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Balmer Lawrie & Co ltd – Call closed – 68% returns

Posted on: August 8th, 2010 at 8:21 pm

CALL CLOSED. Current market price: 388.50 (after bonus). Long term target: 640. Book value: 304.96. P/E ratio: 10.11

Balmer Lawrie started its corporate journey as a Partnership Firm on 1st Februry 1867 at Kolkata, founded by two Scotmen – George Stephen Balmer and Alexander Lawrie.

From Tea to Shipping, Insurance to Banking, Trading to Manufacturing – there was hardly any business, Balme Lawrie did not delve into in its formative years, growing stronger at every landmark of its remarkable corporate journey.

Today, Balmer Lawrie has emerged as a multi-activity, multi-technology, multi-location conglomerate with global footprints – along with its joint Ventures, encompassing diverse interests in Manufacturing Sector viz, Industrial Packaging, Grease & Lubricants, Leather Chemicals and Travel & Tours, Logistics Infrastructure & Services and Engineering & Technology Services.

In it’s existence of over 130 years, Balmer Lawrie has achieved several distinctions that attest the company’s market orientation, customer focus & quality consciousness.

Presently the largest in India in:

  • Steel Barrels Manufacturing
  • Greases Manufacturing
  • Freight Containers Manufacturing
  • Fat Liquor Manufacturing
  • Travel Business

Pioneer among Indian PSUs:

  • First to globalize operations through a joint venture in Dubai (1978)
  • First to offer equity shares to employees (1986)
  • First company in India to issue Commercial Paper in 1990
  • Always made cash profits since inception in 1867
  • President’s Award for Outstanding Export Performance of Packet Teas (1995/96)

National Award winner for excellence in R&D (1994)

– Patented the process for environment friendly ‘non-acid base used oil refining’.
– Majority of the units are ISO certified. Other units are in the process of certification.

Company has been showing good growth for the last 5 yrs and is likely to continue doing that in coming years.

Business:

This public sector behemoth offers a wide and diversified array of services, rendered under five broad segments namely Industrial Packaging, Logistics Infrastructure and Services, Travel and Tours, Greases and Lubricants and Others (Tea, Leather Chemicals and Refinery and Oil Field Services), of these segments the biggest revenue growth driver is the Travel and Tours segment followed by the Logistics Infrastructure and Services sector

Industrial Packaging:

Thought this segment contributes less than 1/5th to the company’s overall revenue, it has garnered a huge reputation within industrial circles, and is considered
to be the largest manufacturer of industrial package containers. The firm manufactures 165, 200 and 210 ml steel drums that are utilized for safe packing, transport and storage of goods. Utilizing its strong R&D facilities and 6 manufacturing units (Mumbai, Kolkata, Chennai, Panipat , Silvassa and Asaoti) it is able to provide a comprehensive series of drums to its diversified client base that ranges from food companies to chemical companies.

Logistics Infrastructure and Services:

Balmer Lawrie offers seamless Logistics Solutions to it’s clients through a country-wide network of offices including all Major Airports & Ports in India,and a World-wide network of associates in more than fifty countries.The expertise of Balmer Lawrie in Logistics Services dates back to Nineteenth Century when it stated this activity and it has grown manifolds over the past decade.
Highlights
a. The only major PSU in the Arena of Complete Logistics Services and related solutions,with equal focus on Public and Private Sectors.
b. Specialist in Air Import Consolidation,Ocean Impots, Air Chartering and Project Cargo Handling..
c. Having a Nation-wide and World-wide network with offices manned by Professionals and State-of-the-Art Communication facilities.
d. Having ISO 9001-2000 Accreditation.
e. Prividing clients with a Total Logistics Solution package.

Services:

Air Freight Services

As an accredited IATA agent,we have been handing Inbound and Outbound cargo through our Consolidation Service,which include Standard and Over-Dimensioned Cargo,Perishable and Temperature-Controller consignments, Dangerous Cargo as defined by IATA,Door-to-Door Service to and from anywhere in the country to anywhere on the globe.

Ocean Freight Services

Containerized,Break-Bulk and LCL cargo on Door-toDoor basis, Out-sized / Heavy-Lift consignment and Specialized Project Cargo including carrier selection,documentation at India and Abroad,CHA and inland movement in the countries of Origin and Destination.Ably assisted through it’s own Container Fright Station at JNPT, Navi Mumbai, Chennai and Kolkata.

