The Associated Cement Companies (ACC), the country's largest cement producer, has embarked on a major debt restructuring exercise as part of its strategy to prune its cost of borrowing.
Top executives at ACC said: "We have converted the existing term loans availed from a leading bank to the tune of over Rs 250 crore into fully hedged FCNR loans, which will yield an arbitrage of over 300 basis points."
This will enable ACC save close to Rs 7.5 crore during fiscal 2001-2002 and 2002-03. Earlier in the year, the company also prepaid term loans of over Rs 120 crore. The cement giant aims at driving its average cost of borrowings to around 11 per cent from around 13 per cent at present.
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ACC's total outstanding debt as of March 31 this year was Rs 1,657 crore, out of which Rs 1,171 crore was secured loans. The cement major paid interest charges of Rs 170 crore last year, up from Rs 161 crore in the previous fiscal.
The company is also exploring the opportunities of entering into swap or other derivative deals with a view to cap its forex and interest rate movement risk to which its debt portfolio is currently exposed to, ACC executives added.
Currently, ACC is working towards substituting certain high cost term loans from financial institutions with cheaper loans.
The company's long-term loans comprises Rs 11.2 crore from financial institutions and Rs 11.34 crore from Sicom and the Madhya Pradesh Sales Tax Authority. Rupee loans from financial institutions and banks are around Rs 320 crore.
Short-term loans out of the fund-based limits of Rs 500 crore, barring a negligible portion, are by the way of commercial paper. Total outstanding foreign currency loans stand at around Rs 207.16 crore.