In the middle of the transformation; Addressing Weaknesses in Operations and Product Portfolio: Eveready Md

Eveready Industries India Ltd is in the “midst of a transformation” of its business and has taken steps to address weaknesses in its operations and product portfolio, while the battery and flashlight maker expects growth in the coming days, said its chief executive. Suvamoy Saha.

Addressing shareholders in the recent annual report, Saha said: “Although operating results have been somewhat disappointing, a good area to highlight is the balance sheet, which has been under pressure in the recent past.”

“Actions taken through careful provisioning have now corrected this shortcoming,” said Saha, who joined Eveready as chief executive in March this year after Khaitains exited.

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Saha, the company’s former co-chief executive, was asked to assume the responsibilities of interim chief executive following the resignations of former non-executive chairman Aditya Khaitan and former chief executive Amritanshu Khaitan on March 3, at the following an open offer by the Burman Group for a majority stake in the company.

The Burmese hold a 19.84% stake in Eveready and have already announced an open offer to acquire an additional 26% at a price of Rs 320 per share.

“Despite the results, I sincerely believe that the company is now on a path to higher levels and is in the midst of a transformation that provides the roadmap. The company has now taken steps to address the weaknesses of its operations and product portfolio,” he said.

According to Saha, work is underway to improve each of these areas, such as increasing portfolio, communicating with consumers and improving processes.

“The companies’ fundamental strengths remain intact: a strong brand, a strong distribution reach and a significantly high market share in the core categories of batteries and flashlights. The company’s management is now solely focused on the leveraging those strengths to get results,” he added.

Some of the initiatives may take some time to bear fruit, but they are aimed at long-term and sustainable value creation, Saha said.

“I am aware that the growth of the business in the past has been negligible. This is an identified area for improvement. ‘also improve existing operational areas,’ he said.

Everready’s focus will be on growth in the coming days. Its existing battery, flashlight and lighting businesses already offer that opportunity, he added.

The uncertainties caused by the war and the pandemic have led to major supply chain disruptions and significant increases in material prices. Soaring inflation was also an inevitable outcome and the Indian market was affected by these factors.

“A slowdown in demand for FMCG products has been observed in large parts of the market, especially in rural areas. Despite this, the Indian market remained resilient, with many sectors making good progress,” Saha said.

However, he added that some FMCG players were showing reasonable financial results. “Unfortunately, I cannot say the same for your business. Revenue decreased by 3.4% to Rs 1,248.76 crore during the year, mainly due to a slowdown in the 4th quarter in the main categories of batteries and flashlights, and also due to the exit of the appliance sector in the 2nd half of the year,” he said.

Eveready’s core business, batteries, experienced an unprecedented cost push, necessitating price increases, which led to market resistance. “The good news is that the company maintained its market share at 52.8% (AC Nielsen) during this quarter, indicating that the market downturn was an industry-wide phenomenon.

In any case, these factors have been taken into account and this seems to bear fruit in the results of the following period. I am confident that the battery business will return to a much higher level of revenue and profitability is not too far in the future,” Saha added.

The flashlight market has been hit quite hard by dumped cheap imports from China and the company has adjusted its product portfolio to meet market demands. Saha hopes this will help Eveready regain lost market share.

“The lighting business is a growth area for the company. This business already accounts for 20% of the company’s total revenue,” he said. The company is now fully focused on providing the consumer with a range of products that are relevant to them and at prices that offer the best value, Saha said.

“Our focus will be on growth in the coming days. Our existing battery, flashlight and lighting businesses already offer this opportunity. We have the team and the processes to make this possible. I remain confident that the Future results will justify that confidence,” he said.


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