Balmer Lawrie & Company Ltd.
|BSE: 523319||Sector: Others|
|NSE: BALMLAWRIE||ISIN Code: INE164A01016|
|BSE LIVE 15:59 | 28 Apr||235.85||
|NSE 15:45 | 28 Apr||235.85||
|Mkt Cap.(Rs cr)||2688.69|
|Mkt Cap.(Rs cr)||2688.69|
Balmer Lawrie & Company Ltd. (BALMLAWRIE) - Director Report
Company director report
To the Members
The Directors have pleasure in presenting the 99th Report on the operationsand results of your Company for the Financial year ended 31st March 2016together with the Audited Financial Statement Auditor's Report and the Comments ofComptroller & Auditor General of India on the Accounts of the Company.
* The Board's Report is based on standalone results and this information is given as anadded information to the members.
Overview of the state of the Company's Affairs
The Company recorded a Turnover of Rs.289495 Lakhs (inclusive of Excise Duty)during 2015-16 which was a marginal reduction from Rs.294404 Lakhs (inclusive of ExciseDuty) in 2014-15 representing a fall of around 1.67% over the previous year.
However the Profit Before Tax during 2015-16 which aggregated to Rs.23454Lakhs had made a significant increase from Rs.21044 Lakhs in 2014-15 registering anincrease of 11.45% over the previous year. Thus the Company had achieved the highest everprofit in its history.
The Profit After Tax for 2015-16 increased to Rs.16320 Lakhs from Rs.14744 Lakhsin 2014-15.
The Strategic Business Units: (a) Industrial Packaging (b) Greases andLubricants and (c) Refinery & Oil Field Services were the main drivers of incrementalprofit generation for the Company during 2015-16.
The Reserve and Surplus of your Company increased to Rs.103776 Lakhs as on 31stMarch 2016 compared to Rs.87456 Lakhs as on 31st March 2015.
The paid up Equity Share Capital of the Company as on 31st March 2016 stoodat Rs.285006410. During the year under review the Company has not issued any sharewith differential voting rights nor has granted any stock options or sweat equity shares.
A dividend of Rs.20/- (Rupees Twenty only) per Equity Share of the face value of Rs.10each fully
paid up on the paid-up Equity Share Capital as on 31st March 2016 has beenrecommended by the Board of Directors for declaration by the Members at the ensuing 99thAnnual General Meeting (AGM) to be held on 22nd September 2016. Subject to theapproval of the Shareholders in the ensuing 99th AGM dividend will be paideither by way of warrant demand draft or NECS mode and will be paid to those Shareholderswho would be holding shares of the Company as on 15th September 2016 End ofDay. In respect of shares held electronically dividend will be paid to the beneficialowners as per details to be furnished by their respective Depositories i.e. eitherCentral Depository Services (India) Ltd. or National Securities Depository Ltd. The trendof past dividend payment is depicted below:
Note: Dividend rate for 2013-14 2014-15 and 2015- Id are post Bonus issue made in May2013.
Material changes and commitments affecting the Financial position of the Companyoccurred between the end of the Financial year and the date of the Report
No material changes and commitments have occurred after the close of the Financial yeartill the date of this Report which could affect the Financial position of the Company.
Management Discussion and Analysis Report
An analytical Report on the businesses of the Company
as required under the SEBI (Listing Obligations And Disclosure Requirements)Regulations 2015 - covering both manufacturing and service activities - is furnishedalong with this Report under the heading "Management Discussion and AnalysisReport" and attached as "Annexure 1".
Consolidated Financial Statements
The Financial Statements and results of your Company have been duly consolidated withits Subsidiaries Associates and Joint Ventures pursuant to applicable provisions of theCompanies Act 2013 the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Accounting Standards.
Further in line with Section 129(3) of the Companies Act 2013 read with the Rulesthereon SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and inaccordance with the Accounting Standard 21 Consolidated Financial Statements prepared byyour Company includes a separate Statement in Form AOC-I containing thesalient features of the Financial Statement of your Company's Subsidiaries Associates andJoint Venture companies which forms part of the Annual Report.
Report on Subsidiaries
During the year under review no company has ceased to be a Subsidiary Joint Ventureor Associate Company.
The Policy for determining material subsidiaries as approved may be accessed on theCompany's website at the link: http://www.balmerlawrie.com/app/webroot/uploads/Policy_on_Determining_Material_Subsidiary-BL.pdf.
