Why is EID Parry getting aggressive about reducing its debt?

In the midst of a boom in sugar demand and sugar prices, Chennai based EID Parry has managed to reduce total debt by over 63% during the financial year 2021-22. In fact, EID Parry has been able to reduce its short term loans and long term loans with the overall reduction in debt being pegged at 63%. Like most of the other companies in India, EID Parry has also been looking to reduce its solvency risk in an uncertain environment.

Due to the sharp cut in the debt levels, the debt servicing finance cost also fell by close to 50% on a yoy basis. Most sugar companies are seeing higher EBIT margins in the ethanol blending space than in traditional sugar business. Hence they are expanding capacity rapidly on ethanol. For the current sugar cycle year, the government has set export target of 6 million tonnes which will be another big opportunity basket for Parry.