Holmarc Opto-Mechatronics Ltd Directors Report

TO

THE MEMBERS

HOLMARC OPTO-MECHATRONICS LIMITED

Your Directors have pleasure in presenting you the 31^st Annual Report along with the audited financial statements and report of the Auditors for the year ended 31^st March 2023.

1. Financial Summary:

	For year ended 31st March, 2023	For year ended 31st March, 2022
Total Revenue	2918.44	2117.84
Total Expenditure	2510.80	1896.59
Profit / (Loss) before Tax	407.65	221.25
Tax Expense
Current Tax	107.32	69.34
Deferred Tax	18.03	(3.29)
Profit / (Loss) after Tax	356.14	155.19

2. State of Companys Affairs:

Your Company has been showing a phenomenal growth in its business operations, registering steady rise in its profits. We booked 27.36 crores worth purchase orders during the financial year 2022-23. During the FY 2021-22, the purchase orders received was worth 22.09 crores. There was an increase of 23.85% in order booking. The Company has earned a total revenue of Rs. 2918.44 (Amount in00,000) during the current year as compared to Rs. 2117.84 (Amount in00,000) earned in the previous year. The revenue growth is 37.83%. We are seeing three reasons for this increase. The first reason is that during 202122, there was covid restrictions in Kerala during April to June. Our functioning was not normal during those days. We estimate that that there was 8% production loss during FY 2021-22 due to covid. This is evident from the fact that our sales during the period is 8% lower than the purchase orders booked. There was no production loss during 2022-23. Secondly, we have made capital investments worth 1.7 crores in production machineries during the last quarter of 2020-21. This resulted in increased production capacity which we could fully utilize during FY 2022-23. In addition to the increased production capacity due to the addition of machineries, we introduced second shift for selected production machineries during FY 2022-23 and increased staff strength in production accordingly.

The total expenditure for the period ended 31.03.2023 is Rs. 2510.80 (Amount in00,000) as compared to Rs. 1896.59 (Amount in00,000) spent during the previous year.

During the financial year, we have increased our staff strength to 260 (as of March 31, 2023) from 216 (As of March 31, 2022). The increase in staff strength is 20%. Number of trainees remained 35, almost same during these two periods (FY 2021-22 and FY 2022-23). Our sales and production increased almost 38% in rupee terms while our staff strength increased 20%. The 18% difference can be attributed to 8% loss of production due to covid and 6% average product price increase due to general inflation. Balance 4% is the result productivity increase. It has been obtained by the capital expenditure made in automated machines as well as training given to our production staff.

We are happy that our productivity increase target has been nearly met during the financial year 2022-23. (Our target was 5% year on year). The result of this productivity increase can be seen in our financials for FY 202-23 as increase in gross profit.

We hope to maintain our productivity increase target of 5% year on year in coming years as well. Your Company has made a profit after tax of Rs. 356.14 (Amount in00,000) for the financial year ended 31.03.2023.

3. Future Outlook

During the financial year 2022-23, Holmarcs research and development activities were vibrant and in full swing. We could complete the development of the below listed nine major products. We are expecting commercial results for these developments in the coming years.

a) Digital In-line Holography microscope (Horizontal configuration)

This system is developed for McGill University, Canada, for tracking the particles from nanometer to several microns in air and liquid and to determine their velocity in 3D. The software helps to create 3D video from a recorded 2D interference video.

b) Inverted Fluorescence Microscope (Research grade)

This fully automated inverted fluorescence microscope is developed for BITS-Goa and Rathinam College- Coimbatore. This microscope is suitable for laser scanning, diagnostic microbiology, microbial ecology, and multichannel fluorescence applications.

c) Triboelectric Measurement System

Triboelectric measurement system is used to provide cyclical impact on a piezoelectric sample for its characterization. The frequency and the force can be set using the front panel LCD and buttons. The force inducer plate is made of electrically insulating material. It is used for characterization of piezo-electric properties of materials

We developOed and supplied the above system to Raja Ramanna Centre for Advanced Technology (RRCAT), Indore and National Institute for Interdisciplinary Science and Technology (NIIST), Trivandrum.

d) Quantum Efficiency and Spectral Response Measurement System

Quantum Efficiency and Spectral Response Measurement System is used to characterize the sensitivity and efficiency of solar cells and photodiodes. We upgraded our existing system with capability to measure both External Quantum Efficiency (EQE) and Internal Quantum Efficient (IQE) of solar cells and photodiodes in infrared region of the solar light spectrum. The system is used for Characterization of solar cells and photodetectors. We supplied the above system to Institute of Plasma Research (IPR) Ahmedabad.

