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Opto Circuits India Directors Report, Opto Circuits Reports by Directors
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Opto Circuits India

BSE: 532391|NSE: OPTOCIRCUI|ISIN: INE808B01016|SECTOR: Hospitals & Medical Services
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Directors Report Year End : Mar '16    Mar 15

To

The Members,

The Board is pleased to present the 24th Annual Report on the business and operations of Opto Circuits (India) Limited, together with the financial statements of your Company for 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

7,667.51

14,092.24

Expenditure

9,422.80

16,036.52

Profit before Depreciation

(805.69)

(19,111.48)

Depreciation

949.60

972.80

Profit before Tax

(1,755.29)

(20,084.28)

Provision for Taxation

46.58

66.88

Profit for the year

(1,801.87)

(20,151.16)

Surplus carried to Balance Sheet

(1,801.87)

(20,151.16)

OPERATIONS - STANDALONE

Standalone Total Revenues was at Rs. 7,667.51 lakhs for the Financial Year ended 31st March 2016 as against Rs. 14,092.24 lakhs for the corresponding Financial Year ended March 31, 2015, a decline of 45.59 %. Standalone profit/ (loss) after tax for the Financial Year ended 31st March 2016 is at Rs. (1,801.87) lakhs, as against Rs.(20,151.16) Lakhs for the corresponding 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. (1,801.87) lakhs is proposed to be retained in the Statement of Profit and 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 Differential Rights.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS:

During the year under review, the Company has not issued Shares under Employee Stock Options.

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

34,678.16

121,191.72

Expenditure

30,620.55

127,270.08

Profit before Depreciation

4,057.61

(6,078.36)

Depreciation

4,136.71

9455.28

Profit before Tax

(79.10)

(15,533.64)

Provision for Taxation

114.91

171.28

Profit for the year

(194.01)

(15,704.92)

APPROPRIATIONS

Proposed Dividend

-

-

Tax on Dividend

-

-

Minority Interest

48.63

(67.47)

Surplus carried to Balance Sheet

(242.64)

(15,637.45)

OPERATIONS - CONSOLIDATED

Consolidated Revenue is at Rs. 34,678.16 lakhs for the Financial Year ended 31st March 2016 as against Rs. 121,191.72 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) lakhs, as against Rs. (15,704.92) 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) direct Subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and all its subsidiaries, which forms part of the Annual Report. Further, a statement containing the salient features 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 not repeated here for the sake of brevity.

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

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

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY OVERVIEW

Medical devices are an eminent part of the healthcare sector. The medical device industry includes devices which simplify the prevention, diagnosis and treatment of diseases and illnesses. The devices range from pacemakers, dialysis machines to thermometers, vital signs monitors, and pulse oximetry sensors which are used in diverse primary, secondary and tertiary medical establishments. North America is the largest market accounting for over 40% followed by Europe and rest of the World. In rest of the World, developing economies in particular China, India, Africa, Middle East and Brazil have been growth contributors over the past couple of years.

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

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

The Indian medical device industry though in its nascent stages shows great potential due to its strong private healthcare system, growing middle class with increasing income levels, change in the disease profiles (lifestyle diseases), greater penetration of health insurance, government focus on healthcare infrastructure development and rising awareness of personal healthcare.

COMPANY OVERVIEW

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

Your Company’s interventional products include stents, balloons both drug eluting and non-drug eluting and AV Shunts used for the treatment of coronary and peripheral arterial 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 of these products allowing us to differentiate these from competing devices. Some of our well known brands in this segment are Dior, Freeway, E-Magic Plus, and Genius Magic, Siro Prime, Freeway Shunt Balloon Catheter.

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

Your Company also sell a variety of related products and consumables and offer a portfolio of related training and key support services, including the installation, training, monitoring and maintenance of our equipments, which allow our customers to optimize the usage of our products and provide us with recurring revenues on a contracted basis. Some of our well known brands in this segment are, Revo NCompass, NGenuity, Poet IQ, etc.

