Business Daily from THE HINDU group of publications
Thursday, Feb 15, 2007
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Business Daily from THE HINDU group of publications Thursday, Feb 15, 2007 ePaper |
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Markets
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Credit Rating
Our Bureau
The short-term rating of `P1+' has been reaffirmed. This rating change follows Hindalco's offer to buy 100 per cent of North America-based Novelis Inc for an overall consideration of $6 billion. The proposed acquisition cost is significantly larger than the company's net worth of about Rs 9,500 crore (as at March 31, 2006). Hindalco is proposing to fund this acquisition primarily through debt, which will have an adverse impact on the capital structure of the company, said CRISIL. However, the rating agency noted that the proposed acquisition would make Hindalco the world's largest aluminium rolling company, and the fifth-largest integrated aluminium manufacturer. This would improve Hindalco's overall business profile by reducing its exposure to volatile aluminium prices and reduce its operating leverage. However, the size of the acquisition, and cash outflow, would impact Hindalco's financial risk profile adversely. Merrill Lynch downgraded Hinadalco to `sell' from `neutral.' Most analysts said the deal would prove expensive for the company. After witnessing fall for the last two days, the stock of Hindalco Industries Ltd, however, finished higher at Rs 146.40 against Tuesday's close of Rs 142.10.
More Stories on : Credit Rating | Aluminium | Hindalco Industries Ltd
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