1. Riding on lubes

Riding on lubes

Company to focus on automotive retail business to drive growth

By: | New Delhi | Published: July 15, 2015 12:03 AM

Balmer Lawrie, a mini-ratna PSU under the ministry of oil and natural gas, is betting big on its lubricant business that brings a fifth of its revenues. A pan-India brand building drive is on for its Balmerol range of lubricants. Balmerol has now got a trendy logo and design. The rebranding is in line with the company’s goal of remaining as India’s largest grease manufacturer, while emerging as a globally competitive, transnational lubricants solution and service provider, said Viren Sinha, chairman and managing director.

“The automotive retail business will continue to be the focus area, which will drive growth and profitability. The shift will be from the industrial segment to the retail automotive segment,” Sinha said, adding the company was trying to rebuild the brand for the last three years. The share of lubricants in the PSU’s top line could rise beyond the 20% level in the days to come, an official said.

Balmer Lawrie, founded by two Scotsmen, George Stephen Balmer and Alexander Lawrie, is a much diversified player. There is hardly any business the company has not got into over the years. From tea to shipping, insurance, banking, trading to manufacturing, Balmer Lawrie has done it all. Today the PSU calls itself as a multi-activity, multi-technology, and multi-location conglomerate having global footprints, with seven joint ventures—Balmer Lawrie Van Leer, Balmer Lawrie UAE, AVI- OIL India Private Ltd, Transafe Services Ltd, Balmer Lawrie Indonesia (PTBLI), Balmer Lawrie Hind Terminals and Balmer Lawrie UK Ltd. These companies encompass a diverse set of interests in manufacturing and services. In effect, Balmer Lawrie is into sectors like industrial packaging, grease & lubricants, leather chemicals, travel & tours, logistics infrastructure services and refinery & oilfield services.

Until September 2013, Balmer Lawrie UK Ltd (BLUK), a wholly owned subsidiary of Balmer Lawrie & Co Ltd, was into tea warehousing, blending and packaging, besides being into hiring marine freight containers. But it exited these businesses, and the proceeds are being used to fund other business opportunities. BLUK, according to officials, has invested in Balmer Lawrie Indonesia (PTBLI) and has taken up 50% of the paid up equity capital in the joint venture, formed to manufacture and

market greases and lubricants in Indonesia. Tea, according to Sinha, was a perennially loss-making venture and its turnover never surpassed R3 crore a year.

Looking back to history, Balmer Lawrie became a private limited company in1924 and a public limited company in 1936. In 1972, it became a subsidiary of Indo Burma Petroleum (IBP) Co. Ltd. and a government of India Company. IBP, by a scheme of arrangement transferred their 61.8% holding to Balmer Lawrie Investments Limited in 2001. Besides public holding of 18%, financial institutions and insurance companies collectively hold about 20% of the capital.

The company is now the largest manufacturer of steel barrels, freight containers, fat liquor and greases & lubricants. Globally the company is also among the top ten grease manufacturers and exports significant quantities to other countries. Its grease products include, Balmerol Industrial, Balmerol Speciality Grease and Balmerol Automotive.

Balmer Lawrie recently launched the new Tech Tonic packs for diesel engine oils and 4T oils for the automotive sector. The company, which has a 2% market share in the lubricant space, aims at doubling it in the next five years, Sinha said.

The company reported a near 2% year-on-year increase in net profit at R45.63 crore for the first quarter this fiscal. It reported 13% y-o-y jump in sales to R683 crore. But net profit in FY15 declined 5.59% to R147.44 crore, though sales rose 4.07% y-o-y to R2,708 crore. The company reported the highest net income of R2,843 crore in FY14 despite a global slowdown.

The company is rapidly expanding the distribution network in both the industrial and automotive retail segment in focused markets. It is also in midst of enhancing and modernising its manufacturing facilities in Kolkata, Chennai, Mumbai and Silvassa.

The PSU will invest between R500 and R1,000 crore in the next three years, an official said. The investment plan for this fiscal is R100-150 crore, mostly for enhancing facility, and has already invested R500 crore over the past three years for system and product up gradation.

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