The Members of
Banco Products (India) Limited
Your Directors have the pleasure in presenting the 58th Annual Report together with theAudited Financial Statements of Banco Products (India) Limited ("the Company")and its subsidiaries for the financial year ended on 31.03.2019.
1. Overview of the Companys Performance :
Economic situation both globally and in India presented a mixed picture during thelast year. Despite somewhat muted growth of major economies in the second half of theyear global economy managed to grow by over 3% in the year 2018. World Bank expectssomewhat weaker outlook for 2019 as the economy faces growing risks of trade barriershigh government debts and slower growth in major developed and emerging nations
In India the economic development started with good momentum in the financial year2018-19 but weakened in the later half. Some the sectors like Commercial Vehicle andConstruction Machinery benefitted from Governments aggressive actions towardsinfrastructure improvement to post robust growth in FY 2018-19. However the other segmentslike passenger cars agricultural tractors and two wheelers posted somewhat lower thanexpected growth during the last year. Still with a GDP growth of approx 7% in the year FY2018-19 India was the fastest growing economy of the world.
For your Company the year 2018-19 was yet another good year. Sales grew by 18.80%(consolidated 13.18%) while profit before tax expanded by 18.36% (consolidated -10 %) overthe previous year.
R&D and Integrated Manufacturing approach are two strong pillars of ourcompanys long term customer centered strategy. By constantly striving to deliversolutions that provide maximum technology and economic benefits to our customers; we wantto become preferred partners of our customers.
Government regulations customer expectation and growing competition are pushingmanufacturers to design and implement technological improvements in their products withever reducing "time to market". With our bespoke engineering approach we workin close cooperation with our customers to design innovative cooling systems and modulesthat deliver maximum efficiency under practical operating conditions. During the yearunder review we initiated a number of development projects with our customers in focussectors such as Commercial Vehicles Agricultural tractors Off Highway equipmentsUtility Vehicles Power generation and Railways.
Responding to the challenges posed by planned introduction of new emission norms forautomotive and off highway vehicles in India our R &D has developed so named"Smart Core Technology that addresses the growing challenges of highefficiency space/ weight limitation and longer warranty period of our customers. Theseinnovative solutions have received growing acceptance from our Indian/ global customers.
We believe that actual operating conditions for on and off highway vehicles in Indiadiffers substantially from the same in the western world. Bancos smart solutionsthat take care of the actual application and maintenance conditions in India and stilldeliver best in class field performance. Ability of our designers to" readbeyond specifications and leverage their vast practical experience to deliverbespoke innovation provides us a unique differentiation in the competitive marketswhere we operate
We continue to expand our customer and product portfolio. During the year under reviewyour company accelerated product development initiatives and added new products for OEMand Aftermarket. Flexibility in the designing approach speed in prototyping and in-housetesting competence helps us to shorten time to market significantly.
A good solution is not just well designed. The aim of our integrated manufacturingapproach is to offer high quality products within shortest possible lead time. Our Companyfollows a vertically integrated approach in manufacturing. All the critical components aremanufactured at our modern manufacturing plants located at Bhaili and Waghodia. During theyear under review our company invested over Rs 37/- crores in capital expenditure toexpand our manufacturing capabilities. We invested in state of the art continuous brazingfurnace which prepares us well for stringent quality expectations under BS 6 standards ourother investments in brazing core making and assembly equipments will help us stayabreast in terms of global trends in manufacturing technology.
In the export markets we continue our initiatives in terms of product and businessdevelopment. Our long term approach to expand global OEM business is making a steadyprogress.
Increase in global prices of metals and commodities together with continueddepreciation of Indian Rupee put pressure on the raw material cost development during theyear. Your company with its relentless focus on cost initiated a number of operationalexcellence initiatives to improve efficiency and productivity besides implementing prudentfinancial discipline.
These measures have helped your organization deliver satisfactory top line and bottomline performance during the year under review despite the challenges mentioned above.
