Tilaknagar Industries Limited has announced the prepayment of its restructured debt to Edelweiss Asset Reconstruction Company (EARC), signaling the end of the financial reconstruction phase for the company.

Accordingly, the total restructured debt of ₹176.22 crore as on June 30, 2023, now stands extinguished. Consequent to the above prepayment, the corresponding balance debt of EARC amounting to ₹3.62 crore has been waived by EARC and the same shall be written back by the company.

The prepayment has been funded by a debt of ₹130 crore from Kotak Mahindra Bank Limited as well as internal accruals of the company. The company has now completely repaid the restructured debt in terms of the Master Restructuring Agreement of February 2020 and stands discharged of all liabilities, dues, demands or claims in respect of the restructured facilities.

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“As we conclude our financial revamp, we are glad to acknowledge the constructive cooperation we received from a very competent team of professionals at EARC. The reduction of debt has been achieved through a combination of internal accruals as well as funds raised by the company through preferential issue of equity over the past couple of years,” said Amit Dahanukar, Chairman and Managing Director, Tilaknagar Industries Limited.

As a result, the finance costs have declined significantly, leading to incremental cash flow generation. The financial turnaround was aided by a business strategy that focussed on volume growth, margin expansion through better product mix, following an asset-light model, and through all-around cost-saving initiatives, he added. 

The EARC debt prepayment marks Tilaknagar Industries’ return to normal banking channels for finance which would offer the company increased flexibility in managing cash flows, said the company. Gross debt from nearly Rs.1,200 crore as of March 2019 to Rs. 239 crore as on June 30, 2023. The company aims to go net-debt free by March 2025.

As part of the financial restructuring exercise, the company had entered into an agreement with Edelweiss Asset Reconstruction Company (EARC) in February 2020 wherein total loans of ₹523.32 crore were restructured at ₹344.47 crore at an interest rate of nine per cent, with balance debt of ₹178.85 crore. 

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