Announcement of India Getting New Fuel-Efficient Vehicle Engine as Part of One Hundred Thirty-Two Million US Dollars Expansion Project on June 26, 1981

Intemational Finance C01poration • 1818 H Street.NW Washington D C 20433 U S A 202-4 77 -1 234 IFC Press Release-No. 81/44 Friday, June 26, 1981 India Getting New Fuel-Efficient Vehicle Engine As Part of $132. 9 Mi.llion Expansion Project The International Finance Corporation is joining with a group of Indian financial institutions to 'be1,p finance a US$132. 9 million .investment for the. construction of a new engine plant and the expansion. and modernization of t?xist- ing facilities of Mahindra and Mahindra (M&M) - a major producer of tractors, jeeps and light commercial vehicles (LCV) in India. A consortium of local institutions led by the Industrial Credit and Investment Corporation of India (ICICI) is proposing to make a US$29.4 million equivalent loan to the project while US$12.1 million equivalent is being sought • from the State Industrial Development Corporation of Maharashtra • Foreign exchange financing includes a US$15 million loan by IFC, and proposed loans of US$5.7 million from the Expert Credit Guarantee Department of the United Kingdom and US$6.2 million from ICICI. Approximately US$64.5 million will come from internally generated cash. The project will improve M&M diesel engine technology, increasing annual LCV production to 10,000 units from 3,000 per year currently and tractor pro- duction to 15,000 from 10,000 units. A new plant to be built at Igatpuri, Maharashtra State, will produce a new fuel efficient diesel engine under a license from Automobiles Peugeot of France. M&M expects the plant to reach full indigenous production of 25,000 engines per year by 1984. The project will provide an additional 1,800 jobs and will also generate employment in the ancillary sector. Furthermore,, while facilitating the transfer to India of a major improve- ment in diesel engine technology, the project will also contribute to a substan- tial reduction in fuel consumption estimated at 20% per vehicle. The proposed investment is part of an overall expansion of the Indian • commercial vehicle industry in response to a growing domestic demand and will  - 2 - result in net foreign exchange savings of approximately US$90 million a year. • It is also consistent with the Government's objectives of improving productivity in the agricultural sector and increasing farm yields. • [Any inquiries strictly relating to IFC's participation in this project should be directed to the IFC Information Office, 1818 H Street, N.W., Washington, D.C. 20433, Telephone (202) 676-3093.) •