Eveready Industries India Ltd Management Discussions

<dhhead>Management Discussion and Analysis</dhhead>

ECONOMIC OVERVIEW

Global economy continues to present a mixed picture. Geopolitical conflicts, persistent inflation, elevated debt levels continue, leading to a growth projection of around ~2.7% by World Bank for Financial Year 2025-26. Heightened policy uncertainty related risks can lead to downsides to the outlook.

Indian economy continues to perform well fueled by strong rural consumption and a robust services sector. Stable domestic demand, growth in core sectors like agriculture and services have driven growth. The resilience of Indian economy was supported by a vibrant export sector and structural reforms reframing India’s economic trajectory. Foundational sectors like steel, cement, chemical providing stability and consumer centric sectors like automotive, electronic and pharmaceuticals driving growth. Government programs like Make in India and Digital India have further fortified domestic manufacturing. The performance underscores India’s consistent trajectory of growth, underpinned by strategic initiatives and resilient economic policies.

Amid rising global uncertainties, Indias macro stability risks to remain largely contained in fiscal FY 2025-26. In fiscal 2026, India economy is expected to maintain a growth of ~6.5% as per Central Bank estimates. The supporting factors for the economy would be the chance of a normal monsoon season and a healthy agricultural production. Overall consumption demand, cooling food inflation, tax benefits announced in Union Budget Financial Year 2025-26 and lower borrowing costs will drive discretionary consumption. Indias potential growth could benefit from manufacturing and export push, increased services exports, and digitalization, leading to improvement in productivity and efficiency gains.

On investment front, the government’s focus on capital expenditure is expected to remain a key growth driver in the year Financial Year 2025-26. Government’s commitment to infrastructure development through consistent allocation to key sectors such as roads, renewable power, ports and urban development will create employment and improve logistics efficiencies. The government’s plan to monetize infrastructure assets and invest them into fresh infrastructure projects will lead to maintaining fiscal prudence and long-term viability.

CONSUMER GOODS INDUSTRY IN INDIA

India’s consumer products industry comprises of multiple categories within the discretionary and non-discretionary space. The high competition, ever shifting consumer preferences and a mix of international and domestic players make the industry a dynamic with a boundless potential for growth and innovation. Financial Year 2024-25 saw some revival in rural demand while the urban consumption showed signs of weakness. Essentials took precedence over discretionary spending for much of the value conscientious urban and rural population. The monsoon season while sufficient overall, was marked by extreme rainfall events thereby moderating farm outputs. Rising prices of consumer goods have led to a cautious spending among rural consumers. Welfare schemes and other social security measures have helped in supporting rural income.

Moving to Financial Year 2025-26, companies must adapt through premiumization, innovation and optimized supply chains to remain competitive and meet diverse consumer demands. Commodity prices remain volatile amid global uncertainties and tariff wars. Q-commerce and E commerce are revving up the FMCG engine by delivering products more efficiently. Technology advancements in supply chains are helping companies grow by using AI, automation and tools like Sales Force Automation.

The macroeconomic environment of the Indian economy appears is supportive for the FMCG sector. Slowing inflation and rising rural consumption can drive growth in Financial Year 2025-26. The consumer goods sector needs to adapt through exclusive pack sizes, premium online variants and pricing strategies that balance convenience and profitability. Continued investment behind innovation, direct consumer engagement and supply chain efficiency will drive future growth.

THE BUSINESS

Eveready Industries India Limited is a household name in dry cell batteries as well as flashlights and has emerging presence in lighting. It has a legacy of over 100 years where the products were first sold in India in 1905. The Company, which is a market leader in the dry cell battery market, has been enhancing peoples quality of life with innovative, transportable energy and lighting solutions.

Eveready is home to India’s well-loved consumer brands. Within Batteries, the Company offers products under Eveready, Ultima, PowerCell, Shakti and Uniross brands. The Company’s flashlights are sold under ‘Eveready’ and ‘PowerCell’. Within the lighting business, the Company uses the brands ‘Eveready’ and ‘PowerCell’. Within each of its segments, the Company offers a variety of SKUs meeting an assortment of requirements.

