Eureka Forbes to ‘purify’ foreign particles in books
The country's largest water purifier and vacuum cleaner maker has undertaken an exercise to clean its books and restructure operations.
First, it has just written down Rs. 187 crore in loss-making Lux International from a book value of Rs. 457 crore. Lux was acquired six years ago to expand into Europe. This is the second time EFL has undertaken this exercise after writing down Rs. 132 crore in FY18. Second, it has further written down Rs. 341 crore in its ASEAN operations run by Forbes Lux.
“Due to the Lux write-off, EFL group’s net worth has come down from Rs. 211crore to Rs. 67 crore. We expect to improve the net worth back to current level in the next two years. However, these write-downs were necessary,” said Shroff, as these were part of a broader transformation plan. “EFL group is planning to double its revenue towards becoming a billion-dollar entity (about Rs. 7,000 crore) in the next five years with earnings before interest, tax, depreciation and amortization (Ebitda) of more than 10%,” he said.
EFL’s consolidated revenue from operations was Rs. 2,388 crore in FY19. Veratech Intelligence, which analysed the company’s financials, said revenue grew at 2.5% last fiscal. “This, when combined with the fact that the CAGR for the company's revenue for the past five years stands at 2.6%, paints a big challenge,” said Veratech founder Mohit Yadav.
As per the financials shared by the company, EFL has raked in a positive operating profit at a consolidated level of Rs. 21.22 crore in the first six months of this fiscal against a loss of Rs. 14.43 crore in the same period last year due to the restructuring.
However, revenue growth continued to be slow at 3% to Rs. 1,239 crore. The company’s restructuring of Lux International also includes a move to ‘distributor model’ of operation in countries like Spain and Italy instead of subsidiaries. It has also added newer products like steam cleaners and healthy sleeping solutions.