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Hindalco Industries, an Aditya Birla Group company, plans to prepay ₹3,000-crore debt this fiscal to bring down its debt-equity ratio to about two times from the current level of three times.
The company has managed to save ₹139 crore in finance cost in the June quarter as it pre-paid ₹1,500 crore in the same quarter. The company’s net debt come down to ₹17,297 crore in the June quarter against ₹27,800 crore in the same period last year.
Satish Pai, Managing Director, Hindalco Industries, told BusinessLine that each of the business has been throwing cash, with demand for both aluminium and copper picking up with the uptrend in economy.
The idea behind debt pre-payment is to restrict the consolidated net debt to equity at about three times even after the US subsidiary Novelis raises about $2.6 billion (about ₹17,800 crore) early next year to fund acquisition of the global aluminium giant Aleris.
“We are in the process of filing for regulatory approvals for buying out Aleris. This will take about 9-12 months. We will be first availing a bridge finance to fund the Aleris deal and re-finance it to a lower rate,” said Pai.
Curbs on imports
Hindalco is expecting the government to levy quantitative restrictions on aluminium imports this quarter as the industry is gearing up to file the trade data sought by the Government. Aluminium imports in the form of scrap have gone up by 20 per cent last quarter raising industry concern. “Despite strong demand, we had to export 50 per cent of production due to sharp rise in imports. Once restrictions are imposed, the company plans to sell 70 per cent in domestic market where the realisations are more. High shipping and other logistics eat into export realisation,” he said.
The government has to clamp down on cheap imports soon as the demand in the domestic market is growing much faster than expected and thebenefits will be taken away by foreign companies.
Though the current global trade war is a concern in the long run, Pai said it has not impacted Hindalco’s exports so far. The company does not export much to the US while the levy of 7.5 per cent duty in Europe and some of the Asian countries is manageable, he said.
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