Eveready assets wiped out by years of losses


Battery packaging at the Eveready East Africa Ltd factory in Nakuru. FILE PHOTO | NMG

Eveready East Africa’s assets have been wiped out by years of losses, becoming the latest firm to trade on the Nairobi Securities Exchange with negative equity.

The battery distributor's liabilities surpassed its assets by Sh2.1 million in the half-year ended March when it reported a net loss of Sh8.4 million, narrowing it from Sh25.9 million a year earlier.

This means there is nothing backing its Sh178.5 million market capitalisation.

Eveready, associated with the family of the late businessman Naushad Merali, indicated that it will ask shareholders for more capital to remain afloat.

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“The company shall continue engaging its key stakeholders on initiatives to place it on a path to sustainable recovery,” the company said in a statement.

Eveready’s sales increased 23.6 percent to Sh41.6 million but higher costs eroded its margins, contributing to the loss.

Eveready’s major liabilities are short-term loans (Sh33.7 million) and amounts owed to suppliers (Sh113 million).

Its major assets are cash at bank (Sh60.7 million), receivables (Sh30 million) and stocks (Sh20.2 million).

Other listed firms that slipped into negative equity are Kenya Airways, Mumias Sugar Company, TransCentury, Home Afrika, and Uchumi Supermarkets.

Shares of the troubled firms have dropped by a large margin but still remain overvalued as measured against the current status of the businesses.

Their shareholders have gone for years without dividends. The Capital Markets Authority (CMA) had earlier proposed a special recovery board to which such firms would be transferred to be rehabilitated, failure to which they were to be delisted.

The plan has however stalled on concerns that it will further shrink the list of publicly traded firms.

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Eveready has been in financial distress in recent years due to a shift in customer preference from dry cell batteries, which it used to manufacture locally at the Nakuru factory and which it closed in 2014.

The company also pulled out of a distributorship agreement with American battery maker Energizer in 2016, accusing the firm of taking control over product distribution and company margins.

Eveready now focuses on the Turbo brand of batteries and its sales have been dwindling over the years.

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