As on March 31, 2025 batteries comprised the majority of the Company’s sales at 64% share of sales. Lighting and flashlights contributed 23% and 13% respectively to the sales. The Company has consistently garnered a dominant market share of more than 50% in India for dry cell batteries. This has been increasing over the years based on persistent efforts undertaken by the Company to further strengthen its distribution presence while introducing new and innovative products to the existing portfolio. This has been supported by a consistent communication with consumers and a revamped route-to-market. The year also marked greenfield investment in a production facility for alkaline batteries at Jammu, under the Make in India initiative. This facility is being aimed for commissioning towards the end of Financial Year 25-26. Alkaline as a category represents vast space for growth in a premiumising market. Establishing its own captive manufacturing facility positions the Company as a first mover in this category, a strategic advantage that will positively impact the sector. Plans remain in place to develop this plant into a multi-product facility to support greater scale advantages.

The Company’s production facilities are well-spread across the country. These are present at Matia, Lucknow, Noida, Haridwar, Maddur, Kolkata and now Jammu. Each of these facilities are in full conformance with the best, internationally accepted operating metrics. The Company also runs a Research & Development facility at Kolkata, engaged in product innovation. This establishment functions under the oversight of the Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology, Government of India.

BATTERIES Industry overview

The Indian dry cell battery market, comprising carbon zinc, alkaline, and rechargeable variants, is estimated Rs 3300 Crore at retail value, with a volume consumption estimated at around 2.4 billion units as per A.C.Nielsen report. Carbon zinc batteries continue to form the backbone of the industry, typically retailed between Rs 10 to Rs 18, the segment accounts for 90% of the overall market with the rest made up by the alkaline segment, which retails for Rs 22 to Rs 50. Alkaline batteries contribute about ~10%.

The usage of dry cell batteries is generally segmented based on the power drain of the end-use application. Low-drain devices, such as remote controls, wall clocks, torches, and basic alarms, typically rely on carbon zinc batteries due to their modest energy needs. Conversely, high-drain devices, including digital cameras, advanced toys, streaming device remotes, wireless peripherals, electronic locks, smart devices and portable audio equipment perform better with alkaline batteries, which offer superior discharge characteristics. Despite being technologically superior, the penetration of alkaline batteries in India remains relatively low, especially when compared to global benchmarks around China, Brazil, and the United States. However, the Indian alkaline segment is expanding rapidly, currently growing at an annual rate of approximately 30%, driven by increasing adoption of high-drain electronic devices and evolving consumer needs. Over time, this has led to a gradual shift in market share from carbon zinc to alkaline batteries, a trend expected to persist.

Looking ahead, demand for dry cell batteries is likely to see sustained growth, fueled by the proliferation of portable devices across both urban and rural India. An emerging consumer trend is the growing preference for smaller battery formats, such as AA and AAA, over the traditionally popular D size batteries. Additionally, sectors such as consumer electronics, automotive, healthcare, telecommunications, and aerospace are expected to contribute to rising battery usage.

Performance review

As per Retail Measurement Service Report A.C. Nielsen, the Company gained 30 bps volume share in the Carbon Zinc category in Financial Year 2024-25. The revamped Alkaline range of ‘Eveready Ultima’ has helped gain volume market share by 550 bps over last year.

In Financial Year 2024–25, the batteries segment recorded revenues of Rs 889.4 Crore, reflecting a 2.8% increase over Rs 865.2 Crore in Financial Year 2023–24. Premiumization within the revamped alkaline portfolio drove this growth. Simultaneously, strong distribution network and brand equity continued to fuel volume growth in the carbon zinc range. We strategically realigned our route-to-market approach to build a more resilient and agile distribution network, with an emphasis on achieving cost efficiencies. In addition, the Company also initiated a comprehensive brand-building campaign through both above-the-line (ATL) and below-the-line (BTL) communication strategies. These efforts were aimed at expanding penetration in under-served sub-segments and geographies, with premiumization as a key growth lever.