2. Financial Performance:
At a glance the summarized Standalone and Consolidated results of your Company aregiven below:
(` in Crores)
|PARTICULARS ||STANDALONE ||CONSOLIDATED |
| ||Year ended on 31.03.2019 ||Year ended on 31.03.2018 ||Year ended on 31.03.2019 ||Year ended on 31.03.2018 |
|Total Tunover ||715 ||602 ||1537 ||1311 |
|Profit Before tax ||174 ||147 ||152 ||164 |
|Less: Tax Expenses ||51 ||27 ||69 ||50 |
|Profit After tax from continuing operations ||123 ||120 ||83 ||114 |
|Profit/(Loss) After tax from discontinued operations ||- ||- ||(14) ||3 |
|Profit for the year ||123 ||120 ||69 ||117 |
|Add: Total comprenesive Income || || || || |
|Balance Brought forward from previous year ||456 ||395 ||533 ||477 |
|Profit available for Appropriation ||579 ||515 ||602 ||594 |
|Appropriations: || || || || |
|Interim Dividend paid during the year ||(36) ||(30) ||(36) ||(30) |
|Tax paid on Interim Dividend ||(0.80) ||(0.15) ||(2) ||(2) |
|Final Dividend ||(41) ||(29) ||(41) ||(29) |
|Balance carried to Balance Sheet ||500 ||456 ||523 ||533 |
Your Directors had declared and paid Interim Dividend during the year at 250% i.e. Rs5/- per equity share of Rs 2/-each absorbing Rs 36/- Crores as dividend and Rs 80 LakhsTax on Dividend (as per applicable provision under Section 115BBD of Income Tax Act) andhave recommended final dividend of 150% i.e. Rs 3/- per equity share of Rs 2/- each forthe financial year ended on 31.03.2019 as compared to Rs 10/- per equity share of Rs 2.00each (500%) during previous year.
The total dividend for the financial year ended 31st March 2019 would accordingly beRs 8/- per equity share of Rs 2/- each i.e. 400%.
The Company has not transferred any amount to reserve.
5. Operations and State of Affairs:
The Company continued its initiatives during the year to upgrade technology andquality at its plants. As pioneers in the country your company will invest in best inclass technology and has lined up an accelerated investment plan to retain its technologyleadership position.
Our Research and Development capabilities including test equipments and designsoftware are being improved in line with modern practices. Our R& D spend during theyear was placed at 00.70 % of turnover.
Sales and Profit for Banco Products (India) Ltd. stood at:
(` In Crores)
|Particulars ||Year ended on 31.03.2019 ||Year ended on 31.03.2018 |
|Sales (Net) ||715 ||602 |
|Profit after Tax (PAT) ||123 ||120 |
During the period under review the Companys Domestic sales stood at Rs 557/-crores as against Rs 451/- crores in the previous year representing a robust 23.50 %growth. We expanded our business both in OEM and Replacement market.
During the period under review the Companys Export sales recovered to reach Rs158/- crores as against Rs 151/ - crores in the previous year despite growing globalcompetition.
Overall sales mix was placed at Domestic 78 % (previous year 75%) and Export 22 %(previous year 25%).
6. Managements Discussion and Analysis:
The Report on Managements Discussion and Analysis as required under the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 ("LODR") isincluded in this report as per Annexure "A".
7. Corporate Social Responsibility:
The Company believed that it is vital for surrounding communities and stakeholders toprogress with the Company. In compliance with the requirements of Section 135 of the Act.read with the Companies (Corporate Social Responsibility Policy) Rules 2014 the Board ofDirectors have constituted a Corporate Social Responsibility Committee. The details ofmembership of the Committee & the meetings held are detailed in the CorporateGovernance Report forming part of the Annual Report.
The contents of the CSR Policy of the Company as approved by the Board on therecommendation of the Corporate Social Responsibility Committee is available on thewebsite of the Company as per the web link provided in the report on Corporate SocialResponsibility Activities as per Annexure "B" to this Report.
8. Conservation of Energy Technology Absorption and Foreign exchange:
In accordance with the provisions of Section 134(3)(m) of the Act read with Rule 8 ofThe Companies (Accounts) Rules 2014 the relevant information pertaining to Conservationof Energy Technology Absorption and Foreign Exchange Earnings and Outgo is annexed as perAnnexure "C" to this Report.
9. Directors Responsibility Statement:
In terms of Section 134(3) (c) of the Companies Act 2013 your directors would like tostate:
i) that in the preparation of the annual financial statements for the year ended 31stMarch 2019 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
ii) that such accounting policies have been selected and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company for the year ended 31st March 2019 and of theprofit and loss of the Company for that period;
iii) that the proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
iv) that the annual financial statements have been prepared on a going concern basis;
v) that the proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;
vi) that the proper systems have been devised to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
10. Directors and Key Managerial Personnel:
The Tenure of Independent Directors Viz. Shri Ramkisan Devidayal and Shri Mukesh DPatel is up to the conclusion of the ensuing Annual General Meeting.
