Eveready sinks in red as zinc prices surge

CORPORATE SCORECARD

Eveready Industries India (EIIL) has reported a net loss of Rs 13.42 crore for the financial year ended March 31, 2007 compared with a net profit Rs 79.65 crore in the corresponding period previous year.

Deepak Khaitan, executive vice-chairman and managing director, said the net profit last year, was on account of other income from sale of real estate in Chennai for Rs 76.64 crore and, therefore, this year's figure cannot be compared with those in the last year.

Khaitan attributed the loss to rise in prices of zinc, a key input, by 150 per cent. The rise in the zinc prices and the resultant price increase led to a drop in battery sales by 20 per cent. EIIL, which launched its LED version of torches in November 2006, is facing threat from LED torch imports from China. Now the company sells 1.2 lakh LED torches a month.

Khaitan said EIIL was targeting a turnover of Rs 1,500 crore in 3-4 years and expected non-battery products to account for 50 per cent. Currently, battery and flashlights contribute 90 per cent to the company's business. The rest comes from packet tea and the newly launched mosquito coils segment. EIIL plans to introduce value-added packet tea, which will add to its current offering of four brands. EIIL will also launch its mosquito coils nationally. With the Centre allocating around Rs 20,000 crore towards the education sector, Eveready will be looking at offering products for the sector. This may include articles like pencils, pens, notebooks among others. The company is also looking at ways to boost demand for batteries by launching new battery operated devices that transfers the use from kerosene lamps.

Eveready recently entered into a tie up with Phoenix Lamps Ltd to market CFL lamps produced by the later.

EIIL's Uttaranchal plant with a capacity of 400 million has begun operating on 50-60 per cent capacity this year.

The excise and income tax benefits will accrue to the plant from this year.

EIIL is also looking at opportunities for setting up a new battery plant. The company's management teams had visited Himachal, Silvasa and Assam apart from Hardwar to take stock of the situation.