balmer lawrie investment ltd Management discussions


Your Company is not engaged in any other business activity, except, to hold the equity shares of Balmer Lawrie & Co. Ltd. and accordingly matters to be covered under ‘Management Discussion and Analysis Report are not applicable to your Company.

Report on Subsidiary Companies and their contribution to the overall performance of the Company during the year

In terms of Section 2(87) of the Companies Act, 2013 (‘the Act) your Company has three subsidiary companies, namely, Balmer Lawrie & Co. Ltd. (‘BL), Balmer Lawrie (UK) Ltd. (‘BLUK) and Visakhapatnam Port Logistics Park Limited (VPLPL). By virtue of shareholding in BL (61.8%), your Company is the holding Company of BL. BL in turn has 2 subsidiaries BLUK and VPLPL.

A brief write up about the Subsidiaries inter-alia reporting about its performance and financial position and other significant events is presented hereunder:

Balmer Lawrie & Co. Ltd. (BL)

BL recorded net turnover of Rs 185672.35 Lakh during 2018-19 as against Rs 179600.39 Lakh in 2017-18 registering an increase of approximately 3% above last year. It also recorded a Profit Before Tax of Rs 28010.48 Lakh in 2018-19 as against Rs 26111.51 Lakh in 2017-18. The increase being attributable to improved performance of various SBUs, particularly SBU: Travel & Vacations, Grease & Lubricants and higher dividend income during 2018-19.

Balmer Lawrie (UK) Ltd. [BLUK]

Balmer Lawrie (UK) Ltd. (‘BLUK) is a 100% subsidiary of Balmer Lawrie & Co. Ltd. incorporated in the UK. The subsidiary had previously been engaged in the business of Leasing & Hiring of Marine Freight Containers as also in Tea Warehousing, Blending & Packaging.

After exiting these businesses, BLUK has been utilizing the proceeds to fund other business opportunities. BLUK has to date invested approximately US$ 2.01 Million equivalent to Indonesian Rupiah 21.0 Billion in PT Balmer Lawrie Indonesia (PTBLI) - having its registered office at Jakarta, Indonesia - which represents 50% of the paid - up equity share capital of the joint venture company. Balance 50% of the paid up share capital of PTBLI is subscribed by PT. Imani Wicaksana of Indonesia. PTBLI is engaged in the manufacture and marketing of greases and other lubricants in Indonesia. The operations at the plant has now stabilized and the JV is actively trying to get a foothold in the challenging Indonesian lube market.

During the year under review, steps were initiated for closing of operations of BLUK and is in the process of getting necessary statutory clearances, from authorities in the United Kingdom. As a part of this process, the shares of PTBLI has been transferred to Balmer Lawrie & Co. Ltd. during the year under review. It may be expected that the process of voluntary winding of the company would be completed during 2019-20.

Visakhapatnam Port Logistics Park Limited [VPLPL]

As part of the Strategic plan, Balmer Lawrie & Co. Ltd. (BL) has been consistently looking for opportunities for growth in the Logistics sector. In this context, a Joint Venture was formed in the name of VPLPL with Visakhapatnam Port Trust (VPT) contributing 40% of equity and the remaining 60% being funded by BL to set up a Multi Modal Logistics Hub in Visakhapatnam on a 53 acre land allotted to VPLPL by VPT. This MultiModal Logistics Hub (MMLH) was built to handle both Exim and domestic cargo. Exim area will have CFS / ICD, Warehousing, Cold Storage/Temperature Controlled Warehouse, Open Cargo Storage, Hazardous & Non-Hazardous Cargo Handling, Truck Parking etc. Non-Bonded/non notified Domestic area will have Yard for Container Storage, General Warehousing, Cold Storage, Open Cargo Storage, Truck Parking, empty container storage, Repairs and maintenance area for containers etc. The unit is also having rail connectivity with a 1.30 KM length track, where 4 rakes can be handled in a day. This hub is the only facility to have direct connectivity with the Port for a seamless movement of laden import and export boxes to and from the Port to the MMLH. The administration building is of 2500 sq.mt. having modular seating arrangement with all modern amenities providing better experience for the customers, CHAs, etc. During the year the site has been made completely ready for full fledged operations with all approvals to operate in place. Billings have started but capacity utilisation is likely to pick up from the third quarter of FY 2019-20.

