A couple of years back, the Burman family of the Dabur group through their various entities like Gyan enterprises Limited, VIC Enterprises Private Limited, Puran associates Private Limited and Chowdary associates bought a 19.84% equity stake in Eveready industries from the open market. Subsequently, it bought an additional 38.22 lakh shares directly on the stock exchanges aggregating to 5.26% stake, thus bringing their total stake in Eveready industries to 25.10%. Considering that they wanted to purchase an additional 26% stake, it would trigger an open offer as per Sebi norms. Now all of this started a few years back when a company owned by the Kolkata based BM Khaitan family (the erstwhile promoters of Eveready Industries) namely, Seajuli Developers and Finance Ltd defaulted on payments due to IndusInd Bank. The Eveready shares pledged against the loan to IndusInd Bank were sold in the open market , plunging the shareholding of the Khaitan family from 44.1% to 4.5%. As lenders started invoking the pledges and the promoter stake declined sharply, the Burman family stepped in as a white knight to prevent a hostile takeover of the company. To avert any takeover possibility, the Burman group family started to purchase the shares from the open market bringing their initial stake to 19.84%. Incidentally, the Khaitan and Burman families have a long standing family relationship making it easier for the latter to step in and prevent a hostile takeover of the company. In a latest move , the Burman Group has through its various entities made an open offer to acquire additional 1.89 crore shares at a price of Rs 320 per share amounting to Rs 604 crore thereby increasing their shareholding by a further 26%. Currently, the open offer has commenced for existing investors to tender their shares and participate in the open offer. It opens from 26 April 2022 and closes on 10 May 2022. Currently, the Eveready stock is trading at Rs 321 on the bourses. Subsequently, in a latest move the current Chairman and MD have both resigned from the company paving the way for a professional management team to assume responsibilities, enabling the company to benefit from new leadership and direction. The company has meanwhile posted a consolidated net loss of Rs 38.41 crore for the March ending quarter of 2022 due to lower demand and increased input costs. The revenue stood at Rs 241 crore as against Rs 271 crore for the same quarter as of last year. Meanwhile, the company has been taking several measures to remove the legacy problems, improve efficiency and activate cost rationalisation initiatives. The new promoters, the Burman family, are quite bullish on the future business prospects of Eveready and are fully supportive of its growth prospects going forward. The current new promoters along with most analysts expect immense shareholder value creation over the next few years. Fund managers and analysts tracking the company suggest portfolio investors to accumulate the stock currently trading at Rs 321 for superlative growth over the next 2 years time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.