Tea and batteries major, Eveready Industries India Ltd has adjusted around Rs 300 crore against revaluation reserve in an effort to clean up its balance-sheet.
The company's auditors, Price Waterhouse and S B Billimoria & Co, have stated that the adjustment, reflected in the notes on accounts, is not in accordance with the pronouncements of the Institute of Chartered Accountants of India.
R S Jhawar, a director of Eveready, said Rs 164 crore of the sum adjusted was on account of loans to subsidiaries and related accrued interest and written-off inter-corporate deposits.
Subsidiaries incurred losses on investment made with advances received from the company in 1995, when McLeod Russel bought Union Carbide.
Analysts said, under normal circumstances, such adjustment is done against general reserves of the company as revaluation reserve is not realised money. However, Jhawar clarified, "The adjustment is similar to that done by banks and financial institutions in case of NPA provisioning, and the company now has a stronger balance-sheet".
Eveready is also in discussion with the financial institutions for restructuring its loans. Jhawar said, "Talks with the institutions are at an advanced stage and some have already agreed to lower the interest rates." A moratorium on payments for a couple of years was also under negotiation, as this would help the company tide over the downturn in the tea industry.
The amalgamation of Eveready and Bishnauth have resulted in higher sales and hence the ratio of sales to borrowings is much lower now, Jhawar pointed out. Eveready's borrowings at present is at Rs 850 crore inclusive of working capital. Before amalgamation, Eveready had a borrowing limit of Rs 600 crore and Bishnauth of Rs 300 crore.
Jhawar said, "Financial restructuring apart, the company's sale of tea gardens and real estate would continue as part of its efforts to reduce the borrowings." The company has already realised Rs 110 crore through sale of tea gardens and is in negotiations with buyers for 2-3 other tea estates.
During the year, Eveready has made an exit from unremunerative businesses. The company has closed down its cinema arc carbons business on account of its unrelated nature with the mainstream activities of Eveready.
To boost exports, Eveready has appointed Greenfield Trading Company Limited, Dartford, UK as its selling agent for sale of tea in all countries outside India except Nepal and Bhutan. Post-separation with the Magors, George Williamson & Co Ltd ceased to be Eveready's overseas selling agent.