As per the aforesaid policy none of the Subsidiaries appear to be material subsidiaryof your Company.
Financial Statements of Subsidiary Companies
In line with the provisions of Section 136 of the Companies Act 2013 your Company hasplaced separate audited accounts in respect of each of its subsidiaries on its website -
Performance and financial position of Subsidiaries Joint Ventures and AssociateCompany
A brief write up on the performance and financial position of Subsidiary Joint ventureand Associate companies of your Company is presented hereunder:
Balmer Lawrie (UK) Ltd. [BLUK]
Balmer Lawrie (UK) Ltd. (BLUK) is a 100% subsidiary of your Companyincorporated in the UK. The subsidiary had previously been engaged in the business ofLeasing & Hiring of Marine Freight Containers as also in Tea Warehousing Blending& Packaging.
After exiting these businesses BLUK has been utilizing the proceeds to fund otherbusiness opportunities. BLUK has to date invested approximately US$ 2.01 millionequivalent to Indonesian Rupiah 21.0 billion in PT Balmer Lawrie Indonesia (PTBLI) -having its registered office at Jakarta Indonesia - which represents 50% of the paid - upequity share capital of the joint venture company. Balance 50% of the paid up sharecapital of PTBLI is subscribed by PT. Imani Wicaksana of Indonesia. PTBLI is engaged inthe manufacture and marketing of greases and other lubricants in Indonesia. The operationsat the plant has now stabilized and the JV is actively trying to get a foothold in thechallenging Indonesian lube market. During the year under review the joint ventureincurred losses due to lower volume of Sales achieved than anticipated. The financialperformance of the company in the last quarter of the year was encouraging and the JV isexpected to show improvement in performance from 2016-17 onwards.
Visakhapatnam Port Logistics Park Limited [VPLPL]
As a part of its Strategic Plan your Company has consistently been looking foropportunities for setting
up logistics infrastructure facilities at ports and inland locations. In pursuance ofthis objective your Company has vigorously worked with Visakhapatnam Port Trust (VPT) forthe last several years for setting up a MultiModal Logistics Hub (MMLH) at Visakhapatnamin joint venture. The efforts have ultimately yielded results with the signing ofShareholders'/JV Agreement between your Company & VPT in March 2014. The proposed JVCompany has been incorporated and christened as Visakhapatnam Port Logistics Park Limited(VPLPL). The JV will have equity participation between your Company & VPT in the ratioof 60:40. While your Company's contribution to equity would be in the form of cash VPT'swould be upfront lease rental of 53.025 acres of land allotted to VPLPL for a period of 30years. VPT handed over the earmarked land to VPLPL in January 2015. The project would bemanaged by your Company. Although the civil work for construction of Boundary wall startedin the month of July 2015 the major work towards land development could not be starteddue to delay in shifting of Transmission towers from our premises by APTRANSCO. The workon land development is now expected to start by the end of 2016 and based on thisschedule the project is expected to be completed by end- 2017.
Report on Joint Ventures
AVI-OIL India Private Ltd. [AVI-OIL]
For the Financial year 2015-2016 AVI-OIL has shown a significant growth as compared tothe previous year with growth in sales volumes of lubricants blended by 44% from 876 KL to1258 KL.
With the improved physical performance the Company achieved a gross turnover ofRs.65.53 Crore with net sales amounting to Rs.58.56 Crore which was higher by 53% ascompared to the previous year.
Moreover the Company achieved the highest ever Profit Before Tax (PBT) of Rs.12.18Crore which was higher by 6.5 times as compared to Rs.1.88 crore PBT earned for theprevious year. The increase in profit is mainly attributable to the higher volumes soldand better product coupled with reduction in raw material and other costs.
AVI-OIL participated in Acrex 2016 at Mumbai from 25th to 27thFebruary 2016. Our stall was visited by many visitors from HVAC & R Air ConditioningVentilation and Refrigeration and Building services industry.
Our Company manufactures synthetic refrigeration oils which are environment friendlyand supports HFCS based refrigeration systems.
Balmer Lawrie Van-Leer Ltd. [BLVL]
In the backdrop of challenging scenario in the global economy and cautious market andbusiness sentiments BLVL has achieved a gross turnover of Rs.297 Crore which reflects amarginal decrease of 2.6% as a result of substantial fall in polymers and steel pricesthereby affecting the sale price of our products over the last Financial year which stoodat Rs.305 Crore. However the profit before tax clocked at Rs. 14.73 Crore as againstRs.7.91 Crore achieved in 2014-15 indicating a clear jump of 86%. The steel closuresproduction have plummeted by 13.5% compared to last year as a result of weak economicdemand in US Europe and Far East Countries. Overall the BLVLs performance was verysatisfactory in the wake of stiff competition faced in the market for its products.
