Eveready Industries posted a net profit of Rs. 4.04 crore despite a 10.87 per cent decline in gross sales at Rs. 311.72 crore for the quarter ended March 31, 2019.
The company had posted a loss of Rs. 16.12 crore in the fourth quarter of the 2017-18 fiscal year with gross sales of Rs. 349.75 crore.
According to the company, the dip in turnover during the quarter was attributable to the segments of lighting and appliances - mainly due to supply constraints in the segment of lighting and no government orders in fans as compared to last year. However, the overall profitability of the company was superior due to higher profitability in the battery and flashlight segments.
Factors contributing to the higher profitability were favourable commodity prices, fiscal benefits from Assam plant and overall cost conservation — mitigating the adverse impact of a depreciating rupee, the company said.
Although the battery market saw heightened activity because of the onset of the mandatory quality standards issued by the Bureau of Indian Standards effective from this month, Eveready’s volume remained flat during the quarter under review. Nevertheless, the company was able to maintain a 17.6 per cent EBITDA margin from this segment while the same for flashlights stood at 10.3 per cent.
“The category is expected to show better volume growth from the second quarter of the current year subject to effective implementation of the BIS standards”, the company said in a note in a filing with the stock exchanges. Besides, it also expects the lighting segment to stage a comeback in the similar quarter of the current fiscal year.
The appliance segment, however, registered an EBIDTA loss of Rs.23.9 crores during the year, as it is in a build-up phase and the revenues are not yet matching the cost structure.
Besides, the packet tea segment had an EBIDTA loss of Rs 11.3 crores during the year.
In another regulatory filing, Eveready said that it hasn’t made any provision for inter-corporate deposits to group companies as it feels that the dues, amounting to Rs. 199.29 crore in principal amount and another Rs. 31.50 crore as interest, can be recovered.
No provision has also been made over the Rs. 171.55 crore penalty imposed by the Competition Commission of India as the firm feels that the final penalty cannot be ascertained at this stage and hence provisioning is not required. The firm has challenged the penalty in NCLT and the case is currently under adjudication.
Moreover, it has also issued corporate guarantees and postdated cheques worth Rs. 283.09 crore to banks and other financial institutions for loans at the group level. The company said that the promoters of these group companies, which is the B.M. Khaitan Group, have guaranteed repayment alongwith interest in case the company defaults on repayment.