Mahindra and Mahindra Ltd will reduce its debt below the Rs 600 crore (Rs 6 billion) level in the next financial year and is planning to ramp up production of the sports utility vehicle Scorpio to over 2,500 units per month shortly.
The automotive and tractor company is cutting the cost of funds and would bring down debt from Rs 1,000 crore (Rs 10 billion) to Rs 800 crore (Rs 8 billion) by the end of March 2004, M&M treasurer Prabal Banerji said, addressing a seminar on "credit diversity" organised by Fitch Rating and ICICI Bank Ltd, in Mumbai.
"We will exercise put and call option on some of the instruments and are also talking for buy-back of some securities, taking debt level down further," Banerji said.
As part of a strategy to reduce interest costs, the company has raised over $20 million in foreign currency debt at fine rates in last few months, including a three-year $10 million loan at 3.89 per cent, he said.
However, the company would maintain a debt equity ratio at 0.6:04 per cent all along, he added.
On the current production of utility vehicles, he said, "We are making 2,000 units of SUV model Scorpio per month and there is a demand backlog of six weeks."
The company would hike production to 2,500-3,000 units per month to meet growing demand in the domestic market, while plans for catering to overseas demand would be over and above it, he added.
The company has exported Scorpio to Italy and would focus on the African markets, Banerji added.
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