In an interview to CNBC-TV18, Amritanshu Khaitan, ED, Eveready India says, even though historically January to March has always been a lean quarter, the car battery manufacturer expects profits and sales growth in Q4 of FY13 to be better than that Q4 of FY12.
Together Eveready and Powercell control around 50 percent of the market share he added
Commenting on price increases he said, “We have no option but to increase prices in our AA batteries. I do not have the details on what will be the quantum of increase but we do plan to pass it on before our season which is June-July-August.”
Revenues for FY13 would anywhere between Rs 1050-1100 crore and going forward into next year; we would aim to do about Rs 1200 crore said Khaitan.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: Can you give us an idea of how the quarter was in terms of sales considering that battery numbers were a disaster last quarter?
A: Basically, we are a typical FMCG company and we have nothing to do with auto. January-February-March quarter for us is normally a lean quarter and this has always been the case historically. But compared to the year gone by, the quarter would be better in terms of turnover by about 6-7 percent, should be better.
Q: How would you see the quarter compared to the previous quarters and more importantly the current year? Are you sensing that you are going to see more pressures in terms of consumption?
A: The quarter in terms of profitability would be better than the year before as well as in terms of sales growth. Going into FY14, both flash light as well as battery should see positive growth. There will be cost pressures which we are facing and we have plans to pass that on partially to the consumer.
We have no option but to increase prices in our AA batteries and we are working on it at the moment. I do not have the details on what will be the quantum of increase but we do plan to pass it on before our season which is June-July-August, which is when there is steep demand for batteries and flash lights due to high power cuts in the country.
Q: What would be the market share of Eveready and would you be market leader and how would it compare to Nippo which is also listed?
A: Eveready as a brand has a market share of around 45 percent and then we have a second brand by the name of Powercell. Together we control over 50 percent of the Indian market. As compared to Nippo and Panasonic which would make another 40 percent. So if you see the Indian market between these three players we control 90 percent of the Indian market.
Q: You are talking about the input cost. Is it mainly on the commodities side like zinc and lead where we have seen a bit of a fall in the price? So could elaborate what kind of pricing pressure you are seeing on the input front?
A: When we speak about input cost, it is not the input cost for the last three-six months but historically Eveready margins have been over 10 percent at EBITDA level.
Two major input costs have been zinc, and the overall raw material basket is impacted by the rupee. Rupee depreciated over 20 percent in FY11-12 and that impact continued last year where we did pass on some of the increase. That has been reflected in past three quarter results of the company where our EBITDA margins have improved compared to the year before.
However, looking from a FMCG company point of view, we need to take these increases over a period of time just to get back to the historical margins the company had three years ago. So zinc price coming down by USD 200 does not impact us to the extent the rupee depreciation has done. So we are trying to catch up on profitability.
Q: What do you think you will do by way of a revenue rise in the year that just ended FY13 compared to the Rs 980 crore you did last year in FY12 and what is the forecast for FY14?
A: We should be anywhere in between Rs 1050-1100 crore in FY13 and going forward into next year I would see us aiming to do about Rs 1200 crore.