Eveready Industries India Ltd, a major batteries and flashlights maker reported a 48 percent decline in consolidated net profit to Rs 31.04 crore for the second quarter ended September 30.
The decline is impacted by lower demand and higher input costs. The company had posted a consolidated net profit of Rs 57.22 crore in the same period last fiscal, Eveready Industries India said in a regulatory filing.
Its consolidated revenue from operations during July-September 2021 fell to Rs 357.49 crore, against Rs 372.63 crore in the year-ago quarter, it added.
Consumption reduced significantly in the COVID-19-related medical devices that use higher-margin batteries, with the situation related to the pandemic improving significantly in the country. Battery turnover was thus lower by six percent, Eveready said.
"Similar soft trend also prevailed in the flashlights business," it said adding that the market was also disturbed by the high volume of low-cost dumped products from China.
On the other hand, the company said the higher cost of inputs, led by overall increases in commodity prices, could not be entirely passed on to the market resulting in lower margins. Total expenses in the second quarter rose to Rs 320.16 crore, compared with Rs 318.38 crore a year ago.
"The competitive scenario in the battery market was quite severe leading to higher cost of market inputs. In this scenario, efforts will be concentrated to optimize product mix to deliver higher margins," it added.
In the lighting and electrical segment, while there was a healthy growth of 17 percent in turnover, it was insufficient to make up for the losses in the core battery and flashlight segments, the company said.
On the outlook, Eveready said batteries and flashlights are under pressure as demand remains muted. Also, the consumption of high-margin batteries in medical devices, the demand for which were very high during the peak of COVID-19, is not likely to repeat and as such the performance of last year may be seen as a one-off, it added.
It is expected that the market will stabilize from the ups and downs caused by the pandemic and the opening of markets will help the company in reaching full potential in a more stable environment through its strong brand and distribution push, it added.
Eveready also said that it would "explore countermeasures again the large-scale dumped flashlights from China." Bullish on the lighting segment, the company said it will continue to grow and efforts are currently on to improve margins by judicious change of mix in the product portfolio.