The 105th Annual General Meeting of Balmer Lawrie & Co. Ltd., a Public Sector Enterprise under the Ministry of Petroleum & Natural Gas, Government of India, was held on 27th September 2022. Below is an extract of the Chairman’s speech on the occasion.
The past two years have been difficult for the world economy which continues to be plagued by uncertainty on account of repeated waves of infection of the COVID-19 pandemic. It is not just about the immediate disruptions and uncertainty caused by repeated waves of the pandemic, but also the long-term uncertainty about the post-Covid world due to accelerated shifts in technology, consumer behaviour, supply chains, geo-politics, climate change and a host of other factors. Not only are these individual factors difficult to forecast, the impact of their interplay is also fundamentally unpredictable.
Overall Financial Performance
Balmer Lawrie recorded net turnover of Rs. 210484.97 lakhs during Financial Year 2021-22 as against Rs. 159276.79 lakhs in Financial Year 2020-21, which is an increase of approximately 32.15% over last year. The company recorded a Profit Before Tax of Rs. 17014.45 lakhs in Financial Year 2021-22 as against Rs. 15664.97 lakhs in Financial Year 2020-21. The increase is attributable to the easing out effect of the COVID-19 pandemic on the performance of SBU: Travel and Vacations which was severely affected in FY 2020-21 due to the same.
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) – Balmer Lawrie & Co. Ltd. is the market Leader in this industry with a formidable market share. This is being maintained with technological upgradation and a very effective procurement policy. SBU: IP expects to continue its growth in FY 2022-23. The SBU anticipates significant growth in the coming years with the biggest drivers being Chemicals, Transformer Oils and Lubes segment. SBU: IP also plans to expand aggressively in the Exports segment.
Greases & Lubricants (SBU: G&L) – The Greases & Lubricants business is divided into three segments: i) Channel Sales [Automotive & Industrial], ii) Direct B2B, and iii) Contract Manufacturing. In Channel sales, the growth was flat as the market was recovering from the impact of COVID-19. The Industrial Distributor segment witnessed a growth of 13% over the last FY. In Direct B2B Sales SBU- G&L’s focus was on generating business from new customers across industries. In the contract manufacturing segment, SBU: G&L continues to have a presence to improve its capacity utilization; however, the volumes have come down significantly over the years. SBU: G&L improved its overall efficiency through operational excellence across various manufacturing units.
Chemicals (SBU: Chemicals) – The SBU is a market leader in the Fat liquors segment and a significant market share holder in the Syntan segment. The SBU has introduced new chemicals in the Beamhouse segment like Wetting agents, Basic Chrome Sulphate (BCS), etc., and launched a new range of finishing chemicals with modern manufacturing facility. The SBU also developed an eco-friendly, metal free tanning process with Glutaraldehyde, which has now become popular in the market. Apart from the leather chemicals business, SBU: Chemicals is also foraying into other synergy chemicals such as textile chemicals and intermediate for agro-chemicals business.
Logistics Infrastructure (SBU: LI) – During FY 2021-22, SBU: LI was able to achieve 6% growth in terms of imports and 35% growth in terms of exports. However, due to cut-throat pricing and competition from industry and reduction in dwell time of containers at Container Freight Station, the turnover has been reduced by 20% and profit is reduced by 26% in comparison to last year. The warehousing activity continued to perform well during the year due to better utilization of space.
Logistics Services (SBU: LS) – During the year SBU: LS achieved all-time record turnover of Rs. 458 crore and a registered top growth of around 24% and moderate growth in bottom line of Rs. 8 crore respectively as compared to the previous year. SBU: LS witnessed significant growth in top line and moderate growth in bottom line despite pressure on margins on account of volatility in ocean freight rates and fixed price contracts. The growth was driven by incremental business in nearly all activities of our Freight Forwarding notably in Ocean Freight, Air Export and Project Logistics.
Cold Chain (SBU: CC) – SBU: Cold Chain was formed in July 2021 which was initially a part of Logistics Infrastructure. Storage business comprising the Cold Chain Units saw 32% increase in the sales YoY and the transportation segment including TCVs witnessed approximately 400% increase during the FY 2021-22. With the improvement in the asset utilisation and the revenue, SBU: Cold Chain is expecting to increase the sales and profitability across locations. The SBU has four Cold Chain Units operating at Hyderabad, Rai (Haryana), Patalganga (Maharashtra) and Bhubaneswar (Odisha).
Travel & Vacations (SBU: T&V) – This SBU has two verticals, viz., Travel and Vacations.
Travel – The Travel vertical has strengthened its operations, sales and software capabilities, which have led to a significant increase in its client-base. The Travel vertical has fully utilised the time to gear up for the future demand and is planning to have centralised ticketing in order to increase its efficiency and to ensure a consistent service experience for the customers.
Vacations – During the financial year 2021-22, the borders were hardly open and the pandemic second wave in various parts of country adversely affected business leading to reduction in the overall revenue and contribution. There was a growth in overall business of about 3.5 times compared to last financial years. Both Corporate Business and Domestic MICE achieved significant growth compared to last FY. The Vacations vertical tried to market virtual events and successfully entered in this segment.
Refinery & Oil Field Service (SBU: ROFS) – Despite loss of substantial production time due to lockdown measures induced by COVID-19, SBU: ROFS was able to achieve the targeted equipment utilisation for the year. The demand for sludge processing services is expected to be stagnant in the near term. SBU: ROFS aims to differentiate its offerings in Sludge Processing space through technological upgradation and incorporation of new technologies for reducing processing time and manual intervention in sludge processing.