Ashok Leyland plans Rs 700 cr debt cut by raising funds

Commercial vehicle major Ashok Leyland aims to reduce its debt by another Rs 700 crore to bring it down to around Rs 3,800 crore from Rs 4,500 crore.

"We aim to reduce debt to Rs 3,800 crore from Rs 4,500 crore from now that will bring debt equity ratio to 1:1 by this fiscal," Managing Director VK Dasari said in Kolkata on Wednesday.

He said that the fund (Rs 700 crore) would be raised in a mix of internal accruals and selling of non-core assets, where the former would be around 50 per cent of the amount.

The company had been reducing debt on a continuous basis and recently raised Rs 666 crore through Qualified institutional placement (QIP) to pay-off its debt.

In order to remain profitable on a sustainable basis and derisking from cyclical nature of truck business, the company will focus more on exports, seeking higher growth in non-truck commercial products.

"We are aiming to bring down the non-truck commercial vehicle share to 50 per cent from around 70 per cent now over a period of time. We are also planning to increase the share of exports to one-third of total revenue, from 10 per cent now, over the next 3-4 years," Dasari said.

The company has various forms of associations in a few countries of the Middle East, Africa, Latin America and ASEAN used as vehicle to boost exports of commercial vehicle products.