To the Members
Your Board is pleased to present the 27th Annual Report on the business and operationsof Opto Circuits (India) Limited together with the Audited Financial Statements of yourCompany for the year ended March 31 2019.
FINANCIAL HIGHLIGHTS : (*Rs* in Lakhs)
|Particulars for the year ended March 31st || |
|2019 ||2018 ||2019 ||2018 |
|I. Revenue from operations ||10481.54 ||6346.46 ||25558.37 ||22836.29 |
|II. Other Income ||316.41 ||24.57 ||402.60 ||120.76 |
|III. Total Income (I+II) ||10797.95 ||6371.03 ||25960.97 ||22957.05 |
|Expenses || || || || |
|Cost of materials consumed ||4263.92 ||2763.93 ||12034.08 ||10300.64 |
|Purchase of stock in trade ||- ||- ||- ||114.92 |
|Changes in inventories of FG WIP & Stock in trade ||17.80 ||6.42 ||(86.32) ||(30.06) |
|Employee benefit expenses ||862.69 ||766.06 ||4057.48 ||3624.94 |
|Finance cost ||114.64 ||136.32 ||323.90 ||575.99 |
|Depreciation & Amortisation Expenses ||881.44 ||906.04 ||1078.73 ||1258.70 |
|Other Expenses ||1165.36 ||791.75 ||3173.75 ||3623.38 |
|IV. Total Expenses ||7305.85 ||5370.52 ||20581.61 ||19468.51 |
|V. Profit /(Loss) before exceptional items and tax (III-IV) ||3492.10 ||1000.51 ||5379.35 ||3488.54 |
|VI. Exceptional items ||- ||- ||- ||(160.29) |
|VII. Profit /( Loss) before tax (V-VI) ||3492.10 ||1000.51 ||5379.35 ||3648.83 |
|VIII. Tax Expenses || || || || |
|1) Current tax ||- ||- ||218.52 ||89.43 |
|2) Deferred tax ||- ||- || ||0.43 |
|IX. Profit /(Loss) for the period from continuing |
|3492.10 ||1000.51 ||5160.84 ||3558.98 |
|X. Profit /(Loss) from discontinued operations ||- ||- ||- ||- |
|XI. Tax expenses of discontinued operations ||- ||- ||- ||- |
|XII. Profit /(Loss) from discontinued operations |
after tax ( X-XI)
| || || ||- |
|XIII. Profit/(loss) for the period (IX+XII) ||3492.10 ||1000.51 ||5160.84 ||3558.98 |
|XIV. Other Comprehensive Income/(loss) || || || || |
|a) Items that will not be reclassified subsequently to profit/loss || || || ||- |
|b) Items that will be reclassified subsequently to profit/loss || || || ||- |
|XV.Total Comprehensive income for the year (XIII+XIV) ||3492.10 ||1000.51 ||5160.84 ||3558.98 |
|Profit for the year attributable to: || || || || |
|Shareholders of the company ||3492.10 ||1000.51 ||5137.69 ||3462.16 |
|Non-Controlling Interests ||NA ||NA ||23.15 ||96.82 |
|Earnings Per Equity Share || || || || |
|Basic ||1.20 ||0.39 ||1.77 ||1.34 |
|Diluted ||1.20 ||0.39 ||1.77 ||1.34 |
COMPANY'S PERFORMANCE ON STANDALONE BASIS
Standalone total revenue was at Rs.10481.54 lakhs for the financial year ended 31stMarch 2019 as against Rs.B346.46 lakhs for the corresponding financial year ended March31 2018 a incline of 65.16%. Standalone profit/ (loss) after tax for the financial yearended 31st March 2019 is at Rs. 3492.10 lakhs as against Rs. 1000.51 lakhs for thecorresponding period financial year ended March 31 2018. Earnings per share for the yearended 31st March 2019 is at Rs.1.20 Basic.
