Mumbai, Jun 20 Hindalco Industries Ltd, the flagship company of Aditya Birla Group and the largest producer of aluminium in India on Friday announced that the company has approved the issue of equity shares for Rs 5,000 crore ($1.2 billion) to existing shareholders on a rights basis to help replace a $3 billion bridge loan taken out for its purchase of Novelis. The company also reported a fall of 11% in its consolidated net profit to Rs 2,387.3 crore for the year ended March 2008.
The share ratio for the right issue will be 1:3 i.e., one right of rupee one each for every three equity shares of rupee one each held by the shareholder as on the record date to be announced later.
Says Debu Bhattacharya, MD of the company, "The balance of the bridge loan will be repaid by sourcing domestic/international debt financing and liquidation of treasury."
Hindalco acquired Canadian aluminium maker Novelis last year for $6 billion. The company took a bridge loan of $3.03 billion for the Novelis acquisition.
"The bridge loan has a rate of 80 basis points over LIBOR, and the company may yet opt for an overseas loan as it would reduce the currency mismatch during repayment," said Sunirmal Talukdar, CFO of the company. The loan comes due on November 10, 2008 and the company would use a mix of overseas and domestic debt and treasury reserves to close it.
Hindalco Industries Ltd shares on Friday were down 6.37% or Rs 10.95 to close at Rs 161 on the Bombay Stock Exchange.
Meanwhile, the company on Friday announced the audited financial results where it reported a fall of 11% in its consolidated net profit to Rs 2,387.3 crore for the year ended March 2008 against Rs 2,685.8 crore last year. The reason for this, the company said was the appreciation of the rupee, coupled with higher cost due to inflationary pressures. However, the company's total revenue for the period grew 211% to Rs 60,013 crore against Rs 19,316 crore in FY07. Earnings per share also dipped to Rs 20.5 against Rs 26.7 last year.
The directors have recommended a divided of Rs 1.85 per share and said that this will be paid in line with applicable regulations.
Addressing the press conference in Mumbai, Bhattacharya said post the acquisition of Novelis, Hindalco is now a global player with a strong presence in five continents and with a product portfolio which is natural hedge against the volatility of aluminium prices.
He further said, "Hindalco has embraced an aggressive growth plan, a combination of organic and inorganic expansion."
Source: THE FINANCIAL EXPRESS
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