Eveready Industries Expected to Pay Off Debt Over Next Two Years
Eveready Industries, the flagship of the Williamson Magor group and the nation’s largest dry cell battery manufacturer, expects to be debt free over the next two years. The company has a debt of Rs 418 crore, according to its FY21 annual report.
The company is expected to withdraw nearly Rs 100 crore of debt by the end of this fiscal year (FY22).
Refinancing of high cost debt at lower rates was carried out, which significantly reduced the interest charge.
“Strict control has been exercised over finances through judicious management of working capital and operational efficiency. Eveready remains focused on reducing its borrowing, which stood at Rs 418.12 crore at the end of the year. The company has respected its financial commitments in terms of debt service and reimbursement thereof on time, ”indicates the annual report.
According to Amritanshu Khaitan, Managing Director of Eveready Industries, cash generation has improved significantly and cash flow from operations increased to Rs 133 crore in FY21 (from 27 crore in 20 ) while free cash flow is up to 121 crore (from ₹ 10 crore).
“We should generate at least around Rs 100 crore of free cash for FY22, if the FY22 first quarter execution rate is a benchmark,” he told BusinessLine, adding that the The company was “comfortable with generating free cash flow” which is sufficient to pay off long-term debt “on time”.
Accounts receivable revenue increased to 28.8 in FY21 (due to improved cash turnover), while operating profit for the year improved by 80 percent to 18 percent (vs. 10 percent). In the first quarter of fiscal 22, operating profit increased 100% year-on-year to 38 crore rupees.
Eveready’s main battery verticals – accounting for nearly Rs 800 crore of its revenue – grew 10% in volume during fiscal year 21. The company owns more than 50 percent of market shares. The AAA battery category, which is primarily used in medical devices and other everyday gadgets, has seen “robust growth” while AA batteries have seen a “marginal increase”. The increase in volume was helped by a drop in Chinese imports.
“Given the overall positive scenario, a tangible threat to battery consumption lies in less use of equipment consuming batteries,” says the annual report.
In flashlights, where the company has a 70% market share and a turnover of Rs 180 crore – with an annual growth of 8% – unorganized gamers and (Eveready) lookalikes pose a threat . The company is considering price adjustments to attract new users.
New lighting verticals, accounting for Rs 221 crore in revenue in FY21, have been hit by supply constraints and distribution disruptions due to the pandemic. The company envisions “competitive pricing” and more in-depth distribution. The segment deteriorated last year.
In the small household appliance segment, the company intends to move upmarket; work on a more robust offer and increase the distribution network, including via e-commerce. “The associated risk is that of product obsolescence which can make inventory management difficult. However, this can be overcome by consolidating the portfolio as the category gains momentum, ”management said.