Eveready Q2 net rises 216% to Rs 58.02 cr on higher demand, lower costs

 Battery and flashlights major, Eveready Industries India, reported 216 per cent increase in net profit to Rs 58.02 crore in the quarter ended September, on the back of strong demand in batteries and flashlights coupled with cost control measures. Operating income of the company was higher by about 7 per cent to Rs 372.63 crore in the September quarter, compared to Rs 348.28 crore in the same period last year.

Eveready Managing Director Amritanshu Khaitan said this was the highest-ever quarterly profits without any other income. Earnings before interest, taxes, depreciation, and amortization (Ebitda) margin at more than 20 per cent was also the best.

The core segments of batteries and torches registered significant increases over the corresponding quarter of the previous year. The turnover from batteries grew by 14 per cent during the quarter while flashlights grew by 8.6 per cent. A strong demand combined with a sharp reduction in cheap Chinese imports helped the segment. In addition, the firm took price increases to mitigate the negative impact of rupee depreciation which further aided turnover.

The Ebitda margin for the battery segment was 31.1 per cent on a turnover of Rs 239.6 crore. Going forward, Eveready expects the batteries and flashlights segment to continue to witness a healthy demand, given the sharp decrease in dumped imports from China and disruptions caused to the unorganised market because of the pandemic.

The lighting and appliances segment also recovered from a poor Q1. Khaitan said the lighting business had turned around while appliances had cut losses.

Eveready Ind soars 10% after Delhi HC permits sale of Hyderabad property

Shares of Eveready Industries India soared 10 per cent to Rs 59.3 on the BSE on Thurasday after the company said that the Delhi High Court has vacated the ad‐interim order of injunction in the IL&FS case, and has allowed to go ahead with the sale of the property at Hyderabad.

"In reference to a matter filed against some of the promoters of the company, with regard to certain alleged dues, the HC had passed an ad‐interim ex‐parte order of injunction by which, inter alia, the company had been restrained from selling, transferring, alienating, disposing, assigning, dealing, encumbering or creating third party rights on any of its assets, and carrying out any change in its capital structure, or any corporate or debt restructuring... However, in a hearing on December 24, the High Court has vacated the said ad‐interim order of injunction, and has allowed to go ahead with the sale of the property at Hyderabad in terms of the Agreement for Sale dated August 30, 2019," the company said in an exchange filing on December 25. 

In September, the Calcutta High Court had restrained the company from transferring, alienating or encumbering any of its assets till the application filed by Infrastructure Leasing & Financial Services (IL&FS) was disposed of. According to IL&FS, it had granted loan facilities of Rs 170 crore to the group through Williamson Magor & Co Ltd, which has not been repaid.

In the course of hearing an appeal from IL&FS against Williamson Magor & Co, both, Eveready Industries and McLeod Russel -- part of BM Khaitan Group -- had contested that they aren't party to the case.

Eveready has been selling its vacant land parcels to pare its Rs 500 crore debt and sources said the firm is scouting for a strategic buyer for its battery business. Both these measures were being impacted by the earlier injunction.

At 10:42 AM, the stock was trading 5.65 per cent higher at Rs 57 apiece, as against a 0.07 per cent decline in the benchmark S&P BSE Sensex. Closet to 1.7 million shares have changed hands so far on the NSE and BSE. Meanwhile, shares of McLeod Russel, too, were locked in the 5 per cent upper circuit band of 4.27 per share.

Eveready profit before tax drops 35.65% to Rs 20.79 crore in Sept quarter

Eveready Industries India has recorded a 35.65 per cent drop in profit before tax (PBT) to Rs 20.79 crore for the quarter ended September 30, 2019, as compared to the same period last year. Net profit dropped 27 per cent to Rs 18.11 crore, as against the same period last year. The company is yet to move to a lower tax rate and is evaluating the same. Gross revenues were lower by 9 per cent to Rs 348.40 crore.

The company said the corresponding quarter of last year had a windfall credit of Rs 4.7 crore towards reversals for labour wage provisions of the closed Chennai manufacturing unit, which was not there in the current year. As a result, despite the superior performance in the battery and flashlights segments, the overall profitability of the company was inferior to that of the corresponding quarter of last year, Eveready said. Turnover was impacted on weak consumption demand, especially in the segments of lighting and appliances as also discontinuance of the packet tea segment. However, the core categories of battery and flashlights did not see a decline in growth.

The battery segment is expected to show better volume growth from subsequent quarters once full effect of implementation of the BIS standards comes into force.

Eveready said a promoter group level restructuring was underway to monetise assets to meet up the various liabilities of the companies, including the outstanding advances and any potential liability related to the guarantees/ post-dated cheques, due to the company.

Price Waterhouse quits as auditor of Eveready over inter-company deposits

Price Waterhouse & Co Chartered Accountants LLP has quit as Eveready Industries’ auditor, saying it has been unable to obtain sufficient audit evidence of inter-company deposits and its recovery. In its place, Singhi & Co Chartered Accountants has been appointed.

“Price Waterhouse & Co has expressed its inability to continue as the auditors of the company,” said Eveready in a notice to the bourses.

While approving the company’s annual financial report, Price Waterhouse & Co had said the holding company had given advances to the tune of Rs 62 crore to a company to get the leasehold rights of a property. The deal had to be executed by the end of the last financial year; and Eveready had the right to claim refund and cancel the agreement if it failed.

“However, neither the deed has been executed nor the refund claimed,” Price Waterhouse & Co said in its auditor’s report.

Sources said the difference of opinion between Price Waterhouse & Co and Eveready was on the recoverability of inter-corporate deposits given to group companies and corporate guarantees given on behalf of group entities. These amount to Rs 512.26 crore.

“We were able to get a good auditor on board immediately,” a company source said.

Future of tea biz

In a separate filing with the bourses, Eveready said its board has proposed to enter into an asset-transfer or licence agreement with Madhu Jayanti International for transfer of the packet tea licence and other related trademarks for Rs 6 crore.

Earlier, Eveready had entered into an agreement with another WMG entity, McLeod Russel, to boost the packet tea business. However, the latter has been selling its estates to pare debt and lenders have been invoking company shares pledged with them.

Company sources said the proceeds from this sale will be used to boost the faster-growing categories such as appliances and lighting. It will also help improve the earnings before income tax deduction and amortisation (Ebidta) margin and reduce working capital needs of the company.

In the last financial year, the packet tea business of Eveready stood at Rs 68.3 crore but it incurred an Ebidta loss of Rs 11.3 crore. Eveready reasoned that it was not able to pump in money to promote the tea brands and it stood at an uneconomical scale.

Eveready has also been scouting for a strategic partner for its batteries business. Sources said some developments are expected on this front in the next 45 days.