Balmer Lawrie and Company

The Directors have pleasure in presenting the 91st Report on the state
 of affairs of your Company for the financial year ended 31 March 2008,
 together with the audited Balance Sheet and Profit & Loss Account of
 the Company.
 
 Overall Financial Results
 
                                             Financial Results
                                               for the Company
                                           Year ended 31 March
 
                                             2008       2007
 
 Surplus for the year before                14521      12047
 Finance Charge, depreciation and tax
 
 Deduct therefrom :
 
 Finance Charge and depreciation             1478       1431
 
 Provision for Taxation                      4350       3594
 
                                             8693       7022
 Add Transfer from :
 
 Profit & Loss Account                       6400       3450
 
 Add : Transfer from Lease 
 Equalisation Reserve                           -          -
 
 Total amount available 
 for Appropriation :                        15093      10472
 
 Appropriations :
 
 Proposed Dividend @ 
 Rs. 17.00 per equity share                  2769       2199
 (previous year Rs. 13.50 
 per equity share)
 
 Corporate Tax on Dividend                    471        373
 
 Transfer to General Reserve / 
 Minority interest etc.                      3000       1500
 
 Surplus carried forward to next year        8853       6400
 
 Total of Appropriations                    15093      10472
 
            (Rs. In lakh)
 Consolidated Financial
 Results
 Year ended 31 March
 
 2008               2007
 
 17993             15358
 
 3285               3242
 
 4726               3795
 
 9982               8321
 
 13849             10140
 
 -                     4
 
 23831             18465
 
 2844               2647
 
 491                 400
 
 3081               1569
 
 17415             13849
 
 23831             18465
 
 
 Overview
 
 In the year 2007-08 your Company achieved significant milestones in
 business and operations as evident from the following :
 
 - The Company recorded its highest ever Turnover with net sales
 crossing Rs. 1490 crore as against Rs. 1300 crore in 2006-07, marking
 an increase of 15%.
 
 - Profit Before Tax increased from Rs. 106 crore in 2006-07 to Rs. 130
 crore in 2007-08, an increase of 23% over the previous year.
 
 - Profit After Tax increased from Rs. 70.22 crore in the previous year
 to Rs. 86.93 crore in 2007-08, an increase of 24% over the previous
 year.
 
 - Segment-wise performance analysis and sales indicate that four
 segments viz., Travel & Tours, Industrial Packaging, Grease &
 Lubricants and Logistics Infrastructure & Services were the main
 revenue generators.
 
 Dividend
 
 A dividend of Rs. 17.00 per equity share of Rs. 10 each for the year
 ended 31 March 2008 as against Rs. 13.50 per equity share in the
 previous year, has been recommended by the Board of Directors for
 declaration by the Members at the ensuing
 
 Management Discussion and Analysis Report
 
 An analytical Report on the businesses of your Company is furnished
 along with this report under the heading Management Discussion and
 Analysis.
 
 Report on Subsidiary
 
 Balmer Lawrie (UK) Ltd.
 
 Balmer Lawrie (UK) Ltd [BLUK] is a 100% subsidiary of your Company.
 The principal business activities of BLUK were - Leasing & Hiring of
 Marine Freight Containers and Import, Warehousing, Blending & Packaging
 of Speciality Tea.
 
 Performance of the Marine Freight Containers activity has generally
 been in line with the performance of the previous year, both in terms
 of utilisation as well as lease rentals. The subsidiary is, however,
 faced with the issue of ageing and diminishing fleet size. The fleet of
 containers, since inception, is managed by TAL International Container
 Corporation of USA (TAL) through two Lease Management Agreements, both
 of which expired a few years back. TAL instead of renewing the
 agreements, had offered to buy the fleet of containers. An agreement in
 this regard has been reached in July 2008 and the entire fleet was
 transferred to them by BLUK on 31 July 2008.
 
 Tea activity had started the financial year 2007-08 with an upswing in
 volume and turnover, primarily on account of blending and packaging
 contract entered into with one of the larger tea packaging companies in
 the UK. The volume and turnover did result in marginal improvement of
 financial performance, but this trend was not expected to be sustained
 in the coming years. As such, the Board of Directors of BLUK took the
 decision to exit the tea business. SBICAP (UK) Ltd. was appointed in
 July 2007 for the purpose of hiving off the activity through a
 competitive bidding process. The bidding process had been
 satisfactorily completed and the Tea Factory along with all its assets
 had been sold to the highest bidder viz., Duncan Macneill & Co. Ltd. of
 the UK. The sale was completed on 7th December 2007.
 
 Exemption from attaching accounts of the Subsidiary
 
 The Ministry of Company Affairs, New Delhi, vide their approval no.
 47/411/2008-CL-III dated 25 June 2008 has exempted your Company from
 attaching the Annual Accounts of Balmer Lawrie (UK) Ltd, the wholly
 owned subsidiary of your Company for the year ended 31 March 2008 with
 its Annual Accounts for the same period. However, such accounts have
 been duly consolidated in terms of applicable Accounting Standards.
 
