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Debt Wiped: Firms Erase Borrowings, Boost Profits
12 Sep
Summary
- Rolex Rings paid Rs 615 crore debt over 10 years through cash flow.
- Sunshield Chemicals eliminated Rs 100 crore debt via a rights issue.
- Both companies surpassed industry returns after debt reduction.
Two Indian manufacturing firms, Rolex Rings and Sunshield Chemicals, have recently achieved a significant milestone: erasing their corporate debt. Rolex Rings, a leading forging company based in Rajkot, took a decade to pay off its Rs 615 crore borrowings entirely through organic cash flow. This process, completed by March 31, 2026, also involved paying approximately Rs 285 crore in interest.
In contrast, Sunshield Chemicals, which manufactures surfactants and other chemical products in Maharashtra, opted for a faster route. By September 2025, it launched a rights issue that raised Rs 130 crore from shareholders, which was used to clear its Rs 100.38 crore borrowings by March 2026. This strategy converted debt into equity, reducing the interest burden.
Both companies have demonstrated improved financial health post-deleveraging. Rolex Rings boasts a return on capital employed (ROCE) of 21%, exceeding the industry median of 16%. Similarly, Sunshield Chemicals reports a ROCE of 20%, higher than its industry's 14% median. Rolex Rings also initiated a Rs 180 crore share buyback in April 2026, while Sunshield Chemicals increased its dividend for FY26.
Despite these successes, challenges remain. Rolex Rings has seen stagnant sales in recent years, and Sunshield Chemicals' growth is currently consuming cash, with free cash flow turning negative. Investors are advised to watch how management deploys the freed-up capital.