ON CONSOLIDATED BASIS
Consolidated revenue is at *Rs* 25558.37 lakhs for the financial year ended 31stMarch 2019 as against *Rs* 22836.29 lakhs for the corresponding period of financial year2018. Consolidated profit after tax for the year ended 31st March 2019 is at *Rs* 5160.84lakhs as against *Rs* 35558.99 lakhs for the corresponding period of financial year2018. Earnings per share for the year ended 31st March 2019 is at *Rs* 1.77Basic.
Your Directors have not recommended any dividend for the year ended 31stMarch 2019.
TRANSFER OF RESERVE
Your Directors have decided to retain the entire amount of *Rs* 3492.10 lakhs inretained earnings.
CHANGES IN SHARE CAPITAL
There was no change in the authorized share capital of the Company.
During the year under review issued and paid up capital stood revised as under:
As per the terms approved by the Shareholders at their 26th Annual General Meeting heldon September 29 2018 The Board of Directors of the company at its meeting held on 22ndJanuary 2019 has allotted 13130338 Equity shares of 10/ each is sued at a price of Rs.15/-per share to other than promoters on a preferential basis in accordance SEBIGuidelines for Preferential Issue. Consequent to above Preferential Allotment the Paid upCapital is revised as under;
|Issued & paid up capital |
|Before allotment ||Issued: Rs.2877573060/- consisting of 287757306 equity shares of face value of Rs.10/- each. |
Paid-up: Rs. 2874954060/- consisting of 287495406 equity shares of face value of 10/- each fully paid.
|After allotment ||Issued: Rs.3008876440/- consisting of 300887644 equity shares of face value of Rs.10/- each. |
Paid-up: Rs. 3006257440/- consisting of 300625744 equity shares of face value of 10/- each fully paid.
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.
SUBSIDIARIES JOINT VENTURE AND ASSOCIATE COMPANIES:
During the year under review the Company continues to have 05 direct subsidiaries. Inaccordance with Section 129(3) of the Companies Act 2013 the Company has preparedconsolidated financial statements of the Company and all its subsidiaries which formspart of the Annual Report. Further a statement containing the salient features of thefinancial statement of our subsidiaries in the prescribed form at AOC-1 is appended asAnnexure-A to the consolidated financial statement and hence not repeated here for thesake of brevity.
The policy for determining material subsidiaries as approved may be accessed on theCompany's website http://www.optoindia.com/pdf/2019-20/OCIL%20-%20Material%20Subsidiaries.pdf
There has been no material change in the nature of the business of the subsidiaries.
MANAGEMENT DISCUSSION AND ANALYSIS
In terms of Provisions of Regulation 34 of SEBI (LODR) Regulations 2015 theManagement Discussion and Analysis is set out as follows:
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 sensor 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 of 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 arising awarenessof personal health care.
Overview of Medical Device industry: The Indian medical device market is growingsteadily. It was valued at US$3.5 Billion in 2015 and could expand to approximately US$4.8 Billion by 2019. As India's economic healthcare and social landscapes evolve itsmedical device market emerges as a promising opportunity for foreign manufacturers.
Opportunities in the Indian market: India relies on imports to supply its healthcaresystem with medical technology. The medical tourism and luxury healthcare markets areamong India's fastest- growing industries which create significant demand forspecialized high-tech medical equipment.
There is consistent demand for surgical instruments cancer diagnostics orthopedic andprosthetic equipment imaging orthodontic and dental implants and electro medicalequipment.
Industry challenges in India: Medical Device Regulation in India only apply to certainproduct categories. However India's underdeveloped regulatory framework is a significantobstacle for foreign manufacturers of regulated device types. The weak rupee makes itdifficult for some medical device companies to remain profitable in this marketparticularly for manufacturers competing with low- cost Chinese products. Also foreignmanufacturers will also encounter significant competition from American European andJapanese companies.
Opto Circuits (India) Limited is an established global medical devices and technologygroup with a diversified product portfolio which is head quartered out of BangaloreIndia. 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. Your Company specializes in vital signs monitoring emergency cardiaccare vascular treatments and sensing technologies. Your US FDA listed and CE markedproducts are manufactured in India Malaysia Germany and the United States.
