The Members of
Banco Products (India) Limited
Your Directors have the pleasure in presenting the 59th Annual Report together with theAudited Financial Statements of Banco Products (India) Limited ("the Company")and its subsidiaries for the financial year ended on 31.03.2020.
At the outset we hope and pray for the safe health of yours and that of your families.COVID-19 pandemic has caused enormous disruption to human lives. During theseunprecedented and uncertain times your Company's immediate priorities has been a. tosafeguard health safety and well-being of our employees and of communities around b. toinitiate effective measures towards rebooting of our operations and thus ensuring businesscontinuity. Covid 19 has not just affected human health; it has caused devastating impacton the economy and on the society in general. It is impossible for an organization toescape the risks of a crisis with such a magnitude- at least in the short term. Theadversities tests an Organization's true character and strength- At Banco we are doingeverything possible- and are confident we will survive and emerge stronger post thecurrent crisis.
1. Overview of the Company's Performance:
The economic scenario during FY 19-20 remained challenging. Overall the economicgrowth in India slowed down considerably during the year under review. Production in theautomotive sector- one of the largest users of your Company's products -was unimpressiveduring the year. Production of Commercial vehicles declined by 33%; while other sectorsnamely Passenger Cars Two Wheelers and Agriculture tractors- all saw decline inproduction by an average of 15%. In the last weeks of March 2020 the sales of the Companywere also impacted due to COVID-19 related lockdown.
The challenging economic environment as above has affected your Company's financialperformance. After posting healthy growth in business during previous two years (FY 17-18and FY 18-19) we saw deceleration in our business during FY 1920.
Total Income from operations during the year for the standalone entity was placed atINR 644.9 crores (previous year INR 819.3 crores). Net profit before tax was lower at INR100.6 crores (previous year INR 173.9 crores). For the consolidated entity the totalincome from operations was placed at INR 1447.2 cror es (previous year INR 1577.1 crores)while Net profit before tax declined to INR 111.5 crores (previous year INR 152.5 crores).
The uncertain and challenging business environment also pushed us to deliver our bestin terms of our core strength i.e. Innovation. Changes in emission norms to BS-VI in theautomotive industry and BS-IV in the construction machinery and off-highway sectors led tolarge number of new development projects that our engineers managed successfully. Thecustomer expectations in terms of emission norms thermal efficiency productcompactness-lower weights and lowest possible Total Cost of Ownership (TCO) have beengrowing like never before.
Our R&D has been successful in responding to these challenges through our BespokeEngineering approach. By continuously improving testing and proving the efficiency ofcooling elements we have delivered to our customers optimized solutions - which are notonly efficient but are capable of delivering best in class field performance underchallenging operating conditions.
It was thus heartening when two of our Key Customers recognized BANCO for itsInnovation capabilities. During the year FY 2019-20 Cummins India recognized BANCO withBest Supplier Innovation Award while JCB also presented us with Best Supplier Award forco-creating the advanced and efficient Engine Cooling Modules suitable for BS-IV norms.
In the export market the Company's business remained flat during the year. We willcontinue to focus on expanding our product portfolio in export market while realizingsteady progress on growing global OEM business.
Your Company as a part of its strategy to be best in its class has always beeninvesting ahead of times towards up gradation of Technology and Capacity Enhancement.During FY 2019-20 we made capital investment of approximately INR 18 crores mainly inmodern plant equipment.
Continuous improvement is at the very core of our Company's culture. During the yearour engineers implemented a number of de-bottle-necking Quality improvement andEfficiency improvement projects in our plants successfully. With relentless focus onoperational excellence and costs we keep our operations flexible and efficient. Duringthe year your Company's employees won several awards in Quality Circle Competitionorganized by QCFI (Quality Circle Forum India).
In-terms of cost of raw materials high depreciation in Indian Rupee was partlycompensated by moderate commodity prices. Your Company follows prudent financial practicesto manage Cash and Working Capital efficiently It is yet unclear how the economy which iscurrently under strain of the disruption caused by the pandemic will recover during theyear FY 2020-21. Overall global political and economic scenario is getting very complexuncertain and volatile; and this does not allow a good and clear visibility into thefuture ... As a Company we are preparing ourselves for the best and the worst that thecoming times may bring. Under our initiative "Resilient BANCO" we are preparingour organization to remain lean and agile in-order to quickly respond to both theopportunities and the challenges of the future.
