Novelis to raise $300-350 mn from Axis Bank in GIFT City

MUMBAI: Novelis, the overseas subsidiary of Hindalco, is raising about $300-350 million in offshore loans from Axis Bank, seeking to trim multiple credit lines through part repayment of earlier market borrowings.

The bilateral short-term loan is being raised from Gujarat GIFT city and will likely be priced after adding about 70-85 basis points over the London Interbank Offered Rate (LIBOR), said two people familiar with the matter.

The loan agreement was finalized in December itself, explaining the use of the LIBOR as a reference frame. SOFR (Secured Overnight Financing Rate), a new benchmark, has primarily replaced LIBOR beginning this year.

“The Novelis Canada arm is raising this loan as the company is trying to repay some of its existing loans, reducing multiple lines of credit,” one of the persons cited above told ET.

Axis Bank did not respond to ET’s queries. Hindalco declined to comment.

Indian companies are rushing to raise money offshore as the US Treasury benchmark is rising amid the likelihood of faster-than-anticipated increases in US Federal Reserve rates. The benchmark yield rose about 27 basis points this year to 1.77 per cent.

The US subsidiary of the Aditya Birla Group company will invest $365 million to build an advanced recycling centre for automotives in North America, it said last week. The company has a recycling capacity of 2.5 mt per annum.

Novelis completed the buyout of Aleris Corp at an enterprise value of $2.8 billion (Rs 21,295 crores) in 2020. The company plans a 100kt rolling expansion and another 100kt casting & recycling expansion in Pinda, Brazil, with a capital investment of $150 million.

Aditya Birla Group’s metal flagship company Hindalco Industries reported its highest-ever quarterly net profit of Rs 3,417 crore, up nearly nine times the net profit reported during the same period last year at Rs 387 crore.

Hindalco’s revenue from operations was up 53 per cent to Rs 47,665 crore during the September quarter. Around 64 per cent of its total revenue is contributed by the company’s US subsidiary Novelis, which reported revenue of Rs 30,512 crores. Novelis recorded quarterly adjusted EBITDA of $553 million (vs $455 million), up 22 per cent YoY.