Recharging Eveready: Company seeks to halve debt by selling land assets

Ever since its creation in 1994, the ₹1,494 crore turnover Eveready Industries, a part of the Kolkata-based Williamson Magor Group, has suffered from two common ills.

Its mainstay, dry-cell battery business suffered headwinds due to changing technology and cheap imports. And, a huge debt burden limited the company’s ability to enter new businesses by leveraging its distribution strength. The model is now set for a change, with Eveready planning to pare debt by half from ₹250 crore (debt-equity 0.68 in FY17) in 18 months by selling excess land assets and focussing on new verticals that will leverage its distribution strengths, to record faster growth.

“You should see a more stable performance from Eveready now on,” says the company’s 34 year-old Managing Director Amritanshu Khaitan. He expects top-line growth to double at a CAGR of 10-15 per cent, over the next few years.

New vertical

Khaitan insists that the company will do its best to maintain its lead in battery and flashlight manufacturing, which together contributed 71 per cent of its turnover in FY17. But he doesn’t foresee much growth in this ₹1,500 crore market. The focus is on leveraging the company’s distribution outreach to emerge as a marketing giant with a presence in high-growth businesses ranging from lighting and FMCG to confectionaries. “The company is entering into the right verticals, for faster growth,” he says.

Eveready is currently pursuing an outsourcing-based marketing model for its lighting, small home appliances and confectionaries businesses.

The lighting and electrical vertical contributes 21 per cent of its turnover. Khaitan is expecting the business to grow by 25-30 per cent a year. Small appliances, contributing barely 3 per cent of turnover, should grow at 30-40 per cent a year.

Confectioneries, which the company launched in FY18 through the Jollies brand, will be another growth driver. From being available in West Bengal, Jharkhand and the North-East, the brand will have a pan-India presence by August this year. According to Khaitan, the segment has the potential to generate ₹200 crore worth of revenues in the next two years.

Joint Ventures (JVs) were struck with group outfit and the world’s largest tea producer McLeod for the sale of packet tea and with Indonesia’s Universal Wellbeing for marketing FMCG products.

Eveready currently sells 4 million kg of packet tea (₹80 crore) through two brands Tez and Jaago, which may be scaled up to 10 million kg. McLeod has lined up investments in the packet tea JV. FMCG offerings are still at the drawing board stage, with the JV firming up launch plans.

Selling packet tea was one of the earliest dreams of Eveready. Khaitan admits that the lack of capital proved to be a major hurdle to scale it up in the past. The issue now seems to have been sorted out with McLeod focussing on packet-tea branding with Eveready to take responsibility for selling it.

In order for all this to happen the company has to cut down its debt. “No marketing company has much debt on its balance-sheet,” Khaitan says. He is looking forward to make Eveready debt-free in three to four years.

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