 "Hindalco, Birla Carbon to raise $2.4-bn via bonds")
Aditya Birla group companies Hindalco and Birla Carbon are tapping the international markets to raise around $2.43 billion by early next year, to bring down their financing costs.
Hindalco is planning to raise $1.5 billion via bonds. Birla Carbon is marketing a $925-million loan to investors from this week, bankers said. Bankers said the marketing of Birla Carbon's loans has started in Singapore, with ANZ, Axis Bank, Credit Agricole, ICICI Bank, StanChart as lead arrangers. Responses from investors are due in the first week of January. Birla Carbon is raising funds to refinance a loan taken in 2011 for the acquisition of Columbian Chemicals. Hindalco is restructuring its loans to bring down finance cost.
The acquisition of Columbian Chemicals in 2011 had made the Aditya Birla group the world's biggest carbon-black maker by volume. In India, the carbon black business of the group was hived off from Aditya Birla Nuvo and was being separately held as a subsidiary called SKI Carbon Black, to be listed later.
Hindalco has been under pressure to cut costs. It was mainly hit by falling commodity prices and also the de-allocation of coal mines to the company by the Supreme Court.
Group chairman Kumar Mangalam Birla had said in an interview last month that the worst of the commodities cycle was now behind it. At current aluminium prices, he had said, many companies would find it difficult to sustain operations. One of the top priorities of the company would be to bring down its debt of Rs 28,518 crore as on September this year.
Hindalco's finance costs shot up by 60 per cent to Rs 616 crore in the September quarter, as compared to the year-ago period, on revenues of Rs 8,925 crore and profits of Rs 103 crore. In September, the company refinanced loans worth Rs 14,700 crore with banks and got the maturity of its local currency project loans extended by 10 years. According to the deal, the company would have to pay six per cent of its debt in the next five years instead of 35 per cent. All these are expected to provide relief to the company, as metal prices have crashed.
The good news in the quarter was that the performance of its North American subsidiary, Novelis, was improving on higher margins in the auto business and improving cost competitiveness in Asia.
Novelis is expecting a positive cash flow in FY16 as capital expenditure has been done. Hindalco expects its financials to improve with a ramp-up of its India facilities.
Many Indian companies - including Mahindra & Mahindra, NTPC and PFC - are planning to issue dollar bonds to fund capital expenditure. Electricity producer NTPC plans to tap the overseas bond market with a $750-million bond issue. In calendar 2015, Reliance Industries was the biggest fund-raiser from the overseas markets. It is using the funds to roll out a telecom network in India.
