The company said total debt had been brought to 1:1 ratio by December, well ahead of the original target of March 2015
Ashok Leyland (ALL) on Friday said it will bring down total debt by half over the next three years — from Rs 4,000 crore as of December 2014 to Rs 2,000 crore. Buoyed by the success of its assembly plant in Ras Al Khaimah (UAE) over the last few years, the company will set up 4-5 such plants abroad, including in the Middle East and Africa, and it hopes to end the fiscal with better-than-present-industry growth.
In an interactive session with mediapersons after announcing third quarter results, Gopal Mahadevan, chief financial officer (CFO), ALL, said total debt had been brought to 1:1 ratio by December, well ahead of the original target of March 2015. From a high of Rs 6,300 crore in August-September 2013, the company had brought down its total debt substantially to Rs 4,000 crore in December by cutting staff costs/overheaads, material, inventory and sale of non-core assets, among other initiatives. Now, the company believes that it can half the total debt, i.e., lower the ratio to 0.5:1 over the next three years.
“We want to ensure that the debt reduction in no way affects our capacity, capability and quality. It could be done through generating profits, cutting material costs by using alternate materials/technologies, alternate sourcings, optimum utilisation of existing resources/funds,” Gopal Mahadevan explained.
The company hopes to start a new assembly plant early next fiscal, probably in the middle east, and it will roll out more such plants in phases. By building such assembly plants, the company hopes to benefit up to 15% on costs.