STRENGTHS OF YOUR COMPANY

One of the biggest competitive advantage is the propriety technology developed by our in-house teams which gives us control over features and intellectual property costs of devices and helps minimize our dependence on third party technologies. The focus on research and development activities has enabled us to develop devices which we believe are technologically superior to other devices available in the market. Your Company''s diversified product portfolio across invasive and non-invasive caters to the needs of primary, secondary and tertiary care establishments is well balanced and includes technologies that command high profit margins and also allows to achieve sales and distribution synergies coupled with economies of scale. The global distribution network is supported by a large team of third-party distributors and highly qualified international team 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 to end-users and enables us to be more responsive to market demand. Your Company has been in the medical devices business since 1992 and have established long- standing relationships with physicians, general practitioners and specialists, clinics and hospitals. Further Your Company believes that our longterm relationships and the quality of our customer base 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, a decline of 71% over Rs. 1,212 Crores reported in Financial Year 2014-15. The decline is sales can be attributed to partly the hostile takeover of CSC, reported elsewhere, causing CSC not to be a Subsidiary of Opto Circuits (India) Limited, hence the entire revenues of CSC were not taken into this year’s revenues combined with, and a softening of European Markets and overall economic slowdown. Further, Opto Eurocor Healthcare Limited and the Standalone entity were entities that witnessed a significant decrease in revenues thereby 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 apart from being caused by the revenue decrease was also impacted by the hostile takeover of CSC as detailed below.

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

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

STANDALONE

The standalone Company reported Sales of Rs. 76.67 Crores in Financial Year 2015-16, a decline of 47.54% over 146.14 Crores reported in Financial Year 2014-15. The Company reported a net loss of Rs. 18.01 Crores in the Financial Year 2015-16 being affected by the decreased sales.

Your Company continues efforts to win more customers and a bigger pie of the existing business, 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 standalone Statement of profit and loss, the component of which are also expressed as a percentage of our 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

7,667.15

100.00

14,614.32

103.70

Other Income

0.36

0.00

(522.08)

(3.70)

TOTAL

7,667.51

100.00

14,092.24

100.00

expenditure

Manufacturing Expenses

3,311.16

-

7,373.71

-

Increase/Decrease in WIP&FG

144.79

-

31.35

-

Net Manufacturing Expenses

3,455.95

45.07

7,405.07

52.55

Administrative & Selling Expenses

1,865.57

24.33

1,877.05

13.32

Financial Expenses

3,151.68

41.10

5,781.61

41.03

Depreciation

949.60

12.38

972.80

6.90

Exceptional Items

-

-

18,140.00

128.72

TOTAL

9,422.80

122.89

34,176.52

242.52

Profit before Tax

(1,755.29)

(22.89)

(20,084.28)

(142.52)

Provision for Taxation

46.58

0.61

66.88

0.47

Profit after Tax

(1,801.87)

(23.50)

(20,151.16)

(142.99)


INCOME

Total Turnover

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Sales

7,667.15

14,614.32

Other Income

0.36

(522.08)

Total Income

7,667.51

14,092.24

OTHER INCOME

Other Income which was Rs.(522.08) lakhs in FY 2015 has an income of 0.36 lakhs in FY 2016. Major components of other income comprise of income/loss from foreign exchange fluctuations.

EXPENDITURE NET MANUFACTURING EXPENSES

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Manufacturing Expenses

2,657.31

6,386.88

Less: (Inc)/Dec in WIP & Finished Goods

144.79

31.35

Factory Expenses

653.85

986.83

Total Expenses

3,455.95

7,405.06

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 to decrease 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

1,006.96

Selling Expenses

141.28

164.94

Total Expenses

1,865.58

1,877.05

Total Expenses as % of Income

24.33%

13.32%

FINANCIAL EXPENSES

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Financial charges

3,151.68

5,781.61

TOTAL

3,151.68

5,781.61

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

2,345.99

(13,329.87)

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

(1,801.87)

(20,151.16)