VPLPL had made an application for grant of CFS licence in May, 2017 and has not yet got the CFS licence till date. This has been regularly followed up at appropriate level by the company. However, the facility presently handles all non CFS activities pending the receipt of the CFS licence.

Financial Statements of Subsidiary Companies

Since the control in BL is intended to be temporary and there is no change in such intention, Consolidated Financial Statements of the Company with BL has not been prepared in terms of para 11(a) of Accounting Standard 21 (AS-21) issued by the Institute of Chartered Accountants of India.

However, separate audited accounts in respect of each of its subsidiary shall be placed on the website of the Company - wwwh.blinv.com . Further, a copy of separate audited financial statements in respect of each of the subsidiary shall be provided on requisition of any shareholder of the Company.

Cessation/change in subsidiaries of the Company during the year

During the year under review, steps were initiated for closing of operations of BLUK and are in the process of getting necessary statutory clearances, from authorities in the United Kingdom. As a part of this process, the shares of PT Balmer Lawrie Indonesia has been transferred to Balmer Lawrie & Co. Ltd. during the year under review. It may be expected that the process of voluntary winding of the company would be completed during 2019-20.

Deposits

Your Company has neither accepted nor is holding any deposits from the public during the FY 2018-19 and no deposit remained unpaid or unclaimed at the end of Financial Year and there was no instance of default in repayment of deposits or interests thereon during the Financial Year and there are NIL deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013. Further, the Company shall not be accepting any deposits in FY 2019-20.

Compliance of Right to Information Act, 2005

Information, which are mandatorily required to be disclosed under the RTI Act 2005, have been disclosed on the website of your Company. The report on receipt and disposal of RTI applications during the FY 2018-19 is as under:

Sr. No. Ministry/ Department/ Organisation

Quarter

Opening balance of Requests (as on start of Quarter)

No.of Requests Received during Quarter

Total no.of Requests (Column 4+5)

No.of Requests transferred to other PAs

Decisions where Applications for Information rejected

Number of cases where disciplinary action taken against any officer in respect of administration of RTI Act

Total Amount Collected (fee+ addl. charges+ penalty) (Rs)

No. of times various Provisions were invoked while Rejecting Requests

Relevant Sections of RTI Act 2005

Section 8(1)

Other Sections

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (9) (11) (24) (Others)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) (23) (24)
1. Balmer Lawrie Investments Limited 1 0 1 1 0 0 0 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
3 0 1 1 0 0 0 10 0 0 0 0 0 0 0 0 0 0 0 0 0 0
4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total 0 2 2 0 0 0 20* 0 0 0 0 0 0 0 0 0 0 0 0 0 0

*These requests were received online through RTI Request & Appeal Management Information System hence the fee is collected by Department of Personnel & Training, Government of India.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

Since the Company does not have any business other than to hold shares of Balmer Lawrie & Co. Ltd. the reporting of Conservation of Energy, Technology Absorption as per Rule 8(3) of the Companies (Accounts) Rules, 2014 is not applicable for your Company.

The details pertaining to Foreign Exchange Earnings and Outgo are enumerated as under:

NIL

Risk Management Policy

The Company does not have any business apart from holding the shares of Balmer Lawrie & Co. Ltd. offloaded by IBP Ltd. and is a Special Purpose Vehicle formed for temporary purpose. Hence, the requirement of laying down procedures for risk assessment and minimization is not applicable. Further, as per Regulation 21 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 pertaining to Risk Management Committee is not applicable to your Company.

