Eveready Industries sells Hyderabad land to Nuland Tech to reduce debt

In a bid to reduce its debt, B.M. Khaitan Group’s flagship company, Eveready Industries concluded an agreement with Nuland Technologies, for sale of its land in Hyderabad for a consideration of Rs 100 crore.

Production in this factory at Moula Ali Industrial Development Area in Hyderabad had stopped in 2010 owing to economic unviability. 

This is the second time the company has concluded an agreement to sell its land to raise money which will help reduce its debt. In December last year, it had sold its land in Chennai to Olympia Group for Rs. 100 crore.

“The proceeds from this sale will be used to reduce the debt”, Amritanshu Khaitan, managing director at Eveready Industries, said.

Asked if the company is considering sale of more idling land parcels, he said, “Sale of non-core assets is a means to bring down the company’s borrowings. However, there is currently no consideration for sale of other land or assets”.

According to India Ratings, a Fitch Group credit ratings enterprise, Eveready repaid around Rs. 50 crore of debt in the first quarter of 2018-19, pat of which was funded through the installment received from the Chennai land sale. 

The credit ratings firm said that term-loans of Eveready would be around Rs 301 crore while fund-based limit would be Rs. 160 and non-fund based limit would be Rs. 120 crore.

In July thus year, Eveready had sold off its loss-making packet tea business to Madhu Jayanti International to reduce burden on working capital. Although this business, in the last fiscal year stood at Rs 68.30 crore, but it had an EBlDTA loss of Rs 11.3 crore. Eveready felt it was not able to pump in money to promote the tea brands and saw the business as uneconomical.

“The company also finalised the sale of its packet tea business for Rs 6 crore. Although this will support the company’s overall profitability as the tea segment generated EBITDA loss, it is unlikely to substantially improve its liquidity or debt metrics”, India Ratings said.

Earlier this year, Price Waterhouse & Co Chartered Accountants LLP quit as the company’s auditor, stating that it has been unable to obtain sufficient audit evidence of inter-company deposits and its recovery. In its place, Singhi & Co Chartered Accountants was appointed.

Sources said the difference of opinion between Price Waterhouse & Co and Eveready was on the recoverability of inter-corporate deposits given to group companies and corporate guarantees given on behalf of group entities. These amount to Rs 512.26 crore.