Net Profit after Tax as % of

-23.50%

-142.99%

Total Income

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

24,231.94

24,231.94

(b) Reserve and Surplus

102,465.09

104,266.96

126,697.03

128,498.90

Non -current Liabilities

(a) Long Term Borrowings

-

387.50

-

387.50

current Liabilities

(a) Short- term borrowings

64,789.34

86,907.16

(b) Trade payables

22,784.22

11,777.84

(c )Other Current Liabilities

11,444.82

14,756.20

(d) Short-term provisions

125.25

93.77

99,143.63

113,534.97

Total

225,840.66

242,421.37

ASSETS

Non-current Assets

(a) Fixed Assets

(i) Tangible assets

8,498.49

9,491.43

(ii) Intangible assets

10,210.43

-

18,708.92

9,491.43

(b) Non-current investments

38,166.45

38,166.46

(c) Deferred tax assets (net)

5.95

35.00

38,172.40

38,201.46

current Assets

(a) Inventories

28,098.68

34,165.16

(b) Trade Receivables

59,977.61

64,599.91

(c ) Cash and Cash Equivalents

276.05

175.75

(d) Short-term-loans and advances

80,599.79

95,779.76

(e) Other current assets

7.21

7.90

168,959.34

194,728.48

Total

225,840.66

242,421.37

NET WORTH

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Share Capital

24,231.94

24,231.94

Reserves & Surplus

102,465.09

104,266.96

Net Worth

126,697.03

128,498.90

LOAN FUNDS

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Short Term Borrowings

64,789.34

86,907.16

Long Term Borrowings

775.00

1,756.51

Total Loan Funds

65,564.34

88,663.67

FIXED ASSETS

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Total Net Block

18,708.92

9,491.43

RAW MATERIAL INVENTORY

Rs.in Lakhs

Particulars

31.03.2016

31.03.2015

Raw Materials & Consumables

19,203.69

25,125.37

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

8,894.99

9,039.78

Number of days to sales

423

226

DEBTORS

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Debtors

59,977.61

64,599.91

Number of days to Sales

2855

1613

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

CURRENT LIABILITIES

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Trade payables

22,784.22

11,777.84

Other current liabilities

10,669.82

13,387.19

Short-term provisions

125.25

93.77

Total current Liabilities

33,579.29

25,258.80

Number of days to sales

1599

631

Previous year''s figures have been regrouped /reclassified wherever necessary to correspond 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

31,297.65

90.25%

118,711.79

97.95%

Other Income

3,380.51

9.75%

2,479.93

2.05%

TOTAL

34,678.16

100.00%

121,191.72

100.00%

expenditure

Cost of materials consumed

16,805.05

65,517.72

Increase/Decrease in W I P & Finished Goods

293.44

(391.49)

Net Manufacturing Expenses

17,098.49

49.31%

65,126.23

53.74%

Employee benefit expense

5,279.50

15.22%

13,679.67

11.29%

Financial Cost

4,366.33

12.59%

14,350.99

11.84%

Depreciation/Amortization

4,136.71

11.93%

9,455.28

7.80%

Other Expenses

8,236.89

23.75%

15,973.19

13.18%

Exceptional Items

(868.57)

-2.50%

18,140.00

14.97%

Extraordinary Items

(3,492.08)

-10.07%

-

0.00%

TOTAL

34,757.27

100.23%

136,725.36

112.82%

Profit for the year before Tax

(79.11)

-0.23%

(15,533.64)

-12.82%

Provision for Taxation

114.90

0.33%

171.28

0.14%

Profit After Tax

(194.01)

-0.56%

(15,704.92)

-12.96%

INCOME TOTAL TURNOVER

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Sales

31,297.65

118,711.79

Other Income

3,380.51

2,479.93

Total Income

34,678.16

121,191.72

EXPENDITURE MANUFACTURING EXPENSE

Rs.in Lakhs

Particulars

31.03.2016

31.03.2015

Manufacturing Expenses

16,805.05

65,517.72

Less: (Inc)/Dec in WIP & Finished Goods

293.44

(391.49)

