Financial Highlights of the quarter and half year ended September 30, 2006

• Net Sales of the Company for the half year ended September 2006 was at Rs. 420.18 crores – up by 11% over the comparable period last year. Growth slowed down during Q2.

• Fast rising input material costs continued to put pressure on the margins, despite aggressive pricing actions by the Company.

• For the first time the pricing actions seemed to encounter consumer resistance – not only for the Company, but for the market as a whole. This resulted in volume declines both for the market as well as the Company.

• PBDIT & PBT related to operations at the half year continued to show improvement over the corresponding period of the previous year.

Review of operations

Dry Cell Batteries

Revenue growth of dry cell batteries during Q2 was at 10% over the corresponding quarter of the previous year. Higher prices realized by the Company accounted for this growth, despite reduction in volume by 8% during the quarter over last year. Growth of revenue at the end of the first half of the current year stood at 18% over the corresponding period last year.

There was a slow down of volumes both for the market as well as the Company during the quarter. The steep price increases passed on to the consumers over the last several quarters seemed to finally have an adverse impact, as there were discernible signs of consumer resistance to such increases. This was quite acutely felt in the ‘D’ segment, which registered de-growth – though somewhat compensated by the growth in the ‘AA’ and ‘AAA’ segments. Eveready’s market share stood at 46.6% in batteries.

Rechargeable batteries were higher in revenue by 15% backed by equivalent volume growth in the 1^st half as compared to that of the previous year. This trend has been consistent over both Q1 and Q2.

Flashlights

The same phenomenon of consumer resistance leading to de-growth in volumes was more acutely seen in the flashlights segment. Revenue for flashlights dipped by 39% during the quarter over last year’s same quarter, accounted for by lower sales volumes in the category - especially in the brass flashlights segment.

Sales revenue from flashlights stood at 85% at the end of the 1^st half of this year as compared to that of the previous year.

Packet Tea

The packet tea business of the Company continued to leverage the distribution network of the Company. The business had a revenue growth of 12% in the quarter over last year’s corresponding quarter, backed by a volume growth
of 8%.

Packet tea revenue was higher by 14% in the 1^st half of the year as compared to that of the previous year supported by 10% volume growth.

Mosquito Coils

The launch of Mosquito Coil was extended to 12 more states in the country. While the business is still at a nascent stage the initial response continues to be encouraging.

Comments on input material costs

The Company's margins have been under severe pressure both in the battery and flashlights segments over the last 24 months due to runaway prices of base metals used by the Company- mainly Zinc and to some extent Copper. The company was quite aggressive and took several pricing actions over the last several quarters in order to neutralize this pressure. During Q2, these pricing actions had neutralized the adverse impact of the raw material. The Company's competitors in these categories had also passed on similar price increases to the market.

As mentioned earlier the consumer has finally reacted to these pricing actions and there was a slow-down in both the product categories. However, such phenomenon is not uncommon in high-cost regimes and the market has to be given time to absorb.

Margin analysis

In view of significantly declining volumes during the quarter, there was a hit to the overall margins as brought out by the analysis below.

Margins took a hit for reasons already explained earlier and due to the temporary shift of product mix away from the ‘D’ segment in batteries and brass flashlights. The margin expansion achieved in Q1 could not be held. However, severe cost conservation measures allowed margins for the 1^st half were held at the same level as last year.

Distribution of Shareholding

Distribution of shareholding stood as follows as on September 30, 2006–

Subsidiary Company

The market related phenomenon of demand slowing down in the face of significant price increases was also felt by the Company's recently acquired subsidiary, Powercell Battery India Limited (PBIL). However, PBIL continues to be on track with a quick turn around. It achieved volume and net sales revenue increase of 30% and 38% respectively for the 1^st half in the current year over the corresponding period of the previous year. Net profit at the end of 1^st half of the current year was break even as compared to a net loss of Rs. 3.22 crores for the corresponding period last year.

The financial results shown in this analysis contains only the stand-alone results of the Company and does not contain any element of those of PBIL.

