Burman Group can provide Eveready ‘a new leadership’ for much faster growth: Dabur VC Mohit Burman
The Burman family, the promoters of Dabur, wants to acquire control and intends to be a promoter of Eveready Industries as it believes if run ‘properly in a professional manner’ with new talent, the dry cell battery major could grow at a much faster pace and profitably.
The Williamson Magor group flagship Eveready, currently controlled by the Khaitans, needs to chart out on its own under ‘a new leadership’ and, hopefully, the Burman Group can provide the same, Dabur India vice chairman Mohit Burman told FE.
The Burman Group, on Monday, made an open offer to acquire an additional 26% share of the Khaitans-promoted company for Rs 604.76 crore, in a bid to acquire full control of it.
“We believe that run properly and professionally with new and existing talent, the brand and company will do well. We believe that the brand has a very good recall and penetration, and provided the right direction, we could see a pick-up in sales. We also plan to extend the brand into new verticals. We plan to clean the company and run it in a professional manner like our other businesses are currently being run,” Burman said in an e-mail interaction on Tuesday.
The mandatory open offer under the takeover regulations was made as the Burmans, already the single largest shareholder in Eveready, placed an order to purchase an additional 5.26% stake in the company for Rs 122.30 crore, taking their total shareholding to 25.11%.
Notably, at the end of the third quarter this fiscal, Khaitans owned 4.84% stake in the Kolkata-based company, while Burmans held 19.84%. Five investment arms of the Burman family announced the open offer. The offer price is Rs 320 per share. JM Financial has been appointed for managing the issue.
Interestingly, given the Burman Group’s significant shareholding in the battery maker and its intention to acquire control, it has already requested appropriate representation on the board through appointing three directors. Moreover, the Burman family will want to appoint a chairman after the open offer, as per the Sebi guidelines, according to sources.
“The company needs new direction, and the existing shareholding structure was not tenable. This company now needs to chart out on its own under a new leadership. Hopefully, we can provide the same,” Burman said.
Amritanshu Khaitan is managing director of Eveready Industries. Amritanshu’s uncle Aditya Khaitan is non-executive chairman of the flagship company of the financially stressed Williamson Magor group.
On Tuesday, Eveready’s scrip jumped 10.42% on BSE to close at Rs 376.30 apiece.
Asked whether he sees a lot of synergy between Dabur India and Eveready Industries, Burman said,”This is an investment made by the family. This is a personal investment of the Burman family and it has nothing to do with Dabur India. The Burman family has been investing their personal wealth in a variety of ventures outside Dabur and this investment in Eveready is one of them. It is not connected to Dabur India in any way.”
Eveready Industries India (EIIL) is the industry frontrunner in the portable energy (dry battery and flashlight) segment, with sales of over 1.3 billion batteries and 21 million flashlights every year. The company has lighting and electrical segments. It also produces small home appliances under the Eveready brand. The company has an extensive distribution network of over 4,000 distributors and reaches towns with population of 5,000 or more.
Eveready registered a net loss of Rs 309.13 crore in FY21, against a net profit of Rs 179.57 crore in the preceding fiscal. Its revenue from operation in the last fiscal grew a marginal 3% year-on-year at Rs 1,236.94 crore.
The board of directors of Eveready Industries had, in August last year, appointed Suvamoy Saha, a non-executive director of the company, as joint managing director. Significantly, appointing a joint MD was in line with what the Burman family wanted.
The Burman family had acquired around 8.48% additional equity stake in the battery major via open market operations in July 2020, taking its holding in the company to 19.84%.
The Khaitans’ shareholding in the company fell below 5% after banks and financial institutions continued to invoke and sell pledged shares for recovery of their dues from other group companies which are debt-ridden.
Check the source here –Source, Financial Express.