Balmer Lawrie restructures, may divest stake in ICLC

By Our Staff Reporter

KOLKATA, OCT. 3. On the block for a demerger from IBP group to a separate holding company Balmer Lawrie Investments, Balmer Lawrie & Co is busy in restructuring operations. Though the Centre was yet to pick it up for divestment, the management expects that it will be put on the block in the next round of divestment. Already divested its stake in two out of seven joint ventures, and reduced the manpower by 25 per cent to 1991 to-date, sources say the company is now looking at possibilities of streamlining its business interests further.

While Balmer Lawrie Freight Containers, a Board for Industrial and Financial Reconstruction listed company, is pushed to a natural death by separating all the 345 employees and writing off Rs. 8 crore (inter-corporate) loan liability, Indian Container Leasing Company (ICLC), a joint venture with Trans American Leasing and ICICI Venture Capital, may be divested in the near future. Also under the scanner are the performance of the tea and grease divisions. A greater emphasis is laid on the travel and tours, project engineering and consultancy, industrial packaging and logistics management divisions. Industrial packaging and travel and tours have contributed 30 per cent and 25 per cent of the profit after tax of the company in 2000-01.

Of the traditional cash cows, grease (the company is the largest manufacturer of grease) business had incurred losses in the last fiscal and tea exports, once the company's forte, almost `cease to exist'. In a bid to survive, the division has made an attempt to reverse the focus on the domestic market, for the first time, by test marketing its packet teas in Kolkata last week.

Talking to The Hindu, company sources said Balmer Lawrie would continue with the profit making joint ventures Balmer Lawrie (UAE) LLC, Balmer Lawrie Van Leer Ltd (BLVL) and AVI-Oil India Pvt Ltd as all three are related to the core competence areas. BL(UAE), for example, is the manufacturer of barrels and drums. BLVL manufactures closure system for drums and is a backward integration of industrial packaging. Though grease business is facing severe pressure on margins the company is in no mood to part with AVI-Oil manufacturing aviation grease till date.

The same is however not true of ICLC. According to sources though still making profits, the eight year old joint venture has ``lost its relation to Balmer Lawrie's core business activity'' after virtual closure of Balmer Lawrie Freight Containers (BLFC) under price pressure from Chinese competitors. Yet to take any decision, ICLC may be put on the block in due course. Incidentally not only BLFC but all the six Indian container manufacturers have closed shop in the face of Chinese competition.

Meanwhile, the company is hopeful of getting the benefits of its ``largest project'' of separating 25 per cent manpower through VRS at a combined liability of Rs. 28 crores due for redemption in full, from next fiscal. The company provisioned Rs. 5.72 crores for the same in the last fiscal at the cost of a decline in net profit from Rs. 14.32 crores to Rs. 6.01 crores.

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Section  : Business
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