Eveready to form JV with Indonesia’s Universal Wellbeing
Kolkata: Battery maker Eveready Industries India Ltd on Wednesday said it will start a company jointly with Indonesian conglomerate Universal Wellbeing Pte Ltd.
Eveready will own 30% in the joint venture, which will have an initial paid-up capital of Rs25 crore, the company said in a regulatory filing.
Universal Wellbeing is a leading consumer goods company in South-east Asia, Eveready said in a statement. Besides packaged food and beverages, the company sells a wide variety of fabric care, home care and personal care products.
In India, the yet unnamed joint venture company will sell its products through Eveready’s distribution network.
On Wednesday, Eveready’s shares fell 1.57% to Rs432.85 on BSE in a flat market.
For foreign companies, the key entry barrier in India is distribution network, said Amritanshu Khaitan, managing director of Eveready.
The battery maker will lend its distribution network, but the joint venture will have to build its own brand in India, according to Khaitan.
Over the next couple of years, cash need of the new company is estimated at Rs100 crore, he said.
By the end of March, the company will be incorporated and some of its products launched soon thereafter.
The product mix hasn’t yet been decided, Khaitan said.
Asked if the company is going to manufacture its products locally in India, Khaitan said it is not immediately clear. But even if there is any production in India, it will not be done at Eveready’s facilities, he clarified.
With the economy growing and incomes rising, India presents “immense potential” for growth, the Eveready statement cited Annie An, a director at Universal Wellbeing as saying.
“We believe with our experience in a number of categories in similar emerging markets combined with robust distribution of Eveready, we will be able to add value and improve lives of Indian consumers,” she said.
Eveready has some 4,000 distributors across India, and its batteries, flashlights and appliance are sold through some one million outlets.
There is a clutter in the consumer goods market, said Harish Bijoor, who runs an eponymous consulting firm. The key challenge for the joint venture will be to establish its brand, he said, adding that Eveready’s brand equity may not be of much use because it sells unrelated products.