Industry structure & development:-
We are a Hydraulic engineering company and we bring out information in brief that is
relevant to our current business interest and our strategy to grow in this segment. Main
mother Industry on whom we are mainly depended on are, heavy engineering works,
Aeronautics, defense, Railways, Automobile, forging, Sheet metal. Apart from these there
are many global companies expanding their manufacturing facilities. There is upward trend
in the business year by year for past couple of years. India is a growing country and
every business house can grow in its own field provided, they add value to the investments
of the buyers program. There is a business opportunity for all segments of business
because our country has not reached to the saturation point unlike European and American
countries. In Bemco, we have given major focus on Automotive and Rail Industry not only
for business in home country but also in the neighboring countries. We have been
successful in securing business as anticipated and much is expected in the years to come.
We believe we are better placed in this segment of industry and are well secured.
Opportunities and Threats: Opportunities
We have different product verticals catering to the above segments therefore there are
ample opportunities to explore the business prospects from different segments of Industry.
1. In the western countries, forging and foundry industry are reduced as a result
Indian Industry is doing better in this segment with export business opportunities. We
cater to this segment and we are recognized in this segment of business so much so that,
we get substantial business from this segment.
2. Automobile: Every Indian vehicle manufacturer has Bemco machines and we are
recognized in this segment of business. Apart from supplying conventional machines, we
also supply customized machines to these companies.
3. Railways: Indian Railways is perhaps second largest in the globe and has many
workshops spread across length and breath of the country. We supply Hydraulic wheel
presses, spring testing machines and an Import substitute equipment by name Hydraulic
Re-railing equipment which Railways buy in good numbers.
4. Aviation and Defense: Bemco has developed few import substitutes wherein the
business is steady and secured although the size of business is not significant. But we
value this business as it is a feather in our cap and add brand value to the company. We
are being seen as one among the reputed and reliable within industry.
Threats:
1. We are a Hydraulic Engineering Industry who design and develop custom built,
application specific Hydraulic machines from concept level to commissioning. Our
responsibility ends after putting the machine into production and then we get paid. Time
frame for returns on the investment is to the tune of 6 to 8 months for each machine. Our
investment on the work in progress is for a longer period of time as a result we carry a
huge inventory at a huge interest cost.
2. We need to retain our entire workforce in good and bad times because all are
specialized brains trained for our business module. Unlike software industry, we cannot
adopt hire and fire policy. We need to carry our work force at all times.
3. If government reduces import duty to promote imports, the domestic hydraulic
industry would suffer competitiveness. This is highly unpredictable.
4. We largely depend on government orders. The decisions are normally taken after 180
days. Earnest money deposited is blocked for unknown period at a huge cost.
5. In case of disputes and arbitration, the decisions are delayed for unknown period of
time and it is beyond our control. Our inventory gets blocked until dispute is resolved.
Security deposits submitted as a surety remain with the government body for an extended
period of time.
6. Bank interests are much higher when compared to the developed countries. Since
realization on our investment is spread over 8 10 months, we lose major chunk of earnings
in bank interest & government levies. At times, when dispute crop up, we end up paying
interest and government levies and lose heavily.
7. We are better placed in selling large size machines because of our infrastructure
and past track record than selling smaller capacity machines. It is often seen that, small
entrepreneurs open a new business account with our existing buyers with smaller machines
and expand their business tentacles to secure larger business. We really need to strike
balance in between, although the business coming from smaller machines does not add much
to the turnover. The only way to sustain in this segment is to make the machines more
efficient than before and make it incomparable with other products technologically. There
is a need for constant innovation, developments and meet expenses without anticipating
quicker returns.
8. With the increased globalization, the buyer and the user are more knowledgeable than
any single manufacturer. There is need to infuse latest technology and produce energy
efficient intelligent machines. It is the time for change over to next generation
technology to grow in this business. We need to either develop technology in-house or have
technical collaboration with the experts of this field.
9. At times, private entrepreneurs do not take delivery after the machine is ready due
many reasons not concerned to us. In this period, we would be carrying huge inventory of
capital goods which otherwise cannot be sold to anyone else than the one who placed order.
Segment wise and Product wise performance:
We have experts of each and every field who are responsible to give their best. The
business is growing by word of mouth from one industry to another. We conceive new
engineering concepts, develop, produce, test, prove said capabilities of the machine &
then sell the first machine. The first machine speaks by itself and sells many more.
Bemco is always dedicated to its work responsibilities & enjoys crossing new mile
stones of success in its under takings. Every employee gives his best to his part of
responsibility and it is in the culture of this organization thereby we convert every
individual of the organization into an asset of the company.
Out look
We are confident and looking forward to a bright future and growth. We have planned for
larger investments on the infrastructure development & induction of new technology.
Risk and Concerns:
In true sense, we have lesser risk factors in our business. We are into manufacture of
custom built products & our investment begins only after securing the business and
after contracts are supported with sufficient advance payment. We are aiming for 50% of
the business from Government sector wherein we get paid upon delivery and returns on our
investment are well secured. We are successful in reaching to these bench marks. As a
result dead inventory is not created which would otherwise compel us for distress selling
or depleting stocks. This is one of the key factors for our 60 years of presence in this
field of business in all circumstances of situation of industry prevailing in the country.
