Battery and flashlight volumes for the quarter were lower than that in the corresponding quarter of the previous year as optimal sales could not be achieved in April 2020 due to lockdown curbs.Battery major Eveready Industries on Wednesday posted an over three-fold year-on-year jump in its consolidated net profit for the June quarter this fiscal.
However, the amount of outstanding inter-corporate deposits (ICDs) to stressed promoter group companies increased compared with the year-ago period, and remain a cause of concern.
Buoyed by improved gross margin and lower costs, Eveready, a Williamson Magor group flagship, reported a net profit of Rs 24.99 crore for the June quarter against Rs 6.91 crore for the corresponding period last fiscal, despite a 20.5% y-o-y fall in its revenue at Rs 263.44 crore owing to lockdown-related disruptions and prolonged restrictions on trade of non-essential items and weak demand.
In spite of the turnover drop, operating Ebitda during April-June was higher by 60% due to an improved gross margin; lower employee cost, distribution cost, promotional spends and overheads, as various establishments of the company continued to run in a restricted manner even after lockdown restrictions were relaxed or removed, Eveready, promoted by the Khaitan family, said.
“Battery and flashlight volumes for the quarter were lower than that in the corresponding quarter of the previous year as optimal sales could not be achieved in April 2020 due to lockdown curbs. After the relaxation of restrictions, however, a healthy demand for batteries and flashlights was observed as trade inventory got depleted and the market continued to witness a reduction in dumped imports from China, after the implementation of quality standards issued by the Bureau of Indian Standards (BIS),” the company said, adding that during May and June, battery volume was higher by around 12% over the corresponding months of the previous year. Despite these uptick, volumes for the quarter remained subdued due to lower sales in April.
Batteries and flashlights, the company’s core categories, are now witnessing a healthy demand, given the sharp decrease in dumped imports from China and the disruptions caused to the unorganised market for non-availability of supplies. The company said the situation in the battery segment should continue to look positive as the full effect of implementation of the BIS standards comes into force.
ICDs to stressed promoter group companies such as debt-laden McLeod Russel and McNally Bharat Engineering remain a major concern for Eveready. Both McLeod and McNally have continuously been facing severe financial stress. For the battery maker, the amounts of outstanding ICDs during the quarter grew to Rs 353.25 crore from Rs 348.16 crore in the same period last fiscal. Interest outstanding on the ICDs grew to Rs 79.65 crore from Rs 38.76 crore in the year-ago period, disclosures made by the company to the stock exchanges reveal.
Auditor to Eveready, Singhi & Co, has mentioned the matter of the company’s unsecure ICDs to “certain companies that are part of the promoter group” in Limited Review Report. Earlier, rating agencies had also raised concerns over the battery major’s high net leverage and weakened liquidity amid financial support extended to the group companies.
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