Monday, 30th October 2017

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Duracell, Energizer eye Eveready stake

Khaitan family, promoters of EIL, keen on a partnership, indicating it wants to hold on to a minority stake

  • Published 12.01.19, 1:10 AM
  • Updated 12.01.19, 1:10 AM
  • 2 mins read
Dry cell batteries accounted for half the Rs 1,456.35-crore revenue in the last fiscal, while flashlights and torches contributed 12%. iStock

Berkshire Hathaway-owned Duracell and Energizer, two of the world’s largest dry-cell battery makers, may be vying for a pie of Eveready Industries, the flagship of the Williamson Magor Group.

Some top private equity players are also said to be in the fray for Eveready (EIL), industry sources said.

The Khaitan family, promoters of EIL, which also manufactures flashlights and consumer appliances, is keen on a partnership, indicating it wants to hold on to a minority stake.

Led by Amritanshu Khaitan, who spearheads Eveready as its managing director, the company is open to multiple options. It could get a partner at the holding company level or even spin off the battery and flashlight segment into a separate subsidiary and dilute equity partly or fully.

When contacted, a spokesperson for St. Louis, Missouri-based Energizer Holdings, said: “No comments. We don’t comment on rumour or speculation.”

Energizer Holdings owns the Eveready brand and sells batteries under it in several countries, except India where the right remains with the Calcutta-based Khaitans. It also sells battery under the Energizer brand.

Duracell, which is present in India, is yet to respond to queries. Duracell is owned by visionary investor Warren Buffett’s Berkshire Hathaway.

Amritanshu Khaitan could not be reached for comment.

The EIL stock jumped at the prospect of a stake sale and closed 12.22 per cent, or Rs 22.20, higher at Rs 203.90 on the NSE.

Industry observers feel the interest being shown by the global majors could be attributed to their inability to enter two of the largest global markets for dry cell batteries, India and China, in any significant manner.

Given that Eveready enjoys over a 50 per cent market share, it will give a potential buyer a large pie of the Indian market, which is growing at 6-7 per cent annually.

For PE players, who already have a stake in the FMCG space, EIL’s vast distribution network of 0.8 million sales point could be a big draw.

The stake sale could possibly open up multiple options for Eveready too, apart from paring debt at the group level.

For instance, the existing owner could be focusing on growing the appliance business, which has grown significantly in the last few years. Moreover, it can pump in more cash to expand the nascent FMCG business.

Dry cell batteries contribute 50.32 per cent of the Rs 1,456.35-crore revenue of the last fiscal, while flashlights and torches contributed 12.13 per cent.

The lighting and electrical division accounted for 23.72 per cent of revenues.

According to one estimate, the enterprise value of EIL could be as much as Rs 4,000 crore. A stake sale would help the owners to pare debt at the group level.