Vedanta Aluminium seeks Rs 135 billion loan from banks after Vedanta demerger

Vedanta Aluminium Metal Ltd, a unit of the Vedanta Group, is planning to raise around ₹135 billion (approximately ₹13,500 crore) through loans from leading banks, marking the first major local-currency borrowing after the conglomerate was split into separate businesses.The fundraising comes as Vedanta works to strengthen the financial independence of its newly separated entities and reduce debt levels following the restructuring approved by an Indian court.Vedanta Aluminium Q1 Consolidated Net Profit Rises 33%, Reports ₹6,597 Crore Banks Extend Loans To Vedanta AluminiumAccording to reports, Axis Bank has signed a loan agreement worth ₹55 billion with Vedanta Aluminium Metal Ltd. HDFC Bank and ICICI Bank are expected to provide an additional ₹80 billion collectively. A portion of the loan will be syndicated among other lenders, with Axis Bank leading the process.The loans have a tenure ranging between six-and-a-half years and seven years. The funds will primarily be used to refinance existing debt inherited by Vedanta Aluminium from the earlier integrated group structure.The interest rates offered by banks are expected to be around 7.9%-8%, according to sources. The transaction reflects growing lender confidence in Vedanta Aluminium’s standalone financial position after the restructuring.Restructuring Improves Financial FlexibilityThe Vedanta Group recently separated its businesses into five independent listed companies as part of a restructuring exercise aimed at allowing individual units to operate with greater financial flexibility. Four companies focusing on aluminium, power, oil and gas, and iron ore began trading separately on stock exchanges in June. Following the demerger, rating agency Crisil upgraded ratings for several Vedanta entities, including Vedanta Aluminium, whose rating was raised to AA+ with a stable outlook.The upgrade was attributed to improved financial flexibility and a stronger standalone business structure.The fundraising also comes amid rising demand for corporate credit in India. Reserve Bank of India data showed bank lending expanded 17.7% to ₹217.3 trillion as of July 15, with credit growth nearly doubling compared with the previous year.

A unit of India’s Vedanta Group is raising about Rs 135 billion ($1.4 billion) from at least three banks, the first large local-currency loan since the conglomerate controlled by billionaire Anil Agarwal was split into separate firms, according to people familiar with the matter.Axis Bank Ltd. has signed a loan agreement for Rs 55 billion with Vedanta Aluminium Metal Ltd., said the people who asked not to be identified because the information is private. HDFC Bank Ltd. and ICICI Bank Ltd. will collectively lend about Rs 80 billion to the new independent entity, they said. The lenders will syndicate a portion of the loan with Axis Bank launching it, the people said.Read more: Each of Vedanta’s five demerged entities can become worth $100 bn: Anil AgarwalThe loan tenors range between 6-1/2 years to 7 years with the proceeds to be used to refinance an existing debt that Vedanta Aluminium inherited from the previously integrated company structure, the people said. The banks are offering interest rates in the range of 7.9%-8%, according to the people.Also read | Anil Agarwal maps aggressive expansion after demerger, targets scale-up of several businessesRepresentatives for Vedanta Group, Axis Bank, ICICI Bank and HDFC Bank didn’t immediately respond to requests for comment.The fundraising shows Vedanta’s push to establish independently financed businesses to give them greater financial flexibility and reduce debt. The new structure was approved by an Indian court in December.Vedanta split its businesses into five separate listed companies, of which four focusing on aluminum, power, oil and gas, and iron ore began trading on stock exchanges in June. Last month, Crisil Ratings, the local arm of S&P Global, upgraded ratings on several Vedanta firms, raising Vedanta Aluminium’s rating to AA+ with a stable outlook, saying the group’s financial flexibility has improved.Demand from companies seeking to refinance debt and support operations has helped spur credit demand in India. Bank lending expanded 17.7% to 217.3 trillion rupees as of July 15, data from the Reserve Bank of India show, with the growth nearly doubling from the same period last year.Vedanta Aluminium’s net debt may drop to below 100 billion rupees by financial year 2028, ICICI Securities said in a report last month, citing its robust cash flows.