Segmental EBITDA for the battery division stood at Rs 139.2 Crore in Financial Year 2024–25, compared to Rs 134.8 Crore in Financial Year 2023–24. EBITDA margins were reported at 15.6% for the year, in line with 15.6% in the prior period. The margin performance improved despite ongoing challenges, including volatility in foreign exchange rates and elevated raw material costs. To bolster long-term brand equity and drive category growth, the Company strategically increased its advertising and promotional investments.

Distribution, Branding, and Market reach

Eveready maintains a best-in-class distribution, strategically enhanced with targeted branding, communication, and channel expansion efforts. The completion of the Route-to-Market (RTM) exercise has created leaner pathways, thereby enhancing overall operational efficiencies. Efforts toward incentivizing channel partners through targeted promotions at the dealer and stockist levels further aid to maximizing market reach and customer satisfaction. To further reinforce the consumer engagement and strengthen the brand, the Company sustained its investments in multi-platform advertising, including television, social media, and print media, ensuring deeper brand resonance across diverse consumer segments.

Eveready’s products are now present across an estimated 4.5 million retail touchpoints nationwide, with direct coverage across approximately 0.7 million outlets. This robust and expansive footprint ranks among the most extensive across all fast-moving consumer goods (FMCG) categories in India. The brand enjoys consistent shelf presence in majority of these outlets, often surpassing competitor availability within the dry cell battery space. While new consumer campaign aims to reinvigorate the Eveready brand, the Company remains sharply focused on strengthening its position in premium segments while retaining leadership in its core market.

Opportunities and Threats

India presents a significant growth opportunity for dry cell battery consumption. Notably, remote controls drive a larger proportion of battery usage here compared to developed markets. Furthermore, Indias per capita toy consumption remains considerably below global averages, indicating a substantial untapped market. While electrification has advanced substantially across the country, the continued relevance of dry cell batteries lies in their suitability for portable and standalone devices. Carbon zinc and alkaline batteries continue to provide an affordable and accessible source of energy and are expected to retain this role for the foreseeable future.

The Eveready brand enjoys strong resonance with consumers, backed by a legacy of trust, consistent product quality, and unmatched availability across the country. These strengths ensure sustained demand in both urban and rural markets. Regulatory measures have also supported market stability. Stringent compliance with Bureau of Indian Standards (BIS) norms for dry cell batteries has limited the inflow of sub-standard imports.

In alignment with its premiumization strategy, the Company has revamped its product portfolio through a refreshed marketing campaign. The ‘Ultima Pro’ and ‘Ultima’ range have achieved significant traction and are poised to be key growth drivers in the years ahead. The Company aims to unlock latent demand in this segment by leveraging its extensive retail reach and brand strength. While the possibility of reduced battery usage due to shifts in consumer behaviour exists, such a scenario appears unlikely given the growing dependence on battery-operated devices. Though the market for rechargeable batteries could potentially evolve, their earlier versions have failed to gain meaningful traction due to high costs and operational limitations.

Risks and Concerns

The Company’s battery business is significantly dependent on imported raw materials. As such, any sharp fluctuation in commodity prices (primarily zinc) and foreign exchange rates poses a cost risk. The Company’s ability to fully pass on such increases to consumers is constrained by prevailing market conditions and competitive pressures.

Nevertheless, the Company continues to leverage its strong brand equity and deep distribution relationships to manage these challenges judiciously. The Company absorbs a portion of these cost pressures internally, while selectively passing on the remainder to consumers, in a calibrated manner that aligns with market affordability.