Corporate Social Responsibility (CSR)

1) The CSR Policy of the Company was adopted by the Company on 27th January, 2017:

The CSR Policy of the Company is as under:

Philosophy

The Policy is in the nature of initiatives or endeavour which the key stakeholders expect of the Company in the discharge of their Corporate Social Responsibility. It reflects the willingness of the Company to voluntarily take a few extra steps to address social, economic and environmental concerns but are nevertheless worthy of attention for promotion of sustainable development in its diverse dimensions.

Activities to be undertaken

It is the policy of the Company to undertake any activity which is permissible to be carried out towards CSR as per:

1) Schedule VII of the Companies Act, 2013 (the Act) and the allied Rules, including any statutory amendment thereof,

2) The guidelines formulated by the Department of Public Enterprises (DPE) on CSR and Sustainability (hereinafter referred to as ‘the Guidelines) which are applicable to CPSEs.

Implementation

The Company shall endeavour to implement activities/programs as per the CSR Policy keeping in view:

1) the constraints faced due to the form and nature of organisation.

2) the administrative and incidental cost are minimum so that the maximum expenditure so allocated is spent for the benefit of the society.

CSR Expenditure

CSR expenditure will include all expenditure, direct and indirect, incurred by the Company on CSR Activities/ Programmes undertaken in accordance with the approved CSR Plan. Any surplus arising from any CSR Activities/Programmes shall be used for CSR. Accordingly, any income arising from CSR Programmes will be netted off from the CSR expenditure and such net amount will be reported as CSR expenditure.

The CSR Policy of the Company is available at:

http://www.blinv.com/Pdf/CSR%20and%20Sustainability%20Policy.pdf

2. The Corporate Social Responsibility Committee of the Company consist of the following members as on 31st March, 2019:

• Smt. Perin Devi, Chairperson

• Shri Shyam Sundar Khuntia, Member

• Smt. Kiran Vasudeva, Member

• Shri Ajay Singhal, Member

3. Average of net profit of the Company for the last three Financial Years:

2015-16 2016-17 2017-18
Net Profit as per Companies (Corporate Social Responsibility Policy) Rules 2014 594.09 565.13 614.19
Average of net profit of the Company 591.14

4. Prescribed CSR Expenditure for 2018-19: Rs 11.82 Lakhs (2% of the Average of net profit for the preceding 3 Financial Years)

5. Details of CSR spent during the Financial Year:

a. Total amount to be spent for the Financial Year - Rs 11.82 Lakhs

b. Amount unspent, if any: NIL

c. Manner in which the amount spent during the Financial Year is detailed below:

Sl. No. CSR Project or activity identified Sector in which the project is covered Projects or programs (1) Local area or other (2) specify the State and district where projects or programs were undertaken Amount Outlay (budget) project or programs wise Amount spent on the projects or programs Subheads: (1) Direct expenditure on projects or programs (2) Overheads: Cumulative Expenditure upto the reporting period Amount Spent: Direct or through implementing agency
1 Contribution to Prime Ministers National Relief Fund NA NA Rs 11.82 Lakh Rs 11.82 Lakh Rs 11.82 Lakh Directly

6. Responsibility statement of the CSR Committee:

"We the members of the CSR Committee hereby confirm that the implementation and monitoring of the CSR Policy is in compliance with CSR objectives and Policy of the Company."

Perin Devi Shyam Sundar Khuntia Kiran Vasudeva Ajay Singhal
Chairperson of CSR Committee Member Member Member

Directors Responsibility Statement

In terms of provisions of Section 134(3) &134(5) of the Companies Act, 2013 your Board of Directors to the best of their knowledge and ability, confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanations and there were no material departures;

(ii) the Directors had selected such accounting policies and applied them consistently and made judgments 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 and of the profit and loss of the Company for that period;

(iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors had prepared the annual accounts on a going concern basis.

(v) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Corporate Governance

Your Company has been consistently complying with the various Regulations and Guidelines of the Securities and Exchange Board of India (SEBI) as well as of Department of Public Enterprises (DPE), to the extent of factors within its control.

