Viney Corp Seeks ₹800 Crore Debt Refinancing to Slash Borrowing Costs
Auto parts manufacturer Viney Corp has appointed Alvarez & Marsal to lead a refinancing initiative for its ₹800 crore high-cost credit line. The company aims to reduce its debt cost to under 15% through a combination of private equity and debt financing. A PE investor will acquire a 20% minority stake in Viney Corp. The company plans to allocate 70-75% of the raised funds to repay high-cost borrowings, with the remainder for expansion. Despite recent EBITDA declines, Viney Corp expects EBITDA to exceed ₹160 crore in the current fiscal year and targets ₹250 crore before considering a public listing. The company has shelved immediate IPO plans to focus on this financial restructuring.
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Auto parts manufacturer Viney Corp is taking significant steps to optimize its financial structure and reduce debt costs. The company has appointed Alvarez & Marsal to spearhead a refinancing initiative for its existing high-cost credit line of ₹800 crore, aiming to cut borrowing expenses by approximately one-third.
Refinancing Strategy
Viney Corp's refinancing plan is designed to bring down the company's debt cost to under 15%, a substantial reduction from its current levels. The strategy involves raising funds through a combination of private equity (PE) and debt financing. Of the total funds raised:
- 70-75% will be allocated to repaying high-cost borrowings
- The remainder will be used for expansion purposes
As part of this financial restructuring, a PE investor is set to acquire a 20% minority stake in Viney Corp through primary issuance.
Financial Performance
The company's recent financial performance highlights the need for this strategic move:
| Metric | FY23 | FY24 |
|---|---|---|
| EBITDA | ₹146.00 crore | ₹144.00 crore |
| EBITDA Margin | 13.00% | 11.60% |
| Gross Debt (End of FY) | - | ₹221.00 crore |
The decline in EBITDA and margin is attributed to higher input prices and increased employee expenses in overseas units.
Future Outlook
Despite the recent challenges, Viney Corp maintains an optimistic outlook:
- The company expects EBITDA to exceed ₹160 crore in the current fiscal year
- It has set an ambitious target of reaching ₹250 crore EBITDA before considering a public listing
- The anticipated valuation for a future IPO is between ₹4,500-5,000 crore
However, it's worth noting that Viney Corp has currently shelved its immediate IPO plans, likely to focus on strengthening its financial position through the refinancing initiative.
This strategic refinancing move by Viney Corp demonstrates the company's proactive approach to managing its financial health and positioning itself for future growth in the competitive auto parts manufacturing sector.
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