Foreign funding in Eveready Industries India records steep surge in one year

KOLKATA: B M Khaitan group controlled Eveready Industries India (EIIL) has become a darling of foreign funds. Foreign institutional investor (FII) holding in the Kolkata based firm has surged up by almost 200 percentage points over the last one year. FII's including the likes of Amansa Holdings, Goldman Sachs, Nomura Trust, CitiGroup Global and Amundi Funds, hold approximately 21 % as on December 31, 2015, compared to 7 % as on December 31, 2014.

Market analysts attribute the increased FII interest to funds expectation that the company will register double digit growth in the next couple of years largely on the back of ‘steady growth in the lighting and electrical solutions’, in addition to the dry cell battery segment which will continue to deliver steady revenue growth.

Reports released by funds claim the LED market could potentially grow to $1.6 billion by 2020 driven by government initiatives and rising consumer awareness.

Incidentally, union government has been encouraging adoption of LED lighting in the country. It has also funded a number of pilot LED street-lighting projects. In addition, several states like West Bengal and Tamil Nadu have also adapted the LED technology and are working towards a steady and smooth migration from CFL’s to LED’s.

"To cash in on the opportunity, the company has set up a dedicated vendor for making LED lights in Hyderabad. With the unit beginning commercial production, EIIL plans to take part in government initiatives by participating in tenders floated by Energy Efficiency Services (EESL) under the DELP programme," analysts tracking the company said.

A joint venture of NTPC, Power Finance Corporation, Rural Electrification Corporation and Power Grid set up under ministry of power, EESL's DELP programme aims to replace all the 77 crore incandescent bulbs sold in India by LEDs. This will result in reduction of 20,000 MW load, energy savings of 100 billion KWh and Green House Gas (GHG) emissions savings of 80 million tonne every year.

All this apart, foreign funds are believed to be looking at the company following a sharp fall in the commodity price like zinc and rollback of anti-dumping duty as the two factors is expected to have a positive impact on EIIL’s topline and bottomline. Battery manufacturers’ have urged government to reverse the relaxation of the anti-dumping policy. “If this comes through in the next few months, it will boost the topline growth of domestic battery manufacturing companies,” the analyst added.