In the medium term we believe that markets will recover and growth will return- Westill will have to get prepared to cyclic impact and unknown disruptions. Your Company ispreparing itself well to manage its business continuity plans while keeping sight on itslong-term strategy of profitable growth on the foundation of Innovation Technology andPeople.
2. Financial Performance:
At a glance the summarized Standalone and Consolidated results of your Company aregiven below:
(` in Crores)
|PARTICULARS || |
| ||Year ended on 31.03.2020 ||Year ended on 31.03.2019 ||Year ended on 31.03.2020 ||Year ended on 31.03.2019 |
|Total Turnover ||582.00 ||715.00 ||1400.00 ||1537.00 |
|Profit Before Taxation ||101.00 ||174.00 ||111.00 ||152.00 |
|Less:-Tax Expenses ||31.00 ||51.00 ||35.00 ||69.00 |
|Profit After Tax ||70.00 ||123.00 ||76.00 ||83.00 |
|Profit/(Loss) from discontinued operations || || || ||-14.00 |
|Balance Brought forward from P.Y. ||500.00 ||456.00 ||523.00 ||533.00 |
|Profit available for Appropriation ||570.00 ||579.00 ||599.00 ||602.00 |
|Appropriations: || || || || |
|- Reclassification of Profit on Sale of Quoted || || || || |
|Investment measured at FVTOCI ||3.00 ||- ||3.00 ||- |
|Dividend and Dividend Tax ||-194.00 ||-79.00 ||-198.00 ||-79.00 |
|Balance Carried to Balance Sheet ||379.00 ||500.00 ||404.00 ||523.00 |
Your Directors had declared and paid Interim Dividend during the year at 1000% i.e Rs.20/- per equity share of Rs. 2/- each absorbing Rs. 143/- Crores as Dividend for thefinancial year ended on 31.03.2020 as compared to Rs. 8/- per equity shares of Rs. 2.00each (400% during previous year). The aforesaid payment of Interim Dividend may be treatedas Final Dividend.
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:
(Rs In Crores)
|Particulars ||Year ended on 31.03.2020 ||Year ended on 31.03.2019 |
|Sales (Net)Profit after Tax (PAT) ||582 ||715 |
|Profit after Tax (PAT) ||70 ||123 |
During the period under review the Company's Domestic sales stood at Rs 437/- croresas against Rs 557/-crores in the previous year representing a 21.54% decline.
During the period under review the Company's Export sales stood at Rs 145/- crores asagainst Rs 158/-crores in the previous year despite growing global competition.
Overall sales mix was placed at Domestic 75% (previous year 78%) and Export 25%(previous year 22%).
6. Management Discussion and Analysis:
The Report on Management's Discussion and Analysis as required under the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 ("LODR") is includedin this report as per Annexure "A".
7. Corporate Social Responsibility:
Your Director believed that it is vital for surrounding communities and stakeholders toprogress wit h 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 of Directors haveconstituted a Corporate Social Responsibility Committee. The details of membership of theCommittee & the meetings held are detailed in the Corporate Governance Report formingpart 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 2020 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 2020 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:
10.A STATEMENT WITH REGARD TO INTEGRITY EXPERTISE AND EXPERIENCE OF THEINDEPENDENT DIRECTORS
Your directors are of the opinion that Independent Directors of the Company are of highintegrity and suitable expertise and experience (including proficiency).
In accordance with the provision of the Act and rules made there underShri RajendraJayantilal Anandpara (DIN 02461259) retires by rotation at the forth coming Annual GeneralMeeting and being eligible offers himself for reappointment.
Th Board has reappointed Shri Rajendra Anandpara as Managing Director for a period from27.04.2020 to 30.05.2023 in terms of the Companies Act 2013 and Rules made there underand in terms of the Listing Regulations on the recommendation of Nomination andRemuneration Committee.
The Board of Directors has appointed Mrs. Ameeta V. Manohar w.e.f 25.04.2020 as anAdditional Director to hold office upto next Annual General Meeting and as a Non ExecutiveIndependent Woman Director w.e.f 25.04.2020 for the period of five years subject toapproval of the members of the Company.
Upon resignation Shri Samir K. Patel ceased to be Non-Executive Non IndependentDirector w.e.f 04.06.2020. The Board placed on records its appreciation of servicesrendered by Shri Samir K. Patel during his tenure of Directorship.
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 out with a well structured questionnaires taking intoconsideration various aspects and roles of the Board and its Committees such as knowledgeskills conduct integrity contribution in setting up and achieving goals etc. The Boardof Directors expressed their satisfaction 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 07 Board Meetings held during the financial year 2019 20 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 Company's website athttp://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 findings and provides strategic guidance on internalcontrols monitors the internal control environment within the Company and ensures thatInternal Audit recommendations are effectively implemented.