FLASHLIGHTS Industry Overview

The total flashlights market is estimated to be close to Rs 1200 Crore at retail level. Historically, the un-organized sector has always been active in the flashlights market, with Eveready being a leader in the battery-powered category. With advances in technology, rechargeable flashlights have emerged as a high- growth category. Eveready commands a significant market share of the battery-powered category, but this market has been shifting to rechargeables. The Company is strategically building a strong presence in the rechargeable market by offering a portfolio of high-quality, attractive products with customer-centric features at competitive price points.

The Indian flashlight market has witnessed notable growth over the years, driven by rising demand for portable lighting solutions across diverse use cases, including household, outdoor activities, industrial settings, and emergency applications. Among the various product categories, rechargeable flashlights have gained increasing traction owing to their cost-efficiency and environmentally friendly nature. These models offer the benefit of multiple recharge cycles, thereby reducing dependence on disposable batteries and contributing to lower environmental impact.

The Indian flashlight market, traditionally led by established brands renowned for quality, performance, and durability, has experienced a shift in recent years with a surge of low-cost sub standard imports. This influx, while offering upfront affordability, has raised questions about quality standards, regulatory adherence, and long-term reliability. To address this concern, BIS has issued the Flashlight (Quality Control) Order, 2025, mandating that all flashlights manufactured in or imported into India must adhere to Indian Standard IS 2083:2024 and bear the Standard Mark under a license from BIS. This will help curb the influx of substandard, low-priced imports that could unfairly compete with higher-quality local products.

Performance review

The Company continues to benefit from consumers and institutional buyers’ for promoting domestically manufactured flashlights. Supporting local production not only ensures compliance with Indian regulations but also strengthens the ecosystem for high-quality, sustainable solutions. Our innovation journey with launch of feature rich products are finding traction with intended end users. In Financial Year 2024-25, the business reported revenues of Rs 174.2 Crore, 6.6% higher than last year. The decline in battery-operated flashlight portfolio has stabilized in Financial Year 2024-25 while the strong performance of rechargeable offerings more than compensating for the decline in traditional battery-powered models. Higher advertisement and promotional expenses continued to support new launches and enhance engagement with consumers. The business saw EBITDA of Rs 12.4 Crore against Rs 14.5 Crore in the previous year.

Opportunities and Threats

Flashlight penetration on a per capita basis in India remains relatively low, indicating a sizeable untapped market. While urban areas traditionally had limited need for flashlights due to consistent power supply, emerging lifestyle trends such as increased participation in outdoor recreational activities are creating new use cases. In smaller towns and cities, frequent power outages continue to drive the demand for reliable lighting solutions. In rural regions, flashlights retain their importance as a practical tool for post-sunset outdoor mobility and activity.

Recognizing the market shifts, the Company strategically prioritizes innovation, superior quality, and value-for-money. Demonstrating this commitment, the Company continues its robust rollout of a product pipeline meticulously designed for consumer requirements. In line with the growing adoption of rechargeable products, the Company continues to engage with the consumers through enhanced communications to foster stronger customer relationships. The industry faces a major challenge due to the prevalence of inexpensive and substandard products originating from the unorganized sector and overseas. While this is expected to be addressed soon, as gazetted BIS certification for flashlights gets implemented, it is crucial for Eveready to continue emphasizing quality, reliability, and innovation to differentiate its offerings and build stronger brand loyalty among consumers who increasingly value dependable products.

Risks and concerns

A key challenge in the market stems from consumers prioritizing price over product quality and features. Despite this, the Company remains confident in the enduring strength of the Eveready brand, which is synonymous with quality and reliability. The Company is deploying focused communication campaigns to deepen consumer engagement, highlight the advantages of its products, and build awareness about the long-term value offered, especially when compared to cheaper alternatives in the informal market.

LIGHTING AND ELECTRICAL PRODUCTS Industry overview

The Indian lighting market, currently is dominated with LED lighting. The LED lighting segment presents a logical growth path for the Eveready brand. With majority of lighting products in India now LED-based, largely driven by the need for energy efficiency, the Company has uniquely positioned itself with a comprehensive and competitive product portfolio. These products are accessible through general trade outlets, modern retail formats, and the electrical channel. The Company employs a dual distribution strategy, leveraging both its general trade network and the electrical outlets division to cater to demand.

