Hindalco Industries to seek shareholders' nod to raise Rs 60 bn via NCDs

Aditya Birla Group flagship Hindalco Industries will seek shareholders' approval for the issue of non-convertible debentures (NCDs) on private placement basis for aggregating Rs 60 billion at its forthcoming annual general meeting (AGM) next week.

The company seeks shareholders' approval for raising around Rs 60 billion through NCDs on private placement basis in order to augment resources for the ongoing capital expenditure, repayment of existing loans, and for general corporate purposes, according to the company's annual report.

"To further bolster the balance sheet, the company has prepaid close to Rs 80 billion of long-term project loans in India. This has led to a significant improvement in the consolidated net debt to EBITDA at below 3x at the end of March 2018," Hindalco chairman Kumar Mangalam Birla said in shareholders' note.

The current net debt stands at Rs 150 billion.

Birla pointed out that the ongoing government initiatives such as the creation of 100+ smart cities, thrust on infrastructure, especially rural infra development, along with 'Make in India' and 'Digital India' will continue to support the demand for aluminum and copper.

He noted that although India's GDP growth slowed from 7.1 per cent in FY17 to 6.7 per cent in FY18, the economy recorded a seven-quarter-high GDP growth of 7.7 per cent in the exit quarter of FY18.

"This reflects momentum. Investors seem to be positive on India's economic prospects. The foreign direct investment (FDI) flows continue to be encouraging," he said.

The prevailing sense of optimism accentuates India's continuing economic growth in the future as well.

It is attributable to the country's solid fundamentals, such as deleveraging by corporates, resulting in much stronger balance sheets, better capacity utilisation with consumption demand becoming stronger and insolvency and bankruptcy process weeding out non-performing assets, among others.

Birla, however, warned that the near-term challenges, including concerns like rising oil prices, hardening inflation, firming bond yields and widening current account deficit, cannot be ignored.

He also pointed out the ongoing global trade frictions, particularly between the US and China, are worrisome and can have a spillover negative effect on countries like India.

"The terrain ahead could be a tad bumpy depending on the economic and geopolitical environment," Birla added.