Our business is hardly affected by product or the technology becoming obsolete overnight
unlike electronic and automobile industry. This process is very slow and as a requirement
of industry, we are already having European technology partner to keep pace with time
& technology in the relevant field.
Concerns:
Our major concern is on the bank interest on capital goods, security deposits for a
longer period of time for government contracts, late decisions of government mechanism
& huge inventory costs while work in progress. There is much things expected from the
government in this regard.
ESTIMATES FOR THE FINANCIAL YEAR 2023-24:
During the financial year 2022-23 it was quite challenging to the company to achieve
the expected turnover due to severe rise in the commodity prices which are our main inputs
like aluminum, steel and oil and the Government sanctions and budgetary quotations
affected the same, the company could not complete the order by the end of the financial
year 2023, due to which there is an impact on the turnover of the company as to previous
year turnover .the company shall complete and diapatch the same in the first quarter of
the financial year 2023-24. However as the year stands out here on, We shall surpass last
year sales and we expect a strong rebond in business and it is our endeavor to marginally
surpass the performance and to achieve the turnover of Rupees seventy five crore plus..
Bemco Fluidtechnik LLP which is engaged in manufacturing of hydraulic pumps, valves,
hydraulic motors, hydraulic equipment/power packs, and manifold blocks and many such items
and have introduced new products in the previous year and has a favorable response for the
same. To sum up, the outlook for the next year looks cautiously optimistic.
Internal Controls and their adequacy:
Bemco has put in place adequate internal financial control with reference to the
financial statement, some of which are outlined below: The financial statement for the
year ended 31st March, 2023 of the company and its subsidiary are prepared with
comparative data, in compliance with Ind AS. Your Company has adopted accounting policies
which are in line with the Accounting Standard prescribed in the Companies (Accounting
Standards) Rules, 2006 that continues to apply u/s 133 and other applicable provisions of
the companies Act, 2013 read with rule 7 of the companies (Accounts) Rules, 2014. These
are in accordance with generally accepted accounting principles in India. Changes in
policies if any are approved in the audit committee in consultation with the auditors.
The policies to ensure uniform accounting treatment are prescribed to the subsidiaries
of your company. The accounts of the subsidiary companies are audited and certified by
their respective auditors for consolidation. The company has proper and adequate system of
internal audit and control which ensures that all the assets are safeguarded against loss
from unauthorized use and that all transactions are authorized recorded and reported
correctly. The company continuously improves upon existing practices for each of its major
functional areas with a view to strengthen the internal control system. The Company has
assigned internal audit function to a firm of Chartered accountants. Regular internal
audit and checks are carried out to ensure that the responsibilities are discharged
effectively. All major findings and suggestions arising out of internal audit are reported
and reviewed by the Audit Committee. The management ensures implementation of these
suggestions and reviews them periodically.
Human Resources:
Your company believes that human talent is its fundamental strength. The Company
nurtures competencies and skills through learning and development programmes and
recognizes talent, and rewards it through performance management system. During 2022-23,
the focus from an organization development perspective was to implement strong processes
and controls to continuously improve efficiencies and improve organization capabilities.
The process of realigning the organization along functional lines in various areas of
business like business acquisition, business execution and technology adoption continued
through 2015-16. On the operational side of business, management changes were undertaken
to create more focus and greater accountability. Your company has enjoyed cordial
relations with its employees, worker and staff employees are paid in accordance with the
wage agreement established with trade unions. The Employee strength of the company as on
31st March, 2023 was 296.
Analytical Ratios:
| Ratio |
Numerator |
Denominator |
Current Period |
Previou s Period |
% Change |
Reason of Change if more than 25% |
| Current Ratio |
Current Assets |
Current Liabilities |
1.60 |
1.43 |
11.79% |
NA |
| Debt-Equity Ratio |
Total Debt |
Shareholders |
0.20 |
0.21 |
-2.49% |
NA |
|
|
Equity |
|
|
|
|
| Debt Service Coverage Ratio |
Earnings Available for debt Services |
Debt Service |
0.67 |
1.03 |
-34.76% |
Decrease in Revenue and profit |
| Return on Equity Ratio |
Net Profit After Tax less Preference Diviend |
Average Shareholders Equity |
0.10 |
0.12 |
-20.01% |
NA |
| Inventory Turnover Ratio |
Cost of Goods Sold (COGS) |
Average Inventory |
1.00 |
2.47 |
-59.63% |
Increase in Inventory and decrease in profit |
| Trade Receivables turnover Ratio |
Net Credit Sales |
Average Accounts Receivable |
2.56 |
3.62 |
-29.34% |
Decrease in sales |
| Trade payables turnover ratio |
Net Credit Purchases |
Average Trade Payables |
2.28 |
2.56 |
-10.94% |
NA |
| Net Capital Turnover Ratio |
Net Sales |
Working Capital |
2.59 |
4.78 |
-45.95% |
Decrease in sales and increase in working capital |
| Net Profit Ratio (%) |
Net profit after Tax |
Net Sales |
10.03% |
8.31% |
20.75% |
Increase in contribution to sales |
| Return on Capital Employed (%) Return on Investment (%) |
Earnings before interest and taxes Income Generated from Invested Funds |
Capital Employed Average Invested Funds in Treasury Investments |
14.29% 18.47% |
22.74% 20.61% |
-37.16% -10.39% |
Decrease in sales and profit NA |
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