Eveready board clears demerger

The board of Eveready Industries India decided to demerge the Brij Mohan Khaitan flagship into two businesses "" bulk tea and fast moving consumer goods (FMCG).

The FMCG business will comprise batteries, flashlights, and packet tea under the existing company, while the bulk tea business will be a new entity.

According to the scheme of demerger, existing shareholders of Eveready would get an equivalent number of equity shares of face value Rs 5 in the new bulk tea company, McLeod Russel Ltd.

Upon demerger, the paid-up share capital of the company would stand reduced to Rs 27.89 crore from Rs 55.78 crore, by reducing the face value of each share from Rs 10 to Rs 5.

The liabilities of both the companies would be shared. Deepak Khaitan, executive vice-chairman and managing director Eveready, said the larger share of the Rs 745 crore debt would be with the FMCG business.

Details of distribution was being worked out by PricewaterhouseCoopers and Billimoria and Co. Deepak Khaitan said the management structure of both the companies would remain the same.

Brij Mohan Khaitan and Deepak Khaitan would be chairman and vice-chairman of the firms respectively.

Sources said, in addition, Deepak Khaitan would continue to be the managing director of Eveready. Sources added that Aditya Khaitan, the younger son of Brij Mohan Khaitan would, however, continue to run the bulk tea business.

The management had already charted out growth plans for the two companies. Deepak Khaitan said the main driver for growth in the FMCG business would be through packet tea, where it was relatively a small player.