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regular-article-logo Friday, 21 June 2024

Eveready Industries defers expansion plans due to problems in distribution channel overhaul

As a result, the company is going to miss the target to double turnover in five years, which was set out in 2022 when the Burman family, promoters of Dabur, took control of Eveready from the Khaitans of Calcutta. The company’s turnover was ₹1,200 crore then

Sambit Saha Calcutta Published 01.05.24, 11:43 AM
Suvamoy Saha

Suvamoy Saha Sourced by the Telegraph

Carbon-zinc battery maker Eveready Industries India has pushed back plans to enter a new category in search of rapid growth for a year after facing teething problems in the distribution channel transformation process.

As a result, the company is going to miss the target to double turnover in five years, which was set out in 2022 when the Burman family, promoters of Dabur, took control of Eveready from the Khaitans of Calcutta. The company’s turnover was 1,200 crore then.

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One of the areas the new promoters identified was to bring back topline growth which remained elusive for years. Realising that battery and flashlight are unlikely to be volume drivers given Eveready’s already high market share, the management had planned a new category.

Prior to that, the company decided to overhaul the distribution network before expanding horizon. However, the process took longer than expected due to glitches.

On Monday, a section of the analysts who interacted with the Eveready senior management at the post results conference call vented their impatience over the tardy pace of growth. However, the company leadership, spearheaded by managing director Suvamoy Saha, assured that Eveready is sticking to the target of doubling turnover but the goalpost has shifted by a year.

“To reach a higher level of turnover in the next 2-3 years, we have to look at new categories. We had aspired to start planning this new category sometime around FY25. Today, the way things have happened, we feel that we first really need to consolidate ourselves this year,” Saha told investors.

He said that Eveready should reach a turnover of 1,800 crore in three years, up from 1,314 crore in FY24. The company expects 5 per cent growth in batteries, 10-12 per cent from the flashlight and 20 per cent growth in lighting going forward. “We expect growth to return from the second quarter of FY25,” Saha informed analysts.

The new category, which will be identified in FY26 and launched in FY27, may fetch 500-600 crore business in one year of operations, taking Eveready’s turnover to 2,400 crore.

RTM challenge

After Burmans took control, Eveready decided to revamp route to market (RTM). The company started working with 1,000 large distributors, cutting down from 4,000 it used to service directly. The super distributors were expected to appoint sub-distributors.

However, the transition took place too rapidly. Some of the super distributors were also found wanting in their delivery. Eveready informed analysts that the glitches have now been identified and fixed.

In Q4FY24, Eveready posted 8.05 crore profit, swinging back from 14.15 crore loss in Q4FY23. Revenue from operations was 280.9 crore from 286.17 crore. For FY24, turnover slipped to 1,314.28 crore from 1,327.73 crore while profit jumped to 66.76 crore from 27.63 crore.

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