Bombay Burmah Trading Corporation Share price and Fundamental Analysis

Company History

Bombay Burmah Trading Corporation Limited (BBTCL) is multi-product and multi-divisional organisation with diverse business interests viz. Plantations (Tea and Coffee), Auto Electric Components, healthcare and real estate.

The company has its tea plantation Estates in South India. Its largest tea plantation area is located at Anamallai district in South India. The company produces and markets premium coffees such as Washed Arabica and Robusta, in specialty segment.

One of the major products of the company's dental products division is dental alloy. Other key products of the company's dental products division are dental impression materials and dental X-Ray films.

Formed in 1863 as Burmah Trading Company by taking over the assets and rights in Burma of William Wallace, the Company was renamed Bombay Burmah Trading Corporation to avoid being confused with a firm of a similar name. The Corporation's activities are in tea, coffee, cardamom, cocoa, rubber and palm oil segments; manufacture of asbestos cement and concrete products, starch from tapioca; logging of timber, boat building and repairs. These activities are spread over India, Indonesia, Thailand, Tanzania and Sabah.

The Corporation, for over 80 years since 1863, was the largest single tea company in the industry, marketing between one-third and one-half of the world's tea supply. Post-war political changes in Burma and Thailand necessitated a restructuring of its activities and areas of operations. This resulted in the corporation's entry into North Borneo, east Africa and the Andamans. AFCO, a Bombay-based small craft industry was acquired by the corporation which became a subsidiary of the company in 1958. In 1962, the corporation floated Formica India in association with Formica International, in technical collaboration with the American Cynamid Company, which is engaged in the production of laminates.

The BCL spring division was formed consequent to the merger of the erstwhile Bombay Company (BCL) with the corporation. In 1995-96, the corporation's formica and springs divisions were accredited with ISO 9002 by International Agencies and in 1997-98, Oothu factory at Singampatti group was accredited with ISO 9002 by KPMG Quality Registrar, USA for the production and supply of green and black teas and the same was revalidated for further 3 years from Aug, 1998 by Bureau Veritas Quality International.

During 1999-2000, the Company faced labour problems at Singampatti Group of Tea Estates. A wage settlement between Tea Workers' Union and the Planters Association of Tamil Nadu was arrived at in December, 1999 with retrospective effect from 1st January, 1999.

During the year ended 31 March 2015, the momentum of activities relating to new product development of Bombay Burmah Trading Corporation Limited's (BBTCL) Electromags division was adversely affected by longer than expected validation timelines at major customer's end. The division released new products of Rs. 5.21 cores to production during FY14-15.

During the year ended 31 March 2016, New Product Development Projects of Bombay Burmah Trading Corporation Limited's (BBTCL) Electromags division were adversely impacted due to longer validation periods with OEMs and end Customers.

The company's Dental Products division launched 'Dental x-ray film' during the latter part of 2015 and performed well in this category.

During the year ended 31 March 2017, Bombay Burmah Trading Corporation Limited (BBTCL) took a number of steps to reduce losses by closing down uneconomical, Bought Leaf operations for tea and Bought Beans operations for Coffee at plantations division. During the year under review, the company tapped the growing awareness for Organic Teas and sale volumes of Organic Teas improved. The company had to reduce buying of coffee fruit to prevent more coffees from being offered in the less lucrative domestic market, which would have pulled down overall prices.

BBTCL's auto electric components business division released New Products worth of Rs 5 crores for production during FY 16-17. The New Product Development Projects were adversely impacted due to longer validation periods with OEMs.

BBTCL's wholly owned subsidiary, Leila Lands Sdn. Bhd., Malaysia, set up in Mauritius an Investment Company, viz. Baymanco Investments Limited, and holds 100% Equity share capital of the said company. As a result, Baymanco Investments Limited has become a step down subsidiary of BBTCL. BBTCL and Baymanco Investments Limited acquired 4,92,18,338 shares representing 23.84% of the paid up share capital of The Bombay Dyeing & Manufacturing Company Limited (BDMC). BBTCL's existing holding of 2,96,39,375 shares representing 14.35% together with the further acquisition of additional Equity shares by the company and its subsidiary, now constitute 38.18% of the paid up share capital of BDMC. As a result, BDMC has become an Associate of the Corporation with effect from 20 March 2017.

Bombay Burmah Trading Corporation Limited's (BBTCL) tea production was adversely impacted in 2017-18 by the unprecedented incident of tea mosquito bugs due to erratic weather conditions and curtailment of Bought Leaf operations due to quality of Bought Leaf during the year. This resulted in lower production of Tea by 19% over the previous year. With regard to Coffee, the year under review was an unusual year during which the production across Coorg region was lower by almost 50% on account of continuous drought like condition during the growing period over last 2 years. BBTCL's production of Coffee at 273 tonnes was the lowest over past few decades. The overall coffee production was lower by 37% over the previous year.

The performance of the company's Electromags division was adversely impacted due to migration to Bharat Stage IV norms resulting in lower turnover almost by Rs 4 crores particularly in exports as domestic sales were almost same as last year. The Government of India has given a timeline of 31 March 2020 for implementation of BS-VI norms, bypassing BS-V norms. The company's Electromags division released new products worth Rs 5.6 crore to production.

The Company's Dental Products division launched dental implants in FY 2017-18

During the year under review, N. W. Exports Limited (NWE) and Sunflower Investments & Textiles Limited (SITL) merged with Nowrosjee Wadia & SonsLtd. (NWS) pursuant to a Scheme of Arrangement and the shares held by NWE and SITL in BBTCL vested in the name of NWS. NWS holds 2,33,53,225 equity shares of BBTCL representing 33.47% of its paid-up share capital. Accordingly, BBTCL is an associate of NWS.

BBTCL in the year 1929 acquired leasehold rights in land for cultivation of tea, coffee, cardamom etc. under a valid lease for a period of 99 years from the Zamindar of Singampatti. The company has been cultivating and carrying on all its plantation activities at the above Tea Estate since then. The leased land has been classified as forest land during the year and also covered as Tiger Reserve under the Wildlife Protection Act, despite the fact that the company has a bustling township on the leased land. The Tamil Nadu Government Authorities have excluded the leased land and permitted the company to continue its plantation activities during the tenure of the lease. BBTCL is however, contesting these matters before the Madras High Court. Also, the Government Authorities in Tamil Nadu during the year demanded increased lease rentals in respect of the leased land retrospectively from the year 1958. BBTCL has challenged the said demand by way of Writ Petition before Madras High Court. The said Writ has been admitted and stay granted.

During the year 2021-22, Go Airlines (India) Limited became the Associate Company of the Corporation w.e.f. 12th May, 2021.

Pursuant to the acquisition of 11,68,000 shares of National Peroxide Ltd (NPL) by Baymanco Investments Limited, a wholly owned step down subsidiary of the Corporation, NPL was made an associate of the Corporation w.e.f. 10th January 2023.