Air Chartering

Custom-Built Logistics Solution for movement of specific Consignment through Chartered Aircraft. This include selection of aircraft,positioning and movement of materials through route specified by client,Customs-Clearence at both Origin and Destination depending on Customer Requirement.

Ship Chartering

Selection of Carrier depending for customer requirement, both Domestic(Coastal) and International,Door-to-Door receipt and delivery of cargo as per Customer requirement.

CHA Activities

One of India’s oldest CHA licence holder, we provide CHA services to our clients at all Airports and Sea Port, CFS (Container Fright Station) and ICD (Inland Container Depot) as well.

Project Logistics Management

Starting from Project registration with Customs, Documentation, pickup from supplier’s doorstep, arranging Air/Ocean Freight as required, surface Transportation, Multimodal movements, warehousing, delivery to the site ,arranging Insurance Coverage, follow-up of Insurance Claims(if any)etc.

Express Cargo Movement

With it’s tie-up with DHL Express, provides world-wide movement of Express Cargo and Temperature Sensitive Cargo..

Travel and Tours:

Nearly 40% of the firm’s revenue comes from this segment and much of the company’s overall fortunes will depend on this sector. This segment of Balmer Lawrie had the unique distinction of handling the Commonwealth Youth games in 2008. The firm has a large base of IATA approved agents (1500) and over 15000 non IATA approved agents to help it service this largely fragmented industry. Revenues and profits from this firm have grown at a healthy rate over the last 5 years (Revenue CAGR of 17.1% and profit CAGR of 19% from 2005-2009) and this is mainly due to the company’s widespread network all over India.

Greases and Lubricants:

This is another segment in which the company has a dominant position, being considered amongst the top 10 grease manufacturers in Asia and the largest in the country. In India 65% of the client base for grease and lubricants consists of automobile companies and the remaining 35% consists of industrial and marine companies. This unit generates sales by selling its flagship lubricant Balmerol and grease processing business and manufacturing services for other companies.

Others (Tea, Leather Chemicals and Refinery and Oil Field Services):
Tea:
Tea is one of the oldest and traditional businesses of Balmer Lawrie. The company is engaged in the entire spectrum of tea operations from sourcing to exports (both in bulk and value added forms). The Company operates from all auction centers in India and owns modern warehousing, tasting, blending and packing facilities at Kolkata, Coimbatore and Bedford (UK).

The company is a Government recognized ‘Export House’. The company is also the recipient of ‘Certificate of Merit’ awarded by the Government of India for ‘outstanding export performance in packet tea and tea bags’. The tea division and its factories at Kolkata and London are ISO9002 certified and IMO certified for blending & packing of organic tea. Work is in advanced stages with regard to HACCP and Safe Quality Food certifications.

The Company enjoys a wide market base both in conventional and sophisticated tea markets of the World. It is one of the largest suppliers of bulk and packet tea from India to Russia & CIS, West Asia and North African countries.

Teas packed by Balmer Lawrie, in own brands or in buyers’ brands, can be seen in chain stores and other outlets in UK, Germany, France, USA, Canada, Japan and Australia. Amongst others, the company is associated with the prestigious Harrods, Selfridges chains in UK, Mitsukoshi, Minami outlets in Japan.

Private labelers, hotel chains and major airlines are among other prominent customers.

Leather Chemicals
Balmer Lawrie started manufacture of leather chemicals in the year 1983 after developing the technology indigenously in collaboration with the world renowned Central Leather Research Institute. Since then, through continuous interaction with customers and supply of products of consistent quality, the company has established leadership for its products in India. Today, the product range includes synthetic and semi-synthetic fatliquors, synthetic tanning agents and auxillaries. The manufacturing plant at Chennai is an ISO 9001 certified unit by BVQI

Refinery and Oil Field Services
The Refinery & Oilfield Services (ROFS), an integral part of the Engineering & Technology Services portfolio of the Company relates to services provided in the high technology oil & gas related areas. In this domain the focus is on providing environment friendly services centered around prevention & recovery of hydrocarbon wastes. This activity assumes greater significance with the all round concern on twin aspects of environment & safety.

