Balmer Lawrie Investments ltd has lot to catch up.

Balmer Lawrie Ltd has Market capitalisation of 1640 crores as closing date 20- Jul-2014 with CMP of 578 with Face value of 10.

Balmer lawrie Investment Ltd has Market Capitalisation of 557 crore as on closing date of 20- Jul 2104 with CMP of 250 with Face value of 10.

Balmer Lawrie Investment ltd like any holding company trades at discount but offlate the discount is quite steep and represents opportunity to be considered in one's long term portfolio.

Balmer Lawrie Investment represents a good Investment opportunity for conservative Investor.

I see this as Corporate Bond which not only increases the Book value every year but also increases the Dividend payout since last 5 years.

It has soon great consistency in last 5 years & it's major verticals are directly pegged to Country's GDP.

Balmer Lawrie Investment Ratios for last 9 years.

Balmer Lawrie Investments Ltd has been solely formed with the intention of divesting its holdings in Balmer Lawrie Company Ltd.

Although i'm interested in writing about Balmer Lawrie Investment we need to first understand bit of Balmer Lawrie Company ltd's History which is as follows.

Company was started by 2 Scotsmen Stephen George Balmer & Alexander lawrie as Tea trading, Tea Blending, Shipping & Forwarding business

In Year 1937, it had setup it's first grease plant at Kolkatta.

In 1969, Balmer Lawrie lost the managing rights over 40 Tea gardens as the Managing Agency was abolished.

In 1972, Management divested their stake to Indo-Burma Petroleum Company.

Due to Nationalisation of Oil Companies in India, Company which was subsidary of IBP was transferred to Indian Oil in 2002. Balmer Lawrie Stake was transferred to Balmer Lawrie Investment Ltd .

Balmer Lawrie Investments Ltd has been solely formed with the intention of divesting its holdings in BLCL.

CSR activities under taken by Balmer Lawrie.

http://www.csr.tiss.edu/research/BalmerLawrieEvaluationreport201213.pdf

Short summary of all the JV's & subsidaries headed by Balmer Lawrie & Co. Ltd.

Balmer Lawrie (UK) Ltd. 100%

Balmer Lawrie (UAE) Llc. 49%

Balmer Lawrie - Van Leer Ltd. 48%

Transafe Services Ltd. 50%

Avi Oil India Private Ltd. 25%

Balmer Lawrie Hind Terminal Pvt. Ltd. 50%

Balmer Lawrie – Transafe Services ltd  history:

In FY10, BLVL had acquired a 50% stake in Transafe Services Limited (TSL) for a consideration of Rs.

18.18 crore. With TSL filing for CDR, this investment is likely to be written off."

Balmer Lawrie - Van Leer limited history:

BLVL is a joint venture between Balmer Lawrie & Company Limited and Greif Inc, manufacturing steel drum closures and plastic drum/containers. The company was incorporated on 12th February 1960 and was originally known as Indian Flange & Manufacturing Company Pvt. Ltd.

In 1993 the name was changed to Balmer Lawrie - Van Leer Limited (BNVL), Balmer Lawrie and Royal Packaging Industries Van Leer NV emerged as major shareholders.

The company went in for a public issue on 26th April 1994.

In 2007, the company decided to de-list from the stock exchange and the shares were bought back by the parent company Greif International  Holding (previously Royal Packaging Industries Van Leer NV).

Key Points of Balmer Lawrie Travel:

In Feb 2014- Balmer lawrie acquired vacation exocita for 20 crores.

Vacation exotica has started it's operation in 2007 & had staff strength of 110 members at time of acquisition.

Vacation exotica gives Balmer Lawrie access to 41 000 - Indian client base & tap network of 100 plus preferred overseas partners. This acquisition complements the nationwide Tour & travel offices setup b  Balmer & withstand the competition from Online portals.

Vacations Exotica average sales growth of 25 per cent for 3years and its tours and travel business has revenues of around Rs 120 crore in year 2013.

Vacation Exoctic earns 40% of it's revenue from Ticketing which can be a very good compliment to Balmer Lawrie's existing infrastructure on Tours & Travels.

