"Management Discussion and Analysis Report"
Banco Products (India) Ltd. is a leading designer, manufacturer of
engine cooling modules for automotive and industrial applications. We combine the power of
innovation and product application engineering to develop products which deliver high
performance solutions for our customers in OEM and aftermarket segments. The Company
enjoys status of strategic supplier to various esteemed Original Equipment Manufacturers
as new product development partner wherein cooling products fall into category of
proprietary parts.
Our Products:
Engine Cooling Modules such as Radiators, Charged Air Coolers, Fuel
Coolers, Oil Coolers for various applications, AC Condensers, De-aeration Plastic tanks,
Metal Layered Gaskets and Elastomeric Moulded gaskets for static sealing applications.
Applications
Engine Cooling Modules and Gaskets are considered very critical for
efficient performance of Internal Combustion Engines as well as for EV electrical systems
with wide ranging applications such as Passenger Cars, Light Commercial Vehicles, Medium
and Heavy Commercial Vehicles, Agricultural Tractors, Harvesters, High Performance Bikes,
Construction Machineries, Material Handling equipment, Mining machinery, Power Generation
Equipment, Traction Rail Locomotives and Air compressors.
Our Markets:
OEM: We design and develop efficient cooling modules for OEM
customers from wide range of various industr ies. With successful record of accomplishment
and long-term relationship with our key customers, we aim to become the preferred supply
partner to OEMs in all off-road and industrial segments by offering innovative thermal
solutions.
Aftermarket:
We meet growing service demand in the automotive aftermarket through
our extensive distribution network which is pan India, by adding new models and related
thermal products as market trends along with measures for strengthening Banco brand reach
by marketing campaigns.
Exports:
BANCO continues to develop a comprehensive service range of cooling
products for global aftermarket.
Establish supplier status with wide range of various MNC OEMs in
advanced markets with the objective of securing long-term business.
INDUSTRY STRUCTURE AND DEVELOPMENTS:
Emissions norms legislation and Trends in Industrial and Automotive
sectors has a large influence on your Companys business. Engine Cooling supplier
vendor base is dominated by MNC or joint ventures both in India and abroad. Globally, OEM
customers outside automotive industry are having increasing preference to develop
autoparts suppliers from low cost countries like India.
The industry is rapidly changing, in terms of its size and technology.
Indian OEM industry for non highway is in the process of developing CPCB IV and Stage V
emission regulatory norms which are likely to be implemented by the end of the year 2023.
We strive to provide cooling solutions for complete range of vehicles and machines in this
segment. Range of product programs are very wide for each OEM wherein quick development
solutions are needed.
Demand development:
Demand development of your Companys products is directly
dependent on the development in the user industries. Investment for increasing production
capacity both for handling additional business volume changes as well as product diversity
is the norm.
Automotive:
Developments in Automotive industry during the last year have been very
positive as withnessed in the quantum of vehicles sold. Government spending on
infrastructure projects is massively up spurring sales of construction machines and
commercial heavy trucks. OEMs are increasing the rate of introduction of new models to
stay ahead of competition.
Agriculture:
The Indian Government has been supporting accelerated development of
agriculture sector with higher grain support prices which has stimulated demand for
tractors and combined harvestors.
Industrial:
Demand is increasing in all sectors due to faster pace of GDP growth
and government spending on roads and launch of large infra projects resulting in
downstream demand for power generation equipment, mining machinery etc.
Our Bespoke engineering approach:
We invest our resources to develop relevant products for wide range of
applications. Banco offers quick and customised solutions to meet cost targets as well as
meeting assorted technical requirements. With this approach, we co-create best in class -
solutions which are efficient and deliver very reliable performance under challenging
operating environment. Process of development of better designs is by taking inputs from
actual users in field conditions and employing advanced IT solutions.
Electric Vehicles:
The development of Electrical Vehicles in India is picking but further
progress will be driven by cost of batteries and downstream charging network facilities.
