Will sell its assets and move towards an outsourcing model
Eveready Industries India Ltd. (EIIL) is set to exit tea processing business.
It has decided to sell assets related to this activity, and move towards an outsourcing model.
The company is looking to retire some of its debt through this move.
EIIL will seek, through postal ballot, shareholders’ approval for sale/ transfer/disposal of the building and other assets of its lone tea blending and packaging factory at Chaupara in the Dooars tea-belt of West Bengal.
The plot of land on which the unit stands is a lease-hold, and the unit would be sold as a going concern.
“We are now planning to covert tea processing into an outsourced activity as enough capacity is available thereof,” a director of EIL told The Hindu, adding that it would help reduce fixed cost while the sale would help reduce EIIL’s Rs. 250 crore-debt.
Tea packaging is one of EIIL’s verticals, which owns CTC (cut, tear and curl) tea brands like Tez, Premium Gold and Jago. These contribute around seven per cent of total turnover. However, there is only marginal growth in this activity, it is learnt. EIIL gets 60 per cent of its revenues from dry cell batteries, with the rest coming from flashlights, lighting systems, tea and exports.
In order to retire its debt, EIIL has been planning to sell some of its real estate in Kolkata, Hyderabad, Lucknow and Noida, although it has ruled out distress sale, saying that it would wait for the right price for either selling these plots directly or developing them through a joint venture.
EIIL executive director Amritanshu Khaitan has said that EIL is likely to break even or post marginal profit in 2012-13.