Total expense

17,098.49

65,126.23

Total expense as % of Income

49.31%

53.74%

DEPRECIATION & AMORTISATION

Rs.in Lakhs

Particulars

31.03.2016

31.03.2015

Depreciation & Amortization

4,136.71

9,455.28

Total

4,136.71

9,455.28

Depreciation & Amortization as % of Income

11.93%

7.80%

STAFF & OTHER EXPENSE

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Staff Expenses

5,279.50

13,679.67

Other Expenses

8,236.89

15,973.19

Total

13,516.39

29,652.86

Total expense as % of Income

38.98%

24.47%

FINANCIAL EXPENSES

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Financial Charges

4,366.33

14,350.99

Total

4,366.33

14,350.99

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)

(15,704.92)

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

8,423.93

8,272.63

PBDIT as % of Income

24.29%

6.83%

CASH PROFIT AFTER TAX

Particulars

31.03.2016

31.03.2015

Cash Profit after Tax

3,942.70

(6,249.64)

cash profit after Tax as % of Income

11.37%

-5.16%

BALANCE SHEET- CONSOLIDATED

Rs.in Lakhs

Particulars

As at March 31, 2016

As at March 31, 2015

EQUITY AND LIABILITIES

(a) Share Capital

24,231.94

24,231.94

(b) Reserves and Surplus

144,599.50

171,006.52

168,831.44

195,238.46

Minority Interest

1,818.54

1,903.23

Non-current Liabilities

(a) Long-term borrowings

6,848.13

1,848.86

(b) Deferred tax liabilities (Net)

-

-

(c) Long term provisions

60.48

271.66

6,908.61

2,120.52

Current Liabilities

(a) Short-term borrowings

102,754.82

135,399.30

(b) Trade payables

29,489.54

26,573.11

(c) Other current liabilities

9,028.63

58,685.99

(d) Short-term provisions

2,418.15

5,486.27

143,691.14

226,144.67

Total

321,249.73

425,406.88

ASSETS

Non-current assets

(a) Fixed assets

(i) Tangible assets

21,672.99

39,548.62

(ii) Intangible assets

27,494.02

13,908.29

(iii) Capital work-in-progress

3,301.52

3,101.96

52,468.53

56,558.87

(b) Goodwill on consolidation

13,220.51

42,114.00

(c) Non-current investments

1.09

1.09

(d) Deferred tax assets (net)

19.60

7,350.43

(e) Long term loans and advances

8.34

8.34

(f) Other non-current assets

6,514.77

6,574.87

6,543.80

13,934.73

current assets

(a) Inventories

48,051.96

74,992.57

(b) Trade receivables

166,078.44

184,271.99

(c) Cash and Cash Equivalents

955.89

2,599.74

(d) Short-term loans and advances

33,616.38

47,528.17

(e) Other current assets

314.22

3,406.81

249,016.89

312,799.28

Total

321,249.73

425,406.88

NET WORTH

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Share Capital

24,231.94

24,231.94

Reserves & Surplus

144,599.50

171,006.52

Net Worth

168,831.44

195,238.46

LOAN FUNDS

Rs.in Lakhs

Particulars

31.03.2016

31.03.2015

Total Loan Funds

86,710.52

164,172.19

FIXED ASSETS

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Net block of Tangible Assets

21,672.99

39,548.62

Net block of Intangible Assets

27,494.02

13,908.29

Total Net Block

49,167.01

53,456.91

GOODWILL

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Opening Balance

42,114.00

42,114.00

Additions/(Deletion) during the year net of Capital Reserve

(28,893.49)

-

closing Balance

13,220.51

42,114.00

RAW MATERIAL INVENTORY

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Raw materials & Consumables

41,751.80

53,779.08

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

3,176.54

5,011.69

Work in Process

9,365.95

9,952.65

Stock of Finished Goods and Work in Process

12,542.49

14,964.34

Number of days to Sales

146

46

DEBTORS

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Debtors

166,078.44

184,271.99

Number of days to Sales

1,937

567

CURRENT LIABILITIES

Rs. in Lakhs

Particulars

31.03.2016

31.03.2015

Current Liabilities

40,095.47

48,878.48

Number of days to Sales

468

150

CONSERVATION OF ENERGY

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

FOREIGN EXCHANGE EARNINGS AND OUTGO.

