Crisil Expects Vedanta $700 M IPO Boosting Sterlite Group

Mumbai, Nov 7: | Updated: Nov 8 2003, 05:30am hrs
The Credit Rating and Information Services Ltd (Crisil) has taken a view that the proceeds of the $700 million initial public offering (IPO) by Vedanta Resources, which will go towards the expansion plans of the Sterlite group, will significantly strengthen its business profile and enable it to emerge as a powerful non-ferrous metals player in the domestic industry.

Crisil has further said that the companys credit ratings would, however, depend on the groups final capital expenditure plans, the funding mix for the various projects and the flexibility to alter its capital expenditure plans, if necessary.

The company is also likely to make additional investments to increase its holding in Bharat Aluminium Company Ltd (Balco) and Hindustan Zinc Ltd (HZL). Crisil has further stated that since the timing and quantum of final capital expenditure/investment plans are not yet clear, it will closely monitor the developments and take appropriate rating action once there is clarity on these issues.

Crisils outstanding ratings AA- on Sterlite Industries India Ltds (SIIL) Rs 500 crore non-convertible debenture programme and P1+ ratings on its Rs 350 crore short-term debt programme remain unchanged. The Sterlite group includes SIIL, HZL and Balco.

The groups proposed capital expenditure plans include the expansion of Balcos aluminium smelter capacity to 3.5 lakh tonne per annum (TPA) from one lakh TPA, setting up of a green field 1 million TPA alumina refinery and brownfield capacity expansions at SIIL and HZL.

In all, the group has planned capital expenditure plans of over Rs 10,000 crore over the next three to four years. SIIL is one of two large players in the domestic copper industry, with a capacity of 1.65 lakh TPA, which is currently being increased to three lakh TPA.

The company has its copper smelter at Tuticorin, in Tamil Nadu and refinery at Silvassa. Balco is an integrated aluminium player with an installed capacity of one lakh TPA, including 50,000 TPA of value-added rolled products and about 25,000 TPA of aluminium rods.

HZL is the largest and only integrated producer of zinc and lead in India. The company is increasing its zinc capacity to over four lakh TPA from 2.10 lakh TPA. Apart from zinc and lead, the company sells by-products like cadmium, silver and sulphuric acid.