Outlook

The current quarter’s performance has been somewhat modest. However, this has to be seen in the perspective of the very severe adverse impact faced by the product categories in terms of input material costs. Indian market being quite opposed to price increases did finally show resistance after patiently bearing the adverse impact over the last several quarters.

Such a phenomenon is not unusual and is faced by businesses from time to time. Under such circumstances, time is required to be given to the market to absorb impacts. In FMCG categories such period is known to be short in nature. The Company also believes that this phenomenon should be temporary in nature and there is no fundamental change in the underlying demand drivers.

However, considering the overall scenario, the Company has revised its guidance of growth in PBDIT to a 10% level for the full year over the previous financial year.

Brief profile of the Company

Eveready Industries India Ltd. (Eveready) is one of India’s leading FMCG Companies. Eveready possesses an expertise in manufacturing, marketing and distributing a diverse range of products to the entire length & breadth of the country. Its portfolio comprises of dry cell batteries, rechargeable batteries, flashlights, packet tea and now mosquito coils. Its market share in batteries is 46.6% (AC Nielsen) and in flashlights about 85% (Company estimate). (Combined market share in batteries with its subsidiary PBIL is 55%). It is a recent entrant in the packet tea segment. Its market share ranges between 2 – 8% in the various regions where the products have been launched.

Eveready is the world’s 3^rd largest zinc carbon player, selling more than a billion units a year, catering to the entire range of equipments that need portable energy. Its rechargeable products cater to the cylindrical replacement market and cordless phones. It has a complete range of flashlights– plastics, aluminium & brass. All battery and flashlight products are branded ‘Eveready’. Packet tea products are branded ‘Tez’, ‘Premium Gold’, ‘Jaago’ and ‘Classic’. Mosquito Coils are branded ‘Eveready PowerOn’.

Key strengths of Eveready lie in its 4 core assets– brand ‘Eveready’, a distribution system that is deeply entrenched, its skill of efficient mass-manufacture and its human capital. Brand ‘Eveready’ celebrated its 100 years of existence in India last year. Across generations ‘Eveready’ has emerged as more than a battery or a flashlight; it has emerged as an idea– that of trusted reliability of the enduring and the dynamism of the contemporary.

Eveready’s manufacturing facilities are located at Chennai, Hyderabad, Lucknow, Noida and Kolkata. Its latest state-of-the-art battery plant is coming up at Haridwar, Uttaranchal, which will have a capacity of 400 million pcs of AA batteries. This plant will be eligible for income tax and sales tax benefits. Another project to augment capacity is also on the anvil– probably in a tax-benefit area– plans for which are being finalized.

Eveready’s sales network is wide and comprises of 15 sales branches and 40 C&F points. It also comprises of a family of 4000 distributors and a team of 1000 exclusive vans servicing retailers covering the length & breadth of the country. Eveready’s products are available in about 3.2 million outlets, which gives it a retail penetration exceeding 65% in its class of outlets. Out of this, about 1 million outlets are directly serviced by the Company’s network. Eveready’s unique strength in distribution lies in its ability to access and service rural parts of the country. Eveready is a clear leader in its 2 mainstay businesses– batteries & flashlights. It has taken an aim to scale up operations by adding new products to its range, with an objective to have a pan-Indian presence– cutting across the rural & urban divide– and to be within the first 3 players of that segment.

Important Notes :

1. Eveready’s Investor Relations activities are co-ordinated by Tehnaz Punwani, Sr. General Manager & Company Secretary (tehnazpunwani@eveready.co.in) and Suvamoy Saha, Director (s_saha@eveready.co.in).

2. Eveready may be contacted for any further information or clarification on Telephone No. +91-33-2288 4436 ; Fax No. +91-33-2288 4059.

3. This Update is being issued after the Board of the Company at its meeting held on October 26, 2006 has taken on record the financial results for the quarter ended June 30, 2006.

4. Some forward looking statements on projections, estimates or expectations are included in this update for better comprehension of the Company’s prospects. Actual results may, however, differ materially on account of several economic or market related factors.

5. This Update is also available on the Company’s website: www.evereadyindustries.com . In view of this, information in this Update is also available to the public and does not therefore constitute unpublished price sensitive information under the SEBI (Prohibition of Insider Trading Regulations, 1992).