 Report on Joint Ventures
 
 AVI-OIL India (P) Ltd. (AVI-0IL)
 
 During the year 2007-08, AVI-OIL witnessed a considerable decline in
 its sales performance as compared to the previous year. This was mainly
 due to the low off-take by the Defence Services, particularly the
 Indian Air Force. Delays in renewal of the Rate Contract by Indian Air
 Force and in processing of orders for certain major grades were the
 contributing factors.
 
 In order to continue the process of approval of the products, offer new
 generation lubricants required for equipment/aircrafts proposed to be
 inducted by the Indian Defence Services and to diversify in the area of
 lubricants for industrial applications, AVI-OIL successfully negotiated
 with NYC0/NEDEN for extension of the Technical Collaboration Agreement,
 which is due to expire in December 2008. Accordingly, the contract has
 been extended by another five years i.e upto December 2013, without any
 additional Technical Know-how fees to be paid to the technology
 provider.
 
 Efforts have been intensified for creating market for products having
 Industrial applications. Thrust areas include synthetic lubricants for
 refrigeration compressors, fire resistant hydraulic fluids and the
 non-inflammable dielectric fluids.
 
 Balmer Lawrie-Van Leer Ltd. (BLVL)
 
 During 2007-08, BLVL achieved an increase in net sales and other income
 from Rs. 103.32 crore in the previous year to Rs. 113.15 crore
 representing an increase of 9% over the last year. In quantitative
 terms, the sales of the Closure Division grew by 11% and in the Plastic
 Division growth was double digit in two of the main product lines. In
 value terms, the domestic sales grew by 8% whereas exports were
 marginally lower by 5%. This was mainly because of appreciation of the
 Rupee vis-a-vis the US Dollar.
 
 The prices of steel and polymers, the main raw materials for Steel
 Closures and Plastic Divisions respectively, after little moderation in
 the first half, moved up sharply in the later part of the second half
 of the year, in tandem with the prices in the international market
 resulting in higher input costs which could not be passed on to the
 customers completely leading to pressure on margins.  Consequently,
 there was an adverse impact on the bottom-line with the Profit before
 Tax (PBT) being marginally lower at Rs. 503.56 lakh as against Rs.
 555.71 lakh in the last year.  Effective PBT was further reduced by Rs.
 316 lakh due to one- time charge associated with surrender of
 lease-hold right on a portion of land at Chembur leased to Balmer
 Lawrie & Co. Ltd.
 
 During the year, BLVL has entered into an agreement with HPCL for sale
 of its Chembur land and Factory Building appurtenant thereto as also
 with Balmer Lawrie & Co. Ltd., for purchase of lease right in respect
 of MIDC land at Turbhe. BLVL has envisaged shifting of its Closure
 Division from Chembur to a location at Turbhe which is adjacent to its
 Plastic Division and simultaneously expand the production capacity
 relating to steel drum closures from 18 million sets to 35 million sets
 per year. The process of shifting has started and full-fledged
 operation is expected to commence from the new location during the
 second quarter of 2008-09.
 
 BLVL is also expanding the capacity of Plastic Drums both at Turbhe and
 Chennai and the capacity-expansion is likely to be completed by the
 second quarter of 2008-09.
 
 Transafe Services Limited (TSL)
 
 TSL has re-structured its businesses into the following four Strategic
 Business Units (SBUs) for maximizing operational efficiency :
 
 (i) SBU-Indian Container Leasing : This SBU offers leasing operations
 in domestic and International sectors.
 
 (ii) SBU-Glacio Cold Chain Logistics : This SBU covers various areas
 like providing transportation through refrigerated containers, cold
 storage required for warehousing, controlled atmosphere storages for
 sensitive perishables, etc.
 
 (iii) SBU-Indo Trailer Logistics : This SBU offers logistics and
 transportation services throughout India in specially designed box
 trailers.
 
 (iv) SBU-Creative Containers: This SBU covers manufacturing of special
 containers like Bunk Houses, Kitchen Containers, Missile Carriers,
 Weapon Carriers, Lab Containers, etc.
 
 The turnover of TSL for the financial year ended 31 March 2008 at Rs.
 85.11 crore recorded an impressive growth of approximately 70% as
 against Rs.50.19 crore during the previous year. During the financial
 year ended 31 March 2008, TSL achieved Profit After Tax of Rs. 8.69
 crore, registering a growth of approximately 77% as against Rs. 4.92
 crore during the year ended 31 March 2007.  TSL is expected to maintain
 its momentum of profitable growth.
 
