The Hindu Business Line : Hindalco to raise Rs 2,500 cr from 1:4 rights — Plans to invest Rs 12,000 cr in expansion

HINDALCO Industries Ltd announced on Tuesday that it would be raising Rs 2,500 crore by offering one share for every four held by existing shareholders on a rights basis to partly fund its expansion plan.

The board would decide the price per share for the rights issue later, the company said in a news release.

Shares of Hindalco edged up to Rs 160.80 on the Bombay Stock Exchange on Tuesday from the previous close of Rs 159.75, after touching a high of Rs 164.45.

The company plans to invest around Rs 12,000 crore in expansion of its alumina and aluminium capacities and also set up new facilities.

The company's investment envisages a brownfield expansion of its alumina facilities at Muri, Jharkhand, from 1.1 lakh tonnes to 4.5 lakh tonnes; and at Belgaum, Karnataka, from 3.5 lakh tonnes to 6.5 lakh tonnes.

The brownfield expansion of its aluminium facility at Hirakud, Orissa, raises capacity from 65,000 tonnes to 1.46 lakh tonnes with captive power units.

Its expansion plans are meant to capture the growing demand for aluminium in India and the overseas market.

Hindaco is also investing in Aditya Aluminium, a fully integrated greenfield aluminium complex in Orissa with an alumina capacity of one million tonnes and aluminium capacity of 2.8 lakh tonnes. The company is also making a 55 per cent equity investment in Utkal Alumina International Ltd, a joint venture company with Alcan Inc for a 1-1.5-million-tonne alumina plant in Orissa.

The company has tied up debt financing to the extent of Rs 7,050 crore and expects to finance the balance requirement from the proceeds of this rights issue and surplus cash with the company.

"Hindalco is at the threshold of its next phase of growth and the planned expansions would transform the company to a global-scale metal producer. The promoters are fully committed to the success of the offering," the release said quoting its chairman, Mr Kumar Mangalam Birla.

The company said that 25 per cent of the rights issue price would be payable as application money, another 25 per cent payable between 9 and 12 months from the date of allotment and the balance 50 per cent between 18 and 24 months after allotment.

"We have structured this instrument keeping in view the phased funding requirements of the company and to provide investors with an option to pay in a phased manner while continuing to participate in the growth of the company," the release said quoting Mr D. Bhattacharya, Managing Director, Hindalco.

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