Vedanta Aluminium raises ₹13,500 crore loan after group's demerger

By Saikat Das

 

A unit of India’s Vedanta Group is raising about ₹13,500 crore ($1.4 billion) from at least three banks, the first large local-currency loan since the conglomerate controlled by billionaire Anil Agarwal was split into separate firms, according to people familiar with the matter.  

Axis Bank Ltd. has signed a loan agreement for ₹5,500 crore with Vedanta Aluminium Metal Ltd., said the people who asked not to be identified because the information is private. HDFC Bank Ltd. and ICICI Bank Ltd. will collectively lend about ₹8,000 crore to the new independent entity, they said. The lenders will syndicate a portion of the loan with Axis Bank launching it, the people said.

 

 

The loan tenors range between 6-1/2 years to 7 years with the proceeds to be used to refinance an existing debt that Vedanta Aluminium inherited from the previously integrated company structure, the people said. The banks are offering interest rates in the range of 7.9 per cent-8 per cent, according to the people.

 

Representatives for Vedanta Group, Axis Bank, ICICI Bank and HDFC Bank didn’t immediately respond to requests for comment.

 

The fundraising shows Vedanta’s push to establish independently financed businesses to give them greater financial flexibility and reduce debt. The new structure was approved by an Indian court in December.

 

Vedanta split its businesses into five separate listed companies, of which four focusing on aluminum, power, oil and gas, and iron ore began trading on stock exchanges in June. Last month, Crisil Ratings, the local arm of S&P Global, upgraded ratings on several Vedanta firms, raising Vedanta Aluminium’s rating to AA+ with a stable outlook, saying the group’s financial flexibility has improved.

 

Demand from companies seeking to refinance debt and support operations has helped spur credit demand in India. Bank lending expanded 17.7 per cent to 217.3 trillion rupees as of July 15, data from the Reserve Bank of India show, with the growth nearly doubling from the same period last year. 

 

Vedanta Aluminium’s net debt may drop to below ₹10,000 crore by financial year 2028, ICICI Securities said in a report last month, citing its robust cash flows.