Global battery majors Duracell and Energizer are tipped to be in the race for a strategic partnership or a buyout of the battery business of Eveready Industries India from the Brij Mohan Khaitan stable, sources familiar with the development said. Some private equity players are also said to be interested.
The sources indicated that Eveready was expecting an enterprise valuation of around Rs 5,000 crore. Various options, including a partnership at the holding company level and even a slump sale of the batteries and flashlights business at a premium, are being considered, the sources said.
A special purpose vehicle could also be created for the batteries and flashlights business, where the promoters would have a minority stake and the rest of the business — comprising appliances, lighting, confectionery, packet tea and the joint venture for FMCG business — could remain with the main company. Promoter group holding in Eveready is at around 45 per cent. The stock reacted positively to the report of the sale of the battery business. It closed at Rs 205.20 on BSE, up 13.6 per cent.
The batteries segment accounted for 50 per cent of Eveready’s turnover of Rs 1,475 crore in FY18. According to the firm’s annual report, the Indian market for dry cell batteries is estimated to be worth Rs 1,600 crore by value. Eveready has a market share of 50 per cent between its Eveready and Powercell brands.
Eveready’s working capital debt in March was at Rs 100-150 crore and total at Rs 350 crore. The overall debt of the Williamson Magor group, as on March, was around Rs 4,200 crore, bulk of which was on account of McNally Bharat Engineering.
Eveready has already sold a 6.5 acre plot in Chennai for Rs 100 crore. Another deal for a 25-acre land in Hyderabad, which is on the verge of being getting concluded, is likely to fetch Rs 100-125 crore.
The objective behind inducting an investor, for which Eveready has mandated Kotak Mahindra Bank, was twofold. At one level, inducting a strategic partner would help in growth, and, at another, it would help in paring debt.
Another group firm, McLeod Russel, too, was deleveraging. The bulk tea major has sold a clutch of estates in Assam and Dooars in tranches and had set a target of raising Rs 800 crore from the sale. The world’s largest bulk producer sold estates to Goodricke Group, Luxmi Tea and M K Shah Exports over the past year. The estates had fetched good prices, pointed out sources. Most of the sale of gardens was now complete, save a few more.