Hindalco said to seek refinancing of $2.4 billion debt

Hindalco Industries Ltd., the Indian aluminum producer backed by billionaire Kumar Mangalam Birla, is seeking to refinance about Rs15,000 crore ($2.4 billion) of debt, people familiar with the matter said.

The Mumbai-based company is discussing with banks about extending the maturity of the local-currency project loans to about 10 years, the people said, asking not to be identified as the talks are confidential. It may also be able to negotiate a marginally lower interest cost, the people said.

Hindalco, whose total debt more than doubled in the four years ended March, is contending with mounting costs at a time when aluminum prices are falling. It is seeking to refinance under central bank guidelines announced in August, which make it easier for industrial firms to extend the tenor of project loans, two of the people said. The norms require new lenders to take over at least 25% of the outstanding loan amount.

The loans being refinanced include about Rs9,900 crore borrowed to fund a smelter in the eastern state of Odisha owned by Hindalco’s Aditya Aluminium unit, according to one of the people. The rest was taken out to build a refinery under its Utkal Alumina International Ltd. subsidiary, the person said. Both began commercial production in the year ended March 2014.

Pragnya Ram, a spokeswoman for Hindalco, said the company can’t comment during the so-called quiet period ahead of its quarterly results announcement.