In particular, two wheeler industry, passenger car and bus industry have shown some
progress towards the development of Electric Vehicles. Cooling systems do play a central
role in an Electric Vehicles. Various projects are under development stage.
Banco New Energy Cooling Systems Limited, a Wholly Owned Subsidiary of
Banco Products is in final stages of plant commission and product trials.
OPERATIONS:
Considering the nature of business cost, pressures are always at the
forefront; we continuously invest in development of competent vendor base as well as
in-house component production facilities to bring flexibility and cost competitiveness in
overall scheme of things.
Investment into advanced low cost manufacturing is on going alongwith
adding capacities wherein management sees good future demand growth.
STRENGTHS:
Our strengths include:
- Wide customer and geographical customer base to minimize exposure to any one customer
segment.
- Competent research, design and product homologation capabilities
- Constant drive to increase customer base and introduction of new products.
- Capability to adjust the operations activities to meet volatility in demand
WEAKNESS:
Some of the concerns:
- Unprecedented increases in commodity prices, inflationary pressures and constant global
supply chain disruptions
- Foreign Exchange volatility.
OPPORTUNITIES:
New development projects:
Growing Indian economy provides several growth opportunities. Growth in
automotive industry is characterized by introduction of numerous new platforms. At the
same time there is ever increasing demand for higher efficiency and tighter emission
control. This provides opportunity for your Company to collaborate with our customers and
co-create efficient engine cooling solutions that is energy efficient and cost efficient.
New Market Sectors:
Cooling systems have a very wide usage in automotive and industrial
segments globally. Various initiatives of past have resulted in business at present and we
are multiplying efforts in that direction.
Global OEM Projects:
Banco is already a supplier to many large industrial MNCs in India as
their strategic supplier and we are leveraging these relationships to their overseas
locations in stages. We are observing a higher intake of RFQs from foreign OEMs and
business development is progressing well.
Strengthening export business:
Customers globally are looking for cost effective alternate to their
existing suppliers. BANCO continues to expand its initiatives in the overseas market to
realize some of these opportunities.
THREATS, Risk and Concerns:
Dynamic business environment of modern times throws several challenges from time to
time. Threats include:
- Growing competition both from domestic and global players.
- High inflationary trends.
- High dependence on imported raw material.
- Volatility in metal prices and fluctuations in Foreign Exchange.
- Foreign government putting protective duty barriers to Indian exports.
TECHNOLOGY:
Management strategically invests to upgrade its product technology and manufacturing
processes in order to meet customer expectations ahead of time.
We have developed advanced solutions for contemporary emission norms for BS-VI for
automotive, BS-IV / Trem V for agriculture machineries/off highway equipment and new CPCB
4 norms for Power Generation equipment.
We are also investing in developing competencies and capabilities of our people so that
they can con tribute effectively to the success of the organization while realizing their
own full potential.
Internal Control and its Adequacy:
The system of internal control designed to provide reasonable
maintenance of proper accounting records and the reliability of operational and financial
information complying with statutes, safeguarding assets from unauthorized use or losses
executing transaction with proper authorization ensuring compliance of corporate policies
used with a view to running business. The Company has clearly defined organization
structure and lines of authority.
Sufficient control is exercised through monthly, quarterly and annual
business review by the Management Review Committee and application of Corporate
Governance. An internal audit system is in place. Normal foreseeable risks to the
Companys assets are adequately covered by comprehensive insurance.
The Company has, during the year appointed Mr. SnehalKumar Shah,
Head-Internal Audit Department as Internal Auditor of the Company, for the services of
Internal Audit of operations of the Company for better control and to ensure adequacy and
efficacy of the Internal Audit function.
In line with well accepted practices and objectives, the planning and
internal audits are oriented towards the review of operational controls in the management
of risk strengths and opportunities.
