Will hike prices to recover FX, input cost losses: Eveready

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Will hike prices to recover FX, input cost losses: Eveready

Eveready Industries had indicated to sell its 25 acre Hyderabad based land. Last quarter wasn’t great for Eveready; primarily it was on account of high raw material cost, foreign exchange devaluation.

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Eveready Industries has put the plans to sell its 25 acre Hyderabad land on hold citing political uncertainty.

Speaking to CNBC-TV18, Deepak Khaitan, executive vice chairman of the company said that they feel this it is not an appropriate time to sell the land as the company is not in need of immediate cash.

Last quarter wasn't great for Eveready. Heavy forex (FX) losses and high input costs took a toll on the company's balance sheet.

The company plans to tackle the persistent problem by taking on price hikes whenever necessary, said Khaitan.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: The last time you had indicated that you are looking to sell your land at Hyderabad, it's about 25 acre plot and you are awaiting responses for the kind of price you might be able to get. Any update on that?

A: The land situation in Hyderabad is very soft. It's wrong time to talk about selling the land. The company is not in need of immediate cash. We have been told to be prudent and wait for the problems to be solved.

Q: It's not even prudent right now to go in for self development along with McNally Bharat, as you had earlier considered as one of the option?

A: That option still stands. Our team has already gone to the site and are coming up with ideas. But nothing has been finalised at the moment.

Q: Last quarter wasn't great for Eveready. It was on account of high raw material cost plus forex variations. How are you going to move forward? Earlier, you have used that as a hedging strategy one against the other. How will it move forward now?

A: Our batteries and flashlight sales are higher than last year. The main problem is that majority of our raw material comes from overseas. Foreign exchange devaluation has hit us. We are not the large exporter of batteries. We cannot offset that with exports. Plus, the cost of raw material is increasing with the shortages.

We have initiated a price increase a month-and-a-half ago, which will come into our balance sheet by December-end. We are waiting for this to respond going forward and then might take another price hike increase in the near future.

Q: Given that your margins had declined sharply in the last quarter on the back of that price increase, how much will it help your margins?

A: We would have recovered about 45-50% of our forex loss plus raw materials. The situation does not change and exchange does not come back. We will would negative every month, by about Rs 40 lakh a month, which has to be recovered only through price increase.