Financial Daily from THE HINDU group of publications
Tuesday, Sep 20, 2005
Financial Daily from THE HINDU group of publications Tuesday, Sep 20, 2005 |
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Corporate
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Mergers & Acquisitions Eveready acquires BPL battery biz Deal worth Rs 67 cr; market share to go up to 56 pc Our Bureau
Kolkata , Sept 19 EVEREADY Industries India Ltd, the flagship company of the BM Khaitan Group, on Monday announced the acquisition of the battery business of BPL for Rs 67 crore. Eveready would be acquiring 4.9 lakh equity shares of BPL Soft Energy System Ltd (BSESL) for Rs 45 crore. It would also be taking over Rs 22 crore of liability of this company. A formal memorandum of understanding (MoU) was signed between the two companies last Thursday. According to Mr Deepak Khaitan, Vice-Chairman and Managing Director of Eveready, BSESL would become a wholly owned subsidiary of Eveready Industries. "We have no immediate plans of merging this company into Eveready," Mr Khaitan told Business Line. Eveready would be entitled to use the BPL brand name for the next 30 months only. However, they can continue with two other brands, namely BPL Shakti and BPL Power, but without the brand name BPL.
Eveready has appointed Deloitte Haskins to carry out a due-diligence of BSESL, which will be starting soon, Mr Khaitan said. The total acquisition exercise is scheduled to be over by October 28. At present, BSESL has a plant at Maddur in Karnataka the annual capacity of which is 240 million pieces of dry cell. Currently Eveready's total annual capacity is 1.2 billion batteries. With this acquisition Eveready's total annual capacity will almost touch the 1.5-billion batteries mark. The company is also setting up a new plant at Uttaranchal with a capacity of 30 million pieces. BPL's battery market share is currently at around 10 per cent. The acquisition would help Eveready to increase its market share to 55-56 per cent from the existing level of 47 per cent. The product baskets of both the companies are almost the same but BSESL produces a D size metal jacket battery, which is not offered by Eveready. "Let us finish the due diligence first, then in future we may consider producing a similar battery under the Eveready brand name," he said. Elaborating the rationale behind the acquisition, Mr Khaitan said it was the best way to protect Eveready's market share and it would also create a barrier for the entrance of another major player. "If we would not have bought the BPL brand, someone else would have. This is the best way to increase market share. Otherwise we would have to cut our prices which would have seriously affected the company's bottomline," Mr Khaitan said.
Keen on buying foreign brand
AFTER completing the acquisition of one its major competitors in the domestic market, Eveready Industries has now expanded its vision and is looking for a global buyout. Talking to Business Line, Mr Deepak Khaitan, Vice-Chairman and Managing Director, confirmed the intention but preferred not to give any details. "Let us first consolidate the BPL acquisition and then we would start seriously looking at a global acquisition," he said. However, the market buzz is that the company will buy some foreign brand. At present, it exports batteries under the Lava brand name.
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