Once a British company, 150-year-old Balmer Lawrie & Co, now a diversified public sector unit, is recalibrating its logistics business. This most profitable strategic business unit of the company had undergone a restructuring early this fiscal through a synergistic combination of its container freight station business with the existing freight forwarding services. It has also rolled out a cold-chain plan. Prabal Basu, Chairman and Managing Director of the ₹2,740-crore company, told BusinessLine that the current initiatives would re-determine value and importance of the logistics vertical of Balmer Lawrie and set a new roadmap.
Is the logistics vertical gaining importance within Balmer Lawrie?
It is now the most profitable business of the company. In terms of revenue, travel and vacations vertical, however, occupies the top slot among all our verticals. But from 2016-17, the scenario would change. Following the Indian Accounting Standards from the next fiscal would mean that only the commission income of the ticketing segment — the largest contributor to the travel and vacations vertical — would be taken into account. This treatment would significantly reduce the revenue figure of the vertical, which so far acknowledged the total value of tickets sold as revenue.
We have initiated a plan to set up a cold-chain infrastructure in the country, in phases. In the first phase, three such temperature-controlled warehouses are being set up in Hyderabad, Delhi and Mumbai, in the next one year. The Hyderabad unit would be ready next month and it would be fully operational in six months. We have begun marketing space for it.
In the second phase, the company will explore possibilities of setting up such a facility in the Eastern region based on a detailed feasibility study, which is to be carried out shortly.
The idea is to gradually build up a cold-chain infrastructure across the country. Going forward, we may have a separate vertical for cold-chain logistics. In the next couple of years, we are likely to cater to both domestic as well export markets for cold-chain services, including cargo movement.
Are you planning new container freight stations?
Yes, we are in the process of forming up a blueprint for our fourth CFS. The plan should be ready in the second quarter of 2016-17. We have initiated moves to select the location of the proposed CFS of 36,000 tonnes-a-year handling capacity in the eastern coast.
Are you looking for any other logistics business opportunity?
We are looking at the emerging business opportunity at Paradeep. As of now, Paradeep port does not have a container terminal. However, in the near future, maybe after four-five years, container freight business would start flowing, when a number of downstream units would dot the petrochemical complex. We are closely evaluating the emerging business prospects in and around Paradeep port.
The Union Ministry of Shipping has recently phased out its ship charting activity. As a PSU in the specialised logistics business, what does it means for Balmer Lawrie’s future business prospect?
It opens up a completely new world of opportunities. We have already got some new ocean freight forwarding business from public entities. We have also made presentations to several PSUs.
The government and the PSUs’ requirements for shipping arrangements are so huge that with our current capabilities we can probably manage only a fraction of it now. We expect that a share of chartering business would flow to us steadily. We have begun to pitch in. In 2016-17, we expect to log in significant additional business revenue. Along the time, we would ramp up our capability to handle more such business.
When will the proposed Balmer Lawrie-operated logistics park at Vizag port be commissioned?
It is expected to be commissioned by June 30, 2017. The project is delayed by a year now because of certain unexpected hurdles in formal transfer of the land meant for the park, by Vizag Port Trust, our 40 per cent joint venture partner. Inability of Andhra Pradesh Power Transmission Corporation to relocate three existing power transmission towers on the 53-acre land came in the way.