The proposed sale of the battery business hung heavy on the annual general meeting of Eveready Industries India Ltd (EIIL) as minority shareholders pleaded with the management not to go ahead with the deal.
Raising concern that Eveready would be without tangible assets if and when such a deal takes place, shareholders questioned the proposed slump sale route for the battery business, even though many rallied behind the promoter group, the family of late Brij Mohan Khaitan.
Amritanshu Khaitan, managing director of EIIL, neither confirmed or denied the sale talks but pointed out that shareholders would get to vote if any decision is taken. “There is no stress on the balance sheet of Eveready. Still the company is disposing non-core properties to deleverage. It is restructuring organisation to cut cost. The core remains strong,” Khaitan assured the shareholders.
Corporate circles are awash with speculation that Eveready would sell the dry cell battery division, an overwhelming category leader in India, to Duracell of the US. It has been reported that Duracell would buy the business for Rs 1,600 crore even as the Khaitans would continue to use the distribution network.
Khaitan admitted that there was stress at the group level and dialogues are on with lenders to find a resolution. He agreed that the EPC (engineering, procurement & contract) business of McNally Engineering has led to stress at the group. EIIL has lent Rs 524 crore to group firms.
EIIL has about Rs 500 crore debt on its balance sheet and is expecting Rs 250-300 crore from property sales (especially Chennai and Hyderabad), Khaitan informed, adding, it saved Rs 12 crore by combining the distribution networks of appliances and flashlights and by selling the packet tea business.
“Battery margin at 17-18 per cent has never been so high. There is softness in consumer demand but we hope the situation will improve after corporate tax cut. The imposition of the BIS standard will also be positive as it will curb cheap Chinese import,” he informed.
Shareholder Saket Kapur said minority shareholders would not gain if a slump sale of the business takes place as opposed to hiving it off to a separate entity. If a buyer picks a majority stake in the new company, it would trigger an open offer and minority shareholders would benefit.
He asked the management not to sell the battery business which contribute s over 50 per cent of the revenue. The sentiment was echoed by shareholder Manoj Gupta.