e) Three Sun Solar Simulator (100mm Diameter)

This product has been developed for Department of Chemistry

Indian Institute of Technology Bombay, Powai, Mumbai 400076. The main objective of solar simulation technology is to produce illumination approximating natural sunlight in order to provide a controllable indoor test facility under laboratory conditions.. Solar simulators are used in a wide range of research areas including photobiology, photo-oxidation, photodegradation, photovoltaics, and photocatalysis.

f) Automated Spectrometer with Motorized slit

This product has been developed for Spectroscopy Diagnostics Section, Institute for Plasma Research, Gandhinagar. It is used for obtaining high resolution spectrograph for ADITYA-U Tokamakplasma spectral broadening measurements and studies. This triple grating spectrometer is designed for high-resolution spectroscopy, featuring a fully automated system with a dual output port, motorized slit, external triggering, and remote spectral capturing. It enables fast, automated, and continuous scanning over a broad spectral range.

g) Magnet Lab High Tesla Electromagnet

This is a high magnetic field PC controlled electromagnet that can provide fields above 3.27 Tesla @ 5 mm field gap. It is designed to meet industrial, educational, and research needs of very high, uniform field strengths in a wide range of air gaps. This product has been developed against a purchase order from Indian Institute of Science, Bangalore-560012.

h) Magnetic Tweezers set-up

The Magnetic Tweezer apparatus developed by HOLMARC is based on a simple inverted microscope, a set of strong NdFeB Permanent Magnet mounted on motorized translation and rotation stages and a PC computer which drives the motion of the magnets and performs video acquisition and bead tracking. The product has been supplied and installed at School of Biological Sciences, IIT Delhi. / <rr, -

i) Laser Beam Induced Current (LBIC) Measurement System

This system is designed for LBIC and photoluminescence mapping of Perovskite-based solar cells. It features a three-layer system that operates at 405nm, 532nm, and 655nm wavelengths, allowing for qualitative analysis of the solar cells. The product has been developed against a firm purchase order received from Department of Energy Science and Engineering, Indian Institute of Technology, Bombay

j) Infrastructure up gradation- Automated Physical Vapor Deposition System.

As mentioned earlier, we have made capital investments in machineries during the last quarter of 2021. The machineries included Automated Physical vapor deposition (PVD) systems in addition to three standard CNC machines. It was during the financial year 202223, we have completed many of the development process using the newly acquired PVD machine. We trained four qualified operators as well during the period.

PVD systems are used for metallic and dielectric thin film coatings on glass substrates. The end products are mirrors, beam splitters, filters etc. The system is also used for creating anti-reflection coatings on lenses.

We hope, commercial results for these efforts will follow in the coming years.

Sales and Production Target for 2023-24

Our organic growth is expected to be only in the range of 10-15% for FY2023-24 without infusion of external capital. With the planned capital infusion for working capital as well as for production machines, we are targeting 40% increase in production and sales during FY 2023-24. Our revenue target for the period is Rs. 40 crores. For the financial year 2024-25, we hope to achieve sales turnover of 60 crores by scaling up production of some of our standard products. As a capital starved and growth suppressed company for many years, we hope fresh infusion of capital will help us to a leap forward with 50% revenue growth for FY 2024-25 to reach our target of Rs. 60 crores sales turn over in the field of laboratory instruments. Please note that total market size for laboratory instruments and equipments in India is around Rs. 15000 crores. _>

Products chosen for finished goods inventory

We have identified optical microscopes and spectrophotometers as products to be manufactured in batch quantity to be kept as finished goods inventory (Produce and sell mode). Please note that we are operating mostly in "sell and produce mode "at present. Though we have standardized hundreds of products, we start manufacturing after receiving firm purchase orders. This just in time manufacturing mode can result. in loss of opportunities as many customers cannot wait for manufacturing lead time. To increase production and sales for the current financial year, we have decided to keep selected models of microscopes and spectro-photometers in stock for immediate dispatch. This is how we hope to achieve our 40% growth target for the current financial year.

Capital Expenditure planned for 2023-24

We are planning to make investment of approximately Rs. 2.5 crores in the financial year 2023-24 for machines and equipment to enhance production capacity as well as productivity. For keeping finished goods stock, we are planning to infuse another Rs. 2.5 crores into our working capital. With these capital investments, we hope we will reach our Rs.40 crores revenue target for the financial year 2023-24.

