Hindalco said to seek refinancing on $2.7 billion of loans

Hindalco Industries Ltd., India’s second biggest aluminum maker, is seeking improved terms on as much as $2.7 billion of debt as projects funded by the rupee loans come on stream, said two people familiar with the talks.

“The company, controlled by billionaire Kumar Mangalam Birla, wants to refinance loans worth Rs.17,775 crore ($2.7 billion) in the year ending 31 March ,” said the people, asking not to be identified as negotiations are on. “One of the new smelters started trial output last quarter, while the other is slated to start production in October.”

Hindalco spokeswoman Pragnya Ram didn’t respond to an email seeking comment.

The company’s total debt swelled 39% to Rs.56,900 crore as of 31 March, according to data compiled by Bloomberg.

Hindalco raised Rs.9,900 crore in September, 125 basis points more than the then base rate of the State Bank of India to fund the Rs.13,200 crore Aditya project. In March 2011, the company agreed to borrow Rs.7,875 crore at 1.75% more than the prevailing SBI base rate, for its Rs.10,500 crore Mahan Aluminium project.

SBI Capital Markets Ltd., Citibank NA, Royal Bank of Scotland NV and Kotak Mahindra Bank Ltd. were the lead arrangers for the Mahan borrowing.

Hindalco shares gained as much as 13% to Rs.Rs.105.30 and on Thursday closed at Rs.103.55 in Mumbai. The stock has declined 21% this year, compared with a 5.7% drop in the benchmark S&P BSE