Balmer Lawrie & Company Limited, a Mini Ratna public sector enterprise, has been quietly growing across its diverse businesses in the manufacturing and service sectors. It has recently unveiled its plan to foray into ethanol manufacturing.
The proposed new ethanol plant will be situated in Naidupeta, Andhra Pradesh, with a capacity to produce 200 KL per day. The land will be acquired from Andhra Pradesh Industrial Infrastructure Corporation Ltd (APIIC). This greenfield project entails an investment of Rs330 crore, approved by the company’s board, and is expected to be operational within the next 3 years.
Balmer Lawrie has historically struggled to align its products and services with its parent ministry, the Ministry of Petroleum and Natural Gas. “We have consciously decided to enter ethanol manufacturing, which is in line with our ministry,” explains Adhip Nath Palchaudhuri, Chairman & Managing Director. He also indicated the possibility of setting up a compressed biogas unit in West Bengal in the future. Palchaudhuri took over as Chairman and Managing Director in July 2024.
Balmer Lawrie will produce ethanol from broken rice and maize. The region has sufficient feedstock supply for production. The second key factor is the availability of sufficient water, and thirdly, a ready market for the by-product, dried distillers’ grains (DDGs). DDGs are typically used as a protein-rich feed for the poultry and fisheries industries. “We have all three elements necessary to set up the plant in Andhra,” says Palchaudhuri.
Ethanol is now a key element in sustainability and green energy. The government has set a target of achieving 20 per cent ethanol blending in petrol by 2025. Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, says: “We will achieve the target.”
The company will sign an MoU with oil companies such as Chennai Petroleum Corporation and Indian Oil Corporation to supply ethanol. “As a government company, selling ethanol is not an issue, and we expect to generate revenue of Rs425 to Rs450 crore once the plant is commissioned,” says Raja Mani Uthayaraja, Director of Manufacturing.
Balmer Lawrie was established in 1867 by two Scotsmen, Stephen George Balmer and Alexander Lawrie, for tea trading, tea blending, shipping, and forwarding. The company’s four-storey office building, which remains its headquarters today, was built in 1909. In 1924, the partnership was converted into a private limited company, and in 1936, it became a public limited company. Balmer Lawrie ventured into manufacturing in 1937, setting up its first grease plant in Kolkata. In 1968, Duncan Brothers acquired the company. However, in 1969, when the managing agency system was abolished in India, Balmer Lawrie lost its managing rights over 40 tea gardens.
No synergy
In 1972, the management divested its stake in favour of Indo-Burma Petroleum Company Ltd (IBP), making Balmer Lawrie a subsidiary of IBP. Following the nationalisation of oil companies, IBP merged with Indian Oil in 2002. However, Indian Oil did not take over Balmer Lawrie’s businesses as they had no synergy with its own operations. As a result, the Government of India created a shell company called Balmer Lawrie Investment Limited (BLIL). The shares of Balmer Lawrie held by IBP were transferred to BLIL, which currently holds 62 per cent, while the public holds 35 per cent, with the remainder held by banks and FIIs.
In 2013, the management bid an emotional farewell to its century-old tea business. The tea division had a small blending unit with two brands, Tarang and Balmer Lawrie, neither of which had significant market presence or commercial viability.
Operating out of its heritage office building in Kolkata’s BBD Bagh, Balmer Lawrie continues to run a diverse portfolio of businesses while maintaining a healthy balance sheet. “The company has never incurred losses in its 157-year history,” claims Saurav Dutta, Director of Finance.
Currently, Balmer Lawrie has a presence in industrial packaging, greases & lubricants, chemicals, logistics, travel & vacations, and refinery & oilfield services. The company’s revenue has grown from Rs1,612 crore in FY20 to Rs2,404 crore in FY24. Its current share price is hovering around Rs192 per share on the NSE, with a market capitalisation of Rs3,280 crore. “Our USP is to work closely with customers’ needs while offering consistent quality and service,” says Palchaudhuri. The company is exploring new business opportunities while strengthening its existing operations. It has also engaged a consultant to prepare a comprehensive growth plan, aiming to reach Rs6,000 crore in revenue by 2030.
Balmer Lawrie is the market leader in industrial packaging (steel drums), holding a formidable 40 per cent market share, producing 4.5 million drums annually. Its closest competitor in the segment lags significantly behind. This Strategic Business Unit (SBU) operates through six manufacturing plants across India, including Taloja, Silvassa, Vadodara, Asaoti, Chennai, and Chittoor.
