Rationale

 The reaffirmation of the ratings continues to factor in Balmer Lawrie & Company Limited's (BLL) highly conservative capital structure, its strong debt protection metrics and a comfortable liquidity position, given a large free cash and bank balance, which impart a high degree of financial flexibility. BLL's business profile is characterised by healthy diversification across business segments and customers, which protects it from any downturns in a particular business. The ratings note BLL's sovereign ownership by the Government of India (GoI), which holds a 61.8% equity stake through Balmer Lawrie Investments Limited. The Central PSU status of BLL enables it to generate a stable revenue source from other PSUs and Government departments especially in the logistics infrastructure and services (LIS) and travel and vacation (T&V) business verticals. The above strengths are, however, offset by moderate margins and the vulnerability of the company's profitability to adverse movements in raw material prices in the industrial packaging (IP) and greases and lubricants (G&L) verticals. Additionally, the revenues and margins in the container handling business remain susceptible to volatility in the EXIM trade and Government policies. The long-term rating remains constrained by the sizeable exposure to a weak subsidiary, which continues to be a drag on BLL's financials. However, the company's stated strategy of not providing any direct financial support to the subsidiary limits incremental financial exposure. The Stable outlook on the long-term rating reflects ICRA's opinion that notwithstanding the expected moderation in BLL's financial performance in FY2021, it would continue to enjoy a near debt-free status, which along with a large cash and bank balance, provides healthy liquidity and financial flexibility. Rationale The reaffirmation of the ratings continues to factor in Balmer Lawrie & Company Limited's (BLL) highly conservative capital structure, its strong debt protection metrics and a comfortable liquidity position, given a large free cash and bank balance, which impart a high degree of financial flexibility. BLL's business profile is characterised by healthy diversification across business segments and customers, which protects it from any downturns in a particular business. The ratings note BLL's sovereign ownership by the Government of India (GoI), which holds a 61.8% equity stake through Balmer Lawrie Investments Limited. The Central PSU status of BLL enables it to generate a stable revenue source from other PSUs and Government departments especially in the logistics infrastructure and services (LIS) and travel and vacation (T&V) business verticals. The above strengths are, however, offset by moderate margins and the vulnerability of the company's profitability to adverse movements in raw material prices in the industrial packaging (IP) and greases and lubricants (G&L) verticals. Additionally, the revenues and margins in the container handling business remain susceptible to volatility in the EXIM trade and Government policies. The long-term rating remains constrained by the sizeable exposure to a weak subsidiary, which continues to be a drag on BLL's financials. However, the company's stated strategy of not providing any direct financial support to the subsidiary limits incremental financial exposure. The Stable outlook on the long-term rating reflects ICRA's opinion that notwithstanding the expected moderation in BLL's financial performance in FY2021, it would continue to enjoy a near debt-free status, which along with a large cash and bank balance, provides healthy liquidity and financial flexibility.