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Eveready to optimize Ad spends amidst 10 percent revenue growth

Eveready to optimize Ad spends amidst 10 percent revenue growth

Eveready Industries India Limited (EIIL) aims to grow by 10 percent this fiscal year after closing FY24 with flat revenue of Rs 1350 crore. The dry cell battery maker also plans to double its revenue in the next four years. Moving forward, EIIL’s spending on advertising and marketing will remain at 8 percent despite revenue growth. Currently, the company spends 10 percent of its topline on advertising and marketing.

Against the backdrop of Eveready’s siren torch with safety alarm launch, Suvamoy Saha, Managing Director, EIIL spoke to Storyboard18 about the brand’s revenue growth and its advertising and marketing strategies.

Explaining about the advertising and marketing spends, Saha said, “We generally follow a thumb rule. We spend between 8 percent to 10 percent of our topline on advertising and promotion and will continue doing so. In fact, as turnover levels rise, we are currently at 10 percent (ad spend), and we will come down to 8 percent as turnover increases.”

He further explained, “Our margins will increase, and the absolute amount of money will remain the same. The percentage will decrease. Simply put, if I am investing Rs 100 on a Rs 1000 turnover, I am spending 10 percent. But if I stay at 100 rupees and my turnover goes to 1200, I am spending 8 percent.”

Eveready spends heavily on TV as a medium and also invests in digital channels to reach the right consumer base. “Major spends are dedicated towards TV, and it is working very well for us in terms of reach. We use print strategically as needed.”

Eveready operates in three segments: Batteries, Lighting, and Flashlights. The highest revenue is generated by the battery segment (65%), followed by the lighting business (23%) and flashlights (12%). Eveready expects growth in these segments by 4 percent, 20 percent, and 12 percent respectively. Eveready Industries sells about 1.4 billion batteries and 25 million flashlights annually, with its entire production sold in the domestic market.

Saha said, “We are expecting growth in rural areas this year, especially after the budget. Demand is expected to grow, and overall as a company, we aim to grow by 10 percent in revenue. I am expecting from the budget that the food prices will come down which will increase rural demand.”

When asked if external factors like the Russia-Ukraine conflict have affected the prices of zinc, Saha said, “Zinc is certainly a contributing factor to our margins. We manage our business according to our budgets, buying zinc when prices dip. So far, we have stayed within budget without adverse effects.”

Saha added, “We don’t want to unnecessarily burden our consumers with higher prices but need to maintain our margins. When situations are beyond control, we pass the costs on to consumers, who stand by the brand and are willing to pay for quality.”

With the festival season setting in, Eveready industries is expecting a growth by 10 percent as compared to last year during the same period. Saha said, “For the whole year, we are looking at a 10 percent growth and that falls in line with to whichever period during the year. In simple terms, in last festival time we grew by 100 and we are looking at 110 this festival period. There is not a particular period that we are expecting a huge spike.”

In 2022, the Burman family-promoters of Dabur had duties over the control of Eveready from the Khaitans. Eveready faced problems due to distribution channels. Saha spoke about the consolidation process and said, “We started looking at growth and took certain initiatives which we thought would sort of be able to help achieve those targets. While doing that, we did some work on the Route To Market (RTM) which is the distribution end. We were working with a very large number of distributors and reduced that to one-fifth of the total number.”

He further said, “In doing so, we left areas vacant. These challenges came up because we tried to do that in a very short period of time and now we are going to consolidate, we are just trying to resolve all those gaps and areas. Also, let me clear this and believe me, it was not imposed by anyone. We only wanted to improve ourselves. During the process, we made some mistakes and now we have to come out of it. The result of the error was that our turnover was flat last year.”

When asked if EIIL has identified those errors to streamline the growth, Saha said, “We were working with 5000 distributors which we reduced to 1100 distributors. We were consolidating, for example, we were in one area, there were 10 distributors, I have now made it 2 distributors. But in doing so, I have made a mistake and left this particular area vacant. So we are rectifying those areas so that our business goals are aligned.”

Eveready holds 53 percent of the market share in battery. While flashlights as a category being both organized and unorganized markets, in the organized market EIIL hold 80 percent of the market share while in unorganized market it holds close to 30 percent of the market share. Flashlight as a category is of Rs 400 crore market size.

Talking about Eveready’s B2B business, Saha said, “Our B2B business is very small which is somewhere 5 percent of the overall revenue. We are trying to grow our B2B business by 50 percent which in terms of value is still small.”