GKB Ophthalmics Ltd

Dear Shareholders,

Your directors have great pleasure in presenting before you the 42nd Annual Report of the Company together with the Audited Annual Financial Statements of the Company for the year ended March 31, 2024.

The Company's financial performance for the year under review along with the previous year figures is given hereunder:

Rs. in lakhs

During the year under review, the turnover from operations of the Company was higher to the tune of Rs. 3118.05 lakhs compared to Rs. 2772.93 lakhs during the previous year. The Company reported a net loss from operations of Rs.341.64 lakhs during the current financial year compared to a net loss of Rs. 288.12 lakhs incurred during the previous financial year. The Company is making all efforts to achieve the targeted sales in order to secure its market share and position in the financial year 2024-25. Considering the demand for its lenses, the Company is expecting good sales and better performance in the financial year 2024-25.

The Company is a manufacturer of plastic lenses. The Company's business has been facing a stiff competition from China as Chinese are dumping lenses at a very lower price. The Company had made a representation to impose an Anti- Dumping Duty on the import of the plastic lenses into India.

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

The anti-dumping and countervailing duty appeals are being adjourned by the Tribunal, on account of the controversy regarding the scope of Tribunal's powers under Section 9C of the Customs Tariff Act, 1975. This situation has led to a general halt in proceedings concerning anti-dumping and countervailing duty matters before the CESTAT.

With the view to conserve the resources, your Directors regret their inability to recommend any dividend for the year 2023-24. No amount has been transferred to reserve for the financial year ended March 31, 2024.

The paid-up equity share capital of the Company as on March 31, 2024, is Rs. 504.05 lakhs.

GKB Ophthalmics Products FZE, Sharjah, UAE is a Wholly Owned Subsidiary of the Company. Lensco - The Lens Company NJ, USA, is a Subsidiary of GKB Ophthalmics Products FZE and a Step-Down Subsidiary of the Company. These are the material subsidiaries of the Company. Prescription Optical Products L.L.C.(POPL), a Limited Liability Company, having its head office in Emirates of Dubai, is a subsidiary of GKB Ophthalmics Products FZE, Sharjah.

GSV Ophthalmics Private Limited is another Material Subsidiary of the Company, which was incorporated to produce Hi-Index Ophthalmic Lenses, however, the Project had become financially unviable and therefore the Company is in the discussion of coming up with an alternate expansion plan.

A statement under Section 129(3) of the Companies Act, 2013, containing salient features of the financial statement and performance of subsidiaries in Form AOC-1, is annexed with the Consolidated Financial Statements. In terms of Section 136(1) (a) of the Companies Act, 2013, the Audited Accounts of the subsidiaries are placed on website of the Company at www.gkb.net. A copy of the audited financial statements in respect of each of the subsidiaries will be made available to interested shareholders, upon a written request. The audited accounts of the subsidiaries are also available at the Registered Office of the Company, for inspection, during business hours.

The Ministry of Corporate Affairs has set up the Investor Education and Protection Fund for promotion of investor awareness and protection of investor interests. In terms of Section 124 of the Companies Act, 2013 and the rules made thereunder, the dividends in respect of the shares of the Company which have remained unpaid or unclaimed for seven consecutive years or more, are required to be transferred to IEPF.

The Company has not declared any dividend since 2010-11.

The Company has been accredited with ISO 9001:2015 by TUV SUD, South Asia Private Limited.

The Promoter's Shareholding as on March 31, 2024 has decreased to 50.93% from 59.09% due to the approval received from BSE Ltd. for reclassification of certain Promoters viz. Mr. Krishna Murari Gupta , Mrs. Usha Gupta , Mr. Aditya Gupta and Mr. Vivek Gupta into the Public Category on August 23, 2023 and Public shareholding has increased to 49.07% from 40.91%.

There has been no change in the nature of business of the Company during the year 2023-24.

Mr. K.G. Gupta will be retiring by rotation at the forthcoming AGM, pursuant to Articles of Association of the Company, being eligible offers himself for re-appointment. Brief resume together with other relevant details of Mr. K.G. Gupta are given in Note no. 13 to the Notice for the ensuing Annual General Meeting.

