YES Bank acquired approx. 9.47% stake in Eveready Industries. This acquisition is as a result of pledge invocation subsequent to breach in credit terms. The credit facilities that are breached were sanctioned by Yes bank group company of BM Khaitan Group i.e. McLeod Russel India. Eveready Industries are also the part of BM Khaitan Group and it was originated in 1934. The business of Eveready Industries is dealing with lighting products, flashlights, batteries, etc. During FY 2019, it earned the consolidated turnover of 1542 crore which was only 1495 crore in FY 2018.
The number of shares acquired by Yes Bank is 6880149 and all are equity. The nominal value of such shares is Rs 5 per share. McLeod Russel made default in repayment of credit facilities which was given by Yes bank and even extended. McLeod Russel is counted among the largest tea planters across the world. It was having a discussion with bankers regarding its plans on refinancing loans and restructuring the things. They are planning such restructuring because the debt of the company has become huge. It is around 1800 to 2000 crores as per the sources.
The holding of BM Khaitan in Eveready is around 42.93% as per march ending data. Eveready Industries is ranked as the largest dry cell battery producer all over the world. Its net profit in 2019 is around 47 crore. Both McLeod Russel and Eveready are trying their best to reduce the debts of the company. McLeod even selling its tea estates to meet the liabilities but it is facing liquidity issues. Until now, 16 tea estates have been sold by the company and MOU has been signed further to dispose of 4 more tea estates. However, delay in debt reduction may lead to high financial leverage and it will be difficult to meet debt obligations from operational cash flows.