BALLARPUR Industries Ltd (BILT) has refinanced its foreign currency borrowings of over $245 million and raised Rs 1,000 crore in rupee-denominated loans to redeem debentures issued to its Netherlands-based subsidiary, as the country’s largest manufacturer of writing and printing paper looks to reduce interest costs on loans and strengthen its balance sheet.
"The refinancing of the foreign currency debt and the rupee loans we have raised to redeem bonds that were issued as part of the restructuring process in 2007 will help us reduce interest cost by half a percentage point and increase the repayment tenure by eighteen months,” said B Hariharan, director of Avantha Group.
BILT, part of the $3 billion Avantha Group, saw its net profit for the September quarter decline by 36% to Rs 49 crore on account of high interest and depreciation costs.
Ballarpur Paper Holdings, Netherlands, had raised over $560 million in foreign currency loans from international banks and financial institutions and international branches of Indian banks at an interest cost of around 11% inclusive of hedging costs in 2007.
"We have charged the interest and depreciation costs arising out of the investment in the Bhigwan unit to the revenue account in this quarter. With the refinancing you will start seeing the proportion of interest cost to revenues coming down from the next quarter itself,” Mr Hariharan said.
BILT has made an investment of Rs 900 crore to expand capacity to produce coated paper at its Bhigwan unit by 180,000 tonne per annum. The plant has only started producing 20,000 tonne of paper so far and will reach full capacity by the end of the financial year. The company has also invested Rs 550 crore to expand its Ballarpur facility where it has added capacity to produce 160,000 tonnes per annum of uncoated paper.
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