BLVLs products continued to be in demand. Capacity constraints at the plasticcontainer plants at Navi Mumbai and Dehradun restricted possible growth of market share.Efforts for debottlenecking production facilities and further improve sales performanceare on in the current year.
Transafe Services Ltd. [TSL]
During the Financial year 2015-16 TSL achieved a turnover of Rs. 65.22 Crore i.e. agrowth of 13.4% over its total turnover last year. In terms of Profit After Tax TSLclosed the year 2015-16 at Rs (4.90) Crore as against last years Rs (6.79) Crore.
In SBU Manufacturing with total income at Rs. 18.73 Crore (including Repair /miscellaneous income)
growth has been high at 58% Year-on-Year. Major chunk of the business is from privatesector customers and there was no manufacturing business order from PSUs like ONGC andCONCOR.
In SBU Logistics the revenue at Rs. 23.73 crore has gone up by 20% Year-on-Year. Themaximum revenue is in the area of Indo Trailers for 37% and ISO tank sector accounting for20% of the total revenue. The Company has brought in new clients in the private sector.The Company has been able to utilize its assets more in 2015-16 compared to last year.
Leasing business with a topline of Rs. 22.76 Crore however experienced a tough timewith a decline in business by 13% caused by reduction in lease rental rates and offleasing of containers by some of the customers. A decline in international business withits effect on domestic business has dented the revenue.
As reported earlier in the Annual Report 2014-15 TSL has duly been referred to Boardfor Industrial and Financial Reconstruction.
Balmer Lawrie (UAE) LLC [BLUAE]
Balmer Lawrie (UAE) LLC achieved increased production and sales volumes in most of themajor product segments.
Increased focus on customer service initiatives taken to garner greater market shareand product innovation enabled the Company to strengthen customer relationships. Thecompany achieved significant improvement in retention of skilled employees and employeemorale with positive impact on productivity and efficiencies. Simultaneously costreduction was achieved on many fronts. These endeavors enabled the company to stay aheadof competition which none the less remains intense.
BLUAE has now firmed up plans and embarked on plant modernization and capacityenhancement initiatives across its different product lines. Work is in progress fordeveloping infrastructure and creating capacities to meet the targeted business growth inthe medium to long term.
Overall performance during the year was however lower than the results achieved due tostiff competition
in the market leading to tremendous pressure on the margins for the products sold bythe company. However in the light of the business environment prevailing in the regionwhere the company operates the performance during the year 2015 is consideredsatisfactory.
Balmer Lawrie Hind Terminals Pvt. Ltd. [BLHTPL]
Balmer Lawrie Hind Terminals Pvt. Ltd. [BLHTPL] a joint venture company has gone for avoluntary winding-up by its members. Last final accounts of BLHTPL was drawn for a periodof 9 months from 1st April 2015 to 31st December 2015 which hasbeen audited by their Statutory Auditors. Based on the audited accounts the Directors ofBLHTPL have given declaration of Solvency and recommended for winding-up.
Further on 11th February 2016 the members of BLHTPL apart from approvingthe proposal of winding- up had appointed Liquidator of the Company. The Liquidatorrealised the assets and paid the liabilities and distributed the surplus amongst theShareholders. The Liquidator then placed the final liquidation accounts at the finalmeeting of Shareholders held on 12th May 2016 at Chennai.
The Liquidator then filed a return of the aforesaid final shareholders meeting togetherwith final liquidation accounts to ROC and the Official Liquidator. The OfficialLiquidator is in the process of formulating its report for due submission before theHon'ble Madras High Court.
Memorandum of Understanding (MoU)
Every year your Company enters into MoU with the Government of India Ministry ofPetroleum & Natural Gas [MoP&NG] based on guidelines issued by the Department ofPublic Enterprises [DPE]. The MoU sets out various targets on operational financial andefficiency parameters customers satisfaction etc. Your Companys performancevis-a-vis the targets set in the MoU is evaluated at the year-end by DPE. The Company'sperformance score in respect of the MoU for the year 2014-15 has been adjudged by the
DPE in "Very Good" category. Based on the internal assessment and consideringaudited results for the year 2015-16 your Company expects to have a "Very Good"rating for the Financial year 2015-16.
