Hindalco to raise Rs 7,500 cr debt for Mahan Aluminium

The A V Birla Group’s flagship company, Hindalco Industries, plans to raise about Rs 7,500 crore of debt under the project finance route to achieve financial closure for Mahan Aluminium, its new factory project.

Mahan is a smelter-power plant complex that boasts of a 359-ktpa aluminum smelter and a 900-Mw captive thermal power plant in Madhya Pradesh, to be ready by September 2011. The project has a total capital expenditure plan of Rs 9,200 crore.

“The company plans to give the mandate to the banks in the next month,” said a person familiar with the development. “Once the debt syndication is launched, it is expected to take about two months to tie up the fund,” he said. SBI Capital Markets is likely to get the mandate for the debt syndication.

Company officials were not available for comment.

The Kumar Mangalam Birla-promoted company plans to set up five projects in two phases at the cost of Rs 40,000 crore in the next three years. In the first phase, it will set up one refinery and two smelters. First is Utkal Alumina Refinery, a 1.5-million tonne per annum (mtpa) project in Orissa, to produce alumina from bauxite and expected to be ready by September 2011. The alumina, raw material for producing aluminium, will be then fed to two smelters, Mahan Aluminium and Aditya Aluminium.

Hindalco plans to fund 30 per cent of its total capital expenditure through equity infusion and internal accruals. It raised Rs 2,900 crore by selling fresh equity in a qualified institutional placement in November. It is now tying up the debt component for these projects.

The financial closures for Utkal Alumina Refinery was achieved recently, with raising of Rs 4,900 crore of debt out of the total project cost of Rs 5,600 crore. SBI Capital Markets, IDBI Bank and ABN Amro did joint syndication for the transaction. Now, it is the turn of Mahan Aluminium, as both projects are linked and are scheduled to be completed in September 2011.

The second phase includes setting up another 1.5-mtpa alumina refinery in Orissa called Aditya Refinery by June 2013. This will be followed by another smelter-power plant complex with a capacity of 359 ktpa, powered by a 900-Mw captive thermal power plant in Jharkhand. This will be also ready by June 2013.