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Business News/ Companies / News/  Eveready to transfer packet tea business to JV with McLeod Russel India
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Eveready to transfer packet tea business to JV with McLeod Russel India

Eveready aims to scale up the packet tea business through the joint venture with McLeod Russel India

In February, Eveready said its board had authorised its managing director Amritanshu Khaitan to explore ways of restructuring its packet tea business. File Photo: Indranil Bhoumik/MintPremium
In February, Eveready said its board had authorised its managing director Amritanshu Khaitan to explore ways of restructuring its packet tea business. File Photo: Indranil Bhoumik/Mint

Kolkata: Battery maker Eveready Industries Ltd on Tuesday said it will transfer its packet tea business to a joint venture with McLeod Russel India Ltd, the world’s biggest producer of tea. Both companies belong to the Khaitan family-controlled Williamson Magor Group.

In February, Eveready said its board had authorised its managing director Amritanshu Khaitan to explore ways of restructuring its packet tea business.

The aim of spinning off the business into a joint venture is to scale it up, Khaitan said on Tuesday. It currently generates around Rs75 crore in annual revenue, which can be scaled up to Rs200-250 crore in 3-4 years.

ALSO READ: Eveready looking beyond batteries to boost growth

Though currently the business does not turn in profits, it has the potential to become profitable if scaled up, Khaitan added. Packet tea sales in India are estimated to generate around Rs10,000 crore in annual revenue, and Hindustan Unilever Ltd and Tata Global Beverages Ltd are the dominant firms.

It is expected that McLeod Russel will provide capital to the joint venture for brand building, said a key Williamson Magor Group official, who asked not to be named. A roadmap will emerge within a month. The group will continue to sell packet tea through Eveready’s distribution channel, so it is expected that the focus will be on “mass brands", this person added.

Eveready has direct access to one million retail outlets, and indirect access to 3.5 million more, Khaitan had said earlier. Eveready currently sells packet tea through its retailers under two brands: Tez and Premium Gold.

The group had earlier indicated that the packet tea business needs Rs10-15 crore a year for brand building for the next few years. If it can be scaled up as envisaged, it will generate profit margins of 10-12%, according to the Williamson Magor Group official cited above.

Eveready on Tuesday said its March quarter net profit jumped 12% over a year ago to Rs10.46 crore amid difficult market conditions, helped by improved margins.

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Published: 30 May 2017, 05:14 PM IST
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