Human Resource Management
The strategy of the Company is centred on managing talent developing leadership &managerial competencies managing employee performance and enhancing employee engagement.Towards achieving these objectives the Company put in place the following initiativesduring the 2015-16:-
[a] Talent Acquisition
During the year we have laterally inducted 65 Executives & Officers to bridge thetalent gap.
[b] Training & Development
Your Company believes in continuously honing the skills and competencies of the peoplewith an objective of creating a leadership pipeline. With this objective in mind theCompany planned and executed exhaustive training programmes for its employees: both inGeneral Management as well as specialist skill development with focus on the requirementof the businesses. In all 1278 (One Thousand Two Hundred Seventy Eight) Man-days oftraining both in-house & external programmes were imparted to all categories ofemployees during the year.
[c] Managing Performance
With a view to improve upon performance orientation and bring about objectivity inassessment the Company has institutionalized a KPT based and Competency linkedperformance appraisal system for its executives.
To further enhance timely completion of PMS the process has already been e-enabled forexecutives upto the grade E-7.
[d] Employee Engagement and Welfare
An effective work culture has been established in the organization which encouragesparticipation and involvement of employees in activities beyond work. Towards furtheringthis during the year the 150th Foundation Day was celebrated in all the unitsand establishments of the company across the country. The employees and their familymembers joined the celebrations in large numbers and made the event a memorable occasion.Also various programs like Annual Sports Day Cultural Evening and competition for familymembers of employees etc. were organized by the Recreation Club at the different majorlocations of the Company.
Direct connect to Leadership is a key to employee engagement continuing the initiativestarted in Financial year 12-13 this year again our Functional Directors interacted withthe Executives & Officers during the Town Hall Meetings and responded to their queriesand concerns. Town Hall Meetings have been institutionalized and are our effective mediumof direct dialogue with employees.
Employment of Special Categories
During the year 2015-16 9 (Nine) employees in the SC category 16 (Sixteen) employeesin the OBC category 2 (Two) women employees and 1 (One) employee in the Minoritiescategory were recruited. The actual number of employees belonging to special categoriesGroup-wise as on 31st March 2016 is given below:-
[*] On and from 08th September 1993 onwards
Implementation of the Persons with Disabilities [Equal Opportunities Protection ofRight and Full Participation] Act 1995
In compliance with the above Act the Company has identified positions for recruitmentof persons with disabilities. A special drive to this effect was initiated
in the month of December 2015 and out of 6 (Six) candidates selected 5 (Five)candidates have already joined.
Your Company has pursued an open and transparent policy of consultation with thecollectives. Employee Relations continued to be cordial at all units / locations of theCompany and there was no instance of any industrial unrest at any of the locations. TheCompany continued its efforts to maintain industrial harmony in all its units and therewas no loss of mandays due to any industrial action at any of the units / establishmentsof the Company.
During the year the Company closed down its SBU: IP Sewree Unit for commercialconsiderations giving Voluntary Retirement to 102 workmen and executives. This was done inthe most cordial atmosphere and was a swift closure.
Implementation of Official Language
To ensure implementation of Rajbhasha policy of the Government of India your Companyhas taken several steps to promote usage of Hindi in official work. Various activitieslike workshops meetings etc. were organized during the year and the Rajbhasha Pakhwadawas celebrated at all locations of the Company with enthusiasm.
The Company provides a very conducive ambience for employment of women. The percentageof women employees is on the rise with new recruitments. The present strength of womenemployees is 7.37% despite the fact that a large chunk of our workforce constitutes ofshop floor workers. The Company has created an atmosphere conducive for women employees tojoin and build a career in this organization.
We would like to assure you that your Company
maintains the highest standard as regards addressing gender equity in the organizationand they are offered equal opportunities of learning and growth. We also comply withguidelines/ statutes as applicable in these matters.
Internal Complaints Committee
Your Company has constituted Internal Complaints Committee in all four regions of theCountry under the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. One case of alleged sexual harassment was reported during the year2015-16 and the same has been disposed off.
Corporate Social Responsibility (CSR)
Detailed information on Corporate Social Responsibility Policy developed andimplemented by the Company on CSR initiatives taken during the year pursuant to section135 of the Companies Act 2013 is given in the Annual Report on CSR activities.
