Eveready posts loss in March quarter, initiates steps for 'quick' recovery

Firm is also undergoing a change of control, with the Burman Group intent on taking charge

The country’s largest dry cell battery maker, Eveready Industries India, posted a net loss of Rs 38.41 crore on a consolidated basis in the quarter ended March 31, due to lower demand and increase in input cost.

A year back, the company had posted a net loss of Rs 442.53 crore,  but on account of a one-time provisioning for outstanding amounts of inter-corporate deposits and write-off of capital advances on a land deal.

In its filing with the stock exchanges, the company said that the quarter continued to experience lower demand in all categories as inflation ruled high. Also, very significant input cost increases due to supply chain disruptions and overall inflationary pressures impacted margins severely and the price increases taken to offset this resulted in market resistance, the company said.

Plus, the flashlights category suffered on account of dumped imports from China.

Revenues from operations in the March quarter stood at Rs 241.24 crore compared to Rs 272.63 crore in the year-ago period.

Eveready said that the quarter and the year were also impacted due to one-time provisioning done as a measure of prudence, for certain disputed receivables and inventories, and on account of restructuring costs, for a total amount of Rs 27 crore and additional communication and consultation costs of Rs 18 crore as against the comparable quarter last year.

For a “quick” recovery, however, Eveready said that several measures had been initiated including de-bottlenecking legacy inefficiencies in the organisation structure and onboarding of Bain & Company for advice on improving operational efficiencies and strategy. 

In January, Eveready roped in the consultancy firm to help it identify profitable business strategy and execution of the same. 

The company has also activated cost rationalisation initiatives to offset some of the inflationary impact.

Eveready is also going through a process of change of control. The Burman Group in February announced an open offer for an additional 26 per cent in Eveready and an intent to take control. Days after, Khaitan family members stepped down from the board.

But sources indicated that the open offer for Eveready was yet to get approval from the Securities and Exchange Board of India (Sebi). The offer opening date as per the tentative schedule was April 26.

However, Burman Group entities are buying shares from the open market as per a purchase order of 5.26 per cent placed with its stock broker, J M Financial Services on February 28. The purchase order for the acquisition of shares in Eveready and the intent to take control had triggered the open offer in line with the Takeover Regulations of Sebi.

According to an exchange filing, the Burman Group holding after acquisition of shares on April 25, stood at 20.68 per cent. At the time of announcement of open offer, the Burman Group holding was at 19.84 per cent.