The Tenure of Independent Directors Viz. Shri Devesh Pathak and Shri Udayan Patel is upto 14.02.2020. The aforesaid Independent Directors are eligible for Appointment for aSecond Term of Five Years from the conclusion of their respective period.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 ("theAct") and LODR.
The proposals for their respective Appointment by way of Special Resolutions for aSecond Term of Five in terms of the recommendation of the Nomination and RemunerationCommittee is included in the Notice of the ensuing Annual General Meeting.
In accordance with the provisions of the Act and rules made there under Shri Mehul KPatel (DIN : 01772099) retires by rotation at the forth coming Annual General Meeting andbeing eligible offers himself for reappointment.
10.1 Performance Evaluation:
Pursuant to the provisions of the Act and LODR the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its requisite Committees. The evaluation has been carried outwith a well structured questionnaires taking into consideration various aspects and rolesof the Board and its Committees such as knowledge skills conduct integritycontribution in setting up and achieving goals etc. The Board of Directors expressed theirsatisfaction with the evaluation process.
10.2 Policy on Directors Nomination Appointment and Remuneration:
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy in relation to remuneration of Directors. The policy also laid down thecriteria for selection and appointment of Directors Senior Management and theirremuneration. The detailed Remuneration Policy is stated in the Corporate GovernanceReport.
10.3 Disclosure of Remuneration paid to Directors:
The details of remuneration paid to the Directors is given in the Report on CorporateGovernance.
11. Number of Board Meetings:
The details of 5 Board Meetings held during the financial year 2018 19 areprovided in the Report on Corporate Governance and forms part of this report.
12. Audit Committee:
The details regarding the Composition power and role of Audit Committee are providedin Report on Corporate Governance and forms part of this report.
13. Vigil Mechanism / Whistle Blower Policy:
The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations. To maintain these standards the Company encourages itsemployees who have concerns about suspected misconduct to come forward and express theirconcerns without fear of punishment or unfair treatment. A Vigil Mechanism provides achannel to the employees and Directors to report to the management concerns aboutunethical behavior actual or suspected fraud or violation of the Codes of Conduct orpolicy. The mechanism provides for adequate safeguards against victimization of employeesand Directors to avail of the mechanism and also provides for direct access to theChairman of the Company / Chairman of the Audit Committee in exceptional cases. The VigilMechanism / Whistle Blower Policy are available on Companys website at http://www.bancoindia.com/wp-content/uploads/2017/06/ Vigil_Mechanism.pdf
14. Risk Management Policy:
Pursuant to the requirement of LODR the Company has formed Risk Management Policy toensure appropriate risk management within its systems and culture. The Company operates ina competitive environment and is generally exposed to various risks at different timessuch as technological risks business risks operational risks financial risks etc. TheBoard of Directors and the Audit Committee of the Company periodically review the RiskManagement Policy of the Company so that the Management can control the risk throughproperly defined network.
The Company has a system based approach to business risk management backed by stronginternal control systems.
The Corporate Governance Policy clearly lays down the roles and responsibilities of thevarious entities in relation to risk management. A range of responsibilities fromstrategic to the operational is specified in the Governance Policy. These role definitioninteralia are aimed at ensuring formulation of appropriate risk management policies andprocedures their effective implementation and independent monitoring and reporting byInternal Audit.
A strong independent Internal Audit Function at the corporate level carries out riskfocused audits across all businesses enabling identification of areas where riskmanagements processes may need to be improved. The Board reviews internal audit findingsand provides strategic guidance on internal controls monitors the internal controlenvironment within the Company and ensures that Internal Audit recommendations areeffectively implemented. The combination of policies and procedures adequately addressesthe various risks associated with your Companys businesses.
15. Corporate Governance:
Pursuant to LODR the Report on Corporate Governance forms an integral part of thisReport. The requisite certificate from the Auditors of the Company confirming compliancewith the conditions of corporate governance is attached to the Report on CorporateGovernance. The Company has paid the requisite Annual Listing Fees to the Stock Exchanges.
16. Extract of Annual Return:
The extract of Annual Return required under Section 134(3)(a) of the Companies Act2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014 isattached as Annexure " D".
