ACC plans to reduce Rs 350 cr debt

The Associated Cement Companies (ACC) is planning to reduce its debt burden by around Rs 350 crore in this year. While ACC is looking at pre-payment of three of its high cost non-convertible debentures worth Rs 250 crore, it will repay back Rs 100 crore of other term loans.

ACC's total debt as on March 31, 2004, stood at Rs 1,420 crore, while its average cost of borrowing had come down by 175 basis points to 5.59 per cent.

A K Jain, executive director, ACC, told Business Standard, "There are some high cost debentures that we are planning to retire this year to reduce our average cost of borrowing and improve our gearing."

Company officials added that the pre-payment of debentures would possible only if the bond holders were willing to cash out.

In the financial year 2003-04, ACC had successfully prepaid a non-convertible debenture of Rs 100 crore, with an interest rate of 14 per cent, two years before its maturity.

The three NCD's that ACC is looking at redeeming, carry an interest rate of 12 per cent, 11.95 per cent and 11.5 per cent respectively.

Jain also said that the debentures would be prepaid primarily through internal accruals. However, he did not rule out the possibility of swapping high cost loans with low interest funds in the near future.

The company also has Rs 400 crore of secured loans in the form of non-convertible debentures, with an interest rate between 9.8 per cent and 6.3 per cent.

"Our gearing has come down to 1.06 at the end of the previous financial year, from almost 1.47 at the end of 2002-03," Jain said. The company would be targeting to bring down the gearing below 1 to around 0.9, he added.