.67
Total 321249.73 425406.88
ASSETS
Non-current assets
(a) Fixed assets
(i) Tangible assets 21672.99 39548.62
(ii) Intangible assets 27494.02 13908.29
(iii) Capital work-in-progress 3301.52 3101.96
52468.53 56558.87
(b) Goodwill on Consolidation 13220.51 42114.00
(c) Non-current investments 1.09 1.09
(d) Deferred tax assets (net) 19.60 7350.43
(e) Long term loans and advances 8.34 8.34
(f) Other non-current assets 6514.77 6574.87
6543.80 13934.73
Current assets
(a) Inventories 48051.96 74992.57
(b) Trade receivables 166078.44 184271.99
(c) Cash and Cash Equivalents 955.89 2599.74
(d) Short-term loans and advances 33616.38 47528.17
(e) Other current assets 314.22 3406.81
249016.89 312799.28
Total 321249.73 425406.88

NET WORTH

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Share Capital 24231.94 24231.94
Reserves & Surplus 144599.50 171006.52
Net Worth 168831.44 195238.46

LOAN FUNDS

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Total Loan Funds 86710.52 164172.19

FIXED ASSETS

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Net block of Tangible Assets 21672.99 39548.62
Net block of Intangible Assets 27494.02 13908.29
Total Net Block 49167.01 53456.91

GOODWILL

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Opening Balance 42114.00 42114.00
Additions/(Deletion) during the year net of Capital Reserve (28893.49) -
Closing Balance 13220.51 42114.00

RAW MATERIAL INVENTORY

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Raw materials & Consumables 41751.80 53779.08
Number of days to Consumption 1391 275

FINISHED GOODS AND WORK IN PROCESS

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Finished Goods 3176.54 5011.69
Work in Process 9365.95 9952.65
Stock of Finished Goods and Work in Process 12542.49 14964.34
Number of days to Sales 146 46

DEBTORS

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Debtors 166078.44 184271.99
Number of days to Sales 1937 567

CURRENT LIABILITIES

Rs in Lakhs

Particulars 31.03.2016 31.03.2015
Current Liabilities 40095.47 48878.48
Number of days to Sales 468 150

CONSERVATION OF ENERGY

Your Company does not fall under the category of power intensive industries. Howeversustained efforts are taken to reduce energy consumption. The organization is an ISO 14001certified Company which is an international Environment Management System Standard. Theenvironmental policy of your company aims at conservation of natural resources andminimization of pollution.

FOREIGN EXCHANGE EARNINGS AND OUTGO.

Your Company earned Rs. 12334.90 Lakhs in foreign exchange in the year under review.Foreign Exchange Outflow was Rs. 1736.20 Lakhs.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

There were no employees who were in receipt of remuneration in excess of Rupees OneCrore Two Lakhs or more or employed part of year and in receipt of remuneration in excessof Rupees Eight Lakhs Fifty Thousand or more a month under information as per Section197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Amendment Rules 2016.

Having regard to the provisions of the first proviso to Section 136(1) of the Act andas advised the Annual Report excluding the information on Disclosures pertainingremuneration and other details as required under Section 197(12) of the Act read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) AmendmentRules2016. is being sent to the members of the Company. The said information is availablefor inspection at the registered office of the Company during working hours and any memberinterested in obtaining such information may write to the Company Secretary and the samewill be furnished on request.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance andadhere to the

corporate governance requirements set out by SEBI. The report on corporate governanceas stipulated under the Listing Regulations forms an integral part of this Report. Therequisite certificate from the Practising Company Secretary confirming compliance with theconditions of corporate governance is attached to the report on corporate governance.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors state that:

a) In the preparation of the Annual Accounts for the year ended March 31 2016 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that ware reasonable and prudent so as to give a true andfair view of the state of affairs of the Company for the year ended on that date;

c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the annual accounts on a going concerns basis;

e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively and

f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

LISTING OF SECURITIES

Your Company’s Equity Shares continue to remain listed on BSE Limited and theNational Stock Exchange of India Limited. As per the requirements of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 which came in effect from December 1 2015 a shortened version of the UniformListing Agreement was signed by the Company with both the Stock Exchanges. Your Companyhas paid the listing fees as payable to the BSE Limited and the National Stock Exchange ofIndia Limited for the financial year 2016-17.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from the public during the financialyear under review.