 In March 2008, TSL issued Bonus Shares in the ratio of 9:10, i.e.  9
 bonus equity shares were issued for every 10 existing equity shares
 held by its shareholders.
 
 Balmer Lawrie (UAE) LLC (BLUAE)
 
 BLUAE registered an all-time high turnover during the year 2007 despite
 adverse market conditions, intense competition and pricing pressures.
 However, customer resistance to price increase continued and the
 margins remained under constant pressure.
 
 The present prices of the main raw materials viz. CR steel, Tinplate
 and HDPE are at record high levels. It will be a challenge to BLUAE to
 pass on the impact of rising raw material cost to its customers. The
 economy in the Middle East is itself fraught with inflationary
 pressures and cost increases, which makes product pricing even more
 challenging.
 
 Nevertheless, BLUAE continues to retain its dominant position in the
 market with customer satisfaction and high business ethics being its
 guiding policies.
 
 Memorandum of Understanding (MoU)
 
 Your Company enters into an MoU with the Government of India, Ministry
 of Petroleum and Natural Gas every year detailing therein various
 targets on operational, financial and efficiency parameters besides
 matters like customer satisfaction, quality and human resource
 development. The targets fixed are evaluated at the year- end by
 Department of Public Enterprises, Government of India (DPE). It is
 indeed a matter of great pride to report that your Company has obtained
 the highest rating category viz. excellent for the financial year
 2006-07. Result of MoU signed for the financial year 2007-08 by the
 Company is yet to be announced by DPE.
 
 Human Resource Management
 
 Your Company has always recognized its human resource to be the prime
 mover of the organization. In this endeavour, utmost stress is given to
 upgrading the skills and competencies of the employees. Further, as
 part of its HR initiative towards organizational development, your
 Company has carried out an innovative Employee Satisfaction Survey and
 360 Degree Assessment of Managers during the year.
 
 Employee Relation
 
 Your Company closed down its manufacturing facility at Mathura with
 effect from 1 December 2007, consequent to cessation of its fabrication
 contracts with Indian Oil Corporation Limited. The Industrial relation
 in all the other units/locations of your Company remained cordial
 during the year.
 
 Implementation of The Persons with Disabilities (Equal Opportunities,
 Protection of Rights and Full Participation) Act, 1995
 
 In compliance with the provision of the Persons With Disabilities
 (Equal Opportunities, Protection of Rights and Full Participation) Act,
 1995, appropriate action has already been initiated by your Company for
 identifying posts for persons with disability and filling up the
 backlog vacancies in the identified areas.
 
 During the year 2007-08, as a part of its commitment to the cause of
 the physically challenged, your Company has contributed Rs.5.0 lakh to
 the Indian Institute of Cerebral Palsy, a non-government organization,
 working for the mentally challenged children at Kolkata.
 
 Implementation of Official language
 
 The Government directives with respect to implementation of official
 language policy are duly followed in your Company.
 
 Welfare of Weaker Sections
 
 Your Company has taken a policy decision to earmark upto 0.5% of the
 net profit towards various programmes aimed at helping the weaker
 sections of the society. To achieve this objective, your Company has
 initiated a number of community development programmes in collaboration
 with reputed Non-Governmental Organizations.
 
 Your Company has also taken steps to ensure that sufficient
 representation is provided in employment to persons belonging to
 SC/ST/OBC/Minority community etc. including women.
 
 Global Compact
 
 The Company is a founder member of the Global Compact Society.  Towards
 fulfillment of its commitment, the principles of Global Compact are
 followed. The Communication on Progress for the year under review has
 been hosted on the site of Global Compact Society as well as on the
 Companys website.
 
 Vigilance
 
 During the year under reference, Vigilance Department has consistently
 and proactively focused on prevention of corruption.  For this purpose,
 periodic and surprise inspections were conducted and valuable
 suggestions made on system improvements and transparency, which proved
 to be useful in simplification of procedures, enhancing accountability
 and easing implementation.  The Vigilance Officials of the Company kept
 in touch with all levels of officers regularly and apprised them about
 the CVC, M0P&NG, DPE directives/guidelines in the matter of purchases,
 contracts, disposals etc. The efforts exerted by the Vigilance
 Department have resulted in creation of a congenial atmosphere, which
 provides scope for better interaction amongst the Officers and the
 Vigilance Department. Vigilance Awareness Week was observed in November
 2007, where suppliers, customers, dealers etc. were briefed on the
 Grievance redressal procedure and the policy of transparency adopted by
 your Company.
 
 The Board of Directors reviews activities of the Vigilance Department
 twice a year and expressed its satisfaction on the performance of the
 Department headed by the Chief Vigilance Officer.
 
 Conservation of Energy, Technology Absorption and Foreign Exchange
 Earnings
 
 As required under Section 217 (1) (e) of the Companies Act, 1956, (the
 Act) read with Rule 2 of the Companies (Disclosure of Particulars in
 the Report of the Board of Directors) Rules, 1988, the information is
 annexed.
 
