Sources close to the development said Gillette is interested in the outright purchase of the brand name and manufacturing units for "anything between Rs 500 crore and Rs 800 crore."
Sources said the global major has appointed a group of professionals to carry out "environmental audit" at the Williamson Magor-group company's 11 manufacturing units, comprising five units of batteries, two of metal and alloys and one each of flashlights, carbon products, electrolytic manganese di-oxide and mechanical processors.
If Gillette clinches the deal, it will carry out the acquisition through its Indian subsidiary Indian Shaving Products Ltd and may prune the 11 production units situated at Cossipore, Taratolla, Chennai, Hyderabad, Noida, Lucknow and New Mumbai, sources said.
The Willamson Magor group, promoters of Eveready Industries, is reluctant to comment on the pricing of the non-tea business. "We have only proposed the restructuring of the company, which includes demerger of non-tea business into a separate identity. Beyond this, nothing can be ascertained now," a top Williamson Magor executive said.
The resolution pertaining to the demerger of the non-tea business into a separate entity as a precursor to "forge strategic alliance with foreign partners" will be placed before the Eveready shareholders at a general meeting on September 29. The proposed restructuring, the company claimed, will also strengthen its tea business which will expand by "merger or acquisition of one or more profit making companies."
"Gillette is keen to purchase only assets (brand name and manufacturing units) and not the liabilities (outstanding loan of Rs 538.68 crore as on March 31, 1999). The brand name and the manufacturing units could command a price of Rs 500-800 crore. However, a final decision can only be taken after auditing the balance sheets," sources said.
Analysts tracking Eveready Industries said an outright sale of the Eveready brand and the production units could conform to the promoters' previous deal with the Rahejas when the city-based group sold the manufacturing units of Standard Batteries to Exide. Standard Batteries still continues to be an investment company of the Willamson Magor group.
The Williamson Magor group acquired Eveready Industries (earlier, Union Carbide India) through McLeod Russel in September 1994 for over Rs 300 crore. Its abortive attempt to meet up the financial burden of the acquisition by raising money from the capital markets, forced the company to go for inter-corporate deposits and high cost borrowings.
The promoters merged Mcleod Russel with Eveready Industries in April, 1996.
In 1998-99, the company's sales grew to Rs 795.39 crore from the previous year's Rs 759 crore. However, net profit dipped to Rs 39 crore from Rs 57 crore in 1997-98, mainly because of rise in gross interest cost and fall in margin in tea business.
