According to sources, the loan, raised in 1997 had a tenure of eight years, maturing in 2005. However, in order to take advantage of the southward moving interest rates, the corporate has opted for refinancing the same for the residual life.

"This forms a deliberate attempt on the part of the corporate towards cost cutting," said sources. This assumes significance in the light of the fact that in the recent past, host of corporates including Oil and natural Gas Corporation (ONGC), Reliance Industries Ltd (RIL), Reliance Petroleum Ltd (RPL) and Southern Petrochemicals Industries Corporation Ltd (Spic) have opted for the similar route to benefit from the floating interest rate cost which is on a downward trend at present.

RIL and RPL both had availed of the facility to refinance a sum of $150 million each, while ONGC for $33 million and Spic for $120 million floating rate notes.

The lead arranger to the issue was Bank of America, Asia and co-arranged by the State Bank of India. The refinancing deal was clinched on February 12, following heavy over-subscription while the fresh tenure of the refinanced loan starts from November 2000 till maturity.

The loan had been raised for meeting the cost of general corporate objectives. Besides refinancing the foreign currency loan, Hindalco had already mobilised rupee funds worth Rs 150 crore by privately placing seven year bonds, carrying a coupon of 11.22 per cent with ICICI Securities, ABN Amro Securities and HSBC Securities. According to industry sources, the aluminium major has been on a ambitious expansion spree to expand its presence with Indian Aluminium already acquired at a cost of Rs 1,008 crore.

Further, the group is also reported to be carrying out a Rs 1,800 crore brownfield expansion programme at its Renukoot unit in Uttar Pradesh. This will boost the company's aluminium smelting capacity to 3,42,000 tonnes per annum (tpa) from 2,42,000 tpa while aluminium refining capacity will increase to 6,60,000 tpa from 4,50,000 tpa. Similarly, captive power generated is also slated to go up to 769 mw from the existing 619 mw. This programme is expected to be over by the 2003-04 fiscal. Earlier the company had announced its plan of pursuing growth opportunities through creation of globally competitive capacities in the primary and downstream segments.