Eveready Industries Ltd, a BM Khaitan Group company, has given up hope of a turnaround of its first overseas acquisition Novener SAS.

It said, in a note to the 2011-12 accounts, that Novener is likely to see complete erosion of net worth this year.

The company also said that it might not be able to recover its investments and created a provision of Rs 75 crore in its FY11-12 accounts as an “exceptional item”.

The company had acquired a controlling (80 per cent) stake in Novener, a French rechargeable battery conglomerate, in July 2009. Novener's products are marketed under the brand name of “Uniross”.

Till March 31, the company invested Rs 46.46 crore and advanced Rs.22.80 crore. “Even though Novener's operations and organisation was substantially restructured in 2010-11, its performance had been less than satisfactory primarily on account of the poor recessionary conditions in Europe and other geographies where it has a strong market presence.

“Novener is likely to register a loss for the current year as well, resulting in a complete erosion of its net worth,” the company added.

It apprehended the worst and made the provisioning to record sinking of its investments, loans and certain anticipated obligatory payment commitments.

Till the end of FY2011, the company had pumped in Rs 41.10 crore as investments and Rs 17.32 crore as advances into Novener for turning it around. In FY'11, Novener recorded a net loss of Rs 52.36 crore and its accumulated losses amounted to Rs 67.25 crore.

Eveready reported a standalone net loss of Rs 79.85 crore in FY2012 against a net profit of Rs 39.37 crore FY2011.

The stock on Tuesday closed at Rs 18.35, down 1.61 per cent on the BSE.

jayanta_mallick@thehindu.co.in

Published on May 15, 2012