Troubled lead battery major, Eveready Industries India Ltd (EIIL) has announced an agreement with the Madhu Jayanti International Private Ltd (MJlPL) for its loss making packet tea business to reduce stress on working capital.
The board has given its nod to enter into a transfer/ assignment/ license agreement with the MJIPL for transfer and/ or license of the relevant and other trademarks identified assets, the company in a statement.
The turnover in the tea segment during the year ended March 31, 2019, stood at ₹68.30 crore registering an EBIDTA loss of ₹11.3 crore.
The company officials did not respond to calls to clarify and provide details.
Eveready in 2017 had announced a 50:50 JV with its group company McLeod Russel to manage the packet tea through a SPV--Greendale India Ltd.
Both the companies were supposed to invest ₹20 crore each.
But, both the group companies are facing concerns in managing group level debt raised by pledge of companies shares.
Eveready owned brands like Tej, Premium Gold.
The city-based Madhu Jayanti group's annual revenue from beverages and commodities is over USD 300 million with over 15 operating locations around the world. Its flagship brand is Jay Tea.
It also claimed that its core expertise lies in production of value added black tea, green tea, red tea and white tea in the widest range of tea bags, caddies, pouches & packets.
Meanwhile, Price Waterhouse & Co Chartered Accountants LLP had quit as Eveready Industries' auditor, saying it has been unable to obtain sufficient audit evidence of inter- company deposits and its recovery.
"Price Waterhouse & Co has expressed its inability to continue as the auditors of the company," said Eveready in a notice to the bourses.
While approving the company's annual financial report, Price Waterhouse & Co had said the holding company had given advances to the tune of ₹62 crore to a company to get the leasehold rights of a property.
The deal had to be executed by the end of the last financial year, and Eveready had the right to claim refund and cancel the agreement if it failed.
"However, neither the deed has been executed nor the refund claimed," Price Waterhouse & Co said in its auditors note.