Preliminary Information Memorandum  

 

of

Balmer Lawrie & Co Limited

(Estd.  1867)

 

 

Disinvestment of 61.80% Shareholding of Balmer Lawrie Investments Limited in Balmer Lawrie & Co Limited

 

 

 

Issued by

Mergers & Acquisitions and Advisory Group

 

 

 

 

 

  June 2002  

1.0 DISCLAIMER

 

1.       SBI Capital Markets Ltd. (“SBICAP”) has been retained as the sole advisor for the disinvestment of 61.80% Equity held by Balmer Lawrie Investments Limited (BLI), a Government of India (GoI) Company, in Balmer Lawrie & Co. Limited (“BLC” or “the Company”)

 

2.        The sole purpose of this Preliminary Information Memorandum (“PIM”) is to assist the recipient to participate in the aforesaid disinvestment process. This PIM is not intended to form the basis for any investment decision and does not constitute, either express or implied, an offer to sell or a solicitation of an offer to buy the stake in BLC. Accordingly, interested parties are advised to carry out their own due diligence, investigations and analysis of any information contained or referred to herein or made available at any stage in the disinvestment process.

 

3.        This PIM has been delivered to interested parties for information purposes only and upon the express understanding that such parties will use it only for the purpose set forth above. It does not purport to be all-inclusive or contain all the information about BLC. While this document has been prepared in good faith, no representation or warranty, express or implied, is or will be made, and no responsibility or liability will be accepted by BLC, BLI, SBICAP or the Government of India (GoI) or any of their employees, advisors or agents as to or in relation to the accuracy or completeness of this document or any other oral or written information made available to any interested recipient or its advisors at any time during the disinvestment process and any liability thereof is hereby expressly disclaimed. The PIM may contain/include certain estimates, projections, statements, targets and forecasts with respect to the Company. These reflect and are based on the various assumptions made by the management, officers or employees of the Company and/or BLI and/or SBICAP, which as well as the information on which they are based may or may not be accurate. Neither of the Company, BLI or SBICAP or affiliates, subsidiaries, advisors, directors, officers or employees or agents of the Company, BLI or SBICAP make any representations and/or warranty in respect of, and no reliance should be placed on any estimates, projections, statements, targets and forecasts or the assumptions on which they may be based. The opinions in this memorandum have been expressed in good faith. Interested parties should rely on their own judgement only in assessing future business conditions and prospects of BLC. Any liability is accordingly expressly disclaimed even if any loss or damage is caused by any act or omission on part of the aforesaid, whether negligent or otherwise. 

 

4.        Neither this document nor anything contained herein shall form a basis of any contract or commitment whatsoever. Any prospective purchaser will be required to acknowledge in the purchase contract that he has not relied on or been induced to enter such agreements by any representation or warranty, save as expressly set out in such an agreement.

 

5.        Any information contained in this document will be superseded by any later written information on the same subject made available to the recipient by or on behalf of BLC, BLI or SBICAP. BLC, BLI and SBICAP undertake no obligation to provide the recipient with any additional information or update this document or to correct any inaccuracies therein which may become apparent and reserve the right, at any time and without advance notice, to change or modify the procedure or process for disinvestment, terminate the due diligence or negotiations or any part of or the entire disinvestment process prior to signing of any binding purchase agreement.

 

6.        This document has not been filed, registered or approved in any jurisdiction. Recipients of this document, particularly in jurisdictions outside India, should inform themselves of and observe any applicable legal requirements.

 

2.0 SUBMISSION OF EXPRESSION OF INTEREST (EoI)

 

2.1       Introduction

Balmer Lawrie & Co. Limited is a subsidiary of Balmer Lawrie Investments Limited (BLI) and is a listed Public Sector Company under the Administrative Control of the Ministry of Petroleum & Natural Gas, Government of India.  Its Registered & Corporate Head Office is located at 21, Netaji Subhas Road, Kolkata 700001.

 

Balmer Lawrie & Co. Limited (BLC) is a diversified business conglomerate operating in various industrial segments through its various Business Divisions, Joint Venture Companies and a Wholly Owned Subsidiary in the UK. BLC is engaged in the manufacture of steel barrels and LPG Cylinders, manufacture of high-performance greases and lubricating oils, manufacture of leather performance chemicals, manufacture of speciality containers for transportation of specialised goods and containerized integrated solutions, procurement, blending and packaging of tea for the export markets, ticketing, inbound/outbound tour handling and related services, logistics services, ownership and management of Container Freight Stations (CFS), projects engineering & consultancy services (including EPC & Turnkey Project Management & Information Technology).

 

Balmer Lawrie & Co. Limited (BLC) was established in 1867 as a Partnership Firm. It was converted to a Private Limited Company in 1924 and subsequently to a Public Limited Company in 1936. BLC became a PSU in 1972 when it became a subsidiary of IBP Co. Limited                                                                                     

 

The 61.8% equity investment held by IBP in BLC has been demerged from IBP and transferred to a new Company, viz. Balmer Lawrie Investments Limited (BLI).  

