The rating revision reflects the weakening of its financial profile in the fourth quarter of 2017-18.
India Ratings and Research (Ind-Ra) has revised Eveready Industries India Ltd.’s outlook to negative from stable.
The rating revision reflects the weakening of its financial profile in the fourth quarter of 2017-18. Also, it reflects the uncertainty over the imposition of penalty by Competition Commission of India on the company.
The rating agency said that EIIL’s deteriorating operating performance in 2017-18, the long-term impact of the CCI order (imposed on three dry cell battery-makers, including EIIL, for allegedly forming a cartel to control price, among other things) and the costs incurred in new segments that EIIL was entering were some of the factors that influenced its decision.
While revising its rating on term loans, fund-based limits and non-fund-based limits, Ind Ra affirmed its rating on EIIL’s commercial paper.
EIIL closed the fourth quarter with a loss of ₹16.1 crore against a profit of ₹ 10.5 crore a year ago despite a 15 % growth in turnover. It said costs had increased as the company “needed to front-end expenditure on its resources for diversification in newer categories, including professional luminaries, appliances and confectioneries.
EIIL managing director Amritanshu Khaitan told The Hindu that the company had faced a lot of headwinds last fiscal which should ease in 2018-19. “We expect the top line and the bottom line to improve this year,” he said.
City-based EIIL, a part of the Williamson Magor Group, offers a range of products such as batteries, flash lights, lighting solutions and home appliances.