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Two NBFC arms of Tata group lend to Calcutta-based Kesoram Industries

Tata Capital and Tata Capital Housing Finance are being joined by Hero Fincorp to pull in Rs 1,850 crore cumulatively in fresh loan for Kesoram, which is expected to save about Rs 150 crore in interest cost annually from the latest round of refinance

Our Special Correspondent Calcutta Published 01.03.24, 09:49 AM
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Two NBFC arms of the Tata group have picked up a Rs 1,500-crore debt exposure in Kesoram Industries, helping the Calcutta-based cement manufacturer refinance existing costly loans.

Tata Capital and Tata Capital Housing Finance are being joined by Hero Fincorp to pull in Rs 1,850 crore cumulatively in fresh loan for Kesoram, which is expected to save about Rs 150 crore in interest cost annually from the latest round of refinance.

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With the debt investment by the trio, Kesoram has paid off the non convertible debentures (NCDs) of Edelweiss, Goldman Sachs and Bank of America.

The fresh loan comes at 11.25 per cent interest per annum, replacing the NCD which were an earning interest of 19 per cent.

The long pending refinance comes within three months of UltraTech, the cement major from the Aditya Birla group, agreeing to acquire the cement business of Kesoram through an all-stock deal.

“We have been talking to the entities for a while. It has now finally happened. The benefit of lower interest will be prominent on the P&L account from the next quarter onwards,” P. Radhakrishnan, CEO of Kesoram Industries, said this evening.

The loans will have an average tenure of eight years. When the transaction with Ultratech concludes, loans which are apportioned to the cement business, will be transferred to the new owner.

Kesoram, the flagship of the Basant Kumar Birla group, is helmed at present by Manjushree Khaitan, the younger daughter of late B.K. Birla.

Post demerger, the cement business will go to Ultratech, led by Kumar Mangalam Birla, the grandson of late B.K. Birla

In 2020, Kesoram had raised debt through NCDs to retire loans extended by scheduled commercial banks at that point of time.

However, it came at a high cost. Since then the company was looking to refinance the NCDs with a sustainable interest rate loan.

It appears that the proposed acquisition by ABG, which is expected to get concluded in CY 2024 post regulatory approvals, has given comfort to the new set of lenders to take long-term exposures in Kesoram.

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