Your Company's interventional products include stents balloons both drug eluting andnon-drug eluting and AV shunts used for the treatment of coronary and peripheral arterialdiseases as well as catheters and implants that are inserted in the human body. YourCompany has proprietary technology with respect to the design and development of theseproducts allowing us to differentiate these from competing devices. Some of our well knownbrands in this segment are Dior Freeway E-Magic Plus and Genius Magic Siro PrimeFreeway Shunt Balloon Catheter.
Your Company develops manufacture and market a broad range of advanced cardiacdiagnostic and therapeutic devices and state of 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 sells 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 RevoNCompass NGenuity Poet IQetc.
Unitexis Vascular Inc an Opto Circuits Group Company is a leader in non invasivetechnology has released the next generation MultiLab vascular system Mlutilab ROODRA isamong the first in the industry to provide extreme flexibility and configurability. Thisone touch fully functional vascular system provides a 24-inch touch screen monitor on amulti-axis mount for ergonomically correct usage.
Eurocor GmbH Germany a Wholly Owned Subsidiary of Opto Eurocor Health Care Limited isan international leader in vascular devices such as stent and Drug Eluting Balloontechnology related services and solutions recently announced the acquisition of a patentapplication related to bioresorbable stents.
Bioresorbable stents represent a novel alternative to traditional vascular stenttechnology. This novel stent design uses a material combination of metal and polymer whichcombines the advantage of bioresorbable and robust stent properties. The patent grant willbolster the extension of Eurocor Portfolio to include bioresorbable devices capable ofaddressing significant new markets and customers globally. Since the launch of thecompany's [ Eurocor GmbH Germany] patented Drug Eluting Ballon [DEB or DCB] productrange Eurocor has invested in future technology that avoids having to leave meta behindin coronary and peripheral lesions. With the advent of Bioresorbable stents the companyis quite excited to extend its patented and novel product technology and to provide metalfree fully resorbable stent products.
STRENGTHS OF YOUR COMPANY
One of the biggest competitive advantages 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 personal 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.
OPTO CIRCUITS [INDIA] LTD- STANDALONE FINANCIALS.
Standalone total revenue was at *Rs* 10481.54 Lakhs for the financial year ended 31stMarch 2019 as against ^6346.46 Lakhs for the corresponding financial year ended 31stMarch2018a increase of 65.16%. Standalone Profit/ (Loss) After Tax for thefinancial year ended 31st March 2019 is at *Rs* 3492.10 Lakhs as against *Rs*1000.51 Lakhs for the corresponding period financial year ended 31st March2018. Basic Earnings per Share for the year ended 31st March 2019 is at *Rs*1.20 .
Your Company continues efforts to win more customers and a bigger pie of the existingbusiness to improve the overall performance.
The Company has borrowings from State Bank of India HDFC Bank Ltd Yes Bank LtdStandard Chartered Bank Ltd and Bank of Nova Scotia Ltd for which no provision forinterest is made in the financial statements as these Banks have categorized
the respective borrowings as NPA. The Company has also lines of operational Credit andBorrowings from Induslnd Bank Ltd classified as standard.
The Management has submitted proposals for One Time Settlement [OTS] /NegotiatedSettlement/ Compromise Proposal/ Restructuring etc of its Loan portfolios with State Bankof India HDFC Bank Ltd and Bank of Nova Scotia Ltd.
The Company has entered into negotiated settlement with Yes Bank Ltd for settling thetotal outstanding amount of *Rs* 33.51 Crore for a consolidated agreed amount of *Rs* 8.5Crore to be paid as per the structutred installements by April 2021.
With State Bank of India the Company has made a proposal for Compromise Settlement for83 Crores and that the company has already Paid *Rs* 12.5 Crores in a phased manner asUpfront Money and for the balance settlement amount of 70.5 Crores awaiting for thebanks' Final approval and being followed up on a regular basis.
With HDFC Bank Ltd the company has given a proposal for restructuring of its Loanwherein the entire loan amount is programmed to be paid in 5 years 3 months time frame ina phased out manner with a security creation and cash flow plans along with theclarifications sought by HDFC Bank had been submitted awaiting the approval from thebank.