Your Company earned Rs. 12,334.90 Lakhs in foreign exchange in the year under review.

Foreign Exchange Outflow was Rs. 1,736.20 Lakhs.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

There were no employees, who were in receipt of remuneration in excess of Rupees One Crore Two Lakhs or more or employed part of year and in receipt of remuneration in excess of Rupees Eight Lakhs Fifty Thousand or more, a month, under information as per Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016.

Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the information on Disclosures pertaining remuneration and other details as required under Section 197(12) of the Act read with Rule 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 information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on corporate governance as stipulated under the Listing Regulations forms an integral part of this Report. The requisite certificate from the Practicing Company Secretary confirming compliance with the conditions 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, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that ware reasonable and prudent so as to give a true and fair 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 adequate accounting records in accordance with the provisions of the Act for safeguarding the assets 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 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 provisions of 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 National Stock Exchange of India Limited. As per the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which came in effect from December 1, 2015, a shortened version of the Uniform Listing Agreement was signed by the Company with both the Stock Exchanges. Your Company has paid the listing fees as payable to the BSE Limited and the National Stock Exchange of India Limited for the financial year 2016-17.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from the public during the financial year 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 of Independent Director, with effect from 26th April 2016. The Directors seek your support in confirming 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 reappointment at the ensuing Annual General Meeting. The Board of Directors recommends the appointment of Mr. 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 they meet the criteria of Independence laid down in Sction 149(6) of the Companies Act, 2013 and 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 Company, Senior managerial personnel make presentations on Company’s strategy, organization structure, products, technology, quality, facilities. Further at the time of appointment of an Independent Director, the Company issues a formal letter of appointment outlining his or her role, function, duties and None of the Directors of your Company are related to each other.

Based on the confirmations received, none of the Directors are disqualified for being appointed/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 the Company.

POLICY ON DIRECTORS APPOINTMENT REMUNERATION AND EVALUATION.

Your Company has in place, the Nomination Remuneration and Evaluation Policy of the Company on Directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of director and other matters provided under sub Section (3) of Section 178 of the Companies Act, 2013. The Policy also contains the evaluation framework as stipulated under SEBI Listing Regulations, 2015 which mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013, states that a formal annual evaluation needs to be made by the Board of its own performance and that of its Committees and individual Directors. The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board.

MEETINGS OF THE BOARD

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

COMMITTEES OF THE BOARD.

Currently, the Board has Five Committees: Audit and Risk Management Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee and Finance Committee.

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

AUDITORS

Based on the recommendation of Audit and Risk Management Committee, the Board of Directors appointed Messrs B.V.Swami & Co, Chartered Accountants, Bangalore as Statutory Auditors for the Financial Year 2015- 2016, to fill up the casual vacancy in place of Messrs Anand Amaranth & Associate, Chartered Accountants, Bangalore, with effect from May 30th 2016.

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

As the term of Messrs B.V.Swami & Co, Statutory Auditor, comes to an end at the conclusion of ensuing Annual General Meeting, approval of members is sought at the ensuing 24th Annual General Meeting to appoint Messrs B.V.Swami & Co, Chartered Accountants, Bangalore as Statutory Auditors for the Financial Year 2016- 17.

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

SECRETARIAL AUDITOR

The Board has appointed Mr. Vijayakrishna KT, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith marked as Annexure 1 in the Form of MR 3 to this Report. The Board of Directors of the Company hereby furnish following explanations and clarifications with respect the observations made by the Secretarial Auditors in their report dated July 29,2016 under the heading observations in points (a) to (c):

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

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

(c) Due to technical issues in making the requisite returns, digitally signing the same and uploading, delays occurred in filings of certain returns. Extreme levels of care and caution 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 line with the best practices in the industry and as per its experience and objectives. The Risk Management system is reviewed periodically and updated.

INTERNAL FINANCIAL CONTROLS

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

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm’s length basis. During the year, the Company had not entered into any contract/ arrangement /transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Accordingly, the disclosure of Related Party Transactions as required under section 134(3)(h) of Companies Act,2013 in Form AOC -2 is not applicable.

