Press Release Details
102nd Annual General Meeting 18 September 2019
The 102nd Annual General Meeting of Balmer Lawrie & Co. Ltd., a Public Sector Enterprise under the Ministry of Petroleum & Natural Gas, Government of India was held at Kolkata on 18th September, 2019.
Below is an extract of the Chairman’s Speech:
India has around three dozen century-old companies that are listed and still actively traded. Balmer Lawrie is one of them. In its journey of 152 years, Balmer Lawrie has witnessed many historical moments of the country. Though it is very proud of its glorious past and heritage, Balmer Lawrie does not believe in resting on its laurels. The Company continues to earn profits by pro-actively seizing the opportunities in the present, such that it is able to live up to the commitment made to all stakeholders in the future. Balmer Lawrie is constantly innovating and leveraging its strengths to be a future ready company.
Overall Financial Performance
Balmer Lawrie recorded net turnover of Rs. 1,857 crores during 2018-19 as against Rs. 1,796 crores in 2017-18 registering an increase of approximately 3% above last year. Further, the Company recorded a Profit Before Tax of Rs. 280.10 crores in 2018-19 as against Rs. 261.11 crores in 2017-18, the increase being attributable to improved performance of various SBUs, particularly, SBU: Travel & Vacations, Greases & Lubricants and higher dividend income earned during 2018-19.
Performance of Strategic Business Units (SBUs)
Balmer Lawrie is a diversified PSU with a presence in both manufacturing and service sectors.
Industrial Packaging (SBU: IP) – The SBU which operates through seven manufacturing plants on pan India basis, added a new manufacturing facility at Vadodara, Gujarat in the current financial year. During the year 2018-19, the Asaoti plant was rated for Silver Category under National Award for Manufacturing Competitiveness. It has received a Silver Rating from Eco Vadis – a global solution provider which partners with 300+ leading multinational organizations to reduce risk across the supply chain and drive innovation in their sustainable procurements.
Greases & Lubricants (SBU: G&L) – The SBU’s shift in focus to profit making non-tender businesses against volume-driven aggressively priced tender businesses has resulted in negative volume growth but a substantial jump in Profit. The SBU has witnessed a stagnation in Channel Sales
as compared to last year mainly because of a sluggish automotive demand in last 3 quarters of FY 2018-19 coupled with fierce competition and sales promotion from MNCs. The SBU’s small pack sales registered a growth over FY 2017-18 and it increased the number of Retail Outlets selling Balmerol brand, which contributed in increasing the profitability. The Balmerol brand has been recognized as one of India’s Best Brands in 2019 by The Economic Times.
Leather Chemicals (SBU: LC) - The leather chemicals business is dominated by MNCs apart from select few reputed domestic players such as Balmer Lawrie. Technical services and marketing support are rendered directly by the chemical companies while availability of products to customers is rendered through a network of distributors. Developing leather samples for the tanneries based on the changing needs of their buyers is the common approach of the leather chemical companies for generating business. Considering the potential of the leather sector in terms of exports and employment generation, the Government has identified the leather sector under its “Make in India” program and has already sanctioned Rs. 2600 crores for upgradation of the industry. With the Government’s interventions and measures, the industry can seek to enhance its productivity and
global competitiveness, capitalizing immensely from its growing domestic customer base.
Logistics (SBU: L) - Under this SBU, there are two verticals viz., Logistics Infrastructure and Logistics Services. Both the verticals continue to drive the bottomline of the Company
Logistics Infrastructure (LI) – During the year, the CFS business could not grow in volume, revenues and earnings as compared to the previous year primarily due to adverse impact of the policies being implemented by the Government for promoting Direct Port Delivery (DPD) on the CFS industry and the competitive scenario prevailing in the industry. The Company was able to however, retain its present set of customers and contain the adverse impact of the change in policy / approach of the Government.
Warehousing activity continues to perform well during the year due to better utilisation of space. The Company has successfully won a contract for providing Central Warehousing in AMTZ which is developed by the Government of Andhra Pradesh for setting up a medical equipment manufacturing
In addition to the two Temperature Controlled Warehouses (Hyderabad and Rai) which are operational, the TCW at Patalganga was successfully commissioned in the month of December’18, and has already started commercial operation. Apart from the existing 3 TCWs, a proposal for setting up a new TCW at Bhubaneswar has been approved by the Board. This is being set up in the Chatabar
region which is around 20 Km from Bhubaneswar and it is expected to be fully operational in early FY 2020-21
Logistics Services (LS) – Air freight services continues to be a dominant activity of the SBU and contributes to around 2/3rd of the SBU’s overall topline. Other than Air Import and Air Export freight services, Air Chartering activity has contributed around 3% to the topline. Sluggish economic conditions coupled with severe price competition both in air freight and ocean freight were primarily responsible for the lack of growth in turnover. Bottomline of the SBU was about 10% down compared to the previous year due to reduction in gross margins.
Travel & Vacations (SBU: T&V) – This SBU has two verticals viz., Ticketing and Vacations
Ticketing - The SBU has continued to perform well and shown remarkable consistency both in turnover and profit for the past two years. The SBU is vigorously promoting the Self Booking Tool (SBT) for large organizations / corporates like SBI, GAIL, IOC, Power Grid etc. To sustain market leadership in the business, the Company has recently launched the new avatar of its travel portal, “FlylikeKing.com”. This vertical achieved a 14% growth in travel volumes during the year 2018-19. With tremendous growth potential in the industry and head room available for growth in B2C segment, the Company is confident of further growth and maintaining the profitability momentum witnessed in the last couple of years with a transparent pricing mechanism.
Vacations - The Vacations vertical of the Company has researched and accordingly planned strategic actions to leverage on the growing market demand and favourable government initiatives to boost the tourism sector. The products are designed in line with the current market trends and priced competitively. Suppliers across the globe are selected with great detailing to ensure high level of service quality and cost effectiveness. Manpower is trained to provide wide spectrum of end to end niche services to its retail and corporate customers.
Refinery and Oil Field Services (SBU: ROFS) – The SBU is the pioneer in mechanized oily sludge processing in India and maintains leadership position with around 70% market share. With patented technology back up, the SBU could process a substantial amount of oily sludge during the past two decades and have developed a loyal list of satisfied clientele, which drives the business. To maintain its competitive edge in the market, the SBU is focused on technology upgradation to stay at par with global standards. The upgradation is being done in close association with its technology partner and investments are being made for acquiring the latest technologies coupled with latest software and other separation equipment. The SBU is also looking towards augmentation and diversification of its service offerings to cater to the needs of related/allied sectors and new areas to fuel business growth.