17.1 Statutory Auditors:
M/s Manubhai & Shah LLP Chartered Accountants were appointed as StatutoryAuditors by the Members of the Company at their 53rd Annual General Meeting held on23.09.2014 to hold the Office upto conclusion of ensuing 58th Annual General Meeting .Accordingly they will retire at this Annual General Meeting. The Statutory Auditors arenot seeking their re-appointment upon end of their Tenure in the forthcoming AnnualGeneral Meeting.
The Company has received a certificate from M/s. Parikh Shah Chotalia & Associates Chartered Accountants (PSCA) Vadodara (Firm Registration No. 118493W ) that ifapproved by the Members they are eligible for Appointment for as Statutory Auditors forFirst Term of Five Years in terms of applicable provisions of the Companies Act 2013 andRules made thereunder under SEBI Rules and Regulations and other Rules and Regulationsas be applicable from time to time.
In accordance with the provision of Section 139 and other applicable provisions ifany of the Companies Act 2013 and the relevant Rules framed thereunder the Board ofDirectors of the Company on the recommendations of Audit Committee has recommended theappointment of M/s. Parikh Shah Chotalia & Associates Chartered Accountants (PSCA)Vadodara (Firm Registration No. 118493W ) as Statutory Auditors of the Company for a termof Five consecutive years at the ensuing 58th Annual General Meeting till the conclusionof 63rd Annual General Meeting in place of retiring Auditors M/s Manubhai & Shah LLPChartered Accountants. The Auditor's Report for financial year 2018-19 does not containany qualification reservation or adverse remark.
17.2 Internal Auditors:
Your Company has appointed M/s. Sharp & Tannan Chartered Accountants Vadodara asthe Internal Auditors to carry out the Internal Audit of various operational areas of theCompany.
17.3 Secretarial Auditors:
Pursuant to the provisions of Section 204 of the Act and The Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 your Company has appointed M/s.J.J. Gandhi & Co. Practicing Company Secretaries. Vadodara as Secretarial Auditors ofthe Company. The Secretarial Audit Report for the Financial Year ended on 31.03.2019 isannexed herewith as per Annexure " E" to this Report.
17.4 Cost Auditors
Your Company has appointed M/s. Y.S. Thakar & Co. Cost Accountants Baroda (FRN :000318) in terms of provisions of Section 148 of the Companies Act 2013 applicableprovisions of the Company Law and Rules made thereunder.
The proposals for approval of their remuneration by way of Ordinary to conduct theaudit of the Cost Records of the Company for the financial year 2019-2020 in terms of therecommendation of the Audit Committee is included in the Notice of the ensuing AnnualGeneral Meeting.
18. Subsidiary Companies:
18. 1 Nederlandse Radiateuren Fabriek B.V - Netherlands:
Nederlandse Radiateuren Fabriek B.V Netherlands and its subsidiaries are engaged inthe business of manufacturing and distribution of heat transfer products. During the yearthe Company has taken many initiatives in the areas of production marketing distributionand other operational areas. We expect that these initiatives will yield results in timeto come and result in improvement in the performance.
18.2 Banco Gaskets (India) Limited Vadodara:
In terms of the requisite approvals of Shareholders the Gasket Divisions of theCompany was transferred to its Wholly Owned Subsidiary Company viz. Banco Gaskets (India)Limited with effect from 31.03.2012 and is in operation.
18.3 Lake Mineral (Mauritius) Limited Mauritius:
During the current Financial Year upon completion of transaction (subject toregulatory filings as applicable) for sale of shares in Lake Minerals (Mauritius) LimitedLake Minerals (Mauritius) Limited Mauritius and Kilimanjaro Biochem Limited (Indirectsubsidiary) ceased to be subsidiary of the Company.
Pursuant to Section 129(3) of the Act the statement containing the salient features ofthe financial statement of the Companys Subsidiaries is annexed as per Annexure"F" to this Report.
The determination of Material Subsidiary is in compliance with LODR.
19. Particulars of Employees:
The Statement pursuant to Section 197(12) of the Act and Rule 5(1) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2015 is attached as perAnnexure "H" to this Report.
The Statement of the details of employees covered under Rule 5(2) are provided in theAnnual Report. The Annual Report is being sent excluding the aforesaid information. Suchparticulars shall be made available to any shareholder on a specific request made inwriting by the shareholder.
20. Related Party Transactions:
All transactions entered into with the Related Parties as defined under the CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015during the financial year ended on 31.03.2019 were in the ordinary course of business andon basis of arms length pricing and do not attract the provisions of Section 188 of theCompanies Act 2013. Thus disclosure in form AOC 2 is not applicable.
