Khaitan holding dips in Eveready, McLeod Russel as IndusInd invokes shares

Dabur's Burman family emerges as largest shareholders in Eveready, with 19.84% stake

Promoter shareholding in Williamson Magor group companies - Eveready Industries India and McLeod Russel India - has dipped further, with IndusInd Bank invoking pledged shares.

The bank informed the exchanges on Saturday that on August 7, it had acquired 5,683,320 shares of Eveready and 7,832,253 shares of McLeod Russel India - translating to 7.82 per cent and 7.50 per cent, respectively - upon invocation of pledge.

Consequently, promoter holding in Eveready and McLeod has fallen to the extent of the invocation. In Eveready, promoter holding stands at about 7.25 per cent and in McLeod it is at around 18.32 per cent. According to exchange filing, promoter holding in McLeod at the end of June stood at 25.82 per cent.

Promoter holding in Eveready had slipped to 15.07 per cent last month while the Burman family - promoters of Dabur India - emerged as the largest shareholders in the company with a holding of 19.84 per cent.

The Burman family, which has been buying into Eveready since March 2019, in the last tranche acquired 8.48 per cent through open market operations and the stock has been on an upward trend since. Since July 13, the scrip has appreciated more than 80 per cent.

Last week, India Ratings upgraded Eveready's long term credit ratings to IND BB+’ from ‘IND BB’ and the outlook was changed to positive.

The rating agency said that the upgrade reflects Eveready's improved liquidity position aided by deleveraging in 2HFY20, coupled with sustained profitability in FY20.

The positive outlook reflects Ind-Ra’s expectations of a further improvement in EIIL’s (Eveready Industries India Ltd's) business profile and its liquidity position in FY21, backed by the improving performance of its battery and flashlight segments, a possible resolution of the contingent liability issue and the possibility of a managerial/board representation by EIIL’s largest shareholder the Burman family, it further said.

"It is surprising that pledged shares are being invoked at a time when value is being created," pointed out sources.

However, it turns out that pledge holders are cashing in, with prospects of debt resolution brightening. Both Eveready and McLeod are looking at tie-ups with investors to tide over the debt situation at promoter level and jointly manage the companies.

Most of the group level debt is on account of extending funds to the EPC company within the Williamson Magor portfolio, McNally Bharat Engineering. McNally has debt of around Rs 3,000 crore and a debt restructuring proposal is awaiting lenders' nod.

IndusInd said in its intimation to stock exchanges that the shares of Eveready and McLeod held by Williamson Magor & Co were pledged with the bank for securing the outstanding dues of Seajuli Developers & Finance Limited (Seajuli), the borrower company. The bank has invoked the pledge for recovery of its dues from Seajuli.

Seajuli is a holding company and the funds were raised for McNally Bharat Engineering. Most of the pledging of promoter shares in Eveready and McLeod was to support McNally and in the last one year, share selling by pledge holders has dragged down promoter holding significantly. A year back, promoter holding in Eveready was at 42 per cent and in McLeod 31 per cent.