One-time provisioning on ICDs drags Eveready to Rs 443 crore loss

The Eveready stock, however, moved up 6.11% to close at Rs 333.35 on BSE

Hit by provisioning for outstanding amounts of inter-corporate deposits (ICDs) and write-off of capital advances on a land deal amounting to Rs 629.70 crore, battery maker, Eveready Industries India, posted a consolidated net loss of Rs 442.53 crore in the March quarter compared to a net profit of Rs 63.07 crore in the same period last year.

The Eveready stock, however, moved up 6.11 per cent and closed at Rs 333.35 on the Bombay Stock Exchange (BSE).

Revenue from operations was 21.67 per cent higher at Rs 272.63 crore as against Rs 224.08 crore in the corresponding quarter last year.

Revenue from operations in FY 2020-21 stood at Rs 1,248.99 crore compared to Rs 1221.09 crore in FY2019-20. Profit before exceptional items & tax stood at Rs 147.27 crore, an increase of 119 per cent. However, the company posted a net loss of Rs 311.52 crore compared to a profit of Rs 178.29 crore on account of the provisioning.

Eveready managing director, Amritanshu Khaitan, said, “The company has achieved its highest-ever operating profit despite a challenging year due to Covid. We will continue to focus on operational efficiencies and generate the kind of profitability that we have seen in the last year.”

“The aim is to make the company a zero debt company in the next two years,” he added. Eveready has a debt of around Rs 400 crore.

On the balance-sheet cleanup, Khaitan said that the board had taken a decision keeping accounting prudence in mind to create a provision for the outstanding on various group companies.

Eveready had given ICDs to promoter group companies and paid for certain guarantees to banks/ other parties who had provided loans to these companies.

“From time to time, in earlier years, as well as in the current year under review, a portion of these deposits were repaid by the borrowing entities to the company on demand,” it said.

However, deposits and recoverables amounting to, 489.29 crore and interest amounting to Rs 68.42 crore were outstanding as on March 31, 2021.

The borrower companies had been given time till February 28, 2021 for repayment of the outstanding. But on the expiry of the timeline, legal proceedings have been initiated for recovery of the outstanding amounts.  

Also, an outstanding amount of Rs 72 crore advance was paid to a company consequent upon a memorandum of understanding (MoU) executed on September 26, 2018, for assignment of leasehold rights of a property.

But on the expiry of the timeline, the MoU was canceled and legal proceedings initiated for recovery of the amount due along with interest.

Eveready said that while it was putting in best efforts to recover the outstandings from the companies, it considered it prudent to make the exceptional adjustments, without prejudice to any of the legal rights and remedies to recover all the due amount.