Eveready Industries cuts number of direct distributors to 1,000 from 5,000

Batteries and flashlights maker Eveready Industries India Ltd has cut the number of its direct distributors to 1,000, from 5,000 earlier, as part of a network revamp strategy to drive efficiency, according to company Managing Director Suvamoy Saha.

The company, in which the Burmans of Dabur had acquired a majority stake last year and became promoters, is seeking to "surpass the growth percentage achieved in FY23" in the ongoing financial year.

"As we continue our journey to scale up our revenues, efforts are underway to make our distribution network more efficient. Our teams have studied the demand pattern and key customer requirements and have effected changes to streamline the route-to-market processes," Saha told analysts.

He further said changes have been affected not only across the organisation but also across its "channel structures wherein we have reduced our direct distributors from an earlier number of 5,000 to a more efficient 1,000".

"We have managed this change without any impact on our business. We are thinking long-term here and expect distribution to be ready to back the present and future portfolio as well," he asserted.

Over the last six months the company's team and its consultants worked closely together to ensure the planning was right and have a scheme which is practical, implementable and was executed, Saha said.

"So today, we are down to 1,000 distributors. Obviously, as a result, the individual skills have gone up, and it will be more remunerative for them to do business with us rather than 5,000 small distributors, who are doing very small business...," Saha said.

However, he said small distributors who have been with the company for a long time have not severed ties completely, as Eveready Industries offered them to remain in its network as sub stockists.

"Now at this stage, I would also like to add that those 4,000 distributors have moved out from our direct distribution scheme of things, but they have become sub-stockist to some of our remaining distributors, people who are still working with us," Saha added.

He further said, "So basically, for a large part of the market, we have gone into a super sub-model and as a result, we have not lost anybody."

On the impact of the new structure, Saha said, "With our route to market having settled down to our new design, the management team is focusing on growth, aided by new efficiencies. The objective for the coming financial year is to surpass the growth percentage achieved in FY23."

In 2022-23, Eveready Industries India had posted a 10 per cent growth in consolidated revenue from operations at Rs 1,327.7 crore as compared to Rs 1,206.75 crore in 2021-22.

With relief from materials inflation and premiumisation incentive initiatives already starting to bear results, he said, "As we go forward, I see a distinct possibility of further gross margin expansion and certainly a more robust margin at the EBITDA level."

As for the future, Saha said, "Eveready is focused on driving growth across business segments with clear emphasis on riding the premiumisation trend, we have the right products, and we are supplementing that with an efficient distribution and impactful ATL (above the line) and BTL (below the line) activities, which we wish to sustain at 10 per cent."

As a consumer brand, Saha said, "We want to be in the minds of our consumers, our strategy for batteries, flashlights, and LED lighting, and associated products are duly aligned with this thought.