“As a family, we like to invest in consumer-centric businesses,” Burman told ET in an email interview. He said the purchase was a “personal investment of the Burman family”.
The Burman family, the largest shareholder with 19.85% stake in Eveready Industries, last month made an open offer to acquire an additional 26% stake in Khaitan family-owned Eveready for Rs 604.76 crore.
Since then, the family has increased its stake to 20.09%. It rallied 0.02% from the open market on Thursday, after buying 0.23% on Monday at Eveready. This is part of the family’s plan to acquire 3.8 million shares, representing 5.26% of Eveready’s voting capital, in addition to the open offer.
“How much stake we have depends on the response to the proposal,” Burman said.
Aditya Khaitan, non-executive chairman of Eveready Industries and Amritanshu Khaitan, managing director, had resigned from the company’s board following an open offer from Burman Group.
Traditional battery usage categories such as torches, transistors or walkmans are becoming obsolete as mobile phones are replacing transistors and torches in rural India as well.
“But Eveready remains a very strong brand and we believe it has great potential,” Berman said. “As the largest shareholder, we look forward to providing that new momentum and direction to the company.”
The new owners will focus on fast-growing segments like alkaline, he added. “We plan to go after that segment, apart from upgrading our range. Our strategy is to strengthen our current position in the dry sale and flashlight market and explore new business opportunities in the medium term.”
The dry sale market is around Rs 1,500 crore.
On street speculation that the deal is a matter of “compromise” between two close business families having roots in Kolkata and bailing out each other, Burman said: “There is no such understanding. It is not a structured deal. Since this is not a negotiated transaction, there is no agreement between us, the company or the existing promoters.”
On speculation that the open offer is intended to prevent a potentially hostile takeover of Eveready by a third party, he said: “We are the largest shareholder and we have offered control at a price that we deem appropriate … if any. Wanted to show the company to be acquired, they would have in the last two years when we were passive shareholders.”
According to its annual report for FY 2011, Eveready Industries, part of Williamson Magor Group, had a debt of Rs 418 crore.
Burman said availing the loan is not a challenge. “At present, the leverage in the company is around Rs 350-400 crore, ideally, we should repay it in due course, but first we would like to settle the house,” he said. “We expect our financial costs to come down as well over time.”
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