DIRECTORS AND KEY MANEGERIAL PERSONNEL

INDUCTION

On the recommendation of Nomination and Remuneration Committee The Board appointed Mr.Somadas G.C (holding DIN: 00678824) as an additional Director in the category ofIndependent Director with effect from 26th April 2016. The Directors seek your support inconfirming the appointment of Mr. Somadas G.C. in the ensuing Annual General Meeting.

RETIREMENT AND REAPPOINTMENTS

As per the provisions of the Companies Act 2013 Mr. Thomas Dietiker (holding DIN :01424625) retires by rotation and being eligible offers himself for re- appointment atthe ensuing Annual General Meeting. The Board of Directors recommends the appointment ofMr. Thomas Dietiker as Director of the Company.

None of the Independent Directors will retire at the ensuing Annual General Meeting.

DECLARATION BY INDEPENDENT DIRECTORS.

The Company has received necessary declaration from Independent Directors that theymeet the criteria of Independence laid down in Sction 149(6) of the Companies Act 2013and the provisions of Regulation 16(1)(b) of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015.

Training of Independent Directors.

To familiarize the new inductees with strategy operations and functions of our CompanySenior managerial personnel make presentations on Company’s strategy organizationstructure products technology quality facilities. Further at the time of appointmentof an Independent Director the Company issues a formal letter of appointment outlininghis or her role function duties and None of the Directors of your Company are related toeach other.

Based on the confirmations received none of the Directors are disqualified for beingappointed/re-appointed as directors in terms of Section 164 the Companies Act 2013.

During the year under review no stock options were issued to the Directors of theCompany.

POLICY ON DIRECTORS APPOINTMENT REMUNERATION AND EVALUATION.

Your Company has in place the Nomination Remuneration and Evaluation Policy of theCompany on Directors appointment and remuneration including criteria for determiningqualifications positive attributes independence of director and other matters providedunder sub Section (3) of Section 178 of the Companies Act 2013. The Policy also containsthe evaluation framework as stipulated under SEBI Listing Regulations 2015 which mandatesthat the Board shall monitor and review the Board evaluation framework. The Companies Act2013 states that a formal annual evaluation needs to be made by the Board of its ownperformance and that of its Committees and individual Directors. The evaluation of all theDirectors and the Board as a whole was conducted based on the criteria and frameworkadopted by the Board.

MEETINGS OF THE BOARD

Eight Meetings of the Board of Directors were held during the year. For furtherdetails please refer Corporate Governance section in this Annual Report.

COMMITTEES OF THE BOARD.

Currently the Board has Five Committees: Audit and Risk Management CommitteeNomination and Remuneration Committee Corporate Social Responsibility CommitteeStakeholders Relationship Committee and Finance Committee.

A detailed note on the composition and scope of the Committees is provided under theCorporate Governance Section in this Annual Report.

AUDITORS

Based on the recommendation of Audit and Risk Management Committee the Board ofDirectors appointed Messrs B.V.Swami & Co Chartered Accountants Bangalore asStatutory Auditors for the Financial Year 2015- 2016 to fill up the casual vacancy inplace of Messrs Anand Amaranth & Associate Chartered Accountants Bangalore witheffect from May 30th 2016.

Casual vacancy caused by the reason other than resignation of auditors can be filled upby the Board and Auditor appointed by Board shall hold office till the conclusion ofensuing Annual General Meeting.

As the term of Messrs B.V.Swami & Co Statutory Auditor comes to an end at theconclusion of ensuing Annual General Meeting approval of members is sought at the ensuing24th Annual General Meeting to appoint Messrs B.V.Swami & Co Chartered AccountantsBangalore as Statutory Auditors for the Financial Year 2016- 17.

Messrs B.V.Swami & Co Chartered Accountants have conveyed their consent to beappointed as the Statutory Auditors of the Company.

SECRETARIAL AUDITOR

The Board has appointed Mr. Vijayakrishna KT Practising Company Secretary to conductSecretarial Audit for the financial year 2015-16. The Secretarial Audit Report for thefinancial year ended March 31 2016 is annexed herewith marked as Annexure 1 in the Formof MR 3 to this Report. The Board of Directors of the Company hereby furnish followingexplanations and clarifications with respect the observations made by the SecretarialAuditors in their report dated July 292016 under the heading observations in points (a)to (c):

(a) Owing to the operational challenges and fund constraints your Company was unableto undertake CSR activities for the financial year 2015 -16.

