As Chinese dumping raises competition, the company is looking close high cost plants and monetise real estate to fund diversification
Dry cell battery major Eveready Industries may sell assets like land as well as close some of its unproductive plants to cut costs and raise funds for its new diversification in response to continuing Chinese dumping.
"We will look to monetise surplus real estate in the next two years," Amritanshu Khaitan, managing director, Eveready Industries, told dna.
While Khaitan didn't elaborate on the details of land holding or real estate that Eveready would monetise, he had earlier said that the company had a land bank comprising of properties in Noida, Kolkata, Lucknow and Hyderabad, which would be monetised depending upon market conditions.
Eveready, which so far has been financing its foray into LED lighting category from internal accruals, now need money to fund its recent diversification into electrical appliances.
Eveready recently entered the overcrowded home appliance sector by launching about 60 odd appliance products starting from mixer grinders to rice cookers in March.
"We need to invest for our growth in newer categories of lighting and now our recent entry into appliances. We continue to invest heavily in brand building in the LED business that would help us to command a position among the top three players in the category. To make the new verticals strong, we do need to invest," Khaitan told analysts.
Eveready, being a legacy company, has in past closed several manufacturing plants partly to cash in on the real estate boom and to comply with environmental regulations that barred companies from having facilities within city limits.
That strategy might get revived with the company planning a large 400 million pieces battery unit in Assam to take advantage of tax incentives.
Subdued battery demand, partly due to cheap Chinese imports and slow economic activities, may turn some of Eveready's existing high costs plants redundant.
"We will rationalise capacity in case battery demand doesn't pick up," Khaitan said.
Eveready currently has plants at Taratola Road, in Kolkata, Tiruvottiyur in Chennai, Noida in UP, SIDCUL industrial estate in Haridwar, KIADB Industrial Area in Karnataka, Aishbag in Lucknow and at Vaikadu in Chennai.
"We are setting up a 400 million battery plant which would get completed by March 2017. As the north east still enjoys excise duties and IT exemptions we see a payback of three years for this investment. This gives us the flexibility of shutting down some of our older plants which run at higher costs," Subhomoy Saha, finance director of the company, told analysts.
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