The share price of troubled battery-maker Eveready rose sharply yesterday following a shareholder approval to re-invent itself through a joint venture with soap manufacturer Orbit Chemicals.
At the close of trading, Eveready stock was priced at Sh4.55 – levels last seen in October 2008, a more than 8 per cent jump in value yesterday alone. Shareholders of the company that was once known in most households for its dry cells for radio and flash lights, also gave their nod to have the idle plant in Nakuru sold during the annual general meeting held last week.
A renewed interest in the stock could signal investor confidence in the new strategy adopted by the management, for a company that had a near-absolute control of the dry cell market but whose products have been overtaken by newer lighting technologies and increased access to electricity across the country.
A total of 215,000 shares of the company were traded yesterday, a rare feat for a company that most investors have come to write off. The joint venture with Orbit Chemicals, which also manufactures Axion and other detergents, among dozens of products, means Eveready would re-enter the manufacturing business.
Its Managing Director Jackson Mutua told The Standard there are several machines in the facility that could boost capital as the company diversifies its business. “Most of our assets have been written off in the accounting books. To get the land for other business ventures we have to auction them,” Mr Mutua said.
Strategic plan
Disposal of assets and machinery that are over 40 years old is part of a five-year strategic plan launched last year to revitalise the company, he explained. To counter the faltering prospects, Eveready had announced plans to enter the real estate market and was in negotiations with prospective investors to fund the construction projects.
Already the firm had commissioned a feasibility study that would inform the decision on whether to invest in a hotel, shopping complex or a residential housing project on the 18.5 acre piece of land currently occupied by the plant.
Mutua told shareholders, who have witnessed their business crumble in the past few years, that cheap and illegal imports which flooded the markets were responsible for the state the company had found itself in.
The disposal process of the obsolete plant, which begins immediately, is part of a five-year strategic plan launched last year to revitalise the company, which has been performing poorly. “There is no committal on what to put up and we are currently undertaking a study on limited options of a shopping mall or a hospitality centre,” Mutua said. Eveready shut down its manufacturing plant known as D in Nakuru last September as a result of losses attributed influx of cheap products.
After the company shut down the plant, the management announced it had entered into an agreement with Energizer Egypt to outsource already manufactured products.
