A one-time payment of Rs 23.21 crore over voluntary retirement scheme (VRS) for its Chennai plant resulted in Eveready Industries posting a 99 per cent fall in its net profit at Rs 0.20 crore during the third quarter of the current financial year.
The net profit during the third quarter (Q3) of the last financial year stood at Rs 20.94 crore. The pre-tax profit, excluding the VRS payment, fell by around 21 per cent to Rs 21.21 crore, as compared to Rs 26.73 crore in the year-ago period.
Despite the company reaping fiscal incentives from the Assam government over its recently commissioned plant in that state and battery sales volumes increasing, its revenue from operations increased by three per cent to touch Rs 379.18 crore, as against Rs 369.57 crore in the Q3 period of the 2017-18 financial year.
On account of the VRS, the company is of the view that it will lead to recurring annualised savings of around Rs 15 crore.
According to the company, its distribution cost increase was slightly higher as it grew in segments such as appliances and luminaires, where such costs are higher than the firm's traditional products distribution network. Also, high crude oil prices had an impact on the cost of fuel, thereby increasing distribution cost.
The battery volume grew by 6.2 per cent, with the earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin at 18 per cent during the quarter.
"The flashlight segment also had a robust margin of 13.4 per cent. On a year-to-date basis, the segments of batteries and flashlights clocked Ebitda margins of 17.2 per cent and 10.7 per cent, respectively," the statement said.
During the quarter under review, its operating Ebitda, however, improved by four per cent to Rs 34.79 crore, as compared to Rs 33.46 crore in the year-ago period.
The company is of the view that although the weakening of the rupee is a concern since the bulk of materials are imported from China, which has also seen a similar level of currency depreciation, there might not be a significant increase in input costs in the near-term.