Annual Report on Corporate Social Responsibility (CSR)
1. Brief outline of the Company's CSR policy
Your Company has a well laid out CSR Policy in compliance with Section 135 of theCompanies Act 2013 read with allied rules and Schedule VII of the Companies Act 2013.The detailed policy is discussed hereunder:
"We are committed to serve the community by empowering it to achieve itsaspirations and improving its overall quality of life."
To undertake CSR activities in chosen areas through partnerships particularly for thecommunities around us and weaker sections of the society by supporting need basedinitiatives.
Improve the health and nutrition status of communities particularly vulnerablegroups such as women children and elderly by improving health infrastructure andfacilitating service provision.
Focus on quality of education and encourage children from marginalized sectionsand girls to complete school education and opt for higher education.
To focus on livelihoods and skill development in order to provide opportunitiesto women and youth and make them self-reliant.
Initiate holistic development programs for differently abled children andorphans with a view to provide them opportunities to lead a meaningful life.
To support the national efforts in rehabilitation and relief post unfortunatenatural disasters.
Balmer Lawrie is committed to continuously improve efforts towards socialresponsibility focus on marginalized sections and encourage employees to contribute inCSR activities. Towards this commitment the company shall be guided by the followingguiding principles.
1. Affirmative action to provide opportunities to marginalized communities
2. Efforts towards gender inclusiveness
3. Encourage community participation and ownership in order to ensure sustainability ofCSR activities.
4. Encourage voluntary participation of employees.
5. Enhancing visibility of our CSR so that others can benefit from our learnings.
6. CSR activities would be based on partnerships.
7. Wherever possible we will align our activities with the business objectives.
8. Capacity building for the weaker sections of the society.
In Balmer Lawrie Corporate Social Responsibility is practiced in various forms such ascorporate conscience responsible business sustainable practices and corporate socialperformance. The aim is to meaningfully engage with stakeholders for socio-economicwelfare and to provide development assistance preferably to those communities and theirhabitat which are directly or indirectly affected by our business activities. In pursuanceof this belief the Company is committed to conducting its business in a sociallyresponsible manner and be responsive to the needs of the society at large. Accordinglythe Company has been pursuing various CSR initiatives since the last decade or so.
Balmer Lawries CSR initiatives are driven by two Flagship Programs - BalmerLawrie Initiative for Self-Sustenance [BLISS] and Samaj Mein Balmer Lawrie [SAMBAL]. Whilethe first Program is directed at providing & improving the long term economicsustenance of the underprivileged the second Program aims at improving the livingstandards and quality of life of population in and around the Companys work-centers.
In advent of the various flagship programmes launched by the government we as anorganisation take pride in furthering the initiatives which comes under the purview of CSRby engaging specialized agencies whilst taking into account DPE guidelines on CSR theCompanies Act 2013 on CSR and Schedule VII of the Companies Act 2013. The Company hasconstantly endeavored to integrate the interest of the business with that of thecommunities with which it operates and ensures that CSR is embedded across variousbusiness units and their operations.
In pursuance of these Programs the Company has
undertaken several community development projects for the year focusing on SwachhBharat Abhiyaan Sanitation Education health Adoption of Tribal schools Funding ofSkill Development Institute Adoption of village and installation of Solar plant bypartnering with various NGOs/Specialized agencies with a focus on thematic areas as statedin our CSR policy and target groups like children women youth elderly and differentlyabled people and in line with Schedule VII of the Companies Act 2013.
2. The Composition of the CSR Committee.
As on 31st March 2016 the CSR committee
consisted of the following members:
Ms. Manjusha Bhatnagar Director (HR & CA)- Chairperson
Shri Shyam Sundar Khuntia Director (Finance)- Member
Shri Alok Chandra Government Nominee Director- Member
3. Average net profit of the company for last three Financial years
4. Prescribed CSR Expenditure (two per cent. of the amount as in item 3 above)
5. Details of CSR spent during the financial year.
(a) Total amount to be spent for the financial year: Rs.394 Lakhs
(b) Amount unspent if any: NIL
(c) Manner in which the amount spent during the financial year 2015-16 is detailedbelow.
CSR Expenditure 2015-2016
6. In case the company has failed to spend the two per cent of the average net profitof the last three financial years or any part thereof the company shall provide thereasons for not spending the amount in its Board Report: NA
7. Responsibility statement of the CSR Committee
"We the members of the CSR Committee hereby certify that the implementation andmonitoring of CSR policy is in compliance with CSR objectives and policy of the Companyas well as the Companies Act 2013 DPE Guidelines and other applicable provisions."