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Eveready plans to split company into two
BS Bureau in Kolkata |
June 15, 2004 11:27 IST
Eveready Industries India, the flagship of the Brij Mohan Khaitan group, is set to demerge the company into two entities -- fast moving consumer goods business comprising batteries, packet tea in the existing company and bulk tea into the new company.
Deepak Khaitan will remain at the helm of Eveready, while Aditya Khaitan will be the managing director of the proposed bulk tea company.
The proposal for re-organisation of business will be placed at Eveready's forthcoming board meeting on June 28.
Deepak Khaitan, executive vice-chairman and managing director of Eveready, said the demerger was aimed at bettering shareholder value, as also employees.
He said that Brij Mohan Khaitan would be the chairman of both the companies and Deepak Khaitan would continue as the managing director of Eveready, while Aditya Khaitan would be the managing director of the bulk tea company.
Brij Mohan Khaitan is the non-executive chairman of Eveready, while Aditya Khaitan is non-executive director.
Deepak Khaitan clarified that both the brothers would be on the board of both the companies.
Deepak Khaitan said the timing was right for a demerger, since the tea business was looking and prices were on the uptrend. "The tea industry is getting back of track" he said.
The broad contours of the demerger would be in the lines of the report submitted by ICICI and Rabo Bank but, there would be some changes. Deepak Khaitan said, the details were being worked out by our chartered accountants and auditors.
Earlier, Eveready was considering selling a minority stake in the batteries business but, Deepak Khaitan said, such a proposition was currently not being explored.
On the growth plans for the bulk tea company, he said the company would consider acquisitions, if something interesting came by and the combined balance-sheet of the two would be strong enough to carry out an acquisition, if required.
However, the financial performances of the bulk tea and FMCG companies were vastly disparate, according to results of 2002-03.
Revenues from FMCG business accounted for Rs 645.43 crore (Rs 6.45 billion) as against Rs 297.09 crore (Rs 2.97 billion) from the bulk tea business. Profit before tax from the FMCG business was at Rs 65.87 crore (Rs 658.7 million) and bulk tea at Rs 6.27 crore (Rs 62.7 million).But, the market expected the tea business to pick up this year owing to higher prices.