All the Related Party Transactions are reviewed by the Audit Committee on quarterlybasis and they have provided an omnibus approval for all Related Party Transactions whichare within its purview.
The information on Related Party Transactions forming part of this Report is providedin Note 37 of Annual Financial Statement for the Financial Year ended on 31.03.2019.
The Board has approved a Policy on Related Party Transactions which has been uploadedon the Companys website at http://www.bancoindia.com/wp-content/uploads/2017/06/Policy_on_Related_Party_Transactions.pdf
21. Particulars of Loans given Guarantees given and Investments made by the Company:
The details pursuant to Section 186 of the Act regarding investments made by theCompany are given as per Annexure "G" to this Report.
22. Share Capital:
As on 31st March 2019 the paid up equity share capital of your Company was Rs 14.30crores. During the year under review the Company has not issued any shares.
23. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 :
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent contractual temporary trainees)are covered under this policy.
The summary of sexual harassment complaints received and disposed off during thefinancial year 2018 19 is as under:
- Number of Complaints Received : Nil
- Number of Complaints Disposed Off : Nil
24. Deposits :
The Company has neither accepted nor renewed any deposits during the year under review.
25. Insurance :
All the properties and insurable interests of the Company including buildings plantand machineries and stocks have been adequately insured.
26. Industrial Relations :
Overall industrial relations continued to be cordial. Your Directors place on recordtheir appreciation for the continued support and co-operation of all the employees.
27. Internal Financial Control :
The Company has appropriate internal financial control systems and procedures in placewith regard to effective utilization of resources efficiency in operation financialreporting and compliance with various rules and regulations and keeping in view theorganizations pace of growth and increasing areas of operations.
The internal auditors conduct extensive audits throughout the year across all locationsand across all functional areas and submit their reports to the Audit Committee of theBoard of Directors.
28. Details of Fraud Reporting if any :
Neither any Fraud has been reported by auditors under Section 143 (12) of the CompaniesAct 2013 nor there was any fraud reportable to the Central Government.
29. Familiarisation Programme for Independent Directors :
The details of programmes for familiarization of Independent Directors and trainingwith the Company their roles rights responsibilities nature of the industry in whichthe Company operates business model of the Company and related matters are put up on thewebsite of the Company at http://www.bancoindia.com/wpcontent/uploads/2017/06/FamiliarizationProgrammsforIndependentDirectors.pdf
30. Human Resources :
Many initiatives have been taken to support business through organizational efficiencyand various employee engagement programmes which have helped the Organization achievehigher productivity levels.
A significant effort has also been undertaken to develop leadership as well astechnical/ functional capabilities in order to meet future talent requirement.
The Companys HR processes such as hiring fair transparent online performanceevaluation and talent management process state-of-the-art workmen development process andmarket aligned policies have been seen as benchmark practices in the Industry.
31. Material changes and Commitments :
Your Directors are of the opinion that there are no material changes and commitmentsaffecting financial position of the Company which have occurred between end of financialyear of the Company and the date of this report.
32. Safety Health and Environment Safety :
The Company has continuously exercised effective safety health and environmentpolicies. Water and air pollution control measures are successfully operated andindustrial trade effluents are used for gardening.
The tree plantation at the factory site is maintained properly and the same shall beduly taken care.
33. Web Links
Web links related to various policies are available in the Corporate Governance Report.
34. Change in the nature of Business :
There is no change in the nature of business during the year under review.
35. Significant and material order passed by the Regulator or Court :
No order was passed by any regulator court or tribunal impacting the going concernstatus and Companys operation in future during the year under review.
36. Disclosure in respect of Cost Records :
The Company has maintained the accounts and records respectively as required underprovisions of the Companies Act 2013.
37. Compliance of applicable Secretarial Standards :
Pursuant to Clause 9 of Secretarial Standards on Meetings of Board of Directors it isstated that the Company is compliant of applicable Secretarial Standards during the year.
Your Directors wish to convey their gratitude and place on record its deep appreciationfor the co-operation and continued support received by the Company from GovernmentCustomers Shareholders Vendors Bankers and Employees at all levels during the year.
| ||By the order of the Board || |
|Date : 22.08.2019 ||Ramkisan Devidayal - Director ||Himali Patel - Director |
|Place : Bil ||(DIN : 00238853) ||(DIN : 07081636) |