EVEREADYNSEQ1 FY238 August 2022

Eveready Industries India Limited

10,207words
123turns
11analyst exchanges
1executives
Management on call
Saha to share his perspectives. Thank you Suvamoy Saha
Good afternoon and a very warm welcome to everyone on the call hosted to
Key numbers — 40 extracted
50%
-oriented approach to establish its credentials. In batteries we enjoy the distinction of having a 50% + market share very consistently, an achievement that is limited to only a handful of other FMCG
65%
business dynamics of the Company. To start with, the brand Eveready has consistently enjoyed over 65% top of mind recall amongst consumers and that puts us at the forefront to take further share in o
4 million
, added to this with the aid of the wholesale channels this reach enhances to cover approximately 4 million outlets. I have already mentioned that our business today is comprised of three business lines.
52%
d offer proportionate higher service. We have an overall leadership of this market, with share of 52% as per Nielsen data for the quarter ended June 30th, 2022. The market share position has remained
2.8 billion
end of this year. As a segment, batteries are well penetrated as an industry with a market size of 2.8 billion pieces and then estimated Rs. 2,750 crore in value terms. These are estimates as per Neilson and t
Rs. 2,750 crore
ies are well penetrated as an industry with a market size of 2.8 billion pieces and then estimated Rs. 2,750 crore in value terms. These are estimates as per Neilson and the value being at market operating consum
rs,
. This has been traditionally our second core category. Over time, particularly in the last few years, the marketplace has become crowded with a vast number of unorganized players. While we have an esti
60%
rketplace has become crowded with a vast number of unorganized players. While we have an estimated 60% market share in organized segment, we have not yet participated meaningfully in the market of rec
Rs. 1,100 crore
ngth of our brand to capitalize all these growing segments. Flashlight market size is estimated at Rs. 1,100 crore at comparable Company level pricing of which traditional battery-operated torches are at Rs. 400 c
Rs. 400 crore
100 crore at comparable Company level pricing of which traditional battery-operated torches are at Rs. 400 crore and the rechargeable torches have grown to Rs. 700 crore. The latter provides a significant window
Rs. 700 crore
aditional battery-operated torches are at Rs. 400 crore and the rechargeable torches have grown to Rs. 700 crore. The latter provides a significant window of opportunity. The Company's brand and distribution are
Rs.12,000 crore
e presenting is LED lighting. The consumer market for LED lighting is a sizeable one, estimated at Rs.12,000 crore at consumer price level, growing around 10%. A key feature of the market is that it is quite fragm
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Guidance — 20 items
Suvamoy Saha
opening
“We expect this work to be completed by end of this year.”
Suvamoy Saha
opening
“We intend to deliver quality products to our consumers and leverage the strength of our brand to capitalize all these growing segments.”
Suvamoy Saha
opening
“We also have the expertise of technology to bring out products, which will be discernibly superior to the products available in the market.”
Suvamoy Saha
opening
“Work is already afoot in developing a full range of rechargeable flashlights, which will be introduced to the market over the next few months.”
Suvamoy Saha
opening
“We expect that we shall have a comprehensive range by end of this financial year.”
Suvamoy Saha
opening
“We have negligible share in the market at this point of time, but we aim to go significantly faster than the market and expect to garner a reasonable market share as we go forward.”
Deepak Poddar
qa
“And what sort of growth you expect over the next, maybe one to two to three years?”
Suvamoy Saha
qa
“On blended Company business, we would certainly aspire for double digit growth.”
Suvamoy Saha
qa
“Maybe I think mid 15% we have good target to chase for this Company where we had seen zero growth in 10 years.”
Deepak Poddar
qa
“That's the CAGR growth that we might look at?”
Risks & concerns — 4 flagged
The risk is like the way we had to bring down our appliances business, how do you see our positioning in lighting different from what it was in the appliances business and based on whatever market research and whatever the study you would have done, how do you see our positioning versus the incumbents?
— Suvamoy Saha
With the ease in commodity prices coming up, so what will be your broad blended margins the Company would probably do because the past two, three quarters have been quite volatile.
— Darshit Shah
Now, in order to meet that price point and also our own standard that we would meet certain specification is a challenge, but not an unsurmountable one.
— Suvamoy Saha
Actually, when they started selling that lower price product, people who came under pressure was not Eveready, but it was our other competitors.