The Company has an Audit Committee, which reviews the Reports of
Internal and External Auditors, making suggestions for improvements, follow up on the
implementation of corrective actions and keeps informed the Board of its major
observations from time to time.
Segment-Wise Performance
- The Company is only in one line of business- automobile components.
- The Segment Revenue in the Geographical Segment considered for disclosures are as
follow:
- Revenue within India includes sales to customers located within India
- Revenue outside India includes sales to customers located outside India
( Crores)
| Sales |
2022-23 |
2021-22 |
| Within India |
709.00 |
531.00 |
| Outside India |
270.00 |
241.00 |
Information Technology:
The Company is successfully operating SAP (ERP) system with the use of advanced
licensed software packages for product simulation, development and general engineering
work.
Financial performance with respect to operational performance:
The detailed financial analysis of the Companys operations for the year is
given in the Boards Report and therefore the same is not repeated. However, some
important ratios on the Companys profitability are given below.
| Particulars |
2022-23 |
2021-22 |
Reasons for Significant changes |
| Operating Profit (PBT)(%) |
29 |
14 |
Rise in Other Income |
| Earnings Per Share (EPS) () |
34 |
12 |
Rise in Other Income |
| Cash Earnings Per Share ()) |
37 |
15 |
Rise in Other Income |
| Return on Net worth (PAT) (%) |
35 |
13 |
Rise in Other Income |
| Dividend Payout Ratio (including Dividend Tax)
(%) |
82 |
17 |
Final dividend for F.Y.2021
-22 20 per share (1000 %) and Interim dividend for
F.Y. 2022-23 8 per share (400%) paid in F.Y. 2022 -23 , compared to
2 per share(100%) for F.Y. 2020-21 paid in F.Y.
2021 -22. |
| Retained Earnings () in crores) |
583 |
538 |
– |
| Retained Earnings (%) |
74 |
97 |
– |
| Debtors Turnover |
4.60 |
4.26 |
– |
| Inventory Turnover |
4.40 |
4.39 |
– |
| Interest Coverage Ratio |
2198 |
930 |
Rise in PBT backed by Other Income |
| Current Ratio |
5.1 |
5.7 |
– |
| Debt Equity Ratio |
0.00032 |
0.00006 |
Rise in Net worth |
Material Developments in Human Resources:
The industrial relations in all the units of the Company during the
financial year 2022-23 were peaceful and harmonious.
Experienced and motivated employees have been the backbone of the
Company. There were 655 peoples employed in the Company as on 31.03.2023.
Your Company puts special emphasis on team building and positive work
culture. We train employees to understand and absorb the latest technological trends which
in turn, prepare them to achieve higher efficiency levels in production, quality besides
leading to higher customer satisfaction.
There is a systematic identification of training needs. Training and
development inputs are provided to all employees in the areas of skill development and
behavioral improvement so that individual development keeps pace with organizational
development.
Future Strategy / Outlook:
Your Company will continue to follow technology led strategy to
realize profitable growth and thus create sustainable value for the organization.
Collaboration with our customers on the basis of our proven ‘bespoke
engineering approach will remain cornerstone of our future strategy. Besides
strengthening our core markets, we will expand and broad base our customer market
portfolio in Indian and International markets. We will continue to invest in advanced
manufacturing and supply chain processes to retain our leadership position. Relentless
drive to improve quality and productivity while cutting waste and cost defines our
approach towards manufacturing excellence.
Qualified, trained and motivated employees drive successful strategies
and towards this objective we also plan to step up our employee development initiative in
the coming days.
Cautionary Statement:
Certain statement made in this report, are forward looking
statements and actual results may differ from such expectations or projections about the
future, as several factors would make significant difference to the Companys
operations such as economic conditions affecting demand and supply, governments
regulations, level of competitions prevailing at the relevant time, etc. The Company
assumes no responsibility publicly to amend, modify or revise any such statements on the
basis of subsequent developments, information or events.
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