 

The Authorised Share Capital of BLC is 3,00,00,000 Equity Shares of Rs 10 each, and Issued and Paid up Capital is 1,62,86,081 Equity Shares of Rs 10 each.

 

BLI now intends to disinvest the 61.8% equity it holds in BLC to a Strategic Buyer.

 

SBI Capital Markets Limited (SBICAP) have been retained as Advisors for the proposed disinvestment process and matters relating thereto.

 

2.2       Advertisement Inviting EoI

 

An advertisement has been issued in the newspapers inviting interested parties to submit their ‘Expression of Interest’ (EoI) to participate in the disinvestment process, a copy of which is enclosed as Annexure I.

 

2.3       Eligibility Criteria

 

1.      The interested party (ies) must have a net worth (excluding revaluation reserves) of over Rs. 1000 million ((» USD 20.4 mio) as on March 31, 2002 and consistently good business and management track record.

 

2.      For a consortium bid, the combined net worth of the constituent entities of the consortium should meet the above mentioned eligibility criterion to participate in the proposed transaction.

 

3.      In case of a consortium bid, the leader of the consortium should meet at least 51% of the above mentioned eligibility criterion.

 

4.      Where the financial statement is expressed in currency other than Indian Rupee, the eligible amount as described above shall be computed by taking the equivalent US Dollars at the exchange rates (as stipulated by Foreign Exchange Dealers Association of India) prevailing on the date(s) of such financial statement.

 

5.      Definition

            Net Worth* = Actually Subscribed Ordinary Equity Share Capital + Reserves

(excluding revaluation reserves)

* Note: Deferred Tax Liability shall not be considered for the purpose of Net Worth

2.4       Format and Submission of EoI

 

1.      Expression of Interest may be submitted by Indian Companies, Overseas Corporate Bodies (OCBs), Foreign Companies, whether currently existing or to be formed specifically to participate in the disinvestment process, either individually or as a consortium (incorporated or unincorporated), for holding 61.8% equity of BLC.

 

2.       The interested parties should submit, in duplicate, the ‘EoI Package’ comprising an ‘Expression of Interest’ as per Annexure II, a ‘Statement of Legal Capacity’ as per Annexure III and a ‘Request for Qualification’ (RFQ) as per Annexure IV. The EoI must be duly signed by authorized representative of the interested party or in case of a consortium, by the duly authorized representative of the consortium.  In addition, the Statement of Legal Capacity and RFQ will have to be submitted by the interested party and each member of the consortium. The RFQ should be duly filled in and accompanied by the following details:

 

Ø      In case of a sole bidder

§         The Audited Balance Sheet and Profit & Loss Account of the sole bidder (Indian company/OCB/Foreign company) for the last 3 financial years

§         Write-up on:

a.      Profile of the sole bidder

b.      A statement of reasons for strategic interest in BLC

c.       Any other information considered material

 

Ø      In case of a consortium bid

§         The audited Balance Sheet and the Profit & Loss Account for the last 3 financial years of the lead bidder and other member companies associated in the bid.

§         Write-up on:

a.      Lead bidder

i)        Profile of the lead bidder

ii)      A statement of reasons for strategic interest in BLC

iii)    Any other information considered material by the lead bidder

b.      Other member companies

i)        Profile of member companies in the consortium

ii)      Any other information considered material

 

3.      Any subsequent change by way of withdrawal/substitution of any member of the consortium or any change affecting the composition of the consortium may be permitted up to the stage of submission of financial bid, but only with the specific permission of BLI. BLI has the sole discretion to determine the impact of the change in membership on the structure and quality of the consortium and reject a proposal without assigning any reason whatsoever.

 

4.      The EoI Package must be in English and each copy should be bound in a separate volume.  Submission of the aforesaid documents by fax, e-mail or any other electronic means will not be acceptable.  The EoI and RFQ duly completed along with the details should be submitted not later than 1700 Hrs. (Indian Standard Time) on August 2, 2002 in a sealed envelope superscribed “Private and Confidential – Expression of Interest for BLC” at any of the following addresses:

 

Gyan Mohan SVP & Group Head (M&A&A)	S. Venkatraghavan Asst. Vice President (M&A&A)
SBI Capital Markets Limited 202, Maker Tower “E” Cuffe Parade Mumbai – 400 005 Tel: +91 22 2184704 Fax: +91 22 2186367 Email: gyan.mohan@sbicaps.com	SBI Capital Markets Limited 202, Maker Tower “E” Cuffe Parade Mumbai – 400 005 Tel: +91 22 2184704 Fax: +91 22 2186367 Email: venkatraghavan.s@sbicaps.com

 

It is the responsibility of the interested party(ies) alone to ensure that its EoI Package with required documents is delivered at the above mentioned address by the stated time and date. BLC/BLI/SBICAP shall not be responsible for non-receipt of correspondence.