Pursuant to the said SEBI Regulations and DPE Guidelines, a separate section titled ‘Corporate Governance Report is being furnished and marked as Annexure-1.

The provisions on Corporate Governance under DPE Guidelines which do not exist in the SEBI Guidelines and also do not contradict any of the provisions of the SEBI Guidelines are also complied with.

Further, your Companys Statutory Auditors have examined compliance of conditions of Corporate Governance and issued a certificate, which is annexed to this Report and marked as Annexure-2.

Directors & Key Managerial Personnel (KMP) and meetings of the Board during the year

Directors and Key Managerial Personnel

As on 31st March, 2019, the Board of your Company consisted of the following four Directors: a. Shri Shyam Sundar Khuntia, Non-Executive Director, Ex-officio member

b. Smt. Perin Devi Rao, Government Nominee Director, Non-Executive Woman Director

c. Smt. Kiran Vasudeva, Government Nominee Director, Non-Executive Woman Director

d. Shri Ajay Singhal, Independent Director

The Company has only one KMP i.e. Company Secretary. The Company does not have any MD/Whole time director or CFO.

Meetings of the Board during the year

The details of the meetings of the Board held during the year have been enumerated in the Corporate Governance Report marked as Annexure 1

Directors retired/appointed/resigned during the year Retired

Smt. Perin Devi Rao, had been appointed as a Non-Executive, Government Nominee, Woman Director on 25th January, 2016 by the Board of Directors pursuant to the letter bearing reference no. C-31033/1/2012-CA/ FTS: 18688 dated 2nd January, 2016 from MOP&NG. Thereafter, Smt. Perin Devi Rao was appointed as NonExecutive Government Nominee Director by the shareholders at the 15th AGM of the Company held on 22nd September, 2016 and was reappointed at the 16th AGM held on 14th September 2017. It may be noted that vide OM No. 31033/1/2016-CA /FTS:42979 of the administrative ministry it was informed that the nomination of Smt. Perin Devi had been extended till 1st January, 2022. At the 18th Annual General Meeting the proposal for reappointment of Smt. Perin Devi Rao who retires by rotation is placed before the shareholders.

Appointed

Shri Ajay Singhal was appointed as Independent Director of the Company on 3rd August, 2018 by the Board in furtherance to the letter No.C-31033/2/2018-CA (22758) dated 24th July, 2018 received from the Ministry of Petroleum & Natural Gas (MoPNG), Government of India. He was further appointed as an Independent Director of the Company at the 17th AGM held on 12th September, 2018. The profile and other details of Shri Singhal is given in the Corporate Governance Report.

As per letter No.C-31033/1/2016-CA/FTS: 42979 dated 27th May, 2019 received from the Ministry of Petroleum & Natural Gas, (MoPNG), Government of India, Shri Shyam Singh Mahar (DIN 08511166) had been nominated as Government Nominee Director on the Board of your Company.

Cessation

During the year 2018-19, no director ceased to be a director. Recently, the administrative ministry of the Company, vide letter No.C-31033/1/2016-CA/FTS: 42979, the MoPNG withdrew nomination of Smt. Kiran Vasudeva.

Board Evaluation and Criteria for evaluation

Your Company, being a Government Company - vide Notification No. GSR 463(E) dated 5th June, 2015 (as amended) has been exempted from applicability of Section 134(3)(p) and 178(2), (3) and (4) of the Companies Act, 2013.

Declaration by Independent Director

Your Company has received a declaration from the Independent Director of the Company confirming that he meets the criteria of independence prescribed under the Act and the SEBI (LODR) Regulations, 2015.

Audit Committee

The Committee as of 31st March, 2019 consisted of 4 members and all of them, including the Chairperson of the Committee, are Non-Executive Directors.

As of 31st March 2019, the following are the members of the Committee:

Names Position held
Shri Ajay Singhal, Independent Director Chairperson
Smt. Perin Devi Rao Member
Shri Shyam Sundar Khuntia Member
Smt. Kiran Vasudeva Member

The members of the Audit Committee are all financially literate and majority have expertise in finance and general management matters. The Company Secretary acted as the secretary to the Audit Committee.