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors, in terms of the provisions of the Companies Act, 2013, appointed Mr. Purushottam S. Mantri (DIN: 06785989) as an Additional Director of the Company in the category "Non-Executive, Independent" with effect from June 20, 2023. The Shareholders of the Company in its meeting held on September 14, 2023, regularized the appointment of Mr. Mantri as a Non Executive, Independent Director, for a term upto five consecutive years till June 19, 2028.

None of the Independent Directors have retired during the year under review. However, the tenure of Mr. Anil Palekar, Independent Director of the Company has ended on May 22, 2024, after the end of the financial year. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors, in terms of the provisions of the Companies Act, 2013, appointed Mrs. Sandhya Ajit Kamat (DIN: 10591664) as an Additional Director of the Company in the category "Non-Executive, Independent" with effect from May 22, 2024. The regularization of the appointment of Mrs. Sandhya Ajit Kamat as a Non Executive, Independent Director, for a term upto five consecutive years till May 21, 2029, shall be decided by the shareholders at the ensuing Annual General Meeting.

Pursuant to provisions of Section 2 (51) and Section 203 of the Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following are the Key Managerial Personnel (KMP) of the Company as on the date of this report:-

In terms of Section 149 (8) read with Schedule IV, of the Companies Act, 2013, the Independent Directors held a Meeting on March 19, 2024 without the attendance of Non-Independent Directors and members of Management. All the Independent Directors were present at the meeting. A familiarization programme for the Independent Directors was held on March 19, 2024. The details of the Familiarization programme are given in the Corporate Governance Report.

At this meeting, the Independent Directors:

1. Reviewed the performance of the Non-Independent Directors and the Board as a whole.

2. Reviewed the performance of Chairperson, taking into account the views of Executive Director and Non-Executive Directors.

3. Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149 of the Companies Act, 2013 and provisions of the Listing Regulations, 2015, stating that they meet the criteria of independence, as provided therein. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act. Further, all Independent Directors on the Board of the Company have registered themselves under Independent Director database vide notification no. G.S.R. 804(E) dated 01st December, 2019, the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019.

During the year under review, five Board Meetings were held. Further details are given in Corporate Governance Report, forming part of this Report. The maximum gap between two Board Meetings held during the year was not more than 120 days.

The composition of the Audit Committee and other details are given in Corporate Governance Report, which is part of this report.

The Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of a director, relating to remuneration for directors, key managerial personnel and senior management as provided under section 178(3) of the Companies Act, 2013 and Listing Regulations, 2015.

The Remuneration Policy is stated in the Corporate Governance Report which is part of this report. Further details have been disseminated on the Company's website www.gkb.net

The Board evaluated the performance of the Board as a whole, Committees of the Board and the performance of individual directors including the Chairman of the Board pursuant to Regulation 17(10) of the Listing Regulations. The performance of the Board, Committees and individual Directors was evaluated by the Board seeking inputs from all the Directors. The Nomination and Remuneration Committee reviewed the performance of the individual Directors. The Independent Directors also carried out the performance evaluation in terms of Part VIII of Schedule IV of the Companies Act, 2013, in their meeting held on March 19, 2024. The details of the Performance Evaluation carried out is provided in the Corporate Governance Report which is a part of this report.

Pursuant to provision of Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability hereby state and confirm:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the Profit and Loss of the Company for that period;

c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

d) that they have prepared the annual accounts on a going concern basis;

e) that they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Pursuant to provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, in the 41st Annual General Meeting held on September 14, 2023, M/s. MSKA & Associates, Chartered Accountants (FRN 105047 W) were re-appointed as the Statutory Auditors of the Company for the second consecutive term of five years, from the conclusion of 41st Annual General Meeting till the conclusion of the 46th Annual General Meeting to be held in the year 2028, at such remuneration as may be mutually agreed upon between the Board of Directors of the Company and the Statutory Auditors of the Company.

The Auditors' Report is unmodified and there are no qualifications, reservations or adverse remarks or disclaimers. In respect of the observation made by the Auditors in their report, the Board's response thereon is as follows: (i) Paragraph 2 (h) (vi) Regarding the observation made by the Auditors, under para 2. (h) (vi) , relating to the upgradation of the Company's accounting software to Edit Log Version , for maintaining its books of account during the year ended March 31, 2024, is self explanatory.