 

2.5       Disqualifications

 

1.      BLI/SBICAP shall not consider for the purpose of qualification, the EoI which has been found to be incomplete in content or attachments or authenticity.

 

2.      Without prejudice to any other rights or remedies available to BLI/SBICAP, a company/consortium may be disqualified and its EoI dropped from further consideration for any of the reasons listed below:

 

ü      Material misrepresentation by such company/member of consortium in the EoI and/or RFQ or otherwise.

ü      Failure by such company/consortium to provide the information required to be provided in the EoI and RFQ, and

ü      Submission of EoI and RFQ in respect of any company/ consortium, where such company or member had already submitted an EoI or is a member of a consortium, which has already submitted an EoI and the earlier EoI has not been withdrawn.

           

3.      If any information becomes known after the interested party has been qualified to receive the information memorandum which would have entitled BLI/SBICAP to reject or disqualify the relevant company/consortium, BLI/SBICAP reserves the right to reject the interested party at the time or at any time after such information becomes known to BLI/SBICAP.

 

4.      Further, Government of India issued guidelines for disqualification of bidders seeking to acquire any public sector enterprises through the process of disinvestment vide Department of Disinvestment OM No.6/4/2001-DD-II dated 13th July 2001, a copy of which is enclosed as Annexure-V.  Entities interested in participating in the proposed disinvestment should not have been convicted by a Court of Law or indicted/ have any adverse order passed against them by any court of law, or any other regulatory authority in any matter involving a grave offence and/or which casts a doubt on their ability to manage BLC. Further, such persons or companies entities and/ or their sister concern(s) should not have any charge sheet against them by any agency of the GoI or any court of law, which involves a matter concerning the security and integrity of India. The final decision in this regard would be taken by the GoI. The GoI, vide its circular F.NO.4/95/2000-DD (Vol.V), has clarified regarding which offence can be treated as a “grave offence” as under:

 

a.      Only those orders of SEBI are to be treated as coming under the category of “grave offences” which directly relate to “fraud” as defined in the SEBI Act and /or regulations.

b.      Only those orders of SEBI that cast a doubt on the ability of the bidder to manage the public sector unit when it is disinvested, are to be treated as adverse.

c.       Any conviction by Court of Law.

d.      In cases in which SEBI also passes a prosecution order, disqualification of the bidder should arise only on conviction by the Court of Law.

 

The interested party(ies) are required to read the guidelines and satisfy themselves that they are qualified to bid for the stake in BLC through the process of disinvestment and give an undertaking to the effect that they are qualified to bid for the stake in BLC in the EoI to be submitted by them.  Further, interested parties would be required to provide the information on the criteria, laid down in the guidelines of 13.7.2001 along with their EoI.  The bidders shall be required to provide with their EoI an undertaking to the effect that no investigation by a regulatory authority is pending against them.  In case any investigation is pending against the concern or its sister concern or against its CEO or any of its Directors/Managers/employees, full details of such investigation including the name of the investigating agency, the charge/offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government. For other criteria also regarding the matters concerning the security and integrity of India, a similar undertaking shall be provided along with EoI.

 

5.      Where the interested party is a consortium, BLI may disqualify the entire consortium for any of the reasons specified in paragraph numbers 2.5(1), 2.5(2), 2.5(3) and 2.5(4), even if it applied to only one member of the consortium.

 

6.      The companies/consortia not satisfying the eligibility and requisite qualification criteria specified in the above sections are not eligible.

 

7.      The PIM along with its enclosures does not constitute a commitment on the part of BLC/BLI/SBICAP other than to provide further information on BLC. Furthermore, this document confers neither the right nor an expectation on any party to participate in the proposed disinvestment process. BLI/SBICAP reserve the right to withdraw from the process or any part thereof or vary any terms at any time without assigning any reasons. BLI reserves the right to accept or reject any /all offer(s) without assigning any reasons.

 

2.6       Future Process

 

1.      The EoI submitted by interested parties shall be evaluated on the basis of the criteria specified elsewhere in this document.  If at any time during the evaluation process, BLI/SBICAP require any clarification, it reserves the right to request such information from any or all of the companies/consortia and the companies/consortia will be obliged to provide the same within reasonable time frame.

 

2.      Based on an evaluation of EoIs received, interested parties, which are deemed fit (“qualified interested parties” “QIP”), will be qualified to participate in the subsequent selection process (without conferring any right or expectation whatsoever to QIP).  QIP will be provided with the Confidential Information Memorandum (CIM) and shall be invited to participate further in the process described in detail in the CIM.  QIP will get an opportunity to conduct due diligence and take up site visits and will also have access to data rooms and hold discussions with the management of BLC/BLI/officials of the Ministry of Petroleum & Natural Gas / Ministry of Disinvestment, Government of India.  The rules regarding access to information in the data rooms will be provided to QIPs later.  QIPs will be invited to submit their proposal and a binding price bid.