With Bank of Nova Scotia Ltd the company has been submitting revise proposal forrestricting of loan liability while the Bank has moved through the provisions of SARFAESIAct the security viz 250 Acres of landed property in SEZ Hassan. The management ishaving series of discussions with the bank and offered a few options including theencashment of the said security /or the sale proceeds/consideration from prospectiveinvestors / buyers so of the parcels of lands towards appropriation of the said loanliability as the valuation of the said property would be adequate to meet the loanliability.
The Management is actively pursuing the above settlement proposals with the respectivebanks on an 'on-going' basis.
BUSINESS PERFORMANCE ANALYSIS CONSOLIDATED
Consolidated revenue is at Rs.25558.37 Lakhs for the financial year ended 31stMarch2019 as against Rs. 22836.29 Lakhs for the corresponding period of financial year2018. Consolidated Profit
after Tax for the year ended 31st March 2019 is at *Rs* 5160.84 Lakhs asagainst *Rs* 35558.99 Lakhs for the corresponding period of financial year 2018. BasicEarnings per Share for the year ended 31st March 2019 is at *Rs* 1.77.
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 ISO14001:2015 certified
Company which is an international Environmental 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* 10108.17 Lakhs in foreign exchange in the year under review.
Foreign Exchange outflow was Rs. 3570.07 Lakhs.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
There were no employees who were in receipt of Rupees One Crore Two Lakhs or moreemployed during the financial year or employed part of year and in receipt of remunerationin excess of Rupees Eight Lakhs Fifty Thousand or more a month under information as perSection 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Amendment Rules2016.
Having regard to the provisions of the second 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 withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)Amendment Rules 2016 is being sent to the members of the Company. The said informationis available for inspection at the registered office of the Company during working hoursand any member interested in obtaining such information may write to the Company Secretaryand the same will be furnished on request.
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 corporategovernance as stipulated under the Listing Regulations forms an integral part of thisReport. The requisite certificate from the practicing company Secretary confirmingcompliance with the conditions of corporate governance and certification ofNon-Disqualification of Directors are attached to the report on corporate governance.
DIRECTORS' RESPONSIBILITY STATEMENT
The financial statements are prepared in accordance
with Indian Accounting Standards (Ind AS).
Pursuant to Section 134(3) (c) and 134 (5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that
a) In the preparation of the Annual Accounts for the year ended March 31 2019 theapplicable accounting standards have been followed and there are no material departuresfrom the same.
b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the company for that period;
c) The Directors have taken proper and sufficient
care for the maintenance of adequate accounting records in accordance the provisions ofthe Act for safe guarding the assets of the Company and for preventing and detecting fraudand other irregularities.
d) The Directors have prepared the annual accounts on the going concerns basis.
e) The Directors have laid down internal financial
controls to be followed by the Company and that such internal financial controls are
adequate and are operating effectively 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 the NationalStock Exchange of India Limited. Your Company has paid the listing fees as payable to theBSE Limited and the National Stock Exchange of India Limited. for the financial year2019-20.
Your Company has not accepted any fixed deposits from the public during the financialyear under
Mr. Vinod Ramnani (DIN: 01580173) Non Executive Director is liable to retire byrotation at the 27th Annual General Meeting.
None of the Independent Directors will retire at the ensuing Annual General Meeting.
DECLARATION BY INDEPENDENT DIRECTOR
The Company has received necessary declaration from Independent Directors that theymeet the criteria of Independence laiddown in Section 149(7) of the Companies Act 2013that he/she meets the criteria laid down under Section 149 (6) of the Companies Act 2013read with Regulation 25 of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015.
All the Independent Directors have also confirmed
under Regulation 16(b) of SEBI (LODR) Regulations 2015 that they are notNon-Independent Director of another Company on the Board of which any Non- IndependentDirector of the listed entity is an Independent Director.
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.
Based on the confirmation 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 oftheCompany.
MEETING OF THE BOARD
Nine Meetings of the Board of Directors were held during the year. For further detailsplease 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 Committee Stakeholders Relationship Committee and Finance Committee.