Our dream is to become a major player in the field of laboratory instruments in India and abroad by the year 2030 by maintaining more than 35% growth year on year. The profit we generate each year is not enough to attain this desired growth. Our company has technology, infrastructure, trained man power, products and market. With additional capital infusion, we are convinced that the desired business growth can be attained and maintained in the long run. During the financial year 2022-23, after much deliberation, we took a final call in this matter. We decided to raise capital from SME capital market by equity dilution. We hope the process can be completed by August 2023. Our target is to raise 11.8 crores by dilution of 28% equity.

4. Share capital:

The Authorised Share Capital of the Company as on 31.03.2023 is Rs. 12,00,00,000/- (Rupees Twelve Crores only) consisting of 1,20,00,000 equity shares of Rs. 10/- each. The issued, subscribed and paid-up capital of the Company is Rs. 7,20,00,000/- (Rupees Seven Crore Twenty Lakhs only) consisting of 72,00,000 equity shares of Rs. 10/- each.

The authorized share capital of the Company was increased from Rs. 2,000,000/- divided into 200,000 equity shares of Rs.10/- each to Rs. 120,000,000/- divided into 12,000,000 equity shares of Rs.10/- each ranking pari-passu with the existing shares in the Annual General Meeting of the Company held on 26.09.2022.

Your Company has issued 70,00,000 equity shares as Bonus Shares on 27.02.2023 to its shareholders pursuant to the resolution passed in Extra-ordinary General Meeting held on 23.12.2022 there by increasing the paid up share capital to Rs. 7,20,00,000/-.

5. Transfer To Reserve:

The Company has not transferred any amount to its reserves during the year.

6. Dividend:

Your directors have recommended a final dividend of 100% of the face value of the shares for the financial year 2021-22 in the Annual General Meeting held on 26.09.2022.

The Board of Directors of your Company had declared and paid to the Shareholders an Interim Dividend amounting to Rs. 21,60,000/- (Rupees Twenty One Lakh Sixty Thousand only) on 29.04.2023.

There were no outstanding amounts that were required to be transferred to Investor Education and Protection Fund (IEPF).

7. Admission of Equity Shares of the Company with Central Depository Services (Indian Limited

The equity shares of the Company have been admitted for Demat with the Central Depository Services (India) Limited (CDSL) as per Rule 9A to the Companies (Prospectus and Allotment of Securities) Rules 2014. The International Security Identification Number (ISIN) allotted to the equity shares of the Company by CDSL is INE0LXA01019.

8. Details of 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 report:

No Material changes and commitments that affects the financial position of the company have occurred between the end of financial year of the Company to which the report relates and the date of the report other than those mentioned in the Report.

9. Significant or Material Orders Passed by Regulators /Courts/ Tribunal:

During the year under review, there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status or operations of the Company in future.

Your Company is continuously monitoring and assessing the impact of COVID-19 pandemic on the business, turnover, profitability and liquidity position at all levels and will be taking all necessary steps in line with various directives issued by the Government and Regulatory Authorities from time to time.

10. Composition of the Board of Directors:

The Board of Directors of the Company comprises of the following directors which are listed as below:

SI. Directors Name No.	DIN	Designation
1. Jolly Cyriac	00409364	Managing Director
2. Ishach Sainuddin	00409402	Whole-Time Director
3. Gopala Kurup Unnikrishna Kurup	07622598	Whole-Time Director
4. Vellachalil Ramakrishnan Sanjaykumar	09257141	Whole-Time Director
5. Abdul Rasheed Aledath Kochunni	09257188	Whole-Time Director
6. Jayagosh Unni Srambikkal	09257206	Whole-Time Director
7. Jim Jose PunnackalJosey	09257264	Whole-Time Director
8. Lijo George	09257355	Whole-Time Director
9. Pottekkattu Muhammed Muhammedshafi	09257403	Whole-Time Director
10. Jaya Jolly	09723618	Whole-Time Director

Smt. Jaya Jolly (09723618) was appointed as the Whole-time Director of the Company in the Annual General Meeting held on 26/09/2022. Sri. Ishach Sainuddin has been appointed as the Chief Financial Officer of the Company with effect from 31/01/2023.

Sri. Jim Jose Punnackal Josey (09257264) and Sri. Lijo George (09257355) retires at the ensuing Annual General Meeting and have offered themselves for re-appointment.

Ms. Parvathy V was appointed as Company Secretary of the Company on 29.09.2022.

Your Company was not required to constitute any committees as envisaged under various provisions of the Companies Act, 2013 and Rules made there under.

