September 2017 quarter results

For the quarter ended September 2017, it registered 7% fall in sales to Rs 371.27 crore. OPM fell 130 basis points from 9.7% to 8.4% which saw OP fall 19% to Rs 31.29 crore.

Other income grew 2% to Rs 14.30 crore and interest cost fell 13% to Rs 97 lakh. After providing for depreciation (up 2% to Rs 6.46 crore), PBT fell 16% to Rs 38.16 crore.

Provision for tax fell 32% to Rs 12.02 crore after which PAT fell 5% to Rs 26.14 crore.

Six months

For the six months, it registered 3% fall in sales to Rs 836.62 crore. OPM fell 200 basis points to 8.8% which saw OP fall 20% to Rs 73.84 crore.

Other income fell 3% to Rs 24.38 crore and interest cost fell 20% to Rs 2.15 crore. After providing for depreciation (up 2% to Rs 12.90 crore), PBT fell 19% to Rs 83.17 crore.

Provision for tax fell 29% to Rs 27.13 crore after which PAT fell 13% to Rs 56.04 crore.

A diversified business model

Balmer Lawrie is a diversified multi-product conglomerate, carrying out operations under seven SBUs, with presence in both manufacturing and service sectors. Major manufacturing SBUs comprise industrial packaging (IP) and greases & lubricants (GL) divisions, while key service SBUs include tour & travel (TT) and logistics infrastructure & services (LIS) divisions. This apart, BLCL is also engaged in manufacturing performance chemicals and service-based activities like project engineering & consultancy for oil & infrastructure sector. It is also engaged in container freight and presence in tea blending & packaging business.

This SBU approach provides the required focus and independence in each business unit.

Leader in Industrial Packaging

Industrial Packaging division is the largest manufacturer and the market leader in the business of 200 Ltr capacity Steel Drums in India. The SBU has the capability to meet the Steel Drum requirements of neighbouring countries as well. The major clientele includes Global Transnational customers and large Indian companies.

Steel Drums are utilized for safe packaging and transportation of liquid and semi-liquid pulp, greases, powders, chemicals etc.

During the quarter sales from Industrial Packaging Division stood at Rs 120.82 and accounted for 32% of sales. PBIT grew 25% to Rs 13.32 crore and accounted for 24% of total.

For the six months sales from Industrial Packaging Division stood at Rs 317.412 and accounted for 36% of sales. PBIT grew 4% to Rs 34.53 crore and accounted for 29% of total.

Logistics Services

India spends around 14.4% of its GDP on logistics and transportation as compared to less than 8% spent by other developing countries. The Indian logistics market is expected to grow at a CAGR of around 11% upto 2020 driven by the growth in the manufacturing, retail, FMCG and e-commerce sectors, although it is observed that the expected growth has stunted from January 2017 onwards. The higher growth forecast is based on the smoother implementation of GST and the logistic companies optimizing their operations to reduce cost and increase their margins. The implementation of GST shall open opportunities for logistic companies to set up just a big few warehouses region wise and can follow hub-spoke model for freight movement from the warehouses to the different manufacturing plants, whole sale outlets, retail outlets and the various point of sales/services.

During the quarter sales from Logistics services business stood at Rs 62.12 and accounted for 17% of sales. PBIT fell 17% to Rs 15.17 crore and accounted for 27% of total.

For the six months sales from Logistics services business stood at Rs 130.97 and accounted for 15% of sales. PBIT fell 16% to Rs 28.57 crore and accounted for 24% of total.

Logistic Infrastructure Services

The Logistics Infrastructure business comprises of three main segments viz., Container Freight Stations (CFS) typically set up in the vicinity of Ports, Warehousing & Distribution (W&D) and Temperature Controlled Warehouses (Cold Chains). CFSs are set up primarily with a view to decongest ports. CFS provides an integrated platform for activities such as loading/unloading, transporting and stuffing, De stuffing of containers.

Presently, the Company has three state-of-the-art CFSs located at Nhava Sheva (Navi Mumbai), Chennai and Kolkata. Incidentally, these three ports account for nearly 54% of the total container traffic handled in Indian Ports.

During the quarter sales from Logistics Infrastructure business stood at Rs 49.55 and accounted for 13% of sales. PBIT fell 7% to Rs 9.92 crore and accounted for 18% of total.

For the six months sales from Logistics Infrastructure business stood at Rs 98.66 and accounted for 11% of sales. PBIT fell 12% to Rs 19.98 crore and accounted for 17% of total.

Travel & Tours

This SBU is one of the largest IATA affiliated travel agencies in the country operating in the organized sector which provides end-to-end domestic and international travel, ticketing, tourism and MICE related services to its clients. It is one of the oldest IATA accredited travel agencies of India. Operating from more than 88 locations across 19 cities in the country Balmer Lawrie works round the clock to provide reliable and cost effective travel solutions to its customers. Its clients include major Central Government Ministries, Public Sector Undertakings, Autonomous Bodies and Corporate houses

The business of the SBU consists of three segments, domestic travel, international travel and tour packages. The focus of the SBU is on the aviation industry, which has a huge potential for growth and constitutes the backbone of the tourism industry. The SBU delivers service to its clients 24x7. Major clients of this SBU are Government departments/ministries and the PSUs.

With strong focus on the tourism sector by the government of India, a positive impact on the Tours & Travel business is anticipated.

Synergy from the two verticals, viz Ticketing and Vacations have resulted in more customers and Government Entities opting to go for a complete end to end travel services including hotels and holiday packages, rather than just booking air tickets with the SBU.

During the quarter sales from Travel & Tours Division stood at Rs 31.71 and accounted for 8% of sales. PBIT grew 55% to Rs 7.51 crore and accounted for 13% of total.

For the six months sales from Travel & Tours Division stood at Rs 77.03 and accounted for 9% of sales. PBIT jumped 72% to Rs 16.14 crore and accounted for 13% of total.

Grease & Lubricants

India continues to be the 3rd largest lubricant market in the world, making it a potential market for achieving volume growth by both PSU Oil Companies as well as private players including MNCs. However, the market is fragmented and the lubricant companies are focusing on niche segments for their growth, based on their strengths and experience.

The SBU caters to two segments, Automotive and Industrial & Marine. About 67% of the lube market comprises Automotive Grades leaving the balance 33% for Industrial Grades. Its products are marketed under the Balmerol brand– which is one of the renowned brands in this sector. SBU-G&L, through its research and development, is emphasizing more on delivering best grade of lubricants to its customers.

To cater to the requirements of Industrial & Retail customers, Balmer Lawrie has expanded its presence with four Regional & Six District marketing offices and is continuing to spread its channel networking through opening up of C&F Agents, appointing distributors & dealers.

During the quarter sales from Greases & Lubricants Division stood at Rs 92.59 and accounted for 25% of sales. PBIT grew 8% to Rs 6.89 crore and accounted for 12% of total.

For the six months sales from Greases & Lubricants Division stood at Rs 216.84 and accounted for 25% of sales. PBIT fell 18% to Rs 14.01 crore and accounted for 12% of total.

Valuation

The share price trades at Rs 259.