Further, with respect to the other two accounting softwares maintained by the Company for processing its payroll transactions and inventory records, a new Payroll software program with advanced features including Edit Log is being developed that shall be made functional w.e.f. October 2024. In case of Inventory Records, efforts are in place to maintain the same in Tally with Edit Log.

There is no significant or material order passed by any Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future.

As per Section 134 (5) (e) of the Companies Act, 2013, read with Rule 8 (viii) of Companies (Accounts) Rules, 2014, the Board has laid the Internal Financial Control to be followed by the Company and that such Internal Financial Controls are adequate and are operating effectively. As per Section 143(3)(i) of the Companies Act, 2013, a report issued by M/s. MSKA & Associates, Statutory Auditors of the Company is attached with their Independent Auditor's Report, which is self explanatory.

The company ensures appropriate management of risks which aligns with its internal systems and culture. The Board of Directors and the management of the Company determine a strategy by identifying and assessing the risks, thereafter, followed by coordinated and economical application of resources to monitor, minimize and control the impact of uncertain events.

Particulars of loans, guarantees given and investments made during the year as required under Section 186 of the Companies Act, 2013 and Schedule V of the Listing Regulations are given in the notes to financial statements.

All transactions entered into with related parties, pursuant to Section 188 of the Companies Act, 2013 and Regulation 23 of Listing Regulations, during the year were at arm's length basis. Therefore, disclosure in Form AOC-2, is not required.

The Company has formulated a policy on materiality of related party transactions and on dealing with related party transactions in terms of Regulation 23(1) of Listing Regulations. The Board of Directors of the Company has approved and adopted a policy on related party transactions and the same has been uploaded on Company's website https://gkb.net/en/wp-content/uploads/Accounts/Related_party_transactions_policy.pdf

The extract of the Annual Return as provided under Section 92(3) of the Companies Act, 2013 and as prescribed in Form No. MGT-9 of the Companies (Management and Administration) Rules, 2014, is set out in Annexure – I and the same is also placed on the website of the company at https://gkb.net/en/wp-content/uploads/Annual-Return-2024.pdf

A separate section on Corporate Governance practices followed by the Company, together with certificate from the Practicing Company Secretary confirming compliance, Management Discussion and Analysis Report and Declaration regarding compliance of Code of Conduct by Board Members and Senior Management Personnel forms the part of this annual report.

As per provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report submitted by Ms. Girija Nagvekar, Practicing Company Secretary, for the financial year ended March 31, 2024, forming part of this Annual Report, is annexed herewith as Annexure - II. The Secretarial Audit Report is self-explanatory and requires no comments. Pursuant to Regulation 24A of SEBI ( Listing Obligations and Disclosure Requirements) Regulations 2015, the Secretarial Audit Report of material subsidiary, GSV Ophthalmics Private Limited, given by a Company Secretary in Practice, for the financial year ended March 31, 2024, is annexed herewith as Annexure - III.

Provisions of Section 135 of the Companies Act, 2013, and Rules made thereunder, regarding Corporate Social Responsibility are not applicable to the Company.

The Company has taken adequate insurance covers for its properties and insurable interest.

The Company has not accepted any deposits from the public during the year. No amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

The relations between the employees and the management, during the year, have been cordial.

There are no material changes and commitments, affecting the financial position of the company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report.

(i) the ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

*ceased to be a Director w.e.f. March 16, 2024, due to resignation.

(ii) (a) the percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

(ii) (b) The Non-Executive Directors of the Company are entitled to sitting fees within the limits approved by the Board of Directors and shareholders. The details of remuneration of Directors are provided in the Corporate Governance Report.

(iii) the percentage increase in the median remuneration of employees in the financial year: 5.72%

(iv) the number of permanent employees on the rolls of Company: 162

(v) average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

Average percentage increase (decrease) made in the salaries of employees other than the managerial personnel in the last financial year i.e 2023-24 is 11.18% whereas the increase (decrease) in the managerial remuneration for the same financial year was 5.32%

(vi) affirmation that the remuneration is as per the remuneration policy of the Company: The remuneration is as per the Remuneration Policy of the Company.