The Company is continually strengthening its capabilities in the electrical outlet division to support the rollout of distinctive product offerings. Across alternative channels i.e., modern trade, e-commerce, q-commerce and professional luminaires, there is emphasis to increase the proportion of value-added offerings in the portfolio. The business is steadily expanding its presence in the institutional segment, which offers promising opportunities for margin expansion. To strengthen consumer reach, the Company is strategically onboarding new distributors and intensifying focus on enhancing its presence within the retail category.

The introduction of new electrical accessories line has received an encouraging response and is effectively complementing Eveready’s existing portfolio by establishing a cross-category presence in retail outlets.

Performance review

In Financial Year 2024-25, the business had revenues of Rs 315.6 Crore, relative to Rs 310.8 Crore in the last year. Persistent value erosion across the lighting segment at the industry level, has impacted performance. In response to this, the Company has strategically prioritized volume growth while maintaining positive margins.

Within the dynamic LED landscape, the Company remains focused firmly on consolidating and expanding its position. Furthermore, the luminaire category experienced robust growth in both value and volume, underscoring Evereadys successful efforts and continued commitment to driving expansion in this promising area.

The business reported an EBITDA break even at Rs 1.1 Crore this year. With strong growth trends and the plans underway at Eveready, the business is poised to witness robust improvement in the coming years in line with expansion in distribution and SKU range.

Opportunities and Threats

As India continues to address its energy deficit, there is a growing inclination towards environmentally sustainable and energy-efficient solutions such as LED lighting. With the nation’s power infrastructure steadily improving in tandem with economic growth, the Company is well-positioned with a comprehensive portfolio geared for accelerated expansion in this segment. The Government of India’s continued push for energy conservation, particularly through the promotion of LED lighting, serves as a significant tailwind for the sector. The Company remains agile in tracking emerging consumer preferences and technological advancements, enabling the timely launch of relevant and innovative products.

While the lighting industry features numerous well-established players, its vast scale and relatively low barriers to entry frequently attract new entrants with aggressive pricing strategies. Despite this, Eveready is confident in its ability to expand its market presence by leveraging its strong brand equity, commitment to quality, and extensive distribution network.

Risks and Concerns

Success in the lighting and electricals segment hinges on continuous product innovation and superior quality. A key risk lies in the inability to anticipate or adapt swiftly to evolving consumer needs, potentially resulting in a loss of relevance.

To mitigate this, the Company has institutionalized a robust product development process aimed at introducing high-utility offerings each season, fostering consumer interest and maintaining brand engagement. Furthermore, the Company’s strategic focus on diversifying its SKU base, particularly through increased participation in the luminaires segment and expanding its distribution footprint is expected to strengthen resilience and ensure sustained growth.

Details of significant changes in key financial ratios:

Key Financial Ratios	2024-25	2023-24	Change (%)	Reasons
Current ratio (Number of times)	1.3	1.3	3%	NA
Debt Equity ratio (Number of times)	0.7	0.8	-15%	NA
Debtors Turnover (Number of times)	12.3	12.1	2%	NA
Interest coverage ratio (number of times)	5.4	4.0	34%	Due to higher operating margin/ lower interest
Inventory Turnover (Number of times)	2.7	2.9	-7%	NA
Net profit margin (%)	6.1	5.1	21%	NA
Operating profit margin (%)	11.3	10.7	6%	NA
Return on Net Worth (%)	19.6	19.1	3%	Due to higher operating margin

INFORMATION TECHNOLOGY

The Company has focused on investing in Information Technology (IT) as a means of delivering efficient business solutions that enable well-informed decision making. The IT domain remains updated and resilient, with robust processes that are deeply integrated within the organization.

