Eveready Industries may monetise land to reduce debt and fund growth
The move to sell surplus land is expected to further strengthen the company balance sheet by reducing its total debt outstanding pegged at Rs 200 crore.
The move to sell surplus land is expected to further strengthen the company balance sheet by reducing its total debt outstanding pegged at Rs 200 crore. Part of the proceeds will also be used to fund EIIL's growth plans. The board of directors of the dry cell battery maker has cleared the management's proposal to monetise surplus land in Kolkata and Hyderabad over the next 12-18 months.
The company has requisitioned the services of a management consultant to identify potential cost-saving areas.
Eveready Industries has suffered a standalone fourth-quarter (Q4) loss of Rs 16.12 crore due to a sharp spike in operating costs. Net profit in the corresponding previous quarter was Rs 10.46 crore. For the whole of 2017-18, net profit was Rs 54.73 crore against Rs 93.63 crore a year ago.
The company said in a filing to the bourses that its employee cost during the quarter increased 18 % and for the full year rose 17 % on account of expenditure on resources for diversification of professional luminaries, appliances and confectioneries. The advertising and promotional spend was up 66 % during the quarter, working out to be 6.1 % of the turnover against 4.2 % a year ago.
Though the company's operating income grew by 15 % during the quarter, there was an erosion of gross margin by about 200 basis points, as the growth came primarily from the still evolving category of appliance, where margin is still much lower than that of the other established categories, the company release stated.
It further added, "battery turnover showed a nominal growth of 2.5% during the quarter while the yearly turnover remained flat. The segment turnover was muted initially, saddled with high GST rate of 28%, which got subsequently reduced from mid-November to 18%. While that has provided some impetus for growth subsequently, the pick-up continued to be sluggish in after effects."
The category was also disturbed by dumped imports from China. The segment still continues to be profitable and remains the mainstay for the company’s profit profile, despite squeeze in its gross margin by 114 basis points on account of strong input materials costs and withdrawal of fiscal benefits at the Haridwar unit, which was partially offset by the new greenfield unit at Assam.