Vedanta raises Rs 17,000 cr debt for Orissa project

Vedanta Aluminium, a subsidiary of the billionaire Anil Agarwal-promoted Vedanta Resources, has raised a Rs 17,000-crore debt for its ongoing project in Orissa to increase its fully-integrated aluminium smelting capacity.

“We recently closed the transaction, in which State Bank of India alone lent Rs 3,000 crore,” said a banker familiar with the development.

SBI Capital Markets was the lead arranger for the transaction, in which around 10 banks participated. “The company has already put Rs 13,500 crore equity in the project and the debt part has been raised now,” said the banker.

This is one of the largest loan syndications done under project finance in recent times. Project finance is essentially a term loan against a project. The banker declined to share the period or interest rate for which the term loan had been raised. Company officials were not available for comment.

Vedanta Aluminium has a Rs 36,000-crore investment plan to increase its fully integrated aluminium smelting capacity to nearly 2.6 million tonnes per annum (mtpa) by 2012. Upon completion, the company is expected to become Asia’s largest integrated producer of aluminium. It will also become one of the top five producers worldwide.

The company is expected to commission the second phase of a 500,000 tonne-per-annum aluminium smelter, with a 1,215-Mw captive power plant, at Jharsuguda in Orissa by the end of the current financial year. Earlier, it commissioned a 1.4-mtpa greenfield alumina refinery project and an associate 90-Mw captive power plant at Lanjigarh in Orissa in 2007.

Vedanta Resources also has its aluminum business under Bharat Aluminum Company (Balco) and Madras Aluminium Company (Malco). Group company Sterlite Industries acquired a controlling stake of 51 per cent in Balco from the Union government in March 2001. The company is in arbitration talks with the government for the buy-out of the residual government stake in the company. Malco is another such company that was taken over by the group in 1995.

The group had planned its primary expansion for the base metal under Vedanta Aluminum, in which the group holding company has 70.5 per cent stake and its subsidiary, Sterlite Industries, owns the other 29.5 per cent.