Eveready Industries India Ltd is in the “midst of a transformation” of its business and has taken steps to address areas of weaknesses in its operations and the product portfolio, while the battery and flashlight maker expects growth in the coming days, said its managing director Suvamoy Saha.
Addressing shareholders in the recent annual report Saha said, “While the operating results were somewhat disappointing, a good area to highlight is the balance sheet, which was under stress in the recent past.”
“Measures taken through prudent provisioning have now rectified that deficiency,” said Saha who joined Eveready as managing director in March this year after the exit of Khaitains.
Saha, erstwhile joint managing director of the company, was asked to assume the responsibilities as interim managing director after the resignations of former non-executive chairman Aditya Khaitan and erstwhile managing director Amritanshu Khaitan on March 3, following an open offer from the Burman group for a controlling stake in the company.
The Burmans have a 19.84 per cent stake in Eveready and have already announced an open offer to acquire another 26 per cent at a price of Rs 320 per share.
“Despite the results, I sincerely believe that the company is now on a journey towards the higher reaches and is in the midst of a transformation that provides the road map. The company has now taken steps to address areas of weaknesses in its operations and the product portfolio,” he said.
According to Saha, work is afoot in improving each of these areas such as portfolio augmentation, reaching out to consumers and process improvements.
“The fundamental strengths of the businesses remain intact — solid brand, strong distribution reach and significantly high market share in the core categories of batteries and flashlights. The management of the company is now purely focused on harnessing these strengths for delivery of results,” he added.
Some of the initiatives may need some time to fructify, but directionally these are for long-term and sustainable value creation, Saha said.
“I am aware that the company’s growth in the past has been negligible. This is an identified area for improvement. Towards this, the company is working to chart out a strategy for growth and also improve existing operational areas,” he said.
Eveready’s accent will centre on growth in the coming days. Its existing businesses of batteries, flashlights and lighting already provide that opportunity, he added.
The uncertainties caused by the war and the pandemic led to major disruptions in the supply chain and significant increases in materials prices. Soaring inflation was also an inevitable result and the Indian market was affected by these factors.
“A slowdown of demand for FMCG products was seen in large parts of the market, particularly the rural ones. Despite this, the Indian market remained resilient with many sectors actually making good progress,” said Saha.
However, he added that some FMCG players showed reasonable financial results.
“Unfortunately, I cannot say the same of your company. Turnover was down by 3.4 per cent to Rs 1,248.76 crore during the year, primarily due to a slowdown in the 4th quarter in the core categories of batteries and flashlights, and also due to the gradual exit from the appliance business in the 2nd half,” he said.
Eveready’s core business of batteries saw an unprecedented cost push, necessitating an increase of prices, which resulted in market resistance.
“The good news is that the company held on to its market share at 52.8% (AC Nielsen) during this quarter, which indicates that the slowdown in the market was an industry-wide phenomenon. In any case, these factors have been addressed and that is seeming to bear fruit in the results of the subsequent period. I am confident that the battery business will return to a much higher level of turnover and profitability is not too distant a future,” Saha added.
The flashlight market was quite badly affected by dumped cheap imports from China and the company has adjusted its product portfolio to address market requirements and Saha is hopeful this will help Eveready in regaining lost market share.
“The lighting business is an area for growth for the company. This business already comprises of 20 per cent of the total company turnover,” he said, The company is now completely focused in providing the consumer with a range of products relevant to her and at prices which deliver the best value for her money, Saha said.
“Our accent will centre on growth in the coming days. Our existing businesses of batteries, flashlights and lighting already provide that opportunity. We have the team and processes to make that possible. I remain confident that the future results will justify this confidence,” he said.