Kolkata :

Eveready Industries, the largest dry cell battery manufacturer in India, is planning to hive off its packet tea business into a separate entity. The B M Khaitan Group firm has convened a board meeting on February 20 to restructure the packet tea business. The packet tea with Rs 75 crore turnover now constitutes a little over 5% of the topline of Eveready, once the generic name in battery and flashlights in the country.

A source close to the company told TOI that the management of EIL is contemplating with 2-3 options, including demerger of the packet tea business and making it a wholly owned subsidiary of the battery maker which has diversified into lighting and consumer appliances in the last few years. The demerger of tea business will help Eveready to concentrate on lighting, appliances and bettery businesses which directly leverage the Eveready brand.
“The new company in packet tea will concentrate on tea business. This would be a win-win situation for both the companies. Eveready will concentrate on its core strength while the new company would concentrate on packet tea,” added the source.

The packet tea volume of Eveready is now around 4.5 million kg making it one among many players. But sources pointed out that after the renewed focus on packet tea business, the number could easily go up to 10-15 million kg making it a new company in the top-3 in packet tea after Unilever and Tata Global Beverages. “The new entity may also look for acquisition of packet tea brands and can induct private equity investors as well if needed,” said another source close to the development. B M Khaitan group is already the largest producer in bulk tea globally with 110 million kg output. The bulk tea business of the group comes under McLeod Russel.

Eveready had a turnover of close to Rs 1,400 crore in the last fiscal. The EBITA margin of the company is now at healthy 11%. A source close to Eveready said that after gaining reasonable success in LED lamps, the company is now addressing a growth path in LED Luminaires. “Growth should also come from the newly launched product segment of Appliances, once the distribution network for the same is fully established on ground. The demerger will help these businesses grow faster,” added the source. Eveready sells over 1.2 billion batteries and 25 million flashlights every year.

source: http://www.timesofindia.indiatimes.com / The Times of India / News> City News> Kolkata News / by Udit Mukherji / TNN / February 17th, 2017