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2 CAREVIEW
Cost of services is the single largest contributor to the 2008) lying in bank fixed deposits, as on March 31, 2009.
operating costs (constituting about 59% of the total cost The company, by and large, maintains similar level of
of sales in the last three years). It increased by 15.3% fixed deposits, as of now. Average utilization of bank
in FY09 over FY08 mainly due to increase in the fare/ limit during the last one year was around 15%. BLCL
freight rates in the country (triggered by rising fuel also has substantial real estate properties in prime
prices) during the year. Raw material consumption cost localities of the country which is likely to provide cushion
was the second major cost constituting about 27% of to the company, in the event of any stress.
total cost of sales during the last three years. Iron &
In H1FY10, while net sales declined by about 8.5% from
steel materials and Lubricating Base Oil constitute major
HIFY09 (due to lower turnover in the LIS and TT
raw materials consumed (about 77% of the total raw
segments), PBILDT grew by about 5% mainly on account
materials consumed in FY09) and thus BLCL is directly
of higher revenue from the IP and GL segments.
affected by the volatility in the input prices of the same.
Increase in PBILDT coupled with decline in interest
However, most of the contracts of IP- SBU have price
charge led to higher increase in PAT during the same
escalation clause which enables the company to pass
period. Consequently, profitability margins also
on the hike in raw material prices to the consumers.
improved.
Ongoing Projects
Industry Outlook & Prospects
BLCL is expanding its Container Freight Station (CFS)
India emphasises significantly on logistics, as indicated
in Mumbai and Chennai, at an aggregate cost of Rs.38.0
by the fact that 13% of GDP is spent on this segment,
crore, being financed out of internal accruals. Expansion
compared to an average of 10% in other developing
work at CFS, Chennai is expected to be completed by
countries. The domestic logistics industry suffers from
January 2010. CFS at Mumbai is on the verge of
inadequate infrastructure, lack of technological
receiving allotment of land from The City & Industrial
developments and complex tax laws. GoI, is now,
Development Corporation of Maharashtra Ltd. (CIDCO)
emphasising on developing road infrastructure which,
and the project completion is expected to be over by
in turn, is likely to benefit the industry to a great extent.
FY11. The company has also decided to consolidate its
operations at Mumbai, Silvassa and Taloja units of GL The domestic TT segment is one of the fastest growing
SBU, at Silvassa. Further, it is exploring various other segments, contributing over 6% of the country’s GDP.
business possibilities as well. This segment witnessed massive expansion during the
last few years owing to increased worldwide interest
Financial Performance
in travel, governments’ encouragement to tourism,
BLCL’s net sales increased by 13.7% in FY09, mainly increase in affordability of international holidays and
due to growth in revenues from the TT and LIS SBUs. low domestic air tariff, which however, has been on
PBILDT increased by 15.7% in FY09, due to higher the higher side, since the past one year. One of the
volume of business from TT segment and high other major income source of the segment (commission
operating income (particularly interest on advances/ income), was hugely affected during the year due to
deposits). Increase in PBILDT coupled with almost same the announcement of zero commission regimes,
level of capital charge led to an improvement in PAT whereby some airlines have stopped paying
(after defd. tax) level & margin. commission to the agents for booking tickets and other
Both overall gearing and long term debt-equity ratios airlines have whittled down the commission rates
were almost nil as on Mar. 31, 2009. The term loan progressively, from 9% to 5%, before eliminating them
balance outstanding as on March 31, 2009 represented altogether. Subsequently, the agents appealed to
payment towards guarantee given by BLCL to Indian Directorate General of Civil Aviation (DGCA) to look
Marine Freight Container Manufacturing Limited into the matter and the same was withdrawn from Jan.
(IMFCML). Interest coverage & GCA remained very 2009.
comfortable in FY09. The domestic GL industry, the sixth largest in the world
The liquidity position of the company was satisfactory is bifurcated into industrial and automotive division, with
with current ratio being 1.39 and an aggregate amount the PSU’s dominating the industrial segment. The GL
of about Rs.200 crore (against Rs.80 crore as on Mar.31, market has seen several phases of turmoil, in the last
November 2009
Disclaimer
CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned
bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by
it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information
and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities
whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank
facilities/instruments.
4 CAREVIEW
CARE is headquartered in Mumbai, with Offices all over India. The office addresses and contact numbers are given below:
4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway,
Sion (East), Mumbai 400 022 Tel.: (022) 67543456 Fax: (022) 67543457
Website: www.careratings.com
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