 

2.7       Enquiries

 

BLI/SBICAP reserve the right not to respond to question raised or provide clarifications sought, in their sole discretion, if it is considered that it would be inappropriate to do so. Nothing in this document shall be taken or read as compelling or requiring BLI/SBICAP to respond to any question or to provide any clarification. No extension of any time and date referred to in this PIM shall be granted on the basis or grounds that BLI/SBICAP has not responded to any question/ provided any clarification.

 

2.8       Governing Laws/Jurisdiction

           

The laws of Union of India shall govern all matters relating to the disinvestment process and the bidding procedure. Only Courts at New Delhi (with exclusion of all other Courts) shall have the jurisdiction to decide or adjudicate on any matter, which may arise out of or in connection with the disinvestment process and the bidding procedure.

3.0 BRIEF PROFILE OF BALMER LAWRIE & CO. LIMITED (BLC)

 

 

3.1              Introduction

 

Balmer Lawrie & Co. Limited (BLC) was established in the year 1867 as a Partnership Firm by two Scotsmen, Mr Stephen George Balmer and Mr. Alexander Lawrie. 

 

Trading and Services were the major activities of the Company during the early years of its operations and BLC were Agents for several leading companies of that period.  In later years, this was extended to include Tea Garden Agencies and Managing Agencies for several Companies in diverse industrial segments. BLC were also in Banking and Insurance activities. BLC entered into manufacturing in 1937 when it set up its first Grease Plant at Kolkata. Since then BLC has entered into several other areas of manufacturing. 

 

BLC has continuously restructured its businesses over the entire period of its history due to change in Government Statutes as well as changes in the business environment. While a few businesses have been retained almost since inception, many businesses have been divested and several new ones added.

 

BLC today is a diversified business conglomerate operating in various industrial segments through its various Business Divisions, Joint Venture Companies and a Wholly Owned Subsidiary.  BLC is not only the largest manufacturer of Steel Barrels and Speciality Greases in India but also a leader in most of the other businesses that it operates in. BLC is a consistently Profit-making Company and recorded a Turnover of Rs. 7,382.3 million (approx USD 150.7 million) during the financial year 2001-02 and had a Net Worth of Rs 1,531.7 million (approx USD 31.3 million) as on 31.3.2002.

 

 

3.2              Strategic Business Units of BLC

 

The strategic business units of BLC along with business undertaken are tabulated as under:

 

 

3.2.1        Industrial Packaging

 

BLC is the largest manufacturer of 200/210 litre mild steel barrels in India with a market share of over 50%.  BLC manufactures a wide range of barrels such as Open Top, Tight Head, Internally Coated, Galvanised, Conical and Composite Barrels in 18 gauge and 20 gauge thickness and their combinations depending on applications.

 

BLC is the only multi-locational barrel manufacturer with seven manufacturing plants located at :

 

Kolkata

Chennai

Mumbai (2 Plants at Sewree and Turbhe)

Mathura

Panipat

Silvassa

 

These plants are equipped with the most modern equipment and testing facilities. The Plant at Mumbai (Sewree) is equipped with Helium Gas Leak Detector Equipment for checking the leak-proof status of barrels, the only such facility available in India.

210 Litre Mild Steel Barrels manufactured at BLC’s Plants

 

Helium Leak Detector Equipment at Mumbai Barrel Plant

 

BLC’s major customers for Barrels are the Public Sector Lubricating Oil Companies, Multi-National Lubricating Oil Companies and national/international customers in Chemical, Pharmaceutical, Agrochemical and Food industry segments. The non-lube oil business segment is showing a steady growth.

 

BLC also has an LPG Cylinder manufacturing plant at Kolkata catering primarily to meet the requirements of the Public Sector Oil companies.

 

 

BLC’s Industrial Packaging activities is supported by in-house tooling and designing facilities at its own Engineering Design & Development Centre at Kolkata.  This centre has not only developed Beading machines, Seaming machines, Speciality Jigs & Fixtures, which are as good as top international machines, but also speciality barrels such as Conical barrels. The Centre has been able to absorb the latest international technology, which is being incorporated in the manufacturing operations of the Division’s various plants.

 

BLC with its multilocational and technological edge is competitively positioned to maintain its leadership position in the industry. Over the past 2-3 years, BLC has grown in its industrial packaging business in a more or less static market.

3.2.2        Greases & Lubricants

 

BLC was importing and distributing lubricating oils from its early years. BLC pioneered the production of greases in the country in 1937 when a grease production facility was set up at Kolkata. This business expanded substantially in the 1950s when BLC began processing greases for the Multi-National Oil companies then operating in India.

 

Today BLC offers the widest range in lubricating greases and a comprehensive range of lubricating oils and specialities.

 

Over one hundred grades of high performance greases such as high temperature greases, extreme pressure greases, water resistant greases, long-life synthetic greases, covering almost every application, are manufactured. BLC’s range of Oils include crankcase oils, gear oils, hydraulic oils, machinery oils, steel rolling oils and other metal-working oils.