— Suvamoy Saha
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Q&A — 11 exchanges
Q
Good afternoon and thanks for the opportunity and really appreciate the Company carrying out the concall. Clearly a great sign in terms of the improvement at the Company level. Continuing with what you mentioned if you can help us understand, I have a few questions on the business itself. Now, while we talked about in our annual report, we talked about improving the health of each business, but as a priority, where do you see more low hanging fruits for us? Similarly, in terms of the organization structure, how is the organization structure being created for each of the segments and who would
Nikhil
Yes, just one continuation on this. How would the KPIs of the new hires or the heads of the each of the segments be connected, so would the KPIs be more on the growth of each of the segments? Because we have amalgamation of business where two business are quite mature and where the focus should be more on profitability and one business, which is on growth. So how are the KPIs surround associated with each of the management segments? I would just clarify you on one point while I also did mention that batteries and battery-operated torches are mature categories, as I talk about it in my earlier
Q
Thank you very much for the call and the interaction with the investor community. I just wanted to understand more from the strategy perspective. Now that the new management has come and you spoke about the three-category focused area of battery, flashlight and LED light, but in general, all these three sectors, I presume, especially our battery segment is kind of a mature segment. Is there any other category that also we are looking at maybe on the EV side or something apart from the dry cell battery? So, any thought process on that in terms of our strategy for growth over the next, maybe thr
Suvamoy Saha
Our hands are completely full with these three categories. We have loads of work to do and loads of headroom exists for us to grow in these three categories, even in the battery category. The battery category itself in this quarter grew by 16% odd with a volume growth of something closer to 5%. The thing is that we just need to sort of pick our growth areas and grow from there. At this point of time, if you ask me if we have got any thoughts or vision on a new category, I would say no, but conceptually only in concept at this point of time, we certainly would like to one day go into another se
Q
I have a few questions, so my first question is in the lighting business, as you rightly mentioned that the focus basically is to capitalize now on the brand and do the distribution network, so what do you think say 2-3 years’ timeframe, what kind of building blocks you need to put in place to make sure that you become a, what I would say sizable player and also in this segment that are most players including the top number one, number two, number three, all these three players are basically reporting decline in margins and that segment, all of a sudden is not growing because number of players
Suvamoy Saha
be your strategy to be different? Are you going to manufacture, are you going to do outsourcing, can you give some more color in this lighting segment? they may have hit their growth momentum, which Yes. See, first of all I'll take you the growth and comparison with the bigger players. We are a very marginal player today as of now. We have got enormous headroom as you know the market is highly fragmented. Anybody, who offers decent distribution, in other words, the availability to the consumer and who offers a well- recognized brand has headroom to go. Now, some mature players may have hit the
Q
If you can help us understand, what is the inherent profitability for battery segment versus flashlight segment? In past, it has been volatile. If you can help us understand what is the profitability or margin range one should expect?
Suvamoy Saha
So, the volatility that you mentioned is purely a function of commodity prices. These categories do have some influence on their margin profile based on how the commodity prices are sort of behaving. Prior to the recent commodity push that happened over the last eight or nine months, the margin was at, for batteries was at 50%. It has then thereafter taken a hit of 20% cost increase in the input materials, which partly or about 50% of that could be passed on to the market. The margin today has settled down at 45%. I think 45% is the minimum sustainable margin for batteries. For flashlights I w
Q
I have couple of questions. One question on the contingent liability that we kind of have in our books. Can you just throw more light on what’s the case there and how do we foresee the outcome in that particular case, if you have any idea?
Suvamoy Saha
Sorry, which one are you referring to? The Rs. 171 crore. This is the penalty imposed by CCI which is currently is under appeal from the Company. So, the case is presently in the court process and in sub judice and I am unable to make any comment further on this. So that is the factual situation. CCI has imposed a fine and we have appealed against that. On the margin front, since you said after what the commodity what we have seen, the margins would be 17%-18% in batteries and around 14%-15% in flashlights battery operated. With the ease in commodity prices coming up, so what will be your broa
Q
My question, I think a lot of that you have already answered in terms of the lighting business. But just wanted to know, since the group and the Dabur group has now become the promoters of the business, I just wanted to understand since the Company is part of the Dabur group now, are there any synergies that you get from the group which Eveready could benefit from? That was the first question. The second question was in order to reduce our debt are there any assets that the Company has which could be disposed off, historical assets? Okay. Thank you. So let me answer the synergy bit. So, first
Mithun Aswath
One more question, there were quite a lot of write-offs in the last couple of years of some of these are receivables. Is there any potential chance of recovering any of that in the next coming quarters or years? So, you are correct. I mean, that was a way we completely cleaned up our balance sheet by taking provisions which should have been taken as a measure of prudence. We have lodged cases in respect of each of those receivables, and we are pursuing those cases in a vigorous manner. Now when and how the court process will finally end in getting us some amounts back, I'm really unable to say
Q
My questions have been answered. So, thanks for the opportunity.