11.Number of meetings of the Board:

The Board met eight (8) times during the period under review on 10/05/2022, 17/08/2022, 29/08/2022, 29/09/2022, 01/12/2022, 31/01/2023, 27/02/2023 and 24/03/2023. The respective attendance of directors in the meeting was as follows:

SI. Name of Director No.	10/05/22	17/08/22	29/08/22	29/09/22	01/12/22	31/01/23	27/02/23	24/03/23
l. Jolly Cyriac	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
2. Ishach Sainuddin	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
3. Gopala Kurup Unnikrishn3 Kurup	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
4. Jayagosh Unni Srambikkal	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
5. Vellachalil Ramakrishnan Sanjaykumar	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
6. Abdul Rasheed Aledath Kochunni	Yes	Yes •	Yes	Yes	Yes	Yes	Yes	Yes
7. Jim Jose Punnackal Josey	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
8. Lijo George	Yes	Yes	Yes	Yes	Yes	No	Yes	Yes
9. Pottekkattu Muhammed Muhammedshafi	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
10. Jaya Jolly	NA	NA	NA	Yes	Yes	Yes	Yes	Yes

12. Directors Responsibility Statement: •

Pursuant to the requirements under Section 134 (5) of the Companies Act, 2013 with respect to Directors Responsibility Statement, it is hereby confirmed:

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

ii) The Directors had selected such accounting policies and applied them consistently and made judgments 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 the financial year and of the profit of the company for period 2022-23.

jjj) The directors had 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.

iv) The directors had prepared the annual accounts on a going concern basis;

v) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

13. Declaration by Independent Directors:

During the reporting period your Company was not required to appoint Independent Directors under Section 149 (4) of Companies Act, 2013 and Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

The Company proposes to appoint 5 (five) Independent Directors in the ensuing Annual General Meeting to the Board of Directors of the Company. The Company has received declarations from the proposed appointees pursuant to the provisions of Section 149 of the Companies Act, 2013 and Rules made thereunder.

^.Companys oolicv on directors acrpointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178:

The provisions of Section 178(1) relating to constitution of Nomination and Remuneration Committee are not applicable to the Company and hence the Company has not devised any policy relating to appointment of Directors, payment of Managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013.

15. Extracts of Annual Return:

The Extract of the Annual Return in Form MGT 9 is not attached to this Report as the same has been dispensed with vide amendment to Rule 12 of the Companies (Management and Administration Rules) 2014 dated 05th March, 2021. The Annual Return in Form MGT 7 shall be physically accessible at the Registered Office of the Company on request during the working hours of the Company upon its filing with the ROC after the Annual General Meeting.

16. Particulars of Employees:

The provisions as envisaged under Section 197 (12) read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable to your Company. Hence the disclosure with reference to the particulars of employees is not attached to this report.

17. Particulars of loans, guarantees or investments under section 186:

Your Company has not given any loan or given any guarantee or provided security in connection with any loan to any person or body corporate during the period under review as envisaged under Section 186 of the Companies Act, 2013. The detail of investments is provided in Note 12 to the financial statements which are as follows:

SI.No Name	Type of Investment	Investment Amount (in Rs.)
1 KSFE Ltd.	Other Investments	29,72,460/-

18.Petails of Associate Companies/ Subsidiary Companies/ Joint Ventures

As on 31.03.2023 your Company has no associate Companies, Subsidiaries or joint ventures. No other companies have become or ceased to be associates or subsidiaries or joint ventures of the Company during the year under review.

19.Statutory Auditors:

M/s. Joseph and Co, Chartered Accountants, was appointed for a term of 5 years in the Annual General Meeting of the Company held on 30.09.2019. M/s. Joseph and Co, Chartered Accountants resigned as Statutory Auditors with effect from 30.11.2022. The Board of Directors then appointed M/s. G. Joseph & Associates, Chartered Accountants (FRN 006310S) as the Statutory Auditors of the Company in the casual vacancy caused due to resignation of the erstwhile auditors M/s. Joseph and Co. Pursuant to the provisions of the Companies Act, 2013 and Rules made thereunder M/s. G. Joseph & Associates, Chartered Accountants (FRN 006310S) holds office upto the ensuing Annual General Meeting. M/s. G. Joseph & Associates, Chartered Accountants (FRN 006310S) has expressed their willingness to be appointed as Statutory Auditors of the Company and have submitted their consent cum certificate as per the provisions of the Companies Act, 2013. Your Board proposes to appoint them for a period of 5 years in the ensuing Annual General Meeting on such remuneration as may be decided by the Board in consultation with the Auditors.

