Grasim Industries to raise up to Rs 2,000 crore through debentures

Aditya Birla Group company, Industries Ltd, plans to raise up to 2,000 crore through debentures to fund its capital expenditure programme.

The company has lined up investment for decorative paints with a project cost estimated at Rs 10,000 crore by FY 25.

The company did not say anything about the company's debt raising plans.

While the plan to paint business would involve some debt funding, the debt coverage metrics for the company are expected to remain comfortable.

Despite the sizable investments in subsidiaries and joint ventures, steady cash accruals over the past several years resulted in a healthy financial profile for Grasim. As of March 31, 2022, the company has zero net debt and net cash of 7,553 crore, according to the ICRA.

The total spent during FY 22 was Rs 2,537 crore, which includes Rs 579 crore for the paints business. In FY22, the company neared the completion of its 7,700 crore capex cycle for its viscose staple fibre and chemical businesses.

In the post results FY 22 statement, the business focused on the timely execution of its capacities, according to the statement about paints business activities. The civil construction has already started at two of its plant sites Panipat and Ludhiana and is expected to begin soon at Chamarajanagar.

The three remaining plants for manufacturing paints are in different stages of the approval process. The market dynamics of the decorative paints sector have changed with new capacities announced backed by strong growth and outlook.

A strong business profile and the expectation of healthy cash flows are reflected in the stable outlook on financial instruments, including debentures.

The entity is expected to keep its financial flexibility, being a key holding company for the Aditya Birla GroupAditya Birla Group for various investments while prudently managing its various expansion and diversification initiatives.