Suvamoy Saha
Thank you.
Q
Firstly, thanks for the opportunity and for patiently solving our queries. Sir, I have two questions basically. On the context of exports, how does the Company's presence look like in international market? That's my first question. And secondly, as sir mentioned about combating the unorganized by pushing the government to implement the BIS standard, does the Company have any specific ideology on or any strategy, any particular strategy it could maybe implement to combat the same? Like maybe a price reduction for the rechargeable flashlights and the LED lighting, something like that. Is there a
Management
Q
A couple of questions. I think Bain consultancy was appointed a couple of quarter back. Sir, just wanted to figure out what are some of the big suggestions that they have made. That's my first question. And the second question is that are the promoters still looking to increase their stake further? I mean, that's a broader question I have. These two.
Gautam
Listen, Bain came on board from 1st of January. They have barely spent about 6-7 months working with the Company. Now they really have not been engaged to kind of give some kind of bombastic suggestion, rather they are working shoulder to shoulder with all of us in identifying areas of opportunity, granularity of data, better decision making, etc. So really, I mean the Company has not told them or given them a mandate to come out with any big time you know some dhamakedar suggestion. We just want to make improvements in our operations, and they are assisting us in that pursuit. With regard to
Q
to place Namaskar sir and thank you for listening to your investors requests and giving us an opportunity for our better understanding. Thank you. And we look for continuity of the same. Firstly, if you could give us some color on the seasonality factor. In our business how does this season start, seasonality factor plays and how do volumes play during those times, if you could give some color on that? the management forward before
Suvamoy Saha
Saket, it is like this, July, August, are typically high offtake months primarily due to monsoon. This year has been a little disturbed because some parts of the country saw delayed onset of monsoon, but overall, I would say second quarter is higher volumes for battery flashlight and then closer to Diwali is higher volume for lighting products. That is how it is. But I wouldn't put too much into the seasonality because we have to do our business consistently right through the year. But what we have seen in the past also the fourth quarter is always a lower quarter. And looking at the employee
Q
So, I thank everyone for taking time out to join us on this earnings conference call today. I hope we have adequately answered all your questions. If you still have any more queries, please reach out to our investor relations team and we will be only too happy to address them. We endeavor to interact with all of you, every quarter through this forum. Thank you once again and look forward to connecting again in the next quarter. Thank you and God bless. Disclaimer: This is a transcription and may contain transcription errors. The transcript has been edited for clarity. The Company takes no resp
Management
Speaking time
Suvamoy Saha
58
Moderator
12
Gautam
11
Aditya
9
Rajesh Kothari
7
Deepak Poddar
6
Chirag Lodaya
6
Darshit Shah
6
Saket Kapoor
3
Nishid Solanki
1
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Opening remarks
Nishid Solanki
Thank you. Good afternoon, everyone and welcome to Eveready Industries India Limited’s earnings conference call. Today, we are joined by senior members of the management team, including Mr. Suvamoy Saha, Managing Director and Mr. Indranil Roy Chowdhury, Chief Financial Officer. Before we begin, let me share a disclaimer. Some of the statements made on today's conference call could be forward-looking in nature and the actual results could vary from these forward-looking statements. A detailed statement in this regard is available in the press release document which has been circulated to you earlier and is also available on the stock exchange website. I would now like to invite Mr. Saha to share his perspectives. Thank you
Suvamoy Saha
Good afternoon and a very warm welcome to everyone on the call hosted to discuss Eveready India's first quarter performance for the period ended June 30th, 2022. As you know the Company is home to the iconic Eveready brand; synonymous with the category, the name instantly conjures batteries. Throughout its history Eveready has taken a very process-oriented approach to establish its credentials. In batteries we enjoy the distinction of having a 50% + market share very consistently, an achievement that is limited to only a handful of other FMCG companies. This has been the result of an iconic brand together with one of the best-in-class distribution networks. Before we go into the discussion on the various businesses of the Company, I would like to highlight the current cultural ethos and the professional ethos of the Company in the backdrop of its recent history. The Company went through a period of turbulence sometime back which had nothing to do with the fundamental structure of its b
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