Industry: Consumer Durables
The B M Khaitan-led Williamson MagorNSE 20.00 % is selling its flagship Eveready NSE 13.87 % Industries, a leader in dry cell batteries and flashlights, triggering an auction process for one of the country’s oldest consumer brands, people directly aware of the matter said. The promoter, which owns 45% in the publicly traded Eveready, is said to have mandated Kotak Mahindra Bank for the potential sale, which could attract the interest of foreign and domestic strategic acquirers as well as private equity buyout specialists.
Khaitans are reviewing the Rs 1,500-crore business — when sales in the core battery operation is slowing — as part of a group-level rejig to pare debt. The group consists of the world’s largest bulk tea producer McLeod Russel, Kilburn Engineering and McNally Bharat.
Eveready is a brand that’s over a century old and was owned by the erstwhile Union Carbide India since 1905. The Khaitans had fought a bitter battle with Nusli Wadia’s Bombay Dyeing to acquire Eveready for Rs 300 crore in the early 1990s. The company currently has a beaten down share price, which has more than halved in the past one year, giving it a current market value of about Rs 1,350 crore, or roughly $200 million.
Eveready Industries MD Amritanshu Khaitan could not be contacted for comment despite several attempts.
Sources close to the Khaitan family said the promoters would be looking to induct a strategic partner by diluting a major chunk of its stake as the first option. “Ideally, they would like to sell around 30% stake and retain 10-15%,” one of the sources cited earlier in the report said. An outright sale was the second option if holding onto a minority ownership was not feasible, the source added.
Eveready sells over 1.2 billion batteries and 25 million flashlights every year. The promoters would expect a premium to the prevailing share price, though the subdued core business and still fledgling diversifications might weigh down buyers. The asking enterprise valuation would be in the range of Rs 3,000-4,000 crore, sources added.
Potential acquirers would be assessing the strength of the Eveready brand and the possibilities of extending the franchise into new consumer segments. Its mainstay dry-cell battery business, which generates around Rs 950 crore turnover, has faced rough weather due to changing technology and cheap imports. While Eveready has attempted diversification into LED lights and appliances in recent years, the group debt burden and deteriorating finances limited the company’s ability to enter new businesses by leveraging its distribution strength.
Source: Economic Times