“Industrial packaging contributes one-third of our revenue, exceeding Rs800 crore in the last financial year. Around 80 per cent of the packaging business comes from chemicals and lubricants, while the rest comes from food, fruit pulp, agrochemicals, etc,” says Palchaudhuri. Balmer Lawrie manufactures high-quality products, including Open-Head, Tight-Head, Plain, Lacquered, Composite, Galvanised, Tall, Necked-In, and Conical Drums, catering to a diverse range of industries.
The state-of-the-art plant in Taloja is fully automated and runs on piped natural gas (PNG). The unit features a high-speed manufacturing line capable of producing close to 5,000 steel drums per shift. It adheres to stringent safety standards and is designed to operate with minimal human intervention – workers are rarely seen on the shop floor. Barrels undergo comprehensive testing using a helium leak detector to inspect the entire surface area. Loading for dispatch is automated via a telescopic conveyor. This zero-discharge facility is equipped with a modern dry-filter paint booth, ensuring no liquid discharge and preventing water, air, or soil contamination.
The Taloja unit caters to segments like lube oil, transformer oil, chemicals, food, flavours and fragrances. Shell, Castrol, Apar, Amul, Jain Irrigation, BASF and Henkel are the key customers. The unit also exports its drums to Sri Lanka.
But things were not always smooth for the company’s IP business. In 2013, the government notified that all steel barrel procurements had to be from the MSME sector only, putting large steel barrel manufacturers like Balmer Lawrie at a disadvantage. “We utilised this as a call to action as the market eroded. We worked harder and made a massive effort to uplift our manufacturing and marketing to gain more share in private sectors. The demand of the private sector is more stringent and specialised. Balmer Lawrie has sustained its position with technology upgrades and superior customer service. So, the MSME rule was a blessing in disguise for the company,” recalls Palchaudhuri.
To increase its product basket in the IP business, Balmer Lawrie is planning to manufacture IBC (Intermediate Bulk Container). “It is our endeavour to look for new opportunities with technological advancements. IBC is a square type of plastic container, which is equivalent to five drums and can hold 1,000 kg. Apart from this, we are also exploring manufacturing steel conical drums, which save space while stacking,” explains Uthayaraja. The company is also eyeing the growing demand for barrels from the paint industry.
The grease and lubricants (G&L) business contributes Rs573 crore to Balmer Lawrie’s revenue. It has three manufacturing plants in Kolkata, Silvassa and Chennai, along with a state-of-the-art Applications Research Laboratory that has been continuously working to develop environmentally friendly tribological solutions. The brand Balmerol has a strong image for its greases owing to its long-standing presence in core sectors like steel, railways, defence, automobiles and mining. “In grease, we are the market leader with 17 per cent,” claims Uthayaraja.
Stiff competition
In lubricants, approximately 65 per cent of the market share goes to the automotive segment. The lube market in India is estimated to grow at a CAGR of around 5 per cent. The Balmerol brand of lubricant currently has an insignificant market share. With global players and local manufacturers putting up aggressive strategies to increase their market share, competition in the market is intense. India’s lubricants market size is expected to reach 3.15 billion litres by 2026.
Balmer Lawrie intends to sharply enhance its presence in the automotive sector by expanding its product basket, increasing its distribution network and judiciously enhancing its marketing and branding presence. It also intends to increase visibility by participating in events, seminars and exhibitions, and by engaging comprehensively with retailers.
The company’s leather chemicals business is small and not part of a large product basket. There is also a lot of pressure from MSMEs on cost structure. The same applies to the refinery and oil field services, which may not figure in the company’s comprehensive growth plan for Vision 2030. “One thing is for sure—we will probably not be in the refinery and oilfield services business for long,” Palchaudhuri indicates.
An ICRA report on Balmer Lawrie stated: ‘Diversified operations and established position across business segments cushion against downturns in a particular segment.’
In logistics, Balmer Lawrie is an end-to-end logistics services provider backed by state-of-the-art infrastructure comprising Container Freight Stations, Cold Chain Units, Temperature-Controlled Vehicles and Warehouses. The company has three state-of-the-art Container Freight Stations (CFSs) in Kolkata, Mumbai and Chennai. The CFSs are fully equipped for the secure handling and timely delivery of cargo, whether it is over-dimensional, perishable, temperature-sensitive or standard cargo.
Mumbai is the largest CFS for Balmer Lawrie, spread across 26 acres. Located at Nhava Sheva, 10 km from JN Port, it can handle 7,000 TEUs plus an additional 1,000 TEUs. Among CFSs, Mumbai is the highest revenue earner for the company, followed by Chennai and Kolkata. “We generate almost 50 per cent of the company’s total revenue from Mumbai,” says RS Louis, executive director of logistics infrastructure and cold chain. The company is also in the process of setting up an FTWZ (Free Trade Warehousing Zone) project in Nhava Sheva, which would provide an opportunity to offer warehousing services for handling and storing EXIM cargo for customers.
