Eveready Industries India Ltd, India’s largest dry-cell battery maker, plans to diversify into consumer products and real estate as part of an initiative to double revenues to Rs2,000 crore by 2010.
Eveready has around 993 acres of land in Mumbai, Lucknow and Hyderabad. The realty plans are at a nascent stage, said Deepak Khaitan, executive vice-chairman and MD, Eveready. Khaitan added that Eveready would also launch writing instruments and home-care products such as floor-cleaning solutions that will be sold through the company’s channel: 5,000 distributors who reach one million outlets directly and another three million indirectly.
“We have set up an in-house team to work out the strategy for the road ahead,” said Khaitan. Over the past decade, the company has been through two major rounds of restructuring: first, merging the Khaitan group’s tea business with Eveready, and then de-merging it from the company (it is now under associate company McLeod Russel India Ltd). “Eveready has been too caught up with its own restructuring to look at its core business more seriously,” said Jigar Shah, director at KR Choksey Shares and Securities Pvt Ltd.
In 2006-07, the company posted a loss of Rs22.69 crore on revenues of Rs953.52 crore. Eveready’s batteries and flashlights took a severe beating, with low-priced Chinese products dominating the market. The sale of the company’s popular brass torch fell from seven million to four million units. It sold fewer plastic flashlights too: two million, down from five million. The entry of LED (light-emitting diode) torches also killed a good part of the demand for Eveready’s D-sized (larger) batteries used in the conventional high-powered flashlights. The company launched its first LED torches in December 2006 and followed it up with the launch of LED brass torches last month.
Eveready’s move to develop its real estate comes in the wake of similar attempts by several business houses, including the Wadia Group.
Eveready has also previously tried to leverage its distribution network—in the 1990s it tried unsuccessfully to sell soaps and other products made by German firm Henkel AG’s Indian arm. “That was before we (the Khaitans) took over from Union Carbide in 1995,” said Khaitan. The company has since tried to sell packed tea and has forged partnerships with Phoenix Lamps to distribute compact fluorescent lamps and with another company for mosquito repelling coils. The products the company now plans to distribute will be made by contract manufacturers and branded Eveready. The company is also considering a foray into coffee.
The diversifications could spur investor interest in the company’s shares. The Eveready scrip (with a face value of Rs5) closed at Rs54.95 on the Bombay Stock Exchange on Tuesday, marginally lower than the previous closing at Rs56.