Dry cell battery maker Eveready Industries defers new category entry

Dry cell battery maker, Eveready Industries India, has pushed the goalpost for entering a new category by a year.

Led by the Burman family of Dabur India, Eveready had planned to enter a new category by FY26, what would have been its fourth after battery, flashlight and lighting. However, its challenges with a revamped route-to-market (RTM) persist.

In the earnings call on Monday, Eveready managing director, Suvamoy Saha, said that the company was contemplating a newer category beyond battery, flashlight and lighting.

“However, we have shifted that goalpost by 12 months because we need to consolidate our present business.”

The current focus areas for the company would be to maintain its presence in carbon zinc and enhance presence in alkaline batteries; limit the decline in growth of battery operated flashlight; rapidly grow rechargeable flashlight and aspire to grow at 20 per cent in the lighting segment.

Saha indicated that the RTM should be amenable to take on other categories. The company had partnered with consulting firm Bain & Company early in 2022 for strategy and improving operations.

In three years, including FY25, Eveready is eyeing a topline of Rs 1,800 crore from its existing operations. Earlier, the company had expected to double turnover by FY27, but the timeline is now likely to get stretched.

The target set against FY22 revenue of Rs 1,206.75 crore had factored in contribution from the fourth category.

In FY24, the company’s revenue from operations on a consolidated basis stood at Rs 1,314.28 core, down by 1 per cent from Rs 1,327.73 crore in FY23.

Net profit at Rs 66.76 crore, was up by 142 per cent.

In Q4FY24, revenue was at Rs 280.9 crore compared to Rs 286.17 crore a year back; net profit in Q4FY24 was at Rs 8 crore compared to a loss of Rs 14.39 crore in Q4FY23.

The company declared a dividend after almost five years, at the rate of Re. 1 per fully paid up equity share of Rs 5 each, (20 per cent of the face value of equity share) for the financial year ended March 31, 2024.

In its results commentary, Eveready said that revenue was flat for the year and the quarter due to weak rural demand affecting offtakes of batteries and flashlights, and industry-wide price deflation in the lighting segment due to players passing on manufacturing efficiencies to the market. Revenues were also impacted due to the challenges from a revamped RTM improvement initiative, which are being resolved.

Saha told analysts that the revamped RTM would start giving rich dividends from the second half of the financial year.

The company is expecting a much better performance in H2FY25 for more reasons than one.  

Saha said that rural demand was likely to see an uptick.

“By the end of second quarter, we would have ironed out all the challenges that we faced on RTM. The value erosion in lighting, which was highly prevalent in FY24, should be addressed.”

“We expect all these factors to culminate into a higher level of growth in the second half of the current financial year,” Saha told analysts.