 

BLC has five manufacturing plants at:

 

·         Kolkata

·         Chennai

·         Mumbai

·         Taloja

Silvassa

 

BLC processes greases for the major Public Sector Oil Companies as well as for some of the Multi-National Oil Companies. BLC’s own products are marketed under its Brand- BALMEROL.

BLC Manufactures over 100 Grades of High Performance Greases & Lubricants

 

R&D in Greases & Lubes

 

BLC’s manufacturing activities are supported by a very well equipped Research & Development Centre - Applications Research Laboratory - located at Kolkata. This R&D Centre is equipped with some of the state-of-art analytical testing equipment such as:

 

FZG Test Rig

Fourier Transform Infrared Spectrophotometer

Atomic Absorption Spectrophotometer

Gas Chromatograph

High Performance Liquid Chromatograph with Gel Permeation Chromatography

 

UV Spectrophotometer

SRV (Oscillation, Friction, Wear) Tester

Particle Size Analyser

Differential Scanning Calorimeter

Thermo Gravimetric Analyser

Vapour Pressure Osmometer

Falex Tester

 

Atomic Absorption Spectrophotometer

FZG Gear Test Rig

 

 

3.2.3        Leather Performance Chemicals

 

BLC entered the field of Leather Chemicals by setting up a unit in Chennai in the year 1983 for the manufacture of Synthetic Fat Liquors by procuring a lab-scale technology developed by CLRI, setting up a Pilot Plant, commercialising it and then becoming the market leader in this product.  Over the years, BLC has added several new products and formulations, developed in-house through its R&D facility (Product Development Centre located at Chennai) and now has a basket of Synthetic & Semi-synthetic Fat Liquors and a range of Synthetic Tanning Agents and Leather Finishes.  Apart from its focus on in-house R&D, BLC has Technical Service Centres located at all major leather processing areas manned by highly qualified and experienced personnel. BLC has an established Marketing Network consisting of Dealers/Stockists supported by a team of in-house Marketing Professionals.  BLC has the highest market share in the Synthetic Fat Liquor segment in competition with Multi-National Companies and others. Products are marketed under BALMOL and BALSYN brand names, which are well recognized in the market.

 

BLC is looking for a strategic alliance in Leather Performance Chemicals for assessing state-of-art technological inputs for development of a comprehensive basket of products in Synthetic Tanning Agents, Beam House Performance Chemicals and Leather Finishes to enable BLC service its customers fully. BLC also has some very strong products in Fat Liquors & Mineral Syntans and complementary marketing in markets outside is also envisaged.

 

 

3.2.4        Speciality Containers

 

BLC pioneered the concept of bunk/housing containers in the mid-1980s to meet the requirements of the Oil Industry (Oil India Limited and ONGC) for use in their exploratory/drilling operations in remote locations. These were self-contained mobile living units, which could be mounted on a truck and moved from one location to another.  This concept has been extended to develop a wide range of containerized solutions for mobile workshops, clinics, rural telephone exchanges, control rooms, disaster management, etc.

 

BLC now has a range of Speciality Containers where detail engineering skills of container building has been coupled with expertise developed in Poly Urethane insulating and cladding with various materials from stainless steel to laminates and offers the following range of intermodal as well as chassis-mounted containers:

 

Ø      Bunk House/Housing Containers

Ø      Mobile Workshops

Ø      PUF Insulated Containers

Ø      Refrigerated Containers

Ø      Speciality Dry Cargo Containers

Ø      Other Custom-built Containers for special applications e.g. Rural Telephone Exchanges, Mobile Kitchen, Mobile Containerised Plants-Chemical/Explosives/Biotech etc.

 

		Truck Mounted Speciality Containers Manufactured at Coimbatore Plant

 

 

The Speciality Containers manufacturing unit is located at Coimbatore with synergistic links with the Project Engineering Division of BLC to further expand the range of integrated containerized solutions. BLC’s products are well established in various speciality markets such as the marine products industry, diary industry, cold chain applications etc, where the products are recognized for superior quality and service attributes.

3.2.5        Tea Blending & Exports

 

BLC’s association with Tea goes back to the period of its early years when tea-related activities formed a major portfolio of the Company. BLC now has Tea Blending, Packing and Warehousing facilities in India at Kolkata and Coimbatore and overseas in the United Kingdom through its wholly-owned subsidiary, Balmer Lawrie (UK) Limited. The product-mix consists of Bulk Tea, Packaged Tea, Tea Bags and Speciality Teas.

 

BLC exports Tea to countries in the Middle-East, UK, CIS, Russia, Japan, USA etc. BLC is the exclusive supplier of Indian Teas to Harrods, UK.  Tea is also supplied to domestic institutional buyers like the Defence Services, Airlines etc. BLC has recently launched Branded Premium Teas in the domestic market.