A Detailed Note on The Composition and Scope of The Committee is Provided Under TheCorporate Governance Section in This Annual Report.
At the 25thAnnual General Meeting held on September 05 2017 members have approved theappointment of M/s. B.V. Swamy & Co. Chartered Accountants Bengaluru (ICAI Firm RegNo.009151S) as Statutory Auditors of the Company.
M/s. B.V. Swamy & Co. Statutory Auditors holds office till the conclusion of theAnnual General Meeting to be held in the year 2020.The requirement of annual ratificationof auditor's appointment at the Annual General Meeting has been omitted pursuant toCompanies (Amendment) Act 2017 notified on May 07 2018.
The Statutory Auditors of the Company have not reported any fraud as specified underthe second proviso of Section 143(12) of the Companies Act 2013 (including any statutorymodification(s) or reenactments) for the time being in force).
The Board has appointed Mr. Vijayakrishna K.T. Practicing Company Secretaryto conductSecretarial Audit for the financial year 2018-19. The Secretarial Audit Report for thefinancial year ended March 31 2019 is annexed here with marked as Annexure 1 in the Formof MR 3 to this Report. The Board of Directors of the Company here by furnish followingexplanations and clarifications with respect the observations made by the SecretarialAuditors in their report dated 28th May 2019 under the heading observations in points a)to d)
a)& b) The Company has taken corrective actions & ensure that such delays donot occur again.
c) The Company has taken corrective actions to strengthen Secretarial Standards &certain provisions of the Act.
d) The Company is in the process of inducting Independent Director on the Board ofunlisted material subsidiary.
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 reportable materialweakness 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's length basis. Duringthe year the Company had not entered into any contract/ arrangement/ transaction withrelated parties which could be considered material in accordance with the policy of theCompany on materiality of related party transactions. The disclosure of Related Partytransactions as required under Section 134(3)(h) of Companies Act 2013 in Form AOC2 isannexed here with marked as Annexure 2.
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 the linkhttp://www.optoindia . com/pdf/2019-20/OCIL%20-%20RTP%20Policy.pdf
Your Directors draw attention of the members to Note No.32 to the financial statementwhich sets out
related party disclosures.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
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-%20 CSR%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 3 to this report.
Due to Non availability of profits the Company was
not required to spend any amount on CSR activities during the Financial Year 2018-2019.
POLICY ON MATERIAL SUBSIDIARIES.
The policy is used to determine material subsidiaries and to provide governance framework for them. In line with SEBI (LODR) (Amendment) Regulations 2018 the policy standrevised w.e.f April 01 2019. The Policy may be accessed on Company's website at the Link:http://www.optoindia.com/pdf/2019-20/ OCIL%20-%20Material%20Subsidiaries.pdf
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 was revised and adopted effective April 01 2019.The Policy may be accessedon Company's website at the Link: http://www.optoindia .com/pdf/2019-20/OCIL%20Nomination%20 Remuneration%20Policy.pdf
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 vigil mechanism andwhistle blower policy under which the employee are free to report violations of applicablelaws and regulations and the code of conduct to chief vigilance officer and Audit andRisk Management Committee of the Board. The Company further confirms that no personal havebeen denied access to the Audit and Risk ManagementCommittee.
The policy on vigil mechanism and whistle blower policy may be accessed on theCompany's website at the link:http://http://www.optoindia. com/pdf/OCIL - Whistle BlowerPolicy.pdf
POLICY ON DISCLOSURE OF MATERIAL EVENT SAND INFORMATION
Your Company has adopted the Policy on Disclosure of Material Events and informationin accordance with Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 to determine the events and information whichare material in nature and are required to be disclosed to the Stock Exchanges.
The said policy is available on the website of the Company athttp://www.optoindia.com/pdf OCIL - Policy on Disclosure of Material Event andInformationx.pdf
POLICY ON PRESERVATION OF DOCUMENTS AND RECORDS
Your Company has adopted the policy on Preservation of Documents and Records inaccordance with Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015. The Policy ensures that the Company complies with theapplicable document retention laws preservation of various statutory documents and alsolays down minimum retention period for the documents and records in respect of which noretention period has been specified by any law/rule/regulation. The policy also providesfor the authority under which the disposal/ destruction of documents and records aftertheir minimum retention period can be carried out.