The Indian logistics market, valued at $107.16 billion in FY23, is projected to grow significantly, reaching $159.54 billion by FY28, with a compounded annual growth rate of 8-9 per cent, according to recent statistics.
“The cost of warehousing in India is almost one-tenth that of the developed countries like Singapore, Germany, the UK or the US. Manufacturers are increasingly producing goods, shipping them and storing them in places like India before re-exporting them,” Palchaudhuri explains.
The cold chain market is expected to grow at over 15 per cent per annum on a sustained basis over the next 4 years. The major products include fruit and vegetables, meat and fish, dairy products, and healthcare products. The company operates four cold chains in Hyderabad, Rai (Haryana), Patalganga (Maharashtra) and Bhubaneswar (Odisha).
Visakhapatnam Port Logistics Park Limited (VPLPL), the 60:40 joint venture (JV) between Balmer Lawrie and Visakhapatnam Port Trust (VPT), was formed in 2014 and finally commissioned in 2024 after a prolonged delay of several years.
The holistic integrated logistics park comprises a CFS, a domestic-cum-custom bonded warehouse, a temperature-controlled warehouse, an open yard for storing domestic containers, and facilities for railway and export movement, spread across a 53-acre plot. The port authority has contributed land worth Rs53 crore, valued at Rs1 crore per acre, whereas Balmer Lawrie has invested Rs81 crore and taken a loan of Rs85 crore from SBI, bringing the total project cost to Rs220 crore. The project faced delays due to licensing issues, which caused significant financial stress. “We will refinance the loan with very low principal repayment in the first few years. It needs that much time to gain momentum. We are optimistic it will perform well in the coming years,” says Palchaudhuri.
The objective of building and operating this Multi-Modal Logistics Hub is to provide end-to-end logistics solutions. The construction of MMLH was completed by March 2019, and the Container Freight Station commenced operations within the Hub only in April this year. The MMLH has the capability to accommodate and handle both Exim and domestic cargo. The Exim area includes CFS, warehousing, cold storage/temperature-controlled warehouses, open cargo storage, hazardous and non-hazardous cargo handling, and truck parking.
Leveraging this tailwind and supplementing it with superior customer service and an aggressive sales strategy, the Travel & Vacations business achieved record turnover, profit, and ticket sales in FY23-24. The company reported a PBT of Rs52.75 crore on revenue of Rs212.73 crore in Travel & Vacations. However, its heavy dependence on government and PSU customers, which account for over 90 per cent of its business, remains a major concern.
Balmer Lawrie has 860 regular employees across its diverse business portfolios. The company’s HR policy focuses on employee development, career progression based on performance, a strong emphasis on values and ethics, and a commitment to providing opportunities for learning and growth within the organisation.
“We have a robust appraisal mechanism that is linked to promotions and career elevation. At the same time, it is also tied to performance-based compensation,” says Abhijit Ghosh, Director of HR & Corporate Affairs.
The Umnesha mentoring programme offers career development opportunities and supports both mentors and mentees in their personal and professional growth. By pairing experienced employees as mentors for junior employees at various stages of their careers, the programme helps them enhance their skills, explore career opportunities within the organisation, and build stronger relationships with senior colleagues, which can lead to sponsorship opportunities.
Balmer Lawrie reported consolidated annual revenue of Rs2,404.17 crore in March 2024, compared to Rs2,383.09 crore in March 2023. Profit after tax rose to Rs203.47 crore in 2024 from Rs153.86 crore in March 2023. For Q2 2024-25, the company achieved revenue of Rs648.66 crore with a net profit of Rs49.68 crore, compared to Rs643.62 crore and Rs46.79 crore, respectively, in the corresponding previous period.
Balmer Lawrie generates revenue primarily from manufacturing, while its services SBUs strengthen the bottom line. “We are a debt-free company. Our shareholders are very loyal, holding shares across generations. They are happy with the dividends. However, the company has never created excitement in the stock market, as its shares are thinly traded,” Dutta explains. He adds that logistics should be a key driver in achieving the target of Rs6,000 crore by 2030.
‘BLL’s liquidity position is strong, with healthy cash flow from operations, large free cash and bank balances of approximately Rs450 crore as of 31 March 2024, no debt repayment obligations, and adequate buffer in the form of unutilised working capital limits (100 per cent fund-based limits). While the company has planned project capex of Rs339 crore and Rs230 crore for the next 2-3years, this is expected to be funded through a mix of
debt and internal accruals,’ states an ICRA report.
Balmer Lawrie’s carefully crafted business diversification has been key to its success. It will be interesting to see how the company efficiently seeks new avenues with a top-down focus and takes its business to the next level.