There were no such instances where the Board had not accepted any recommendation of the Audit Committee.

Related Party Transactions

Your Company adopted a policy on "Related Party Transactions" with effect from 28th March, 2015. The said Policy was amended vide resolution by circulation dated 29th March, 2019 to bring in line with the amendment in the provisions of Companies Act, 2013 and SEBI (LODR) Regulations, 2015 and has been uploaded on the website of the Company and is available on the following link :

http://www.blinv.com/Pdf/Related%20Party%20Transactions%20Policy%20of%20BLIL-new.pdf.

The Policy aims at setting out the materiality thresholds for Related Party Transactions and the manner of dealing with the transactions between the Company and its Related Parties based on the applicable laws.

Particulars of contracts and arrangements with Related Parties referred under section 188 (1) of the Companies Act, 2013

The particulars of contracts and arrangements with Related Parties referred under section 188 (1) of the Companies Act, 2013 in the prescribed form is as under:

Form No. AOC 2

1. Details of contracts and arrangements or transactions not at arms length basis - NIL. All the contracts and arrangements or transactions with Related Parties during the year ended 31st March, 2019 were on arms length basis.

2. Details of material contracts or arrangement or transactions at arms length basis - NIL. None of the transactions with Related Party can be considered as "material" as per the policy on - Materiality of Related Party Transactions and dealing with Related Party Transactions adopted by the Company.

All contracts or arrangement entered into under Section 188(1) of the Companies Act, 2013 has been enumerated in details in Note no. 24 of Financial Statements in compliance with the applicable accounting standards, thereby forming part of the Financial Statement as on 31st March, 2019.

Justification on the Related Party Transactions entered -

• In the year 2002, the Company for the purpose of infrastructure and management support entered into a service contract with its subsidiary Balmer Lawrie & Co. Ltd. (BL), since the Company does not have any infrastructure arrangement or any employee. The said agreement is renewed from time to time pursuant to which the Company receives services in nature of administration, finance, taxation, legal, secretarial, etc from BL.

• The Company was formed as a Special Purpose Vehicle with no regular business activity on 20th September 2001, with the sole objective of holding the Equity shares of BL, transferred / de-merged from IBP Co. Ltd. (under the scheme of Arrangement & Reconstruction);

• The major source of income of your Company is dividend earned from its subsidiary, BL.

• The Company has no employees of its own including the Company Secretary, who is deputed from the subsidiary Company.

Particulars of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013

Details of investments made by the Company in other company is enumerated in Note 7 and Note 18 of Financial Statement.

Auditors

The Statutory Auditors of your Company (being a ‘Government Company), are appointed by the Comptroller & Auditor General of India (‘CAG) under Section 139 and other applicable provisions of the Companies Act, 2013.

Pursuant to Section 142 and other applicable provisions of the Companies Act, 2013 the remuneration of the Statutory Auditors for the year 2019-20 is to be determined by the members at the ensuing 18th Annual General Meeting.

Report of the Statutory Auditor

The Report of the Statutory Auditors on Annual Accounts of your Company for Financial Year ended 31st March 2019 does not have any reservation, qualification or adverse remark. Report of the Statutory Auditors is attached with the Financial Statement.

The office of the Comptroller & Auditor General of India (‘CAG) had decided to conduct the supplementary audit of the Financial Statements of the Company for the year ended 31st March, 2019. The CAG has commented that in view of the revisions made in statutory auditors report, to give effect to some of CAGs audit observations, they have no further comments to offer upon or supplement to the statutory auditors report. The communication from the CAG in this regard is attached as Annexure 3.

