Hindalco Industries, India’s largest aluminium maker, hopes to complete Rs 4,900 crore of debt-raising in the next two weeks to achieve financial closure for Utkal Alumina Refinery, a 1.5-million tonne per annum project in Orissa.
The debt syndication was launched in the third week of December by Hindalco’s bankers, SBI Capital Markets, IDBI Bank and ABN Amro. “It will take another two weeks before the fund raising is completed,” said a banker familiar with the development.
The refinery is expected to start production from July 2011 and the order for machinery has been placed. It involves an estimated Rs 6,500 crore of planned capital expenditure, 25 per cent of which is being put up as equity by the company, while the rest is being raised as debt.
The company is raising a term loan against the project. Such financing is usually called project finance in banking parlance. It usually takes six to eight weeks to raise debt through the project finance route.
The company has capital expenditure plans of over Rs 23,000 crore for the next three years, including other new plants in Orissa, Madhya Pradesh and Jharkhand.
Hindalco plans to fund 30 per cent of its total capital expenditure through equity infusion and internal accruals. It raised Rs 2,900 crore by selling fresh equity in qualified institutional placement in November. It is now tying up the debt component for the projects.
Its revenue for the last financial year was Rs 65,414 crore, while net profit was reported at Rs 485 crore — down from Rs 2,193 crore in the previous year, primarily due to the Canadian subsidiary, Novelis, which reported Rs 8,769-crore loss in that year. The subsidiary is expected to make Rs 5,000 crore of operational profit from the financial year 2012-13, according to the company estimates given in the annual general meeting a few months earlier.
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In Madhya Pradesh, the company is setting up Mahan Aluminium, a complex of smelters and a thermal power plant, with respective capacities of 359 ktpa and 900 Mw. This is also slated for production in July 2011. Bankers say this would be the next one for achieving financial closure after Utkal Alumina.
Aditya Alumina and Aluminium is another new project planned as an integrated aluminium complex in Orissa. The project includes a 4.2 million-tpa bauxite mine, a 1.5 million-tpa alumina refinery at Kansariguda and a 359-ktpa smelter at Lapanga.