EXTRACT OF ANNUAL RETURN
Extract of Annual Return of the Company is annexed here with as Annexure 4 to thisReport.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY.
There have been no material changes or commitments affecting the financial position ofthe
Company between the end of the Financial Year and as on the date of this report towhich the Financial Statements relate.
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.
The Company has complied with all applicable Secretarial Standards.
RESPONSE TO AUDITORS OBSERVATIONS
The Board of Directors of the company furnish following response to the Qualifications/observations made by the Auditors in their Report dated May 28 2019 for the StandaloneFinancial Statements and Consolidated Financial Statements.
RESPONSE TO AUDITORS OBSERVATION ON STANDALONE FINANCIAL STATEMENTS FOR FY 2018-19.
RESPONSE TO QUALIFIED OPINION:
The Debtors represent the export bills receivables discounted with the banks and we arepursuing the same with the respective debtors for recovery; Meanwhile we have also soughtthe requisite approvals for Write off of the said Receivables over 36 months [Rs 265.55Crores] as per the Regulatory requirements with the respective AD banks and also taken upthe same with RBI while we have made a provision for bad debts amounting to Rs.265.55crores and the said amounts being considered Doubtful book debt in our Audited FinancialStatements.
With regard to the payables over 3 years the company had taken up with the vendors andaddressed certain inadequacies in the quality specifications with respect to the materialssupplies by these vendors and the negotiations are underway to sort these out to arrive ata mutually acceptable settlement. The Company is following up this matter.
b] Investment in subsidiary- Opto Cardiac Care Ltd[ OCCL]
b-i] Auditors' Observation is Noted.
b-ii] The company has taken up the matter with the Hon'ble City Civil Court inBangalore Karnataka and obtained Mandatory Injunction against DBS Bank Ltd.
Further The Company also made a claim of USD 160.82 Million against DBS Bank Ltd videits letter dated 24th January 2017 and this claim is part of the above petition filedbefore the Hon'ble City Civil Court Bangalore by the Company and that the matter issub-judice. The Company has also informed all the other lender Banks in the above matter.
The Company also has lodged a complaint with Debt Recovery Tribunal -2 [DRT-2]Bangalore on the company's claim against DBS Bank Ltd. DRT-2 Bangalore had sought response/ explanations from DBS Bank Ltd in this matter.
Your company will take a decision to impair the investments when these legal cases aresettled.
c] Bank Borrowings - NPA - Negotiated Settlement / OTS etc:
Winding up order has been passed. Petition for recall of the winding up order pendingbefore high court of Karnataka. Compromise settlement for re phasement of loan liabilityapproved and sanctioned by the banks submitted to the high court awaiting recall of thewinding up order. High court of Karnataka stayed the action by the official liquidator.
d] Impairment of Assets-AS 36
The Company continues to battle and survive amidst absence of working capitalassistance in view of the aforesaid facts while trying its best & managing to repaythe banks and to keep the operations of the company running and to meet the existingorders. There is inadequate working capital funds support for sustaining the operationsthe company is not able to allocate further resources for this intangible assets.
Response to Annexure to the Auditors Report[ CARO] [i] to [xvi]
[ii] The Company has taken note of the comments by the Auditors and that the companywould carry out physical verification of inventories on a quarterly yearly basis from thisfinancial year.
[iii] [a] [b] & [c] The Company had granted unsecured loans to its subsidiaries tomeet their working capital requirements and that no interest has been charged since thecompany is not incurring interest costs.
[vii] with respect to the Auditors Comments and observations in para [vii] [vii-a] tothe Annexure this is noted and in future no delays would occur as we ensure compliance ofthe time lines for making such statutory payments.
[vii-b] The said amounts or demands are disputed and we have taken up the matter withCIT Appeals ITAT and with the Honorable High Court and are being followed up.
