Financial Daily from THE HINDU group of publications
Friday, Sep 13, 2002
Eveready appoints I-Sec, Rabo Bank to study recast
KOLKATA, Sept. 12
EVEREADY Industries India Ltd, the flagship company of B.M. Khaitan group, has appointed ICICI Securities and Rabo Bank to find ways of reducing the interest cost, increasing profit and, if necessary, demerging the company into its two businesses, tea and batteries.
This was stated by Mr Deepak Khaitan, Vice-Chairman and Managing Director, while responding to queries of shareholders at the 67th annual general meeting. According to him, the two agencies were working in tandem and they would place their first report by the end of next month.
Responding to a query whether the tea and battery businesses would be separated, Mr Khaitan said the two consulting agencies would work out ways of increasing the profitability of Eveready and demerger could be one such option.
"We will first study their report and then the board of directors will take a decision on it,'' Mr Khaitan said.
Later, talking to newspersons, Mr Khaitan said a demerger was not easy to implement. Further, it had not been suggested to the two consulting agencies.
For the year ended March 30, 2002, Eveready Industries registered a turnover of Rs 897.14 crore and a net loss of Rs 53.33 crore. However, Mr Khaitan was confident that the company would be back in the black in the current financial year.
According to him, the battery business was doing well and had sold 23 million pieces in the first five months of 2002-03 compared to 18 million in the corresponding period in 2001-02. He was confident of registering record sales.
Regarding the tea business, he said the prospects were good because of a shortage of tea both in the Indian and global markets. Recent floods had taken a toll of 38 million kg (mkg) of Indian tea.
Worldwide there had been a drop of 55 mkg. Moreover, in the last three weeks, prices had firmed up in the auction centres. "We are confident that the tea industry will turn around,'' he said.
Meanwhile, the Khaitans have decided to use the Williamson Magor (WM) brandname in their bulk tea business. According to Mr Khaitan, the WM brand signifies good quality tea in the trade.
In this context, he said all disputes with the earlier partner, the UK-based Magors, had been settled. "It has been decided that they will use the elephant logo and we will use the WM brandname,'' he said. He, however, admitted there were still some differences and hoped they "would be sorted out amicably''.
The packet tea business of Eveready had started to generate profits. In 2001-02, it sold 4,000 tonnes through its three tea packet brands, Tez, Jaago and Premium Gold. In 2002-03, the company hopes to sell 6,000 tonnes.
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