Eveready says COVID-19 to hit profitability in short term; in talks with lenders for fund infusion

Image Source : AP (FILE) Eveready says COVID-19 to hit profitability in short term; in talks with lenders for fund infusion (Representative image)

Battery and lighting equipment major Eveready Industries on Friday said the coronavirus pandemic will have an impact on its profitability in the short term and it is engaged in discussions with lenders to infuse additional fund to meet working capital gap and ensure no impact on its operations.

In a regulatory filing disclosing the impact of COVID-19, Eveready Industries said that as on date, all of its manufacturing facilities are operating with limited workforce on account of restrictions and safety measures (including social distancing measures) as per government guidelines.

Also, all depots, warehouses, godowns of the company across the country, which were initially closed due to the lockdown, have started functioning in a staggered manner.

Describing the impact of the pandemic, the company said it has “imposed incremental operating costs on the business. While there will be some impact on the company’s profitability, in the short term, however, it is difficult to assess the exact quantum at this stage.”

On financial resources, Eveready Industries said, “There is a prevailing working capital crisis in the retail market due to restricted fund rotation on account of COVID-19. While impact of such crisis was sharply felt towards the end of March and April wherein there were strict restrictions on supply of non-essential commodities, the situation has improved in May, as more segments of the economy were opened up.”

With lockdown restrictions being gradually relaxed, cash flow situation is likely to improve further in the following months, it added.

“The company is engaged in discussions with lenders in relation to infusion of additional funds (fund and non-fund based) to bridge the company’s working capital gap and ensure no impact on its operations,” it said.

Besides, Eveready Industries said it has also “approached all term lenders to extend moratorium as per the RBI’s COVID-19 regulatory package in relation to repayment of instalments falling due during the period of March 1 to August 31, 2020, and some of the requests for moratorium have been granted by the term lenders. This moratorium shall help ease out the cash flow situation in the company”.

The company’s efforts are currently focussed on bringing its operations back to pre-coronavirus levels, which would be further enhanced with the relaxation measures announced by the government(s)/authorities from time to time, it added.

On the future impact on business operations, the company said it is “difficult to assess at this point, as the crisis of the pandemic continues to accelerate and the situation remains volatile. However, barring unforeseen circumstances, the company is confident about its ability to manage this crisis and come out of it slowly but steadily.”

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