 

Premium Branded Teas of BLC

 

BLC is looking for a strategic alliances in this business which could provide backward linkages with tea producer, forward linkages with overseas buyers for tea exports and leverage the marketing of its brand in the domestic market through extensive marketing network thus enhancing value of its existing business.

3.2.6        Travel & Tours

 

Travel operations of BLC also date back to the inception of BLC when it was conceived as the Passage Department of BLC. The Tourism wing is relatively young and was set up in 1983 at New Delhi.

 

This SBU is a recognized Travel Agency by all leading Airlines of the world and has received numerous awards for best performance. It has membership of various bodies including IATA. The Travel activities comprise of domestic and international air bookings, rail bookings and ancillary services like travel documentation, hotel bookings, car rental services etc.  Travel Operations at Delhi has also got full-fledged money changing activity. Tours activity comprises conducting group tours for inbound and outbound tourists, handling of international seminars, festivals etc. The SBU is geared for the emerging trends of e-commerce to enhance customer services based on its extensive network and computerized facilities backed by its custom-built softwares, apart from standard packages.

 

Customers are a mix of Public Sector and Private Sector clients. BLC is one of the largest Ticketing Agents in India for the National Domestic and International Carriers and operates through a network of offices located all over the Country. Offices are located at

Kolkata, Chennai, Mumbai, New Delhi, Baroda, Bangalore, Hyderabad, Bhubaneshwar Ahmedabad and Thiruvananthapuram.

 

BLC’s Travel Office at New Delhi

 

BLC is looking for a Strategic Alliance preferably with a large overseas Tour Operator for development of inbound & outbound tourism business where the Alliance Partner can use BLC’s facilities in India for development of in-bound Tourism and outbound tours from India can be promoted by BLC. An arrangement (in the nature of an Agency agreement) has recently been entered into with Kuoni Travel for promotion and marketing of SOTC Outbound Tours.

 

 

3.2.7        Logistics Services

 

Cargo operations of BLC can be traced back to the early years of BLC’s history when it was conceived as the Shipping & Forwarding Department of BLC.  BLC built on captive opportunities by extending the services on a commercial basis to clients.

 

BLC today offers integrated logistics services including General Cargo Forwarding, Clearing & Handling, Turnkey Project Cargo and Logistics Management Services by Sea/Air, NVOCC operations etc. BLC is a leading player in Air Import Consolidation. In addition it has a large Warehouse and a Freight Container Repairs & Refurbishment facility at Kolkata, which are support services for Cargo activities.

 

The Logistics Services Division services clients from the Government and Public Sector as well as from the Private Sector. Apart from a large number of players in the unorganised sector, BLC competes with a number of large global firms, and is a recognized member of various trade bodies.

 

The Division operates through the following offices located all over India, viz

 

In addition to the network of offices in India, the Division has around forty Cargo Associates all over the world for providing door-to-door logistic services. The Countries where BLC has Associates include the following:

Argentina Australia Austria Belgium Belarus Bulgaria Canada China Czech Republic Denmark Finland France Germany Greece

Holland Hong Kong Hungary Israel Italy Japan Korea Kazakhstan Khyrghystan Lithuania Malaysia Norway Poland Russia

Singapore Spain Sweden Switzerland Slovakia Thailand Turkey Turkmenistan United Kingdom U.S.A. Ukraine Uzbekistan

 

 

3.2.8        Container Freight Station  (CFS)

 

CFS is essentially an extension of the Port to enable quicker turnaround of ships and thereby help in decongesting the Port and supplementing it. CFS is an infrastructural facility with storage yard, warehouse and material handling equipment for handling, loading, unloading and storage of containerised import and export cargo. Customs formalities for both import and export cargo are permitted to be carried out at the CFS under supervision of Customs officials who are positioned at the CFS.

 

With growth in Containerised Cargo movement, BLC saw tremendous growth opportunities in this area and to avail of the same BLC set up its first CFS at Kolkata in 1995. This was followed by one at Mumbai in 1999 and another at Chennai in 2000. All three CFS’ are located in close proximity to the Ports and equipped with Reach Stackers, Fork-lift Trucks, large Storage Yards and Warehouses. The CFS at Mumbai which is located close to the busy JNPT Port is also equipped with two Rubber Tyred Gantry Cranes (RTG) for achieving faster turnaround times.

 

 

As this activity offers tremendous growth potential and enjoys infrastructure benefits, BLC is looking for a strategic alliance for expansion of this activity and setting up CFS at other locations.

3.2.9        Project Engineering & Consultancy Services

 

BLC has been a pioneer in Project Activities in India through its Civil Engineering Division (CANDE), which became Bridge & Roof Company  (I) Limited (B&R) in 1920 as a subsidiary of BLC. In 1980, B&R was restructured from the IBP-BLC Group into a new group, viz, BYNL, under the Ministry of Industry. The Project Division of BLC was set up initially to execute various expansion and diversification projects of BLC. Over the years it has acquired the skills and technology for preparation of basic and detailed engineering packages and providing total project management services for turnkey execution of projects.