(b) The Company will take necessary steps to comply the appointment of InternalAuditor.

(c) Due to technical issues in making the requisite returns digitally signing the sameand uploading delays occurred in filings of certain returns. Extreme levels of care andcaution will be exercised to ensure that such delays do not occur again.

RISK MANAGEMENT

The Company has laid down risk assessment and minimization procedures which are in linewith the best practices in the industry and as per its experience and objectives. The RiskManagement system is reviewed periodically and updated.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm’slength basis. During the year the Company had not entered into any contract/ arrangement/transaction with related parties which could be considered material in accordance withthe policy of the Company on materiality of related party transactions. Accordingly thedisclosure of Related Party Transactions as required under section 134(3)(h) of CompaniesAct2013 in Form AOC -2 is not applicable.

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company’s website at thelink:

http://www.optoindia.com/pdf/OCIL%20-%20Policy%20on%20%20Related%20Party%20Transaction.pdf

Your Directors draw attention of the members to Note No. 30 to the financial statementwhich sets out related party disclosures.

PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED

During the year under review the Company has not given any loan Guarantees or madeInvestments within the meaning of Section 186 of the Companies Act 2013.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee (CSR Committee) appointed by the Boardhas formulated and recommended to the Board a Corporate Social Responsibility Policy (CSRPolicy) indicating the activities to be undertaken by the Company which has been approvedby the Board. The CSR Policy may be accessed on the Company’s website at the link:http://www.optoindia.com/pdf/OCIL%20-%20CSR%20Policy.pdf

In terms of Section 134 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 the annual report on Corporate SocialResponsibility activities of the Company is given in Annexure 2 to this report.

Owing to the operational challenges and fund constraints; your Company was unable toundertake CSR activities for the financial year 2015-16.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company promotes ethical behavior in all its business activities and has put inplace a mechanism for reporting illegal or unethical behavior. The Company has a vigilmechanism and Whistle Blower Policy under which the employee are free to report violationsof applicable laws and regulations and the Code of Conduct to Chief Vigilance officer andAudit and Risk Management Committee of the Board. The Company further confirms that nopersonal have been denied access to the Audit and Risk Management Committee.

The policy on vigil mechanism and whistle blower policy may be accessed on theCompany’s website at the link:

http://www.optoindia.com/pdf/OCIL%20-%20Whistle%20Blower%20Policy.pdf

POLICY ON DISCLOSURE OF MATERIAL EVENTS AND INFORMATION

During the year under review your Company has adopted the Policy on Disclosure ofMaterial Events and Information in accordance with Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 to determine theevents and information which are material in nature and are required to be disclosed tothe Stock Exchanges.

The said Policy is available on the website of the Company at

http://www.optoindia.com/pdf/OCIL%20-%20Policy%20on%20Disclosure%20of%20Material%20Event%20and%20Informationx.pdf

POLICY ON PRESERVATION OF DOCUMENTS AND RECORDS.

During the year under review your Company has adopted the Policy on Preservation ofDocuments and Records in accordance with Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015. The Policy ensures that theCompany complies with the applicable document retention laws preservation of variousstatutory documents and also lays down minimum retention period for the documents andrecords in respect of which no retention period has been specified by any law/ rule/regulation. The Policy also provides for the authority under which the disposal/destruction of documents and records after their minimum retention period can be carriedout.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed herewith as Annexure 3 to thisReport.

SIGNIFICANT AND MATERIAL ORDERS.

No order was passed by any court or regulator or tribunal during the year under reviewwhich impacts going concern status of the Company.

AUDITORS OBSERVATION ON STANDALONE FINANCIAL STATEMENTS

The Board of Directors of the Company response to the Qualifications/observations madeby the Auditors in their Report dated 14th June 2016 for the Standalone FinancialStatements under the heading Basis for qualified Opinion in points [a] to [d] and Responseto Annexure to the Auditors Report Point [iii(b)].

