Khaitans likely to join hands with Burmans to run Eveready Industries

From the current holding pattern, the Burmans are likely to be the majority partner, sources said.
The Burman family — the promoters of Dabur India — may join hands with the Khaitans of Williamson Magor Group to manage the country’s largest dry cell battery maker, Eveready Industries India.

A source close to the development said, “The Burmans’ shoring up their holding could pave the way for a partnership between the two families to jointly run the firm.” 

After the last tranche of share purchase of 8.48 per cent by the Burmans about a week back, the promoter holding in Eveready slipped below theirs. At present, the Burman family holding is at 19.84 per cent while promoters of Eveready are at 15.07 per cent.

From the current holding pattern, the Burmans are likely to be the majority partner, sources said.

With this partnership, the promoters of Eveready are hoping to ring-fence long-term interests of the company. Eveready had earlier held talks with Energizer and Duracell for a slump-sale of the battery business.

However, there are legal tangles. Finalising the deal is pending because of an interim order of the Delhi High Court, preventing a change in the capital structure and sale of assets of Eveready, McLeod Russel India, and other Williamson Magor group companies.

KKR India, which had originally lent Rs 200 crore to Williamson Magor Group entities, had moved court late last year, seeking relief over its exposure. An order in favour of the Khaitans will pave the way forthe partnership.

However, Mohit Burman, vice-chairman of Dabur India, told Business Standard so far it had been only a portfolio investment in a business which “we believe is undervalued and in a similar business to ours”, which is FMCG (fast-moving consumer goods).

“We have been buying shares because we believe that the business has a lot of potential and the shares are undervalued. However, there is no plan at the moment of becoming a promoter,” Burman said. “We know them (Khaitans). They are still managing the business,” he added. 

“It’s unfortunate that their problem is a little bit bigger than Eveready, but as far as I am concerned, we are only interested in this business,” Burman said.

Eveready, however, happens to be the only company in which the Burmans have a high shareholding without management control.

The Eveready stock has surged since the Burmans bought the last lot of shares. In the past one week, the stock price moved from Rs 88.90 to Rs 115.45 on the BSE. Sources indicated with backing from the Burmans, it would help the company to raise funds since promoter shares were largely pledged. Eveready had debt of around Rs 350 crore, but promoter shares were used as collateral for raising funds for other group companies.

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