The markets have cheered the winds of change hovering over Eveready Industries - a part of the Williamson Magor Group. On March 1, the share price of the dry cell battery major rose sharply on the back of an open offer announcement by the single largest shareholder, the Burmans, who are the promoters of Dabur.
The Burman family has made an open offer to acquire an additional 26 percent share of the Khaitans-promoted company for Rs 604.76 crore. Remember, the shareholding of the Khaitan’s in the firm was substantially diluted after lenders invoked and sold pledged shares for recovery of dues from other debt-ridden group companies. Eveready has a debt of Rs 418 crore, as per its FY21 annual report.
The mandatory open offer being managed by JM Financial under the SEBI takeover norms, was made even as the Burmans proposed to purchase an additional 5.26 percent share of the battery maker for Rs 122.30 crore, taking their total shareholding to 25.11 percent. The open offer price is Rs 320 per share.
So, why are the Burmans betting big on Eveready? What are the plans to scale up the firm’s business? Will the open offer lead to a rejig in the board?
Moneycontrol’s Ashwin Mohan caught up exclusively with Mohit Burman, Vice-Chairman, Dabur India for a quick, exclusive chat on the road ahead….
The Burmans hold a 19.84 percent stake in Eveready Batteries currently. While the promoters, the Khaitan family hold 4.84 per cent stake. What prompted the move to launch an open offer now? Do we read this as a rescue act of sorts for the debt-ridden firm which has seen lenders invoking pledges in the past?
We have been shareholders in Eveready for over two and a half years, and we felt that the company now needs new direction. We felt that this is the opportune time to step in and provide that direction. Luckily, the company is on a decent financial wicket despite the promoter group’s financial issues. This is not a rescue act but us believing that there is a good future for this company and for all its shareholders, both minority and majority.
Is the open offer aimed at preventing any possible hostile takeover of Eveready Batteries by a third party?
No, our intent is just to take control of the company and become the new promoters (post culmination of the open offer) and provide direction to the company. The brand has immense potential and we feel we will be able to add value and take this business to the next level.
Assuming the open offer is concluded successfully, what is the eventual stake that the Burman family will end up holding and will it have the status of a joint promoter along with the Khaitans?
What we get in the offer is open to speculation right now. We will see this after the offer completion.
Is there a plan to rejig the board of the company? How many board seats would you seek and if there indeed is a rejig, who would be the chairman?
We do plan to rejig the board post the culmination of the offer. We are seeking three seats on the board and we will be appointing the chairman.
What potential does the Burman family see in the dry cell battery manufacturing segment and what is your plan going ahead to add value, tackle debt and scale up the business?We believe that the brand has a very good recall and penetration, and provided the right direction, we could see a pick-up in sales. We also plan to extend the brand into new verticals. We plan to clean the company and run it in a professional manner like how we run our other businesses. Luckily, this company is not high in debt and leverage is well within control.