The Burman family may consider taking control of Eveready Industries Ltd (EIL), the dry cell battery maker, if the Khaitans decide to exit the company.
The Burmans hold close to 20 per cent stake in the Calcutta headquartered EIL, nearly four times more than the existing promoters who manage the company now.
Amritanshu Khaitan is the managing director of EIL while his uncle Aditya Khaitan is the chairman of the board.
The Burmans, who are promoters of Dabur India Ltd, have also confirmed their intention to corner more shares in EIL but ruled out buying at the current market prices.
EIL rose 6.94 per cent to close at Rs 195.75 on the BSE on Wednesday after a media report suggested that the Burmans were getting ready to buy out the remaining shares of the Khaitans. Both sides denied the development.
The stock closed at Rs 195.65 on the NSE, after hitting a 52-week high of Rs 206.
The average cost at which the Burmans have built up their stake over the past 18 months is between Rs 80 and Rs 100 per share.
“(We will buy) at an appropriate price…not at this price!” Mohit Burman, vice-chairman of Dabur, told this newspaper when asked if the Burman family intended to acquire more shares in Eveready.
Asked if the Burman family would take control of Eveready going forward, he added: “Only if the Khaitans decide to exit.”
The Khaitans have disclosed no plans to move out of the company that the late Brij Mohan Khaitan acquired in 1993. But their options are becoming limited as their equity holding in the company has fallen dramatically.
The Khaitans own around 4.4 per cent stake in EIL, down from the 44.11 per cent that they held on March 31 last year.
The situation arose after promoter group companies that held shares in EIL defaulted on creditor agreements, prompting the lenders to invoke the Eveready shares that had been pledged with them as collateral.
Ironically, Eveready did not have any blotches on its own balance sheet. But the toxic debt had piled up in group firm McNally Bharat Engineering. The promoter group companies pledged their holdings in EIL and bulk tea producer McLeod Russel India Ltd to raise funds and funnelled the cash to mitigate the crisis at McNally Bharat.
At one stage, there were several reports that suggested global giants Energizer and Duracell were eyeing EIL’s battery business. While none of these deals materialised, the Burmans started picking up shares from the market.
Mohit Burman, who spearheaded the family’s entry into the financial sector (it had partnered Aviva of the UK for its life insurance foray in India), said Eveready was a strong brand with a national presence and this is what attracted them to the company.
Unless the Khaitans find ways to creep back into the company, it might become difficult for them to carry on for the long to medium term now that the Burmans have articulated their desire to acquire more shares and take control if the situation turns favourable. So far, however, the relation between the two camps have been extremely cordial.
If the Burmans cross the 25 per cent stake threshold, they will mandatorily be required to make an open offer for another 26 per cent.