Report of the Secretarial Auditor

The Company also appointed M/s N.K & Associates, Practicing Company Secretaries, 159 Rabindra Sarani, 9th Floor, Kolkata 700007 as Secretarial Auditor in compliance with the provisions of Section 204 of the Companies Act, 2013. The Report of Secretarial Auditor is annexed and marked as Annexure 4. The response of management to the observations to qualification, observations or remarks of the Secretarial Auditors is as under:

Sl Observation / Comment / Qualification No. of the Secretarial Auditors Clarification from the Management
1. The Company has not appointed Managing Director/Whole time Director/Manager/CEO and CFO. We are a Government Company and as is evident from our shareholding pattern, President of India has a majority shareholding in our Company.
Hence, Board Composition is not complied. As per the Articles of Association of the Company so long as the Company remains a Government Company, the President of India shall be entitled to appoint one or more person(s) to hold office as Director(s) on the Board and also to appoint one or more such Director(s) as Managing or Whole-time Director(s) of the Company. Accordingly, Ministry of Petroleum & Natural Gas (MOPNG), being the administrative Ministry directs us every time when a change in appointment of Directors is required.
The Company has no employee of its own including, the Company Secretary whose services have been seconded from its subsidiary pursuant to a Service Agreement between the Company and Balmer Lawrie & Co. Ltd.
It may be pertinent to mention that MCA vide GSR dated 5th June, 2015 has exempted that : The provisions of sub-sections (1), (2), (3) and (4) of section 203 of the Companies Act 2013 shall not apply to a Managing Director or Chief Executive Officer or Manager and in their absence, a Wholetime director of the Government Company.
2. The Company has appointed only one Independent Director. Explained in Serial 1 above
3. Owing to Serial 2 above, no separate meeting of Independent Directors was held during the Financial Year 2018-19. There was only one Independent Director on the Board of the Company hence no separate meeting of Independent Director was held during the financial year 2018-19.
4. The Company has constituted Audit Committee and Nomination and Remuneration Committee but the composition of both the committees are not as per Companies Act, 2013 and Regulations 18 and 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 due to absence of Independent Directors. The Composition of the Committee was a fall out of Serial (1) and (2) above explanation to which has been given.

Adequacy of Internal Financial Controls

The Company has inter-alia taken the following measures to ensure that an adequate internal financial control exists:

- Appointment of Internal Auditor as per Section 138 read with Rule 13 of the Companies (Accounts) Rules, 2014 as well as Secretarial Auditor as per Section 204 of the Companies Act, 2013.

- The Company has adopted the following policies apart from the Code of Conduct applicable to Directors and Senior Management:

• Policy on ‘Related Party Transactions;

• Policy for determining ‘Material subsidiaries;

• "Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information" and

• "Code of Conduct to Regulate, Monitor and Report Trading by Designated Persons and immediate relative of Designated Persons".

Details of Significant and Material Orders passed by the Regulators, Courts and Tribunals

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

Vigilance Cases

No vigilance cases were reported, disposed off nor there are any such cases pending during the year.

Constitution of Internal Complaints Committee

The Company has no employees of its own. The requirement of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 did not arise.

Cost Records

The requirement of maintenance of cost records is not applicable to your Company.

Procurement from MSMEs

The Company is formed for temporary purpose and is not having any business and hence has neither had taken any target nor made procurement from MSMEs.

Extract of Annual Return and Weblink

An extract of the annual return in the prescribed form MGT 9 is attached to this report as Annexure 5. Further, the Annual Return for 2018-19, as and when filed with the Registrar of Companies, shall be uploaded on the website of the Company - www.blinv.com

Compliance with Secretarial Standards

The Company is in compliance with Secretarial Standard-1 and Secretarial Standard-2.

Appreciation

Your Directors wish to place on record their appreciation for the continued guidance and support extended by the Ministry of Petroleum & Natural Gas & and other Ministries. Your Directors also acknowledge the valuable support and services provided by BL. Your Directors appreciate and value the trust imposed upon them by the members of the Company.

Registered Office: On behalf of Board of:
21, Netaji Subhas Road, Balmer Lawrie Investments Limited
Kolkata-700 001
Date: 13th August, 2019 [Shyam Sundar Khuntia] [Perin Devi]
Director Director