2 Williamson Magor Group companies in advanced talks to recast loans

Promoters are also exploring capital infusion into certain promoter group companies and monetisation of certain assets of the group

Discussions between lenders and bankers over the debt restructuring of two Williamson Magor Group companies are at an advanced stage, Chairman Aditya Khaitan informed shareholders of group firm Eveready Industries India — the battery maker of the group — on Tuesday.

Faced with debt challenges at the group level, Williamson Magor has been charting separate resolutions for its companies.

With a resolution plan coming into effect, these companies will be able to generate cash flows within the next few years and restructure payments to the holding company, which will be used to repay Eveready’s dues.

Eveready does not require debt restructuring, but, it is understood that the group’s bulk tea producer, McLeod Russel India, is in the final leg of talks with lenders for debt restructuring and propose capital infusion by an investor.

McLeod has around Rs 2,000 crore of debt on its books.

McNally Bharat Engineering Company, the group’s engineering, procurement, and construction firm, is also awaiting lenders’ approval for restructuring of its debt.

At Eveready’s annual general meeting, Khaitan said a promoter group-level restructuring was underway. Through this, the promoters of the company were exploring possibilities of a capital infusion into certain promoter group companies and monetisation of certain assets of the group.

This is aimed at addressing outstanding liabilities and obligations of group companies, including inter-corporate deposits (ICDs) and advances, and a potential liability related to corporate guarantees. However, the restructuring has been delayed by the Covid-19 pandemic and the lockdowns in India to curb its spread.

“Physical interactions and due diligence of a transaction of this size and volume could not be effectively concluded due to the pandemic,” said Khaitan, adding, “While the pandemic has delayed the process, investor interest continues, and possible opportunities for investment and restructuring are being examined and explored as we speak.”

On ICDs and outstanding to Eveready, Khaitan said the board had requested promoter directors for a specific plan regarding restructuring, monetisation of assets, definite timelines not exceeding three months for repayment of the outstanding, and guaranteed obligations, besides steps to be taken for recoverability.

Accordingly, all borrowing entities would have to provide repayment plans and timelines at the earliest — not later than 15 days from the receipt of letters issued by the company. Letters were sent by Eveready to the companies on September 24.

While issues remained at the group level, Eveready is doing well on the operational front. Its Managing Director Amritanshu Khaitan said the core categories of batteries and flashlights witnessed a healthy demand. This, coupled with lower operational costs, resulted in a 60 per cent improvement in earnings before interest, tax, depreciation, and amortisation during the June quarter, despite an overall turnover dip.

“As the festive season approaches and the supply chain normalises, demand for lighting products are also expected to increase. Given the outlook, we expect to improve operating margins in the forthcoming quarters,” added Khaitan.

In response to a shareholder query on the Burman family’s investment in Eveready, Khaitan said, “We value their investment as a shareholder.” The Burmans of Dabur India now hold around 19.84 per cent in the company.