“The B M Khaitan-led Williamson Magor is selling its flagship Eveready Industries, triggering an auction process for one of the country’s oldest consumer brands,” the Times of India report suggested.
“The promoter, which owns 45% in the publicly traded Eveready, is said to have mandated Kotak Mahindra Bank for the potential sale, which could attract the interest of foreign and domestic strategic acquirers as well as private equity buyout specialist,” it added.
On December 7, 2018, the rating agency India Ratings and Research (Ind-Ra) had revised the rating outlook of EIIL from stable to negative. The downgrading of the rating is a reflection of the weakening financial profile observed in Jan-Mar 2018.
The Negative Outlook reflects EIIL’s continued high net leverage (net debt/EBITDA) of 2.6x in 1HFY19 (FY18: 2.5x, FY17: 1.6x), as the company had taken additional debts of Rs 150 crore, of which Rs 100 crore was extended as loans to group companies. This is in contrast to Ind-Ra’s expectation of a reduction in debt as well as inter-corporate loans (ICDs) during FY19 to reduce leverage, the rating agency said.
Any delay in the company’s ability to monetise surplus plant/land parcels and/or further extension of support to group companies would result in further deterioration of the credit profile and this would be negative for the ratings, it added.
EIIL’s battery business continues to be its cash cow with flattish revenue but robust EBITDA generation and minimal incremental working capital requirements. EIIL continues to hold a strong market position in batteries and flashlights with a dominant market share of around 50% and 75%, respectively, and high brand recall and robust distribution network, the rating agency said.
At 09:33 am; Eveready Industries was trading 15% higher at Rs 210 on the BSE on back of heavy volumes. In comparison, the S&P BSE Sensex was up 0.08% at 36,135 points. A combined 1.43 million equity shares changed hands on the counter on the NSE and BSE so far.
Meanwhile, Williamson Magor & Company has locked in upper circuit of 20% at Rs 63.60 on the BSE. The trading volumes on the counter jumped nearly 10-fold with a combined 54,459 shares changed hands so far. There were pending buy orders for 59,852 shares on both the exchanges.