Present Activities of SBU

● Crude oil sludge cleaning & Hydrocarbon Recovery
► In-situ mechanized tank bottom sludge cleaning
► Lagoon/ pit sludge cleaning

● Vapour loss Prevention & Recovery
► Aluminum Internal floating Roof
► Aluminum Tank Dome
► Membrane based vapour Recovery

● Other Services
► Decontamination of Process Plants
► Composite Repair of pipelines & Tankages

Share holding pattern:

Promotor holding = 0%
Public holding = 17%
FII holding = 0.79%
Others = 82.09%

Company Stakes:
Company name Balmer Lawrie’s stake
Balmer Lawrie U.K. — 100%
Avil Oil India ltd — 25%
Balmer Lawrie (UAE) LCC — 49%
Balmer Lawrie-Van Leer ltd — 40.12%
Transafe Services Ltd — 50%

The global financial slowdown hasn’t left Balmer Lawrie untouched, Its operating performance stagnated in FY09 and the net profit was propped up by a spurt in nonoperative income. Revenues went up 13.7% in FY09 at Rs 2,007 crore and profits grew by 9.3% to bring in Rs 109 crore.

The services sector did well during the year with travels and tours posting 19% growth and logistics services growing at 21%. Both these businesses posted healthy improvement in profits as against a fall in profit for manufacturing businesses such as industrial packaging and lubricants.

With established businesses and very low annual capex, the company has maintained its return on employed capital to beyond 40% for last four years.

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84 Responses

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Comment pages: 123456Show all

  1. ramaswamy Says:
    January 15th, 2011
    Posted at: 11:48 am

    thaxn for 5800 call


  2. leadpb Says:
    January 20th, 2011
    Posted at: 8:25 am

    Hey CB/Kartik,

    Do you suggest accumulating further ??


  3. manish Says:
    January 21st, 2011
    Posted at: 11:33 am

    Hi i bought 125 shares of Hyderabad Industries @ 600 per share it is now trading @ 420 what to do , can i average it ??


  4. Amit Pandey Says:
    January 28th, 2011
    Posted at: 1:02 pm

    Fundamental call : Exit From TATAMOTORS (DVR) @ CMP 682.


  5. rajesh Says:
    January 30th, 2011
    Posted at: 10:46 pm

    good analysis on Balmer..


  6. Arif Says:
    February 24th, 2011
    Posted at: 4:12 pm

    Hi,

    Please suggest on Jupiter BioScience.


  7. shiva15 Says:
    May 19th, 2011
    Posted at: 9:37 pm

    i want to invest in tril. Can i? At which price i can buy and what is tgt in 1 yr.


  8. sanjeet kumar Says:
    July 31st, 2011
    Posted at: 9:33 am

    Can you tell me about Nifty,
    what will happen in next 3 month.


  9. Karan Mehta Says:
    September 4th, 2011
    Posted at: 1:03 pm

    Sir, on 8/8/2011, in Investment Idea call was given - Buy Balmer Lawrie and now it is more than ONE YEAR that no call is given in Investment Idea or I am missing some calls given, kindly inform me.


  10. Biswajit Says:
    November 3rd, 2011
    Posted at: 8:46 am

    can I buy Rec or titan today? Should I buy Nifty at this level?


  11. Rohit Says:
    May 15th, 2012
    Posted at: 3:36 pm

    Hi CB.. is this a good investment at CMP?? if yes, what is the time frame we should be looking at?


  12. CB Says:
    May 15th, 2012
    Posted at: 3:45 pm

    Hi Rohit, yes, its a good long term bet. hold for 1-2 yrs.


  13. raj Says:
    May 19th, 2012
    Posted at: 11:16 pm

    hi cb !!!wats ur view on zylog systems?


  14. raj Says:
    May 19th, 2012
    Posted at: 11:20 pm

    hi cb !!!bought bata at 789 presently 870.shud i book profit?also bought sbi at 1854 and now its 1942 shud i hold?


  15. CB Says:
    May 20th, 2012
    Posted at: 1:17 am

    Hi raj, Zylog is fundamentally a good long term bet. can accumulate on dips. don't add at cmp as its rallied quite a bit. bata cant test 920 in coming days. sbi around 1950.


  16. van tai duong viet Says:
    August 1st, 2012
    Posted at: 2:32 am

    I just couldn't go away your web site prior to suggesting that I actually enjoyed the standard info a person supply for your visitors? Is going to be again ceaselessly to investigate cross-check new posts

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