Proliferation of battery-operated medical equipment to boost battery demand: Eveready

Batteries and flashlights major Eveready Industries India Ltd on Friday said the proliferation of various battery-operated medical equipment is expected to give a fillip to battery demand, while the flashlight segment will remain steady on the back of the revival of rural economy from the adverse impact of COVID-19 pandemic. The company continues to witness steady demand in its categories of batteries and flashlights as there is a "sharp decrease in dumped imports from China and an overall strong demand in expectation of a near-normal monsoon", Eveready Industries India Ltd said in a regulatory filing.
In its quarterly update to the stock exchanges, the company said, "The situation in the battery segment should continue to look positive as imports continue to remain low with the BIS standards having come into force - providing a level playing field to domestic manufacturers."

Furthermore, it said the "proliferation of various battery-operated medical equipment should add filip to battery demand. The flashlight segment is also likely to remain steady as the rural economy revives from the adverse impact of the pandemic."

The increased focus on rechargeable flashlights is also likely to benefit the segment, the company added.

With a view to counter the sharp increases in raw material costs, Eveready Industries said it has taken a price increase of around 4-5 per cent in batteries from May 2021.

"Similar pricing actions have been taken in the flashlight segment as well. These actions should mitigate any adverse impact on margins," it added.

The lighting segment, which was hit by weak demand and supply constraints arising out of the pandemic, could partially recover, it said adding "the situation is likely to improve in the forthcoming quarters as normalcy is restored in demand and as supply sources are stabilised".

"Once normalcy is restored in the supply chain, the company would be able to augment its turnover through its various channels of distribution," the company said.

However, the turnover in the small home appliances category is yet to reach scale due to overall weak demand, it said adding, "supply constraints have also impacted turnover for some of the key products in the category".

The current COVID situation is expected to impact demand for the category in the near term as consumers are likely to curb discretionary spending over essential purchases, the company said.

Yet, in the medium to long term, with growing disposable incomes and the government's initiative towards rural electrification, this category is expected to improve, the company said.

"Given the outlook, the company is expected to maintain high operating margins in the forthcoming years," it added.

Eveready Industries also said it has initiated legal proceedings for recovery of outstanding amounts in respect of inter-corporate deposits and other recoverables, along with interest from certain promoter group companies,

Deposits and recoverables amounting to Rs 489.29 crore with an interest of Rs 68.42 crore are lying outstanding as of March 31, 2021, the company said adding it had given time till February 28, 2021, to the borrower companies for repayment of the outstanding, considering the widespread economic fallout caused by the COVID-19 pandemic and the resultant lack of liquidity in the market.

"On the expiry of the aforesaid timeline, the company has initiated legal proceedings for recovery of the outstanding amounts, in respect of inter-corporate deposits and other recoverables from certain companies, along with accrued interest thereon," the filing said.