Nalco short-lists SBI, Axis banks to raise Rs 900 crore

National Aluminium Co Ltd (Nalco) has short-listed the State Bank of India (SBI) and Axis Bank to raise euro 150 million (Rs 900 crore) through external commercial borrowings (ECBs). "The mandate for raising the euro 150 million will be given to both the SBI and Axis Bank," Nalco director of finance BL Bagra told FE. The director said the fund amount would be split between the two banks, which were selected after the rate, the size of the operation and experiences were taken into consideration. Bagra said the letters would be issued by the end of next week. Nalco had received EOIs from nine banks and merchant bankers. However, seven-ABN Amro, BNP Paribas, ICICI Bank, HDFC Bank, Standard Chartered, the SBI and Axis Bank-have submitted firm bids for the job. Bagra said the recent Reserve Bank of India (RBI) restriction on ECBs would not affect Nalco's fund-raising programme as the entire fund would be invested abroad. The euros will be used to part-finance its Rs 5003-crore phase II expansion project. Payments will be made in euros to about 16 vendors in Europe that will supply equipment worth Rs 1500 crore. Cash-rich Nalco preferred to go for ECBs as the cost of funds would be cheaper. The euro will be available at less than 6%, as against the 9.5% the company is now getting on its parked funds, the director said. The euro will also put Nalco in ready mode to invest in greenfield projects and acquisitions abroad. The company has been offered land and coal-linkages in Indonesia and coalmines in South Africa for setting up smelters. Nalco has also received offers from companies in Indonesia and Tajikistan for acquisition of aluminium smelters, Bagra said.