 Directors Responsibility Statement
 
 Pursuant to the requirement under Section 217 (2AA) of the Act, it is
 hereby confirmed :
 
 (i) That in the preparation of the accounts for the financial year
 ended 31 March 2008, the applicable accounting standards have been
 followed and there was no departure from such standards ;
 
 (ii) That the Directors have selected such accounting policies and
 applied them consistently and made judgment and estimates that were
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year on 31 March
 2008 and of the profit of the Company for the said financial year ;
 
 (iii) That the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act, for safeguarding the assets of the Company and
 for detecting and preventing fraud and other irregularities ;
 
 (iv) That the Directors have prepared the accounts for the financial
 year ended 31 March 2008 on a going concern basis.
 
 Consolidated Financial Statement
 
 The financial statements of your Company have been duly consolidated
 with its subsidiary and joint ventures in pursuance of Clause 32, 41 as
 well as 50 of the Listing Agreement with the Stock Exchanges. For the
 purpose of such consolidation, the Accounting Standards especially, AS
 21 and 27 have been adhered to.
 
 Report on Corporate Governance
 
 A detailed report on the Corporate Governance is also furnished with
 this Report as required under Clause 49 of the Listing Agreement with
 the Stock Exchanges along with the Auditors Certificate regarding
 Compliance of the conditions of Corporate Governance.
 
 Particulars of Employees
 
 During the financial year, the Company did not have any employee who
 received remuneration of Rs. 2,00,000 or more per month or Rs.
 24,00,000 per annum. Therefore, the disclosure under Section 217(2A) of
 the Companies Act, 1956 read with the Companies (Particulars of
 Employees) Rules, 1975 has not been made.
 
 Comments of Comptroller & Auditor General of India
 
 The comments of Comptroller & Auditor General of India, under Section
 619(4) of the Companies Act, 1956 on the Accounts of the Company for
 the financial year ended 31 March 2008 is set out elsewhere in the
 Annual Report.
 
 Directors
 
 In accordance with the provisions of Article 12 of the Articles of
 Association, Shri S K Mukherjee and Shri P Radhakrishnan would retire
 by rotation at the ensuing Annual General Meeting and they are eligible
 for reappointment at the said Meeting.
 
 Shri A Kaushik, who was appointed a Director of the Company on 19
 February 2007 as a nominee of Ministry of Petroleum and Natural Gas,
 Government of India vacated his office on the Board of your Company
 with effect from 15 April 2008. The Board of Directors records its deep
 appreciation of the valuable services rendered by Shri Kaushik during
 his tenure as Director of your Company.
 
 Auditors
 
 Your Company being a Government Company, Auditors are appointed or
 reappointed by the Comptroller and Auditor General of India in terms of
 Section 619(2) of the Companies Act, 1956.  Accordingly, the Auditors
 have been appointed for auditing the books of account of the Company
 for the financial year ended 31 March 2009. The remuneration of the
 Auditors for the year 2008-09 is to be determined by the members at the
 ensuing Annual General Meeting as per Sections 224(8)(aa) and 619 of
 the Act.
 
 Auditors Report
 
 The Auditors Report dated 16 June 2008 for the year ended 31 March
 2008 does not have any reservation, qualification or adverse remark.
 
 The Statutory Auditors have opined that there is an adequate internal
 control system commensurate with the size of the Company and the nature
 of its business for the purchase of inventory, fixed assets and for the
 sale of goods and services.
 
 The Statutory Auditors have also opined that the Balance Sheet of the
 Company as at 31 March 2008 and the Profit & Loss account and the Cash
 Flow Statement for the year ended on that date are in agreement with
 the books of account and comply with the Accounting Standards referred
 to in Section 211(3C) of the Act.
 
 Acknowledgement
 
 The Board of Directors wish to place on record its appreciation to all
 the employees for their sincere co-operation, dedication, commitment,
 perseverance and maintenance of a pro-active work culture, which
 contributed in the achievement of new milestones.  Sincere thanks are
 also expressed to the customers, business associates/consultants,
 bankers, auditors, solicitors and lawyers for their continued
 patronage, association and confidence reposed in the Company.
 
 The Directors are also thankful to the Ministry of Petroleum & Natural
 Gas, Government of India, for the valuable guidance, support and
 co-operation extended to the Company from time to time.
 
 Finally, the Directors also wish to place on record their special
 appreciation to the valued Shareholders of the Company.
 
                                   On behalf of the Board of Directors
 
 Registered Office :
 Balmer Lawrie House
 21 Netaji Subhas Road
 Kolkata - 700 001               S K Mukherjee       Managing Director
 25 August 2008                P Radhakrishnan      Wholetime Director