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

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 statement which 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 made Investments 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 Board, has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by 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 (Corporate Social Responsibility Policy) Rules, 2014, the annual report on Corporate Social Responsibility activities of the Company is given in Annexure 2 to this report.

Owing to the operational challenges and fund constraints; your Company was unable to undertake 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 in place a mechanism for reporting illegal or unethical behavior. The Company has a vigil mechanism and Whistle Blower Policy under which the employee are free to report violations of applicable laws and regulations and the Code of Conduct, to Chief Vigilance officer and Audit and Risk Management Committee of the Board. The Company further confirms that no personal have been denied access to the Audit and Risk Management Committee.

The policy on vigil mechanism and whistle blower policy may be accessed on the Company’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 of Material Events and Information, in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 to determine the events and information which are material in nature and are required to be disclosed to the 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 of Documents and Records in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy ensures that the Company complies with the applicable document retention laws, preservation of various statutory documents and also lays down minimum retention period for the documents and records 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 carried out.

EXTRACT OF ANNUAL RETURN

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

SIGNIFICANT AND MATERIAL ORDERS.

No order was passed by any court or regulator or tribunal during the year under review which 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 made by the Auditors in their Report dated 14th June, 2016 for the Standalone Financial Statements under the heading Basis for qualified Opinion in points [a] to [d] and Response to Annexure to the Auditors Report Point [iii(b)].

RESPONSE TO QUALIFIED OPINION:

a) i) Receivables:

The Company is constantly pursuing these long over dues with the debtors and that the progress is encouraging. The company was able to recover amounts aggregating to Rs. 12,300 Lakhs during the Financial Year. Further the company has recovered Rs. 1,500 Lakhs as on date of the report. Further the Company will constantly pursue and put in efforts to recover the long outstanding receivables and in extremely difficult cases, the Company would seek Regulatory approvals as required for write off as needed.

ii) Payables:

Regarding the payables over 3 years, the Company had observed certain quality issues with the materials supplied by the concerned vendors and that the Company is negotiating with 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 these borrowings as NPA and have not been providing interest on the same as per RBI Guidelines and 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 the company, subsequent to the hostile takeover of Cardiac Science Corporation, USA, [CSC], a subsidiary of OCCL, the Company is seeking appropriate legal recourse to protect the rights of the shareholders. Your company will take a decision to impair the investments when these legal cases are settled.

d) As regards the Winding up notices and notice under the SARFAESI Act, the Company is negotiating 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 capital needs and no interest has been charged.

AUDITORS OBSERVATION ON CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors of the Company response to the Qualifications/observations made by the Auditors in their Report dated 14th June, 2016 for the Consolidated Financial Statements 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 action in due course.

2. i) Long outstanding Receivables:

The Company is constantly pursuing these long over dues with the debtors and that the progress is encouraging. The Company would constantly pursue and put in efforts to recover the long outstanding receivables and in extremely difficult cases, the Company would seek Regulatory approvals as required for write off if needed.

ii) Long outstanding Payables:

Regarding the payables over 3 years, the Company had observed certain quality issues with the materials supplied by the concerned vendors and that the Company is negotiating with 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 in supply 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 is negotiating 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 for such branch audit in the USA. The Company has sufficient adequate internal control systems, checks and mechanisms in place and is directly monitoring the same.

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

6. Regarding Service Tax Liability the Company has taken up this matter with the department 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 Performance analysis.

RESPONSE TO AUDITORS’ OBSERVATIONS ON EMPHASIS OF MATTERS

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

INDUSTRIAL RELATIONS

Industrial relations have been cordial and constructive, which have helped your Company to achieve production targets.

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

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

A policy on Prevention of Sexual Harassment a Workplace has been released by the Company. The policy aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behavior. Three member Internal Complaints Committee (ICC) was set up from the senior management with women employees constituting majority. The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy. No complaints pertaining to sexual harassment was reported during the year.

ACKNOWLEDGEMENTS

Your Directors greatly appreciate the commitment and dedication of employees at all levels that have contributed to the growth and success of your Company. Your Company also thank all our stakeholders, customers, vendors, investors, bankers and other business associates 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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