India Cements, is looking to raise as much as ₹750 crore in bonds and has mandated ICICI Bank and EY to arrange for the debt from lenders including private credit funds.
The debt, which might be priced north of 15%, will be used to fund working capital and capital expenditure, said two sources aware of the development.
“India Cements has mandated ICICI Bank and EY to arrange the debt, which could be borrowed at 15%-17%,” said a source. “These two are syndicating the loan and are in talks with lenders including Barclays. The loan could be later sold down to private credit funds.”
India Cements, ICICI Bank, EY and Barclays did not respond to requests for comment.
Margins in the cement sector have shrunk recently, affecting the profitability of companies. India Cements had reported a net loss of ₹105 crore in FY23.
Of the sum being borrowed, ₹250 crore could be used to fund working capital and ₹500 crore in improvement capex.
Due to the lower operating performance from the significantly higher power and fuel requirement compared to the industry average and also the continued loss in market share in the southern region over the years, CareEdge has kept the rating at BB+.
“The company’s capital structure also remains leveraged and the repayment of the debt, in light of subdued operational cash flows from business, has largely been done from… advances from certain group companies,” said the rating statement of February 13.
The recent search operations conducted by theED at the premises of a group entity and any negative outcome linked to the raids could adversely impact the financial risk profile of the company.