Eveready net falls 63% to ₹6.85 crore on weak consumption demand

Our Bureau Kolkata | Updated on August 14, 2019 Published on August 14, 2019

Auditors mention about inter-corporate deposit dues

The country’s largest maker of dry-cell batteries, Eveready Industries Ltd, saw a 63 per cent decline in net profit to ₹6.85 crore for the first quarter ended June 30, 2019. Profit in the corresponding quarter last fiscal stood at ₹18.35 crore.

The decline came even as the company witnessed a 16 per cent dip in operating income to ₹321 crore for Q1FY20. The income in the year-ago-period stood at ₹383.34 crore.

According to a company statement, operating results “were inferior” due to “lower turnover across all segments”. The dip in turnover was attributable to “weak consumption demand, especially in the rural sector”.

Lighting and appliances were impacted by supply constraints and absence of “government orders for fans”. The appliance segment was also affected on account of consolidation of portfolio and channels of distribution”. There was negative segment EBITDA for lighting.

In the battery segment, volumes remained subdued, but there was a “healthy EBITDA margin”. In flashlight too, margins remained robust. “The category is expected to show better volume growth from Q2, subject to effective implementation of BIS standards,” Eveready said.

Inter-Corporate Deposits

The company auditors in their limited review report have mentioned that Eveready Industries has given unsecured inter-corporate deposits (ICDs) to certain promoter group companies. Total outstanding amount of ICDs, including interest, is ₹389 crore (apprx). This apart, Eveready has given corporate guarantee and post dated cheques on behalf of certain promoter group companies amounting to over ₹134 crore.

Further as on June 30 this year, Eveready has given advance ₹72 crore to another company on the basis of an MoU towards transfer “by way of assignment, the leasehold rights of a property”. The lease is yet to be executed nor has Eveready exercised its “right to cancel the MoU and claim refund”. The time period for execution has been extended till March 2020.

Meanwhile, Eveready in notes to its Profit and Loss account for Q1 FY20 mentioned that “the management believes that the outstanding dues shall be recovered and no provision is required at this stage”.

It also points out that, in case of a default, the repayment of these deposits and guarantees and interest dues to other companies have been guaranteed by certain promoter directors (of Eveready).

“Furthermore a promoter group level restructuring is underway to monetise assets and meet-up various liabilities of the companies (part of the promoter group),” the notes to account mention.

Published on August 14, 2019
This article is closed for comments.
Please Email the Editor