Eveready completes one year of successful SAP implementation fulfilling business requirements and delivering expected benefits. The business is also deriving benefits of SFA (Sales Force Automation) and DMS (Distribution Management System) implementation in terms of better optimization of sales operations, improved efficiency and enhanced decision making.

INTERNAL CONTROL AND SYSTEMS

The Company maintains robust internal control procedures tailored to its size and operations, ensuring efficient resource utilization, accurate financial reporting, and compliance with regulations. This system includes clear work guidelines, defined authorization processes for transactions, designated custodial responsibilities, and source-level computerized controls.

The Company has in place a well-documented Risk Management Framework to proactively identify, assess, and mitigate potential threats to its operations, financial performance, and strategic objectives. Risk oversight is integrated at all levels of the organization and guided by the Risk Management policy, ensuring alignment with corporate governance standards. Key risk areas including market volatility, regulatory compliance, cybersecurity, and operational disruptions are continuously monitored through structured assessments and internal controls. Regular updates are provided to the Board of Directors and Risk Management Committee, enabling informed decision-making and promoting a culture of risk awareness across the organization. This disciplined approach supports the Company’s resilience, long-term sustainability, and ability to respond effectively to a dynamic business environment.

HUMAN RESOURCES

The Company recognizes that its people power is fundamental to its success. With nearly 1953 individuals employed (permanent) across various plants, branch locations and Corporate office, the Company values a shared passion for excellence. The human capital at Eveready is characterized by a wealth of knowledge, expertise and experience.

Throughout Financial Year 2024-25, employee-management relations remained amicable. The human resource management system at Eveready prioritizes recognizing merit-based performance and enhancing employee skill levels through development programs.

OUTLOOK

The Company anticipates battery demand to normalize over the medium to long term. Alkaline category would continue to drive growth as penetration increase due to increased usage and particularly following the introduction of the revamped Ultima brand. Further, targeted enhancements in marketing and distribution is underway to stimulate growth. A forecast of a normal monsoon season is expected to provide additional support to rural consumption and contribute to category momentum.

Leveraging its strong portfolio of high-quality products, trusted brand, and robust distribution network, the Company is well-positioned to capture incremental flashlight market share by strategically replacing battery-operated products with its rechargeable offerings, in-line with the shift in the market. Strategic initiatives, including aligning flashlights with gazetted BIS regulations and scaling up the range of rechargeable flashlight offerings, are being actively pursued. Consistent consumer engagement through sustained brand communication will remain a cornerstone of the Company’s approach to maintaining visibility and relevance. The Company’s ongoing focus on portfolio optimization and consumer-centric communication is supporting favourable outcomes. As overall consumption improves, Eveready is well-placed to leverage its strong brand recall and extensive market presence.

In the lighting and electrical products segment, the Company sees strong potential and is broadening its offering. Product development, backed by in-house teams and stringent quality protocols, remains a key focus. Eveready’s lighting solutions now enjoy availability across both traditional outlets and specialized electrical shops, underlining for it a competitive edge. Strategic emphasis is being laid on penetrating into smaller towns and cities while simultaneously enhancing performance in metro markets through modern trade and retail partnerships. The Company also continues to vigorously pursue opportunities in the institutional segment.

APPRECIATION

The Company has been getting necessary support and cooperation from all stakeholders including customers, suppliers, value chain partners, investors, authorities, lenders and employees of the Company to whom the Company expresses its sense of appreciation.

CAUTIONARY STATEMENT

This Management Discussion and Analysis Report contains forward-looking statements, including projections, assumptions, and expectations that are made in good faith and based on available information. However, actual results may differ materially from those expressed or implied due to a variety of external and internal factors beyond the Company’s control.

Additionally, market insights and product-related data presented in this report have been sourced from both published and unpublished materials. While care has been taken to ensure the accuracy and reliability of this information, its completeness and precision cannot be fully guaranteed. Readers are therefore advised to exercise their own judgment while interpreting the forward-looking information contained herein.