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Business News/ Companies / News/  Balmer Lawrie to wind up its tea business by September end
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Balmer Lawrie to wind up its tea business by September end

Focus now shifts to tourism—another of Balmer Lawrie’s early ventures that started in the form of shipping and forwarding

Balmer Lawrie chairman and managing director Virendra Sinha says the company is looking to acquire a private firm that earned 40% of its revenues from ticketing. Photo: Indranil Bhoumik/Mint (Indranil Bhoumik/Mint)Premium
Balmer Lawrie chairman and managing director Virendra Sinha says the company is looking to acquire a private firm that earned 40% of its revenues from ticketing. Photo: Indranil Bhoumik/Mint
(Indranil Bhoumik/Mint)

Kolkata: Balmer Lawrie and Co. Ltd, a pioneer in the tea business, is winding up the division, ending an almost 150-year journey that saw it transform from a managing agency for planters in Assam and Darjeeling to a manufacturer of containers and industrial lubricants.

Named after two Scotsmen who founded it, Balmer Lawrie—now a government-controlled firm—will stop “blending and packaging" tea by the end of this month because the business is no longer viable, said chairman and managing director Virendra Sinha. The company had started the tea business in 1867.

Tea used to be a prized business in the early years though by the 1880s, Balmer Lawrie had ventured into various other fields such as banking, shipping and trading. While expanding in tea, founder Alexander Lawrie spread his risks far and wide—in the 1880s, his company used to be the sole agent for distribution of Laphroaig single malt scotch in Kolkata, then Calcutta.

By the early 1950s, Balmer Lawrie was the managing agency for as many as 46 tea gardens with at least 34,000 acres under cultivation. However, in 1969 it had to cede the rights to market tea for these gardens when managing agencies were abolished in India.

By then, the successors of the company’s founders had already divested control and ownership to another managing agency, Duncan Brothers.

Balmer Lawrie was eventually taken over in the early 1970s by Indo-Burma Petroleum Co. Ltd, a government-controlled firm, which was later renamed IBP and merged with Indian Oil Corp. Ltd (IOC). IBP’s holding in this former British managing agency was carved out before it was integrated with IOC in 2002.

“Our history in tea goes back a long way," said Sinha, “but with a heavy heart, we decided to wind down the tea business."

The tea division contributed only 3 crore of Balmer Lawrie’s 2,702.93 crore consolidated revenue in the last fiscal year.

The division was losing on average 2 crore a year, according to Sinha. With there being no sign of a revival, the management decided to shut the division.

The 22 people who were employed in the tea business will be asked to leave under a voluntary retirement scheme, Sinha said. A severance package is being negotiated.

Despite its pole position in marketing tea for planters, the company never acquired estates. It remained an exporter and a marginal player in the domestic market.

To stay afloat, it agreed to package tea for Goodricke Group Ltd—one of the last surviving London-controlled tea companies in India. But Goodricke recently decided to terminate the arrangement. “That was the last nail in the coffin," Sinha said.

What remained were its own brands: The Tea—a blend of the Darjeeling crop—and the mass market Tarang. But there are hardly any takers anymore for Balmer Lawrie’s blend.

The company’s tea division was fully dependent on exports, said Prabal Basu, director (finance).

The loss of Afghanistan and Russia as export markets ruined its chances of staying afloat to complete 150 years, he added.

The focus now shifts to tourism—another of Balmer Lawrie’s early ventures that started in the form of shipping and forwarding.

Sinha said Balmer Lawrie was looking to acquire a private firm that earned 40% of its revenues from ticketing.

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Published: 24 Sep 2013, 09:47 PM IST
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