Hindalco Said to Seek Refinancing on $2.7 Billion of Loans

Hindalco Industries Ltd. (HNDL), India’s second-biggest aluminum maker, is seeking improved terms on as much as $2.7 billion of debt as projects funded by the rupee loans come on stream, said two people familiar with the talks.

The company, controlled by billionaire Kumar Mangalam Birla, wants to refinance loans worth 177.75 billion rupees ($2.7 billion) in the year ending March 31, said the people, asking not to be identified as negotiations are on. One of the new smelters started trial output last quarter, while the other is slated to start production in October.

Hindalco spokeswoman Pragnya Ram didn’t respond to an e-mail seeking comment.

The company’s total debt swelled 39 percent to 569 billion rupees as of March 31, according to data compiled by Bloomberg.

Hindalco raised 99 billion rupees in September, 125 basis points more than the then base rate of the State Bank of India to fund the 132 billion-rupee Aditya project. In March 2011, the company agreed to borrow 78.75 billion rupees at 1.75 percent more than the prevailing SBI base rate, for its 105 billion rupee Mahan Aluminium project.

SBI Capital Markets Ltd., Citibank NA, Royal Bank of Scotland NV and Kotak Mahindra Bank Ltd. (KMB) were the lead arrangers for the Mahan borrowing.

Hindalco shares gained as much as 13 percent to 105.30 rupees and traded at 103.65 rupees as of 3:25 p.m. in Mumbai. The stock has declined 21 percent this year, compared with a 5.7 percent drop in the benchmark S&P BSE Sensex.

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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