 

Some of the core areas where BLC’s Projects Division specializes in are:

Market Research & Detailed Project Reports

Lube Oil Blending Plants

Industrial Packaging Plants/Barrels/LPG Cylinders

LPG Bottling Plants

Grease Plants

POL Storage Terminals/Depots

POL Retail Outlets/Jubilee Retail Outlets

Bitumen Emulsion/Film Packaging

Speciality Performance Chemical Plants

Used Oil Re-refining Plants

Reliability Studies

Containerised Solutions for various uses – Fuel Dispensing, Mobile Field Hospitals etc.

Emission Control & Vapour Recovery Systems

Effluent Treatment plants

Energy Management & Automated Remote Metering Load Management

Custom-built Automation & Software Solutions

·         Infrastructure Projects /Roads/CFS/ICDs/Cultural Complex etc

Crude Oil Tank Cleaning & Sludge Recovery  (This is being done using BLABO Technology for the first time in the Country, and the mobile BLABO units are manufactured by BLC).

·         Training/Post Commissioning & further development support in above areas.

Grease & LOBP Plant at Sharjah	BLABO Operations at IOC-Haldia

 

The Projects Division has executed several in-house projects including some of its Joint Venture projects. It has carried out several turnkey projects for Oil Companies and other clients in India as well as overseas in the following countries:

Abu Dhabi Dubai Sharjah

Nepal Myanmar Bangladesh

 

 

3.3     Joint Ventures of BLC

 

BLC, at present has interest in the following five Joint Venture Companies whose businesses are also tabulated:

 

 

These Joint Ventures were set up in association with well-known partners many of whom are also reputed Global players. The primary objectives of BLC for promoting these Joint Ventures were to access the state-of-art technology, add new products to its existing range and enter new markets.

 

In addition, BLC has a wholly owned subsidiary (WOS) in Balmer Lawrie (UK) Limited.

 

3.3.1        Balmer Lawrie-Van Leer Limited

 

BLC made a strategic investment in Trisure India Ltd (TIL) at Mumbai in the year 1989 (this unit manufactured  “Trisure” Closures for barrels), as a backward integration of its Steel Barrel activities. TIL was renamed as Balmer Lawrie Van Leer Ltd in the year 1993 when Van Leer B.V. of Netherlands was brought in as a strategic partner to add  “Valerex” Plastic Barrels of different capacities to the product-mix. Van Leer of Netherlands is among the world’s largest producers of packaging products, with plants located worldwide.

 

This JV manufactures the following products:

·         200 Litre HMHDPE Plastic “Valerex” Containers

·         20/25 Litre HMHDPE Plastic “Valerex” Containers

Plastic Pails

Liners

“Trisure” Closures (These hi-tech closures are used in Steel Barrels using a proprietary technology)

 

The shareholding in BLVL is as follows: 

 

BLC                              -          40%

Van Leer                     -           40%

Public & Others          -           20%

 

This JV complements BLC’s range of products in Industrial Packaging.

 

3.3.2        Indian Container Leasing Company Limited (ICLC)

 

The Indian Container Leasing Company Limited (ICLC) was set-up in 1990 to pioneer and promote the concept of Containerisation in the domestic movement of cargo by rail, road and river transport systems through leasing of freight containers. Movement of goods in Containers, as compared to the conventional movement of cargo, offers several advantages such as safety of the goods from pilferage, protection against weather, fast intermodal-transfer, storage etc.

 

ICLC provides Operating lease of Dry Van Containers, Refrigerated Containers and their derivatives as well as Hire Purchase of Trucks and Containers. Users of such services are the Road Transport, Railways and Costal Shipping sectors. This JV is seeking a strategic alliance to further leverage the growth of this business.

 

The shareholding in ICLC is as follows: 

BLC                                                       -            29%

ICICI                                                   -           29%

Transamerica Leasing Inc., USA      -           27%

ICICI Venture Fund                           -           15%

 

 

3.3.3        Balmer Lawrie (UAE) LLC, Dubai

 

BLC had set up a barrel-manufacturing unit in Dubai as a branch of the Indian Company in 1978. It was converted into a Joint Venture  (Partnership Firm) in 1983 in partnership with His Highness Sheikh Hasher Maktoum of the Royal Family of Dubai. In 1993, the JV was converted into a Limited Liability Company incorporated in the Emirate of Dubai as Balmer Lawrie (UAE) LLC,  [BL(UAE)].

 

The manufacturing range of BL (UAE) covers:

• Barrels
• Bitumen Drums
• Blow-moulded Plastic Containers
• Tin Cans
• Conical pails
• Lithography with studio facilities for high-quality printing on Containers.
• Reconditioning of used barrels

 

BL (UAE) is the predominant supplier in the United Arab Emirates and the adjoining Gulf region.

 

The shareholding in BL (UAE) is as follows: 

H H Sheikh Hasher Maktoum           -           51%

BLC                                                     -           49%

 

This JV complements BLC’s range of products in industrial packaging.

