(MUMBAI, India) – Indias Disinvestment Ministry has short-listed prospective bidders and announced that the privatization of Balmer Lawrie and Co. will be completed by January.
Expressions of interest from 17 companies are in. Though no names have been made public yet, reliable sources indicate that none of the public sector or multinational oil companies figure in this list. The prime reason for this surprising phenomenon may be the governments decision to privatize the diverse businesses of this small but professionally managed profit-making concern en block.
Balmer Lawrie, a name synonymous with grease in India, has come a long way since founders Alexander Lawrie and Stephen Balmer established their small partnership in Calcutta in 1867. The company is the grand old pioneer of grease making in the country; a barrel a day of cup grease was first made in a lean-to shed in Howrah in 1937.
Today it has a presence in fields as varied as lubricants and greases, industrial packaging, performance chemicals, travel tours and cargo, containerization, project engineering and consultancy, and tea blending and exports. As the due diligence process and site inspections get under way there is considerable fear in industry circles that the new owner may indulge in asset stripping; it is difficult to conceive of a corporation motivated enough to manage such an astonishing range.
The new owner will doubtless acquire a valuable asset. With a turnover of Rupees 7.7 billion (U.S. $158.7 million) for the fiscal year ended March 2002 excluding its joint ventures, Balmer Lawrie posted net profit after tax of Rs. 80 million (U.S. $1.65 million), an improvement of 33 percent from the previous year. First quarter results this year are even more encouraging at Rs. 35 million.
General Manager V.N. Sharma feels any new owner would be at a distinct advantage. The various businesses of Balmer Lawrie, he says, are leaders in their own niche areas and have long functioned in a competitive environment so privatization will not cause any major upheaval.
Total lubes and greases production last year was around 35,000 metric tons, of which 12,000 constituted greases, a 6 percent growth over the previous year, claiming 20 percent of Indias stagnant 60,000-ton market.
Balmer Lawrie has five plants at Mumbai, Kolkata, Taloja, Silvassa and Chennai, with a combined capacity of 80,000 metric tons per annum for greases. Though the capacity is severely underutilized, the company is a respected contract processorfor public sector undertakings like Hindustan Petroleum and Bharat Petroleum (both of which are slated for privatization soon), Bharat Shell and Valvoline. It also manufactures nearly 100 high-performance products under its brand name Balmerol, which has a small presence in the bazaar or direct sales network of lube outlets and mechanic workshops.
Balmer Lawrie graduated from a partnership firm to a public limited company and eventually became a subsidiary of the public sector Indo Burma Petroleum Co. (IBP), under the Petroleum Ministry. In October 2001 it was hived off from the parent as part of the IBP sell-off.
IBP transferred its 61.8 percent stake to Balmer Lawrie Investment Ltd., a holding company that will soon divest its entire stake.