Utkal loan refinancing to help save Rs 150cr: Hindalco

Hindalco Industries, the manufacturer of non-ferrous metals would save nearly Rs 150 crore of interest payment on annual basis following refinancing of Utkal alumina project, Managing Director, D Bhattacharya told CNBC-TV18.

The Aditya Birla group company refinanced Rs 4700 crore loan from State Bank of India and Axis Bank for its Utkal alumina project, according to The Economic Times report. At an interest rate of 10.15 percent payable over an eight-year period, this will imply a reduction of a whopping 300 basis points from the previous loan.
Utkal is a 1.5-million-tonne refinery that will feed the company's Mahan and Aditya smelters in Madhya Pradesh and Orissa, respectively. The total project cost is Rs 7,009 crore, 70 percent of which has been funded through debt.
“Now that the commissioning is happening then lenders feel much more confident about the project and that has helped us to refinance by which we can save the interest cost to the tune of about Rs 150 crore in a year,” Bhattacharya said. The company today reported 2 percent year-on-year jump in profit to Rs 474 crore during June quarter, despite a challenging environment. The bottom-line got a boost from higher other income of Rs 428 crore. The company had reported Rs 301 crore as other income in the year-ago period.
Net sales declined over 3 percent Y-o-Y to Rs 5766 crore. Below is the verbatim transcript of the Bhattacharya’s interview Q: Can you take us through first quarter numbers?
A: We ensured that we improve our asset productivity by producing more aluminum. Second, we tried to improve our operational efficiencies so that production is at a relatively lower cost. Third, we try to produce more value added products, so even within the same tonnage we got more dollars out of it. Fortunately for us we were able to sell them at the market where the market realisation is the highest, thereby ensuring that we made better EBITDA per tonne of the production. However there have been many headwinds, one is LME itself came down. Two, we had undertaken a longest shutdown for copper that reduced the volume very substantially but fortunately for us aided by some of the other income we have been able to deliver a EBITDA, which is the highest in last five quarters and significantly ahead of the last quarter in the corresponding quarter. Q: Talking about Utkal, just take us through the debt refinancing and the interest cost savings that have happened for this quarter? Going forward does it make sense at this point to look at refinancing in other projects or for other projects as well?
A: In case of Utkal we refinanced after the plant was stabilised and now that the commissioning is happening then lenders feel much more confident about the project and that has helped us to refinance by which we can save the interest cost to the tune of about Rs 150 crore in a year.