Eveready Industries India has hiked the per battery price by 5 percent. This Rs 0.50 hike per battery is on the back of rupee depreciation, says Amritanshu Khaitan, MD, Eveready Industries India. Speaking to CNBC-TV18, Khaitan says the company is passing the price due to cost pressures and expects 11 percent margins in second half this year.Meanwhile, he adds that the Chinese dump is also impacting their business adversely. Below is the transcript of Amritanshu Khaitan's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Sonia: Take us through the price hike that you have done and are you not worried that this could at some point start affecting demand as well because even in the quarter gone by, your battery revenues were up just about 3 percent and you have taken a lot of price hikes in the recent past?
A: This is precisely the reason we split the price increase this time to first implement in the premium range which is a red range of batteries where the brand equity is much stronger and we noticed that this price increase has gone in pretty smoothly. It is still being implemented but the volumes have been pretty stable.The recent rupee depreciation, which has taken place doesn’t leave any choice but to pass on this cost pressure and we are very confident that with this kind of rupee depreciation trend, the other players would also follow because this cost pressure is for all players.
Latha: Isn't there competition from landed batteries, that used to be a big problem for battery cell makers for the longest time the competition from China, with you raising the price is that a threat at all?
A: The Chinese batteries are coming in at dumped prices of 50 paisa to a rupee. This has no impact compared to the branded player kind of products, which we sell. We are hopeful that the government will bring in an anti-dumping duties on the category soon and this price increase, which we have taken is only 50 paisa, which is very small but on a volume base of nearly 700 million pieces, it gives the company a hefty realisation increase.
Sonia: Can you give us the numbers in terms of revenues, how much would that be and how much would the margins increase?
A: I think the 5 percent price increase, which we have highlighted, would go into net sales. At a margin level -- after neutralising the rupee devaluation -- I think in the second half of the year we should see margins at around 11 percent for the company. However, the real impact of this price increase along with the price increase we took two months ago will come in next year because the battery and flashlight season had a higher weightage in the first half of the year.
Latha: What you are looking at in terms of revenues for current year and next year?
A: The current year first half is muted because of rural demand being a bit sluggish for flashlights. So we think our growth rate in the first half will be single digits but with LED business picking up for us and the lighting season which is the festival season picking up from the month of October, we think the second half of the year, the company should post much higher double digit growth.
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