Companies

Eveready Industries expected to turn debt- free over next two years

Abhishek Law Kolkata | Updated on September 12, 2021

Amritanshu Khaitan, MD, Eveready Industries India ltd   -  Photo: Debasish Bhaduri

The company is expected to retire nearly Rs 100 crore of debt by the end of FY22.

Eveready Industries, the Williamson Magor Group flagship, and the country’s largest dry-cell battery-maker, is expecting to turn debt-free over the next two years. The company has a debt of Rs 418 crore, as per its FY21 annual report.

The company is expected to retire nearly Rs 100 crore of debt by the end of this fiscal (FY22).

Refinancing of high cost debt at lower rates was done and this has significantly reduced the interest burden.

“Tight control was kept over the finances through judicious working capital management and operational efficiencies. Eveready remains focused to reduce its borrowings, which stood at Rs 418.12 crore at the end of the year. The company met its financial commitments in servicing debt and repayment thereof in a timely manner,” the annual report reads.

According to Amritanshu Khaitan, Managing Director, Eveready Industries, the cash generation improved significantly and cash flow from operations has increased to Rs 133 crore in FY21 (from ₹27 crore in FY20) while free cash flows are up at ₹121 crore (from ₹10 crore).

“We are expected to generate at least around Rs 100 crore of free cash for FY22, if the run rate of Q1FY22 is a benchmark,” he told BusinessLine adding that the company is “comfortable with the free cash flow generation” which is enough to retire long term debts “on time”.

Debtors turnover increased to 28.8 in FY21 (due to improved cash rotation business), while operating profit for the year improved 80 per cent to 18 per cent (from 10 per cent). In Q1FY22, operating profit saw a 100 per cent jump YoY to Rs 38 crore.

Business Outlook

Eveready’s prime verticals of batteries– accounting for nearly Rs 800 crore of its topline – saw a 10 per cent volume growth in FY21. The company has a 50 per cent plus market share. The AAA battery category, which finds usage in medical devices primarily and other everyday gadgets, has seen “robust growth” while AA batteries saw a “marginal rise”.Volume rise was aided by a drop in Chinese imports.

“Given the overall positive scenario, a tangible threat to battery consumption lies in lower usage of battery consuming equipment,” the annual report said.

In flashlights, where the company has 70 per cent market share, and topline of Rs 180 crore – with 8 per cent annual growth – unorganised players and lookalikes (of Eveready) pose a threat. The company is looking at price tweaks to hook onto first time users.

New verticals of lighting, accounting for Rs 221 crore of turnover in FY21, have been hit by supply constraints and distribution disruptions because of the pandemic. The company is looking at “competitive pricing” and deeper distribution. The segment degrew last year.

In the small home appliances segment, the company intends to upscale production; work on a more robust range of offerings and increase the distribution network, including through e-commerce. “The risk associated is that of product obsolescence which may make inventory management difficult. However, this can be overcome through consolidation of the portfolio as the category reaches scale,” the management said.

Published on September 12, 2021

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