Vedanta to raise Rs 10K cr debt for Orissa project

Vedanta Aluminium Limited (VAL) is raising a debt of Rs 10,000 crore for expansion of its aluminium project in Orissa. Sources close to the development say the State Bank of India has been signed up as the lead underwriter for the loan. SBI is talking to various bankers for the syndication of Rs 10,000 crore for Vedanta.

ICICI Bank, IDBI, PNB, BoI, Canara Bank, and Axis Bank are expected to be part of the syndicate to provide PLR-linked long-term debt to VAL, in which Sterlite Industries holds 29.5 per cent stake. Anil Agarwal’s global metal group, Vedanta Resources Plc, holds rest of the 70.5 per cent stake in VAL through Twin Star & Welter Trading. This loan is expected to be a non-recourse loan for Indian company, Sterlite Industries, to be serviced by Vedanta Resources.

VAL is raising debt for investing in its alumina and aluminium-producing units in Orissa. In the second phase of the expansion plans, the capacity of the alumina refinery will increase to 5 MTPA from 1.4 MTPA currently. The capacity of the aluminium smelter will be raised to 1.75 MTPA, from close to 0.7 MTPA. The total investment is expected to be $5.8 billion for next three years.

Reacting to the debt tie-up, Tarang Bhanushali, a senior metal analyst with India Infoline said, “That they raised the fund easily in the financial crisis is positive.” The Sterlite Industries stock is trading lower today, after trading advancing for eight straight trading sessions.

Sources in the Vedanta Group also suggest that the group is targeting to raise Rs 15,000-20,000 crore in the next six months. A large chunk of that is already tied up for the Orissa project. In April, Sterlite Energy, a wholly-owned subsidiary of Sterlite Industries, raised Rs 6,000 crore for part-investment in the 2400 MW power project at Jharsuguda in Orissa.