Burman family adds another 0.28% in Eveready Industries

The Delhi based Burman family, that owns Dabur Ltd, acquired an additional 0.28% in Eveready Industries from the open market. They have been buying the stock for some time and have now taken their cumulative shareholding in Eveready Industries to 20.68%.

The acquisition of these shares has been done by five holding companies of the promoter group. Burmans have given the mandate to buy the stake to JM Financials.

In February 2022, the Burman family had mandated JM Financial Services to buy an additional 5.26% in Eveready Industries from the open market. In Feb, it was already holding 19.8% in the company, so since then the accretion has not been too much.

The Burman family has also made an open offer for an additional 26% stake in to the existing shareholders. Eveready was run by Khaitans, who had lost control a few years back.

Check - Eveready Share Price
 

The problems for the Khaitan group started when they had pledged shares of Eveready Industries to raise loans to fill the gaps in some of their group infrastructure companies.

Both McNally Bharat and McLeod Russell needed to be urgently bailed at that point of time and the Khaitans were the promoters of both the companies. They ended up pledging the shares of Eveready to bail out McNally Bharat and McLeod Russell.
 

Since the Khaitans could not repay the loan, the banks had sold off the shares in the open market leading to the Khaitan group becoming a very nominal shareholder in Eveready. At that point, Dabur group had come in as a white knight.

They had warehoused the shares with them and meanwhile allowed the Khaitans to continue to run the business. Of course, this leeway was given based on a time bound assurance of deliverables by Khaitan group.

Even apart form loss of control, the Eveready group has other business level problems. The lucrative flashlight category continued to suffer on account of dumped imports from China, with the maximum impact felt in the last two quarters.

Eveready has appointed Bain & Company to advise on improving operational efficiencies and revamping strategy, including urgent cost rationalization measures to return to profitability by FY23.

While Burmans had originally given 2 years for the Khaitans to run the business, there was not much improvement in the business of Eveready. As a result, late last year, Burmans decided to take control of Eveready.

Accordingly, the nominees of the Khaitan family stepped down from the key board positions and instead the Burman family nominated two of its members into key positions in Eveready Industries. 

For now, the pressure on financials is still visible. It reported a net loss of Rs.38.39 crore in Q4, although it is just a tenth of the losses in the fourth quarter last year.

The company also witnessed a sharp 11.5% fall in total revenues for the fourth quarter while the full year revenues for FY22 were also down by 3.4% at just about Rs.1,207 crore. 

In its investor update, Eveready has mentioned that lower demand in all categories due to high inflation combined with significant input cost increases due to supply chain disruptions were the villains of the piece.

The Eveready stock closed lower at Rs.319.10 on the Bombay Stock Exchange on 25th April. It remains to be seen how the Burmans plan to turn around the floundering business model of Eveready Industries.