Eveready to expand packaged tea business, retire huge debts

Kolkata, Jan 2: The Rs 1,000-crore Eveready Industries India Ltd (EIIL) on Wednesday announced that it would expand its packaged tea business substantially and sell off its NPAs to retire huge debts.
Declaring the new corporate strategic direction of the company, EIIL vice chairman and managing director Deepak Khaitan said here that the endeavour now would be to expand the marketing network.

Currently, the packaged tea business added only Rs 60 crore to the company’s total turnover, he said, but “in the coming years it should increase substantially.”

He, however, stressed that it did not mean there would be a shift from the main business of battery and flashlights to tea, but “both the businesses should grow simultaneously.”

“We are almost doubling the number of Eveready vans to 1,000 to reach remote corners of the country. Each van would now also carry our branded tea packets, besides Eveready products,” Mr Khaitan said.

He, however, hinted that the company would now focus more on packaged tea than its traditional area of bulk tea business, which currently contributed about Rs 350 crore to the total turnover.
To a query on the high debt the company is facing, Mr Khaitan said currently the company is in a “happy position” and there is no crisis because of it.

He added that EIIL, part of the BM Khaitan group, had chalked out ways to retire the nearly Rs 700 crore debt at the earliest.

“We have identified some non-performing assets (NPAs) and will sell them at an appropriate time to retire our debts.”

Mr Khaitan said that the huge debt of the company was due to the fact that its public issue immediately after the takeover of Eveready faced problems a few years ago due to the MS Shoes controversy.
Khaitans, traditionally in the bulk tea business, had bought Eveready in a cash deal with Union Carbide.

The EIIL managing director said the company was also focussed on the international market of battery cell and its ‘lava’ brand have been doing very well in African market.“In fact we are giving a tough time to Eveready brand in African market and will very soon expand our market,” Mr Khaitan said.

As per the deal with Union Carbide EIIL cannot market the Eveready brand outside India.

To a question on cheap battery import from China, Mr Khaitan said initially it was a worrying factor, but gradually when consumers discovered that the products were of poor quality and short life span, they rejected them.

The government also came to the aid of the industry by imposing anti-dumping duty on such products, he said.

Talking of the militancy problem in tea-growing areas like Assam, Mr Khaitan said this had definitely affected business in the state.
But now the government was helping in tackling this issue while tea growers had also raised an Assam tea protection force to deal with the situation.

— PTI