Eveready ropes in Bain & Company for rejigging business strategy

Consultancy to study firm's strengths and weaknesses and thereafter identify the low-hanging fruits in terms of profitability

Eveready Industries India, the country’s largest dry cell battery maker, has roped in consultancy firm Bain & Company to help it evolve and execute a comprehensive business strategy.

Amritanshu Khaitan, managing director, Eveready, said Bain & Company has a comprehensive mandate to increase Eveready’s top line and bottom line over the next few years.

“Bain will analyse the strengths and weaknesses of the company, the brand and the distribution network, and thereby recommend what are the low hanging fruits in terms of profitability. It will also look at the long-term goals to improve topline and bottomline – the areas of growth that the company should look at. It’s a comprehensive exercise to transform Eveready, going forward,” explained Khaitan.

According to the company’s annual report, Eveready has a more than 50 per cent share in the Indian dry cell battery segment and 70 per cent share of India’s organized flash light market.

A third vertical – lighting and electricals – is also gaining importance in Eveready’s scheme of things.  

“Lighting will be a big thrust for the next five years,” said Khaitan, adding that the consultancy firm would also be analyzing the benefits of this adjacency category as well. Possible new verticals for Eveready’s growth is also something that Bain may look at.

The company’s revenue from operations had stood at Rs 1,236.94 crore in FY21; batteries accounted for the largest chunk in turnover at Rs 800.90 crore while lighting recorded revenues of Rs 221.10 crore.

However, the market size for lighting was over Rs 20,000 crore, pointed out Khaitan.

The year FY21 was good for Eveready, with profit before exceptional items and tax more than doubling to Rs 149.64 crore, partly led by the Covid-19 pandemic that sent battery volumes soaring on medical equipment-buying frenzy. That apart, the company also focused on increasing operating efficiencies.

However, Q3FY22 saw a sharp drop in profitability on a year-on-year basis, as the battery segment faced cost push.

“From a very big jump (last year), we have seen a dip in this quarter due to cost push,” said Khaitan.

“The cost push in Q3 and Q4 has been to the tune of 30 per cent. We have already passed on close to 15 per cent price increases and we would evaluate further increases as and when it will be required to get margins back to earlier levels. We should look at steady 15-16 per cent EBITDA margins, going forward,” added Khaitan.

However, Khaitan also said that last year’s performance should not be taken as a benchmark as all expenses had been virtually stopped due to the pandemic.

“We do plan to go back to brand building and increase spend there,” he said.