Balco raises Rs 700 cr loan for Korba spread

The Anil Agarwal-controlled Bharat Aluminium Co has raised a syndicated six-year term loan of Rs 700 crore (Rs 7 billion) for funding its capacity expansion at Korba. The loan has been raised at 6.65 per cent.

Balco, which is a 51 per cent subsidiary of Sterlite Industries, has announced an investment of $800 million {approximately Rs 3,600 crore (Rs 36 billion)} for its expansion plan at Korba.

Sources familiar with the development told Business Standard, "The company has raised this loan to meet the debt component of the investment for the expansion."

Balco had also raised a rupee term loan of Rs 1,000 crore (Rs 10 billion), last November for the project. The project has now completed financial closure, sources said.

"The project has a debt component of Rs 1,700 crore (RS 17 billion), with the balance funds coming in through equity and internal accruals," said the source.

Sterlite's holding company, Vedanta Resources, raised $1 billion through its initial public offering in December last year. Around $225 million of the IPO proceeds are expected to be utilised for the expansion at Korba.

Union Bank of India, UCO Bank and EXIM Bank were the lead lenders among eight banks who participated in the syndication, sources said. The rupee loan was syndicated at an average rate of 6.65 per cent per annum, and has a final maturity of six years.

The loan will be repaid in eight equal quarterly installments commencing at the end of 51 months. ABN Amro Securities India was the sole arranger for the deal.

The expansion project entails a smelter capacity enhancement to 345,000 tonne per annum, from the current 100,000 tonne per annum. The company will also set up a 540 mw captive power plant to support the increased capacity.

Sterlite has also exercised its call option to buy out the balance 49 per cent stake of Balco from the government. The government is yet to take a final decision on this matter.

Sterlite is also planning to set up a 1.4 million tonne alumina refining unit in Orissa.

Around 50 per cent of the alumina produced at the Orissa refinery will be used for captive purposes.