JK Tyre has said that it plans to spend 200 crore rupees in the next two years to amplify its production capacity through de-bottlenecking of its plants even as it continues de-leveraging exercise and reduced net debt by 929 crore rupees in financial year 2020-21.
The company is focusing on prudent capital allocation and tight management of its working capital to ensure accelerated de-leveraging going forward, JK Tyre said in a statement.
“Going forward, the company is planning to incur 200 crore rupees over the next two years by way of de-bottlenecking its plants to increase capacities, to be funded through internal accruals,” the company said.
There would be sufficient operational capacities through the proposed de-bottlenecking to cater to higher demand for its products, it added.
The company has 12 manufacturing facilities with annual production capacity of 575,000 metric tonnes (around 32 million tyres) in fiscal 2020-21.
In FY21, JK Tyre said it has reduced substantially the net debt by 929 crore rupees through higher cash accruals and funds released due to better working capital management, which is a reduction of 17% compared to last year.
According to an investor presentation, the company’s net debt in FY21 stood at 4,483 crore rupees, down from 5,412 crore rupees in the previous year.
The company also achieved interest cost reduction by 83 crore rupees in FY21. Stating that the finance cost is lower by 15% approximately, JK Tyre said it is on track to reduce its long-term debt to a level of 45% approximately by FY24.