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| Hindalco Industries plans GDR issue |
| BS Reporter / Mumbai Aug 01, 2009, 01:31 IST |
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Volatility in the domestic market has got Hindalco Industries, the Aditya Birla group’s flagship firm, to cut the size of its $500 million qualified institutional placement (QIP) and go in for a global depositary receipts (GDR) issue. While the total fund-raising target will remain $500 million, the company has not disclosed how much it planned to raise through GDRs.
Hindalco will be joining a growing list of large Indian companies that have raised money from overseas equity markets, mainly to bring in the equity component for financing large projects, and also to retire debts.
The plan to raise $200 million was part of its scheme to fill the gap in funding due to expected decline in internal accrual.
The overseas fund raising rally started this year with Sterlite Industries, the nation’s biggest copper producer, which raised $1.5 billion selling shares in the US. Soon after, Tata Steel had raised $500 million and Suzlon Energy raised $108 million by issuing GDRs. Tata Power was the most recent in the list with its $335 million GDR.
“Following India’s biggest stock rally in five years and the government’s plan to boost infrastructure investments, the demand for shares of Indian companies is surging in developed markets. This essentially resulted in the success of GDRs,” said a Mumbai-based analyst.
Hindalco requires Rs 25,000-30,000-crore for its capital expenditure till 2013, that includes new projects and expansion of existing ones in Orissa and Jharkhand. It also has a consolidated debt of $5.2 billion (about Rs 25,000 crore). Of which, Novelis, its Canadian subsidiary, alone has $2.4 billion (about Rs 11,500 crore) debt.
Earlier this year, the company had raised a five-year loan of $1 billion, to partly pay off a $3-billion bridge loan taken during the acquisition of Canadian aluminium major, Novelis.
Later, it had got lenders’ consent for covenant re laxations relating to the $982 million bank loan.
Profit dips a third
Hindalco Industries has seen a 31 per cent fall in net profit at Rs 481 crore during the financial year’s first quarter, on lower metal prices. The income has dropped 16 per cent to Rs 3,899 crore.
Aluminum producers globally reported lower profit during the quarter, as prices almost halved on the London Metal Exchange (LME).
The rupee’s depreciation against the dollar and higher sales volume have also impacted topline growth.
Hindalco expects revenue to increase in the current quarter from the previous three months as prices recover.
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