Eveready to monetise land, assets to reduce debt and fund growth

Eveready to charge up growth and reduce debt through monetizing land

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Eveready

The company has surplus land in Calcutta and Hyderabad which are lying idle for quite sometime. The board has given an in-principle approval for monetization of the same in the next 12-18 months.

In FY18, Company has incurred a one-time management consulting charge of Rs 3.07 crore to identify cost saving areas. Its employee cost during the quarter ended March, 2018, increased 18 per cent and for the full year rose 17 per cent on account of expenditure on resources for diversification of professional luminaries, appliances and confectioneries. The advertising and promotional spend was up 66 per cent during the quarter, working out to be 6.1 per cent of the turnover against 4.2 per cent a year ago.

Why is this important

Eveready has a net debt of Rs 200 crore on the balance sheet. This move will strengthen the balance sheet and aid growth in the loss making business segments. Many of the one time expenses were bunched up together in this quarter to grow the businesses such as professional luminaries and consumer appliances which led to significant loss. The company has projected to turn appliances profitable in 2020 even as losses will come down from this fiscal.

Eveready to be positively impacted

Monetization of land will help the Company reduce the debt levels and eventually the finance costs. Also to finance growth plans there would be no requirement to issue additional debt thus strengthening the balance sheet

Eveready Industries (CMP: Rs. 251, MCap: Rs. 1,828 crs, FY2020 PE: 13.8).

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