Click to play videoNew Delhi: Along with UK telecom giant Vodafone’s acquisition of Hutch-Essar for an estimated enterprise value of $19 billion, the other big deal that shook corporate India is the $ 6-billion buy out of US-based Novellis by Birla-owned Hindalco.
Hindalco will now become one of the world's largest integrated aluminum companies in the world. CNN-IBN caught up with Kumar Mangalam Birla to get details about the deal:
Menaka Doshi: Would you tell us details on financing of the steel and what it does to the debt of Hindalco and what it does to the profit margins in Hindalco?
Kumar Mangalam Birla: The balance of that is debt, a small part of which has re-cost to the balance sheet of Hindalco. The rest will sit on the balance sheet of Novellis. The margins of the downstream business are inherently lower than the upstream business. More important is the fact that when our Greenfield projects come online in the next three-four years, we will be long on aluminum. The aluminum produced then will be used by Novellis and turned into high-value products. That is the strategic fit that is driving this transaction.
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