The combination of policies and procedures adequately addresses the various risksassociated with your Company's businesses.
15. Corporate Governance:
Pursuant to LODR the Report on Corporate Governance forms an integral part of thisReport. The requisite certificate confirming compliance with the conditions of corporategovernance is attached to the Report on Corporate Governance. The Company has paid therequisite 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. Parikh Shah Chotalia & Associates Chartered Accountants (PSCA) Vadodara(Firm Registration No. 118493W) were appointed as Statutory Auditors of the Company for aterm of Five consecutive years at the conclusion of 58th Annual General Meeting till theconclusion of 63rd Annual General Meeting in place of retiring Auditors M/s Manubhai& Shah LLP Chartered Accountants upon end of their term. The Auditor's Report forfinancial year 2019-20 does not contain any qualification reservation or adverse remark.The Auditors have conveyed their confirmation about their eligibility to continue asStatutory Auditors of the Company.
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 read with The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hasappointed M/s. J.J. Gandhi & Co. Practicing Company Secretaries. Vadodara asSecretarial Auditors of the Company. The Secretarial Audit
Report for the Financial Year ended on 31.03.2020 is annexed herewith as per Annexure"E" to this Report. Regarding the observation of the Secretarial Auditor forlate submission of Shareholding pattern as on 30.06.2019 it is informed that the delaywas inadvertent and unintentional.
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 and any other provisions applicatible ifany of the Companies Act 2013 and Rules made thereunder.
The proposals for retification of other remuneration by way of Ordinary Resolution toconduct the audit of the Cost Records of the Company for the financial year 2020-21 interms of the recommendation of the Audit Committee is included in the Notice of theensuing Annual General 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.
Pursuant to Section 129(3) of the Act the statement containing the salient features ofthe financial statement of the Company's 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 "G" 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 31.03.2020 were in the ordinary course of business andon basis of arms length pricing and do not attract the provisions of Section 188 of theAct 2013. Thus disclosure in form AOC 2 is not applicable.
All the Related Party Transactions are reviewed by the Audit Committee on quarterlybasis and it has provided an omnibus approval for all Related Party Transactions which arewithin 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 31.03.2020.
The Board has approved a Policy on Related Party Transactions which has been uploadedon the Company's website at http://www.bancoindia.com/wp-content/uploads/2017/06Policy_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 "H" to this Report.
22. Share Capital:
As on 31st March 2020 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 2019-20 is as under: -Number of Complaints Received : Nil -Number ofComplaints 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 theorganization's 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 have also been undertaken to developleadership as well as technical/ functiona l capabilities in order to meet future talentrequirement.
The Company's 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 siteis maintained properly and is being duly 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 Company's 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.
38. Covid -19 Impact
|S. No. ||Particulars ||Disclosures |
|1. ||Impact of the CoVlD-19 pandemic on the business ||The Company's manufacturing facilities remained shut from March 23 2020 due to lockdown and partially re-opened w.e.f. April 21 2020 which has impacted its operations during April and May' 2020. Some of the Company's pending orders are on hold as per requirements of buyers. However upon opening of factories we are in process of dispatch of some of our export orders to USA and Europe. |
|2. ||Ability to maintain operations including the factories/units/office spaces functioning and dosed down; ||The Company has restarted operations at some of the locations in due compliance of the applicable regulatory Guidelines/ Rules and as per available workforce since April 21 2020 adhering to the safety norms prescribed by Government of India. |
|3. ||Steps taken to ensure smooth functioning of operations ||The Company is taking utmost care of its staff and work force like sanitisation social distancing mandatory mask wearing thermal check at the gate maintaining proper hygiene of all the Work force visitors etc. Supply chains being monitored to ensure availability of material. We have taken cash flow capital expenditure and overhead control measures to smoothly manage our operations. |
|4. ||Estimation of the future impact of CoVlD-19 on its operations ||April-June' 2020 being lockdown months the revenues and profitability of the Company are likely to be adversely impacted. As the business situation is very dynamic the company is closely monitoring it. However we are optimistic the business situation to improve over a period during coming quarters. |
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 all others Stake Holders Employees at alllevels during the year.
| ||By the order of the Board |
|Date : 17.07.2020 ||Mehul K. Patel - Chairman |
|Place: Bil ||(DIN : 01772099) |