Mumbai: India’s largest aluminium producer, Hindalco Industries Ltd, said on Friday it will repay a Rs12,000 crore loan it had taken to buy US-based Novelis Inc. in October last year.
The company announced a 11% fall in net profit for the year ended March, partly due to the high interest it paid on borrowings to buy Novelis.
It also said it had mark-to-market losses of Rs22 crore on outstanding derivative instruments as on 31 March, from hedging transactions for its commodities and foreign currency-related exposures.
Hindalco hopes to bring down its interest costs, which impacted its performance in the reporting fiscal, by paying off the loan.
The company’s repayment plan includes a rights issue of up to Rs5,000 crore, which will offer investors one share for every three held.
The price of the rights offer will be set by its board later, Hindalco said in a statement to the Bombay Stock Exchange.
This is Hindalco’s second rights issue. It had offered one share for every four held in Novermber 2005.
It will raise the remaining amount through international and domestic loans, debt financing, rupee loans, and liquidation of treasury, managing director Debu Bhattacharya said. The company will decide on the combination of loans and bonds closer to the time of repayment, Bhattacharya said.
The company has free treasury reserves of about $1 billion (about Rs4,300 crore), “which we have an option to use”, he added. Hindalco, part of the Aditya Birla Group, bought Novelis for about $6 billion (Rs25,800 crore today), including a debt of about $2.40 billion.
On a consolidated basis, Hindalco saw its net profit fall to Rs2,387.30 crore from Rs2,685.80 crore, as interest and financing charges surged to Rs1,849.10 crore from Rs313.40 crore.
Net sales and operating revenues rose to Rs60,012.80 crore in the year to March, up from Rs19,316 crore posted in the previous fiscal. Consolidated results for the year include Novelis’ performance between 16 May 2006 and 31 March, Hindalco said.