 

3.3.4        Avi-Oil  India (P) Limited

 

This JV, which started commercial production from 1998, was set-up as an extension of BLC’s existing activity in the area of greases and speciality lubricants. This JV was formed in association with NYCO SA of France and Indian Oil Corporation.

 

The technology for this project is from NYCO, France who are leading manufacturers of a wide range of defence aviation lubricants as well as a full range of synthetic ester base stocks required for the blending of these products. Besides sophisticated technology, these lubes require elaborate approvals from relevant certifying agencies. NYCO lubricants are already approved by the military authorities of several countries, renowned aircraft engine manufacturers as well as for a range of French, Russian, British and other aircrafts available with the Indian Defence Services.

 

Avi-Oil’s Plant

 

 

Avi-Oil operates in a market where there are currently no indigenous manufacturers of such lubricants.

 

The shareholding in Avi-Oil is as follows: 

NYCO SA, France                  -           50%

BLC                                         -           25%

Indian Oil Corporation          -           25%

 

This JV complements BLC’s range of products in Greases & Lubricants.

 

 

3.3.5        Indian Marine Freight Container Manufacturing Limited (IMFC)

 

This Joint Venture was set up in 1994 as a 100% EOU for Manufacture of Marine Freight Containers with a state-of-art plant capacity of 20,000 TEUs, the largest in India, based on expectations of competitive advantage for India considering labour intensity & engineering skill on one hand and surge in containerized exports in the wake of liberalization.

 

The product-mix consisted of Standard Dry Van Marine Freight Container in 20’ and 40’ sizes and specials such as High Cube and Open Top Freight Containers.

 

The shareholding in IMFC is as follows:

BLC                                         -           49%

Okura & Co. Ltd., Japan       -             5%

Tectrans, Germany                -             4%

Public                                      -           42%

 

The JV has not performed well primarily due to the continued depression in exports of containerisable cargo from India, which affected the demand of newly built containers. This was further aggravated by unrestricted and aggressive positioning into India of newly built containers from overseas, primarily China, which has also affected all the other container manufacturers in India whereby the entire Industry has become sick and practically closed. This JV has been referred to the Board for Industrial & Financial Reconstruction (BIFR) in June 2000, and since October 2000 the due process under BIFR has commenced.

 

3.3.6        Balmer Lawrie (UK) Ltd

 

BLC has one wholly owned subsidiary (WOS) viz., Balmer Lawrie (UK) Ltd. This WOS was established in 1992 in London with the intent of entering into the international leasing business for marine freight containers. For this purpose, a Fleet Management Agreement was entered into with Transamerica Leasing Inc., USA, who are the world’s largest container leasing Company.

 

Balmer Lawrie (UK) Limited  (BLUK) also looks after the tea markets in UK and Europe through direct sourcing of tea from BLC, India for customers in these markets. In 1998, BLUK diversified by setting up a Tea blending and packaging unit at Bedford in UK to cater to the growing market and customer requirements.

 

 

3.4     Key Strengths of BLC

 

BLC is a diversified Business Conglomerate and is the largest in India in Steel Barrel manufacturing, Speciality Grease manufacturing and Travel Services

 

A Service provider to the Oil Industry for most of its businesses - Barrels, LPG Cylinders, Greases & Lubricants, Logistics Services and Project Engineering & Consultancy

 

Track record of achieving cash profits in its existence of close to 135 years and continuous profits over the entire period of its being a PSU (since 1972)

 

Track record of continuous dividend payment

 

Shares are listed at Kolkata, Mumbai, Delhi, Chennai, Ahmedabad and National Stock Exchanges. The Equity Shares are available for trading only in Dematerialised form for which BLC has entered into agreements with Central Depository Services (India) Limited and National Securities Depositories Limited

 

Assets have not been revalued. Prime assets in various locations

 

Pioneer among PSUs to Globalise Operations (Dubai, 1978)

 

Pioneer among PSUs to Offer Shares to Employees (1986)

 

A sound capital structure with a comfortable Debt:Equity Ratio

 

Continuously ploughing back profits after dividend payout

 

Steady growth in assets

 

First Company in India to issue Commercial Paper (1990). Highest Credit Rating P1+ from CRISIL continuously for 8 years (discontinued from 1998)

 

Harmonious relationship with Unions for past several years

 

Manpower reduced by over 1000 over the last 6 years

 

 

3.5     Manpower

 

BLC had 1988 employees as on March 31, 2002. The Company has a record of being able to take up ‘rightsizing’ as per needs of the business (while retaining “Human Assets” that are critical) as reflected in the employee strength during the last five years:

 

3.6     Financials

 

Equity Base

 

The paid-up share capital of BLC stands at Rs. 162.86 million (approx. USD 3.35 million) comprising 16,286,081 equity shares of face value of Rs. 10/- each.

 

Profitability

 

A snapshot of the performance of BLC for the last 3 years is given below: