Key highlights

• Banco Products is into manufacturing of Gaskets and Radiators for almost four decades now. The company's products form an important component in sealing and cooling applications of Automotive Power, Earthmoving and Industrial engines. Maruti, Tata Motors, Hero Honda, Bajaj Auto, Caterpillar India, Kirloskar Oil Engine, Cummins India, BEML, JCB and Indian railways are some of its prominent customers.

• The company has three manufacturing plants at Baroda and one plant at Jamshedpur which is dedicated exclusively for Tata Motors requirements. The company is fully backward integrated player and is able to buy its requirement of steel, copper, aluminum locally and being cash rich, is able to get sufficient discount. Together with this the company is able to pass on any fluctuation of raw material prices to its end users and the management is confident of it in future as well.

• Nearly 33% of its sales come from exports with EU being the key market. The company never hedges any of its forex exposure.

• Of the domestic sales, nearly 80-85% comes from OEMs and the rest are from after sales market.

• Of the total sales, nearly 55% comes from Autos, around 15-20% from Earth Moving equipments and the rest from other industries and Railways. Railways, which at one point of time contributed only 3-4% of sales, is now in the range of about 10-12%.

• According to management, value addition, full backward integration, introduction of new products every year and cost cutting and being able to pass on the vulnerability in raw material prices are some of the reasons why the margins of the company are so high.

• The company has incorporated 99.8% subsidiary named Kilimanjaro Biochem in Tanzania with an equity investment of about US $ 3.5 M. The company has a mine from which it will extract Potable Grade Alcohol which when combined with Molasses will result in Distilled Potable Alcohol. This Alcohol will be supplied to companies like United Spirits, Mcdowell etc that are engaged in manufacturing whisky, rum, alcohol etc. As per the management, it expects ROC of about 25%. The project will commission from April'11 onwards and will require debt of about US $ 7 M.

• The company's one of the Baroda units is an EOU. The company continues to remain under MAT uptil 2011. The company continues to enjoy debt free status and capex of about Rs 15-18 crore every year will be met from internal accruals.