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Eveready Industries, the country’s largest dry-cell battery maker and part of the BM Khaitan-controlled Willamson Magor Group, has faced a downgrade in credit rating because of its ‘continued high leverage and weakened liquidity,’ ‘financial support extended to group companies,’ and ‘delayed asset monetisation.’
Rating agency India Ratings and Research (Ind-Ra) has downgraded Eveready’s long-term issuer rating to ‘IND A+’ from ‘IND AA-’ while putting it on rating watch ‘negative’.
The rating report noted that during FY19 and FY18, Eveready extended inter-corporate debts (ICDs) of around ₹134 core (net of ₹124 crore repaid in March 2019) and ₹76 crore to its debt companies.
Additionally, advances amounting to ₹75-80 crore were outstanding. This apart, the company’s interest expenses rose considerably because of its increased term debts and working capital requirements.
Eveready, incidentally, plans to reduce debt and is exploring the possibility of raising funds by sale of its battery business.
The rating agency said it was expecting Eveready to “reduce debt by ₹130-140 crore by FY-20” and this could be achieved by sale of its Hyderabad asset or full repayment of ICDs. Eveready has debt repayment worth ₹140 crore due in FY20.
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