Nalco to take debt-equity mix route to fund Rs 41,000-crore projects

To broaden its footprint, the country’s second largest aluminium maker, the National Aluminium Company Ltd (Nalco), will go in for a mix of debt and equity infusion to fund its Rs 41,500 crore greenfield projects. Two of those projects are in India and two abroad. “We may go for a debt-equity mix to raise funds for the Greenfield projects,” company director (finance) BL Bagra, told FE. “Since the project construction period would span from three to five years, Nalco may need big money only from 2011-12 and we may follow up the debt with an equity offer, if required,” he said Bagra said raising fund for the projects would not be a problem since the valuations of the company is very good. “Nalco’s net worth, which is now about Rs 9,000 crore, would become Rs 13,000 crore to Rs 14,000 crore by 2011-12. A debt-free company like Nalco would be in a position to raise Rs 20,000 crore in the debt market,” the director (finance) said. Nalco, except for the part funding of the capital cost of the original project to the tune of Rs 1,288 crore by way of equity, has not depended on the government support at any point of time. The company had funded the Rs 3,600 crore first phase expansion and Rs 5,000 crore second phase of its flagship plant in Orissa from its internal accruals and market borrowings. Nalco, which is in the midst of a $1.2 billion expansion plan would have little problem in getting high premium on its equity offer because of its good financial performance and the prices at which its scripts are being traded. The company scripts were quoted at Rs 381 when the market closed on Thursday. The central government holds 87.5% stake in the company while the financial institutions and employees have 12.5% following dilution of stakes by the government in 1990s. Nalco is proposing to set up a smelter project along with a captive power plant in Indonesia with an investment of Rs 14,000 crore and a 3.1 lakh tonne smelter project in Iran at a capital cost of Rs 4,000 crore as a joint venture with ALPHA. ---financialexpress