RESPONSE TO QUALIFIED OPINION:

a) i) Receivables:

The Company is constantly pursuing these long overdues with the debtors and that theprogress is encouraging. The company was able to recover amounts aggregating to Rs. 12300Lakhs during the Financial Year. Further the company has recovered Rs. 1500 Lakhs as ondate of the report. Further the Company will constantly pursue and put in efforts torecover the long outstanding receivables and in extremely difficult cases the Companywould seek Regulatory approvals as required for write off as needed.

ii) Payables:

Regarding the payables over 3 years the Company had observed certain quality issueswith the materials supplied by the concerned vendorsand that the Company is negotiatingwith these with the vendors for an amicable settlement.

b) Interest on Bank Borrowings:

As regards the interest on borrowings from the Banks the banks have classified theseborrowings as NPA and have not been providing interest on the same as per RBI Guidelinesand hence the Company has not provided for the same.

c) Impairment of Investment and Advances to Opto Cardiac Care Limited (OCCL):

With regard to the investment in Opto Cardiac Care Ltd [OCCL] a subsidiary of thecompany subsequent to the hostile takeover of Cardiac Science Corporation USA [CSC] asubsidiaryof OCCL the Company is seeking appropriate legal recourse to protect the rightsof the shareholders. Your company will take a decision to impair the investments whenthese legal cases are settled.

d) As regards the Winding up notices and notice under the SARFAESI Act the Company isnegotiating with the respective banks for an amicable settlement of the liabilities.

RESPONSE TO ANNEXURE TO THE AUDITORS REPORT

[iii(b)] Regarding Loans and Advances to Subsidiaries:

The Company has granted unsecured loans to its subsidiaries for their working capitalneeds and no interest has been charged.

AUDITORS OBSERVATION ON CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors of the Company response to the Qualifications/observations madeby the Auditors in their Report dated 14th June 2016 for the Consolidated FinancialStatements under the heading Basis for qualified Opinion in points [1] to [8].

RESPONSE TO QUALIFIED OPINION:

1. Non Moving Stock:

The Company is examining the quality of non-moving stocks and take appropriate actionin due course.

2. i) Long outstanding Receivables:

The Company is constantly pursuing these long overdues with the debtors and that theprogress is encouraging. The Company would constantly pursue and put in efforts to recoverthe long outstanding receivables and in extremely difficult cases the Company would seekRegulatory approvals as required for write off if needed.

ii) Long outstanding Payables:

Regarding the payables over 3 years the Company had observed certain quality issueswith the materials supplied by the concerned vendors and that the Company is negotiatingwith these with the vendors for an amicable settlement.

iii) Advances to Suppliers:

The Company has given advances to suppliers for supply of the materials. The delay insupply of the materials is due to certain product/design specification changes.

3. As regards the Winding up notices and notice under the SARFAESI Act the Company isnegotiating with the respective banks for an amicable settlement of the liabilities. 4.Advances Micronics Devices Ltd has a branch at USA. There is no mandatory requirement forsuch branch audit in the USA. The Company has sufficient adequate internal controlsystems checks and mechanisms in place and is directly monitoring the same.

5. We have appointed auditors to audit our overseas subsidiaries and await the auditreports.

6. Regarding Service Tax Liability the Company has taken up this matter with thedepartment and awaiting the outcome of the assessment.

7. The Company’s management is working out options to revive these subsidiaries.

8. Loss of Investment:

Refer to the observations made in the Directors report under Business Performanceanalysis.

RESPONSE TO AUDITORS’ OBSERVATIONS ON EMPHASIS OF MATTERS

1] Please refer to the Section Business Performance and Analysis [Consolidated] inDirectors’ Report and also the section in Management Discussions and Analysis underthe Caption Consolidated- Business Performance and Analysis.

INDUSTRIAL RELATIONS

Industrial relations have been cordial and constructive which have helped your Companyto achieve production targets.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:

Your Company has always believed in providing a safe and harassment free workplace forevery individual working in Company’s premises through various interventions andpractices. The Company always endeavors to create and provide an environment that is freefrom discrimination and harassment including sexual harassment.

A policy on Prevention of Sexual Harassment a Workplace has been released by theCompany. The policy aims at prevention of harassment of employees and lays down theguidelines for identification reporting and prevention of undesired behavior. Threemember Internal Complaints Committee (ICC) was set up from the senior management withwomen employees constituting majority. The ICC is responsible for redressal of complaintsrelated to sexual harassment and follows the guidelines provided in the policy. Nocomplaints pertaining to sexual harassment was reported during the year.

ACKNOWLEDGEMENTS

Your Directors greatly appreciate the commitment and dedication of employees at alllevels that have contributed to the growth and success of your Company. Your Company alsothank all our stakeholders customers vendors investors bankers and other businessassociates for their continued support and encouragement during the year.

For and on behalf of the Board

Vinod Ramnani

Chairman and Managing Director

Place: Bengaluru Date: July 29 2016

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