For Eveready, Uniross recharge’s 6 months away

Eveready may have to wait another 6-8 months before it can bring its newest acquisition, France-based rechargeable batteries company Uniross, to break-even and leverage the French firm’s distribution network to sell its products overseas.

The dry-cell battery major feels that the Uniross debt would not have any significant impact on the company’s profitability in the current year.

Deepak Khaitan, vice-chairman, Eveready Industries, told DNA Money, “The acquisition of Uniross is yet to fructify into value. Unfortunately the global company missed out on festive orders as it was a victim of the global meltdown. We would see real growth happening next year. In fact, we estimate the company would come into ship-shape by September.”

“We have undertaken plans for restructuring the company and a review meeting in Paris in January would take stock of getting some of the plans ready. The activity in the first three months of the calendar year would also decide on the pace of growth in the second quarter—the crucial one for order bookings of the calendar year,” Khaitan said.

Eveready had acquired 80% control in Uniross, a company which commands a 10% share in the global rechargeable market, in July 2008.   

Once the subsidiary, which has a majority market share in Europe and China, is up and running, it is learnt that Eveready would utilise this platform to sell its own products abroad.

Although there are some guidelines which restricts Eveready to sell under its own brand name beyond India and Nepal, the battery maker may eventually push its products under a different name to some of the countries.

Eveready currently sells batteries under the Lava brand to some countries in Africa and some third-party exports as well.
Eveready, meanwhile, is likely to reduce its debt burden to Rs 250 crore this fiscal from Rs 300 crore last year.

An analyst tracking Eveready said, “The company would be able to bring its debt down by another Rs 40 crore without the Uniross acquisition. However, having an international company into its fold makes much sense in the longer run.”

Vijay Gaba, equity strategist with Merrill Lynch, said in a recent report, “The acquisition will enable Eveready to cater to the global marketing leveraging Uniross brand. Uniross had reported a loss of €3 million last year. The company, however, estimates it to break even in the current year.”