None of the employees is covered under Section 197 of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

As per Listing Regulations, Management Discussion and Analysis Report is attached to this report.

FINANCE:

Total Fund based exposure of the Company with the Banks was to the tune of Rs. 820.00 lakhs.Total Non-Fund based exposure of the Company with the Banks was to the tune of Rs. 460.00 lakhs (Rs. 100 lakhs interchangeability between Fund based and Non Fund Based).

The Company had availed credit facilities of Rs. 120.00 lakhs from State Bank of India under its "Guaranteed Emergency Credit Line (GECL)" scheme, out of which Rs. 11.22 lakhs was outstanding as on March 31, 2024 compared to Rs.57.04 lakhs , which was outstanding as on March 31, 2023.

The Company had availed a Covid Term loan of Rs. 100.00 lakhs from The Saraswat Co-operative Bank Limited under its Emergency Credit Line Guarantee Scheme (ECLGS) out of which Rs. 97.99 lakhs is outstanding as on March 31, 2024 compared to Rs. 100.00 lakhs as on March 31, 2023.

The Company has not accepted any deposits falling under the ambit of Section 73 of the Companies Act, 2013 from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on 31st March 2024.

CRISIL Limited – Credit Rating agency, vide its letter dated January 29,2024, has assigned the Credit rating of "CRISIL D (Downgraded from CRISIL C)" for Long-Term Bank facilities and "CRISIL D ( Downgraded from CRISIL A4)" for Short-Term Bank facilities availed by the Company.

The Company has in place a Vigil Mechanism. It provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct policy and the same has been posted on the Company's website www.gkb.net.

During the year under review, no offense involving fraud has been committed against the Company by its employees or officers of the Company in terms of Section 143(12) of the Companies Act, 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

During the year under review no complaints were received.

In terms of Section 90 B (5) (d) of the Goa Factories Rules, 1985, the Company has an Occupational Health, Safety and Environment Policy through which every employee is made responsible for the observance of the measures designed to prevent accidents, damage to property, occupational ill- health and avoidable environmental pollutants.

Safety & Health:-

The Company continues with its efforts to safeguard the environment and the natural resources, ensuring the safety of its workers by identifying workplace hazards thereby eliminating accidents and exposure to harmful substances.

The employees are being trained on accident prevention , emergency preparedness, first aid procedure, Behavioral Safety including use of protective clothing and equipment, occupational safety, health & environment. Also, during the Annual event of Safety Week Celebration under Factories Act, a seminar was conducted with a goal to promote safety and well being of the workforce. The company has organized Eye-testing for employees engaged in Quality Control and other relevant sections during the year.

Audit – Industrial Hygiene Survey was conducted by an external agency to assess the Illumination, Ventilation and Noise level in the factory premises. Internal Electrical Safety Audit was conducted to assess potential fire hazards in the factory set-up and to provide assurance on the implementation and effectiveness of these system and processes.

Environment: - The Company has been focusing on achieving environmental standards with "Go Green" philosophy. The Company is certified with ISO 9001:2015 standard of TUV Certifying body. The company has continued its efforts for water and energy conservation. Licenses under Pollution Control Board are periodically renewed under Air, Water and Hazard Waste Management. The process of Solid waste management disposal is done on regular basis to registered re-cyclers.

1) The consolidated financial statement is also being presented in addition to the standalone financial statement of the company.

2) The maintenance of cost records is not applicable to the Company as per the amended Companies (Cost Records and Audit) Rules, 2014, prescribed by the Central Government under Section 148(1) of the Companies Act, 2013.

Particulars required to be disclosed under the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 are annexed herewith as Annexure – IV and forms an integral part of this report.

No application was made under IBC by or against the Company and no proceeding is pending under IBC, during the year under review.

The Company has not entered into any onetime settlement with the Banks or Financial Institutions during the year under review.

ACKNOWLEDGEMENT

Your Directors wish to acknowledge and are grateful for the excellent support received from all levels, customers, vendors, regulatory authorities, bankers, shareholders and all other stakeholders. Your Directors recognize and appreciate the hard work and efforts put in by all the employees of the Company and their contribution to the progress of the Company in a very challenging environment.