Grasim to raise up to Rs 2,000 cr via debentures to fund capex programme

Grasim has lined up investment for foray into decorative paints with project cost estimated at Rs 10,000 crore by FY25

Grasim Industries Ltd, an Aditya Birla group company, is planning to raise upto Rs 2,000 crore through debentures to fund its capital expenditure programme.

The company has lined up investment for foray into decorative paints with project cost estimated at Rs 10,000 crore by FY25.

The company spokesperson declined to comment on debt raising plans.

While the planned capex towards the paint business would entail some debt funding, the overall debt coverage metrics for the company are expected to remain comfortable.

Steady cash accruals over the past several years resulted in a healthy financial profile for Grasim, despite sizable capex and investments in subsidiaries and Joint ventures, ICRA said in a statement.  ICRA has assigned AAA\ stable rating to non-convertible debentures.

The company is at zero net debt with net cash of 7,553 crore as on March 31, 2022.

The total capex spent during FY22 stood at Rs 2,537 crore, which includes Rs 579 crore spent for the paints business.  In FY22, the company neared the completion of its Rs 7,700-crore capex cycle for its viscose staple fibre and chemical businesses.

About paints business activities, Grasim in the post results (FY22) statement said the business is focused on the timely execution of its capacities. The civil construction has already commenced at two of its plant sites (Panipat and Ludhiana) and is expected to start shortly at Chamarajanagar.

The remaining three plants for manufacturing paints are at different stages of the government approval processes. The market dynamics of the decorative paints sector has changed with new capacities being announced backed by strong growth and outlook.

The stable outlook on financial instruments, including debentures, reflects expectation that Grasim will continue to maintain a robust credit profile, aided by its strong business profile and expectations of healthy cash flows.

The entity is expected to continue to maintain a significant financial flexibility, being a key holding company for the Aditya Birla Group for various investments, while prudently managing its various expansion and diversification initiatives.