Home-grown tyre manufacturer JK Tyre is focusing on prudent capital allocation and tight management of its working capital to ensure accelerated de-leveraging in the future.
The company has reduced the net debt substantially by INR 930 crore in FY21 through higher cash accruals and funds released due to better working capital management, which is a reduction of 17% compared to last year and the finance cost is lower by 15% approximately, the company said in a press release.
The net debt to EBIDTA has improved significantly to 3.32x in FY21 from 5.33x earlier, and net debt to equity improved to 1.61x in FY21 from 2.23x in last year.
The company is on track to reduce its long-term debt to a level of 55% approximately by FY24.
From now on, the company is planning to incur INR 200 crore over the next two years by way of debottlenecking its plants to increase capacities to be funded through internal accruals.
There would be sufficient operational capacities through the proposed debottlenecking to cater to higher demand for its products.
The tyre manufacturer is presently keeping a close watch on the current demand scenario and shall decide on further expansions at the appropriate time, the release added.