The company has received Board's approval to raise up to Rs 150 crore through qualified placement; has hiked ad and marketing budget by 25%
The management of Eveready, in order to give a boost to its topline as well as bottomline, is banking on a Qualified Institutional Placement (QIP) of up to Rs 150 crore coupled with thrust on advertisement and marketing, the budget for which is being hiked 25% to Rs 75 crore this year.
The QIP issue was cleared by the Board on Friday. It would help the company invest in locally producing some components for batteries and boost its long term working capital, which would reduce its high cost debt, Eveready managing director Amritanshu Khaitan said.
Additionally, Eveready's Board has allowed raising the Foreign Institutional Investors' (FIIs') holding limit to 49% from 24% at present. FIIs increased their stake in the company by 6% during the April-June quarter from 10.47% at the end of March quarter to 16.29% in June.
Some of the investors in Eveready are Goldman Sachs, Nomura Trust, CitiGroup and Amundi. The QIP issue as well as raising of FII limit would result in re-rating of the stock, which has already turned into a multi-bagger.
"We are expecting that interest cost will become half by the end of the year from Rs 33 crore last year. While battery is a nil-working capital business where products are sold for cash, our growing lighting business needs working capital," Khaitan said.
The lighting business grew a whooping 70% during the quarter to Rs 67.50 crore even as the bigger battery segment rose by just 3% at Rs 193.40 crore.
Within the lighting business, sales from LED products grew from Rs 50 lakh a year ago to Rs 22 crore in first quarter of this fiscal.
"LED bulbs will continue to be a major driver of turnover growth for the company. Current trend of growth is seen to be sustainable in the near term," he said.
Overall, Eveready's profit jumped 50% at Rs 15.89 crore for the first quarter against Rs 10.6 crore for the corresponding period of the last fiscal while operating income grew a modest 8% to Rs 348 crore.
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