Promoters raise pledge to half of holdings in Eveready

From 14.63% of total shares pledged a year back, the extent of promoters’ shares pledged has touched 21.97%, or half of the promoters’ holdings of 43.68% following additional pledging by Williamson Magor & Co, a promoter entity, as per the disclosures made.

After making an additional share pledging of little over 2% as disclosed on Wednesday, the total pledge by promoters has crossed 50% of the stake held by the BM Khaitan group, which also controls other entities like tea plantation company McLeod Russel and engineering company McNally Bharat.

High debt levels and cash crunch across the group have forced the promoters to aggressively look at selling some of its core assets like tea gardens along with non-core assets like idle land holdings.

The group, however, has some major milestones to achieve like selling a significant stake in Eveready and reach debt settlement for McNally Bharat.

Rating agency firm India Ratings has already raised a red flag and has set deadlines.

“Ind-Ra estimates that a reduction in the company’s leverage to below 1.75x by end-FY19 (from 2.6x in first half of FY19) will necessitate a reduction in debt by Rs 1,500 million-1,600 million by March 2019, which can only be achieved by the sale of both assets or full repayment of Inter Corporate Deposits,” the rating agency had said in its last update in December.

The high net leverage was partly because of the raising of debt of about Rs 100 crore that was extended to group companies, the agency had said.

While Eveready’s third quarter revenues were below estimates of some analysts due to muted growth in the battery and flashlight business, the management, however, has a positive view on the core business of battery and lighting even as its newly launched home appliances business continues to achieve larger reach.