Eveready to hike D-battery prices

Eveready Industries India has decided to increase prices from May 1, by 50 paise, per piece, to protect its bottomline from increasing raw material prices.

Deepak Khaitan, executive vice chairman and managing director of Eveready Industries India, said the company has taken actions to pass on the adverse impact of raw material prices to the market, which will improve margins further.

The company absorbed all raw material cost in the previous financial year, which has affected Eveready's bottomline.

Eveready has a 45.6 per cent market share in batteries and 85 per cent share in flashlights.

Eveready was looking at a 15 per cent topline growth at the end of the current financial year and a 40 per cent growth in EBIDTA. Khaitan said, the earnings per share (EPS) would increase from Rs 8 to Rs 12.

The company registered sales of Rs 745.71 crore at the end of 2004-05. Net sales was at Rs 654.93 crore. Profit before tax was at Rs 48.30 crore and profit after tax at Rs 46.31 crore.

Eveready's sales in 2003-04 stood at Rs 968.23 crore and profit after tax was at Rs 38 lakh. However, the figures are not comparable.

But, comparison with the segment results of the FMCG division of the company for 2003-04 shows that total net revenues were higher by Rs 95.64 crore, a growth of 16.3 per cent over the previous financial year. Correspondingly, profit before depreciation, interest and taxation improved from Rs 76.26 crore to Rs 106.80 crore over the period, a gain of 40 per cent.

Packet tea contributed under 10 per cent to the company's total revenues. Khaitan said, Eveready would endeavour to grow it to 30 per cent in three years' time.

Eveready would also explore offloading some stake to institutional investors in the future.

The board would take a call after watching how the stock market reacted.

The Eveready scrip made a debut on the bourses yesterday, after the demerger. The scrip went upto a high of Rs 98.20 on Tuesday. Today it touched a high of Rs 92.50 and then finally closed at Rs 88.30. The face value of the share is Rs 5.

Khaitan said, the company could also weigh the option of increasing the authorised share capital, as another financing option.

The options would be explored if Eveready decides to reduce its debt burden or to finance some acquisitions.

Eveready's debt burden as on March 31, 2005 was at Rs 500 crore as compared to Rs 750 crore, prior to the demerger. "The company is laying out the plan for future diversification and looking at introducing 2-3 products in its portfolio" said Khaitan.

Eveready was also setting a greenfield project in Uttaranchal for a new capacity of 400 million pieces batteries at an estimated outlay of Rs 60 crore.