There were no qualifications, reservations, adverse remarks or disclaimer made by the Auditors in their report.

20. Particulars of contracts or arrangements made with Related Parties:

The particulars of contracts or arrangements with Related Parties in Form AOC 2 as referred to in sub-section (2) of Section 188 of the Companies Act, 2013 read with Rule 8 (2) of Companies (Accounts) Rules, 2014 is attached to this report.

21. Conservation of Energy, technology absorption, foreign exchange earnings arid outgo:

The information under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, for the financial year ended 31.03.2023 is given below:

i. Conservation of Energy: Your Company is committed to conserve energy in all its operations. Your Company has been looking forward to utilize alternate sources of energy. During the period under review no capital investments on energy conservation equipments have been made.

ii. Technology Absorption: Your Company has an in house team as also equipments for carrying out various activities at its facilities as well as in the activities connected with expansion programmes that the Company undertakes. There is a continuous process of research to optimize the engineering for these projects with the intention of improving efficiencies and reducing costs of the equipments and operations. The Company also aims to improve efficiencies in its activities so as to reduce the time taken and costs. In this process the Company also intends to adopt technologies which would contribute towards improvement of efficiencies. During the period no separate expenditure has been incurred as to research and development.

iii. Foreign Exchange Earnings and outgo: The foreign exchange earnings during the year under review is Rs. 510.07 lakhs and foreign exchange outgo during the year is Rs. 162.45 lakhs.

CONSERVATION OF ENERGY
The steps taken or impact on conservation of enerqv *	NA
The steps taken by the company for utilising alternate sources of enerqy	NA
The capital investment on energy conservation eauiDment	NA
TECHNOLOGY ABSORPTION
The efforts made towards technology absorption	The Companys Department of Research and Development has developed following new instruments in association with Educational/Research Institutions in India:
	1) A rubbing machine using the technical knowhow of University of Hyderabad.
	2) Roundness Tester with the technical knowhow of Amrita Vishwa Vidyapeethom, Kollam.
	3) An Industrial Grade Electrospinning Machine which is being used by Sastra University, Thanjavoor for developing pharmaceutical fabrics.
	4) An Electro Hydrogen Leak Detector with the technical knowhow of National Institute For Interdisciplinary Science and Technology (NIIST)
The benefits derived like product improvement, cost reduction, product development or import substitution	Rubbing machine and Industrial Grade Electrospinning Machine - Product Development and Import Substitute.
The details of technology imported	NA

22. CorPorate Social Responsibility:

The provisions as mentioned in Section 135 of the Companies Act, 2013 are not applicable to the Company.

23. Risk Management;

Risks are an integral part of business and it is imperative to manage these risks at acceptable levels in order to achieve business objectives. The risks to which the Company is exposed are both external and internal. Your Company has an in-house Risk Management procedure wherein all material risks faced by the Company are identified and assessed. Major risks identified are addressed and monitored by the Board of Directors of the Company. ‘ _%

24. Deposits:

The Company has not accepted or invited any deposits as per Companies Act, 2013 during the financial year and no amount has remained unpaid or unclaimed as at the end of the financial year.

25. Disclosure under Sexual Harassment of Women at Workplace—(Prevention, Prohibition and Redressal) Act,2013: .

The Company is committed in providing and promoting a safe and healthy work environment for all its employees. During the period under review no complaints were received or disposed off as envisaged under Sexual Harassment of Women at Workplace (Prevention & Redressal) Act, 2013.

26. Fraud Reporting:

Your Company has not entered into transactions which are fraudulent, illegal or violative of the Companys Code of Conduct. During the period under review no frauds have occurred in the Company and no frauds were reported by the Auditors of the Company.

27. Compliance with Secretarial Standards

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board meetings and General Meetings.

28. Disclosure of Maintenance of Cost Records:

The disclosure as to whether the maintenance of cost records as specified by the Central Government under sub section (1) of Section 148 of the Companies Act, 2013 is not applicable to your Company.

29.Other disclosures:

a) There was no change in the nature of business during the financial year.

b) There were no deposits which were not in compliance with requirements of Chapter V of the Companies Act, 2013.

c) The Company has adequate internal financial controls to commensurate the business.

d) The provision with respect to Secretarial Audit is not applicable.

30. Acknowledgement:

Your Directors express their appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, clients and members during the year und(Rs r review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the employees of the Company.