MUMBAI: Hindalco Industries plans to borrow about Rs 14,000 crore in the next couple of years to build two new plants that will treble its aluminium
making capacity as increased production of cars and aircraft, fuel demand for the white metal.
The Mumbai-based metals major — that became one of the world’s top five aluminium makers after buying Canada’s Novelis in 2007 — needs about Rs 9,200 crore each for the Aditya Aluminium and Mahan Aluminium projects. It aims to start the plants by 2012, according to managing director Debu Bhattacharya.
The debt will be in the form of so-called non-recourse loans, which in this case means they won’t be on the books of Hindalco. Instead they will be secured by the assets of Aditya Mahan Aluminium. The loans will be repaid from the cash flow generated from the projects.
“If you include Utkal Alumina, then we have $5 billion worth of projects under execution and we intend to keep the debt-equity ratio at 70:30,” said Hindalco CFO Sunirmal Talukdar. “These are project finance loans under which lenders set certain milestones and after completion of those milestones, funds are disbursed. Funds are not drawn down unless the project is on the ground,” he added.
The equity portion of the projects, which is 30% of the base cost, has already been tied up, said Mr Talukdar.
Aditya Aluminium is a greenfield complex, producing both alumina and aluminium at a site in Orissa. Uktal Alumina, also in the same state, produces alumina, a feedstock for the metal. Mahan is a new aluminium plant in Madhya Pradesh.
The expansion is being geared to meet demand. “Aluminium demand in India is very positive due to auto, construction and electrical sectors,” said Mr Bhattacharya. Although world aluminium demand fell 8% in 2009 due to the slowdown, it is likely to rise 14% in 2010, mainly because of rising consumption in China and India.
Average prices of aluminium on the London Metal Exchange in the year ended March 31, fell 16.6% to $1,903.6 a tonne. Global demand for the metal which is also used in beverage cans is expected to increase 10% this year, led mainly by China. Mr Bhattacharya said that average aluminium prices would be about $2,000 per tonne.
Hindalco also said that it plans to acquire copper mines. “Our aim is to have 40% of our concentrate requirement from our own mines. We are still short of that,” said Mr Bhattacharya. Hindalco operates copper mines in Australia through its subsidiary Aditya Birla Minerals.
Shares of Hindalco fell 5.8% to Rs 132.2 in a weak trading market, on a day when the broader market was down 1%.
source:economictimes.indiatimes.com
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