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In the early years of the millennium, Amritanshu could be seen sitting through Eveready press conferences. He always occupied a chair in the last row. would be around for other important company meets, but never public role. Then he went to pursue an MBA at the London Business School.
In 2011, Amritanshu, still in his 20s, was made an executive director on the board of Eveready Industries India Ltd (EIIL). He became managing director in May 2014. Tragedy struck in 2015, when Deepak Khaitan died, at the age of 59. Three years later, Amritanshu is steering EIIL on a course that places the company’s distribution muscle at the centre of its business strategy.
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The MD of EIIL wants the 84-year-old company to place larger bets on distribution, the core strength of the company, rather than looking at technologies around batteries or energy storage. While in the mid-nineties Deepak Khaitan identified the distribution strengths of Eveready and wanted the group’s tea and foils businesses (India Foils, which was later sold to Sterlite) to ride on Eveready’s distribution, son Amritanshu today wants to leverage the distribution strengths independent of group businesses, forming partnerships and joint ventures with other players.
A step in this direction was taken in January when EIIL signed a joint venture with Indonesian FMCG major Wings to launch their products in India. Amritanshu says the JV may launch products from Wings’ range of products and may also develop some for India locally. He wants to use this route to double EIIL’s top line in three to four years from Rs 1,475 crore in 2017-18, up 4% from a year ago.
“Our plan is similar to how ITC Ltd went about expanding their FMCG portfolio,” he says. The Khaitans have always straddled the world of batteries and teas. The business model made EIIL develop a distribution network that directly covers a million retail outlets in India.
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The network covers 4,000 FMCG distributors, 300 appliances distributors and 300 lighting products distributors. Electrical appliances reach 25,000-30,000 retailers and appliances go to 15,000 retailers. Such a reach in a country with one of the biggest consuming population can be a driver of growth.
A report by Firstcall Research, published on October 16, 2018, said EIIL was expected to grow (compounded annually) its net sales at 8% and profit after tax at 12% up to 2020. The report also gave an overweight rating to the EIIL stock, indicating it was a better value for money stock in the market now.
While batteries will remain stable, it added, the company would see good growth from all the new segments. To strengthen the distribution chain, EIIL is selling real estate assets worth Rs 150-200 crore.
Amritanshu says this is an asset-lite model, also similar to a strategy the group’s tea business is pursuing by selling some of its labour-intensive Indian tea gardens in favour of buying leaves for processing and also optimising production from gardens outside India. The packaged tea business, one of the mainstays of EIIL, is being hived off.
Back in the nineties, the BM Khaitan Group of companies, which owned some of the best tea gardens in India, had launched packaged teas under brands such as Tez and Jaago using Eveready’s distribution. The Khaitans had acquired a majority stake in Eveready in 1993-94 from Union Carbide.
The Khaitan’s bulk tea business, covering tea gardens and sale of bulk tea, was merged into Eveready in 1995. In 1997, Eveready launched packaged teas. Later, only the bulk tea business was demerged as Mcleod Russel, which has a similar turnover as EIIL. Mcleod Russel is led by Aditya Khaitan, BM Khaitan’s younger son and Amritanshu’s uncle.
“We have not been able to scale up the packaged tea business. Future investments in the tea JV will come from McLeod, and their stake in the JV will go up,” Amritanshu says, referring to the packaged tea business that was hived off as a JV between Eveready and McLeod.
According to the Firstcall report, the packaged teas business has recorded a loss of Rs 2.1 crore at the operating level for the quarter ended September 30, 2018. Under Amritanshu, EIIL has been on a diversification spree.
First to be launched was the lighting and electrical appliances business in 2013-14. Then came candies in 2017-18. Jollies, a fruit-chew confectionery, was launched in December 2017. In January, EIIL decided to ride on Wings.
Eveready’s 30:70 venture with the Indonesia FMCG major, Preferred Consumer Products Ltd, will launch a range of products from January 2019, Amritanshu says. More brands will be developed for the Indian market.
EIIL is planning to expand its confectionery footprint by launching six flavours of sugar-boiled candies in three months. Apart from an extensive food range, Wings also has home and personal care products.
“We are open to further joint ventures,” says Amritanshu. “Even for batteries, in the Lithium-ion battery space, we can outsource production and launch products in India, provided we get the right partner. The idea is that the company’s revenues should double in the next three to four years.”
There are many challenges in the path to achieving this target. The youngest Khaitan CEO from the BM Khaitan Group faced one in September when his mentor and RP-SG Group chairman, Sanjiv Goenka, resigned from the EIIL board. Khaitan insists the resignation was because Goenka wanted to focus on his own businesses. The mentorship will continue, he adds. However, the fact remains that the RP-SG Group is looking for a big chunk of the FMCG business with his new venture, Guiltfree Industries.
Clearly, there would have been a conflict of interest. Mentorship or no mentorship, it is now up to Amritanshu Khaitan to deliver growth.
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