Vacation Exoctica has rating of 3.7 in Justdial & Glassdoor3.

Indian Govt employees roughly 19 million people (3.4 Central Govt, 7.2 State Govt, 6.4 Quasi Govt 9 (Reference: https://kgovindan.wordpress.com/2009/08/)

Online Portal http://balmerlawrietravel.com.

Online Portal http://www.vacationsexotica.com.

Tours and Travel segment of Business breakup:

Balmer Lawrie has done sales of 1161 cr (after exclusion of Inter segment revenue) in FY 2014 & PBT of 24cr for FY14.

Balmer Lawrie has done sales of 1120 cr (after exclusion of Inter segment revenue) in FY 2014 & PBT of 32cr for FY13.

YoY Sales growth rate has been 4% . Capex is 122 crores in FY14, generating ROCE of 14% for the company.

Key Points of Balmer Lawrie Lubricants

Balmer Lawrie sells grease under the Brand name Balmerol.

It has 3% of the Market share & underwent some re-branding exercise in the year 2012.

It has 4 blending plants in Kolkatta, Chennai , Mumbai (Sewri) & Silvassa.

Govt of India can consolidate all lubricant business under one roof and compete with MNC's such as Shell & Castrol.

Servo is brand from HPCL, Tide Water Oil ltd sells under Bran Vedol is another company from PSU sector competing with each other.

Balmer Lawrie sells grease mainly to Industrial sectors such as Steel, Mining , Railway , Automobile & Defence which accounts for 70% of it's Lubricant Sales.

Company added 20000 tpa in it's Silvassa plant in Year 2013 at cost of 35crores.

Company's Sewri (Mumbai) plant of   6000 tpa will be shut down due to Environmental issues.

G&L operates mainly in two wings - Automotive grades, which constitute about 60% of the market and Industrial & Marine Grades, which represent the balance

Balmer Lawrie has only captured 2% of market share in Lubricant & 24% in Grease segment.

Balmer lawrie lacks the marketing skills and Distributor network has to be improvised.

Reference:

http://www.slideshare.net/saturnchallenger/balmer-lawrie-lubricants-and-greases-distributorship-review?qid=9ea89b4a-8a23-4497-aed2-8a00dbdab840&v=default&b=&from_search=2

The Lubricant industry in India has been pegged around Rs. 15,000 crore annually with consumption estimated at around 1.50 million tonnes in 2012-13. (Balmer's Lawrie's management Insights for 2012-2013)

 Financials of Balmer Lawrie Ltd by Segment for year 2013 & 2014

Net profit TO Market Cap: 9.53% 

TAX %: 26.85% 

Operating Cash flow for Year 2013:  Rs 70.59 

DEBT PER SHARE:  Rs 79.82 

Net Current Asset PER SHARE: Rs  259.63 

Net Block PER SHARE: Rs 201.57 

Working Captial PER SHARE:  Rs 259.63

SALES PERSHARE:  1347.45 

CONTINGENT LIABILITY PERSHARE:  92.11 

CMPTODEBTPERSHARE: 7.25 

CMPTOCONTILIABPERSHARE: 6.28 

CMPTONETBLOCKPERSHARE: 2.87 

CMPTONCAPERSHARE: 2.23 

CMPTOWCAPPERSHARE: 2.23 

Working Capital Days: 20.52 

Net profit:  166.07Cr. 

EVEBITDA: 4.89 

Altman Z Score: 4 plus

5 Year Growth rate in Business is what I observe for Industrial companies.

Key Risk for Investments in Balmer Lawrie Investment:

Upward revision in Dividend Distribution Tax.

Any Reduction in dividend payments by the subsidiary will impact the Price of the Company.

Dividends paid by a domestic company are subject to the dividend distribution tax (DDT) at an effective rate of 16.995%.

Comparision of Valution for peers in the Industry

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Conclusion:

I don't want to leave a Target Price or BUY recommendation.

One has to read and decide what he intends to do with this beautiful company.