Kesoram may tap ECB route to repay high cost NCDs, OCDs

Kolkata: BK Birla Group flagship Kesoram Industries is planning to raise low cost funds to replace high cost NCDs and OCDs and may tap fully-hedged External Commercial Borrowing (ECB). The company raised about Rs 1,900 crore Non-Convertible Debentures (NCDs) and Optionally Convertible Debentures (OCDs) in the past for bank debt restructuring at nearly 20 per cent rate through a private placement.

"The company board will meet shortly to enable workout for further fund raising plan after the rights issue of Rs 400 crore. There are options for ECBs and Rupee loans from banking channels to reduce the cost of debt. Fully, hedged ECBs will cost around 11 per cent far less than existing rates. However, it may be in combination of Rupee and foreign currency loan," sources aware of the development told PTI.

With Rs 200 crore raised as part payment from the rights offer while the remaining Rs 200 crore will come at a later date, the working capital issue has been largely resolved.

"The company is expected to be Rs 550-600 crore EBITA (Earnings Before Interest Taxes and amortisation) company in FY'22. And this will rerate the company in terms of borrowing capabilities," officials said.

The company has set a target to bring down the debt by Rs 450 crore by the end of the fiscal through improved earnings and the rights issue proceeds, and another Rs 350 crore by August next year.