[xiv] During the Financial Year the company alloted 13130338 equity shares of *Rs*10 each issued at a price of *Rs* 15 per share to other than promoters on preferentialbasis.
The said issue and allotment is as per the requirements of the Companies Act and wasapproved by the Stock Exchanges as per the Listing obligations provisions under ChapterVII SEBI (ICDR) Regulations 2009 and Regulatory requirements.
RESPONSE TO AUDITORS OBSERVATION ON CONSOLIDATED FINANCIAL STATEMENTS FOR FY 2018-19.
The Board of Directors of the Company response to the Qualifications/observations madeby the Auditors in their Report dated 28th May 2019 for the Consolidated FinancialStatements under the heading Basis for Qualified Opinion in points
 to 
RESPONSE TO QUALIFIED OPINION
1. Long outstanding Receivables/ Payables
The Holding Company is constantly pursuing these long over dues with the Debtors andthat the management has taken a stand for provisioning of receivables over 36 monthsaggregating to *Rs* 265.55 Crores. The company will be sought the requisite Regulatoryapprovals for write off of these receivables with the respective AD Banks and awaitresponse.
With regard to the payables over 3 years the company had taken up with the vendors andaddressed certain inadequacies in the quality specifications with respect to the materialssupplies by these vendors and the negotiations are underway to sort these out to arrive ata mutually acceptable settlement.
2. Investment in Opto Cardiac Care Ltd .Subsidiary- Opto Cardiac Care Ltd [OCCL]
Auditors' Observation is Noted .
The company has taken up the matter with the Hon'ble City Civil Court in BangaloreKarnataka and obtained Mandatory Injunction against DBS Bank Ltd.
Further The Company also made a claim of USD 160.82 Million against DBS Bank Ltd videits letter dated 24th January 2017 and this claim is part of the above petition filedbefore the Hon'ble Court Bangalore by the Company and that the matter is is sub-judice.The Company has also informed all the other lender Banks in the above matter.
The Company also has lodged a complaint with Debt Recovery Tribunal -2 [DRT-2]Bangalore on the company's claim against DBS Bank Ltd. DRT Bangalore had sought response /explanations from DBS Bank Ltd in this matter.
Your company will take a decision to impair the investments when these legal cases aresettled.
3. Bank Borrowings - NPA - Negotiated Settlement / OTS etc:
Winding up order has been passed. Petition for recall of the winding up order pendingbefore high court of Karnataka. Compromise settlement for re phasement of loan liability
approved and sanctioned by the banks submitted to the high court awaiting recall ofthe winding up order. High court of Karnataka stayed the action by the officialliquidator.
4. Impairment of Non-Current Investment/
i) EurocorTech Gmbh has taken overthe business of Eurocor Gmbh as successor company.Residual assets / liabilities are under insolvency proceedings. Subject to confirmation ofaccounts from the administrator of insolvency proceedings the investment is carried atbook value of Eurocor gmbh.
ii) Due to absence of information / financial statements from the two step downsubsidiaries and subject to pending liquidation procedures in their respectivejurisdiction the management has decided not to apply impairment policy.
iii) There is inadequate working capital funds support for sustaining the operationsthe company is not able to allocate further resources for this intangible assets.
5. Loans and Advances to Subsidiary
The Company had granted unsecured loans to its subsidiaries to meet their workingcapital requirements and that no interest has been charged since the company is notincurring interest costs.
6. Auditor Observations noted please refer point no. b of response to Auditorsobservation on Standalone Financial Statements.
7. Auditors Observation is noted.
COMMENTS OF THE AUDITORS NOTE 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 work place forevery individual working in Company's premises through various interventions andpractices. The Company always
endeavors to create and provide an environment that is free from discrimination andharassment including sexual harassment.
A policy on prevention of Sexual Harassment at work place 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. Threemembers 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.
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 stake holders customers vendors Investors bankers and other businessassociates for their continued support and encouragement during the year.
On behalf of the Board of Directors
Nanjappaiah Madgondapalli Ramu
Managing Director (DIN:00678824)
Place: Bengaluru Date: 28h May 2019.