Balmer Lawrie To Finalise Deal With Il & Fs For Recast

Balmer Lawrie & Co Ltd is set to appoint Infrastructure Leasing & Financial Services Ltd (IL&FS) as the operating agency for the company's equity and business restructuring. The company's board will meet on October 30 to take a formal decision on the issue.

In an interview with Business Standard, C V Chandrasekharan, managing director, Balmer Lawrie, said: "We would like to reduce our exposure in some joint ventures." The areas where exposure would be scaled down include container manufacturing, tea exports and international trading. "Ideally, the stake in each of the joint ventures would be scaled down to a minimum of 26 per cent. This also implies that Balmer Lawrie would not be making any investments in these joint ventures for at least the next two years," he said.

The restructuring would result in a complete overhaul of the seven joint venture companies in which Balmer Lawrie has significant stakes. Chandrasekharan, however, said that there were no plans to get out of these businesses completely. The objective of the restructuring exercise is to reduce exposure in low growth areas and focus on core competencies, he explained.

The company's marine freight container manufacturing business has been hit hard, primarily because of continued dumping of low cost containers from China. While the container freight station and leasing operations have been making profits, the container manufacturing division itself has slipped into losses as a result of stagnating demand. Balmer Lawrie has a freight container manufacturing capacity of 25,000 containers per annum and operates two factories. Tea exports have also fallen as a result of the crash in the Russian markets. While the company is trying to acquire five gardens in Darjeeling and Dooars, tea exports and trading operations would now cease to be a priority for the company. While tea and container manufacture are on the list of low priorities, the company would be stepping up efforts to expand its presence in the petroleum and services sector.

Services, which includes travel, cargo and tourism, at present constitutes 35 per cent of the total turnover. This would be expanded significantly in the coming years. Petroleum-related activities would remain the company's core competency area, and extensive investments have been planned in this sector to facilitate further growth. In the first half of the current fiscal, the company has witnessed a five per cent growth in turnover but profits have remained under pressure.