Ashok Leyland to go slow on raising debt

CHENNAI - India’s second largest commercial vehicle manufacturer Ashok Leyland, authorised to raise Rs.700 crore debt this year, is not in a hurry as a major portion of the capital expenditure will be funded from internal accruals.

The company has announced Rs.1,200 crore capital expenditure over the next two years — Rs.400 crore on its expansion and Rs.800 crore in joint ventures.

“With the market for the commercial vehicles picking up, the cash generation for the company is good. Major portion of the proposed investments will be funded from internal accruals and the remaining portion will be met by debt raised at an appropriate time,” an official told IANS.

During the current fiscal, the company has raised Rs.360 crore debt at an average cost of around 7.79 percent per annum.

At the end of last fiscal, the company’s total debt stood at Rs.2,200 crore. Ashok Leyland plans to contain borrowings within Rs.800 crore over the next two years.

According to officials, the capital expenditure came down drastically as the company and its light commercial vehicle (LCV) joint venture partner Nissan Motor Company decided to use their existing facilities to roll out the vehicles instead of a greenfield facility.

Ashok Leyland will roll out the LCVs from its Hosur facility while Nissan Motor will produce the models at its Oragadam plant.