Announcement of IFC to take 20 Interest in Indian Telephone Equipment Company September 12, 1988

September 12, 1988 Ekwow Spio-Garbrah Press Release No. 89/07 (202) 473-7716 IFC TAKES 20% INTEREST IN INDIAN TELEPHONE EQUIPMENT COMPANY The International Finance Corporation (IFC) has agreed to take a 20 percent equity interest in a new company in the southern Indian state of Kerala that will manufacture modern pushbutton telephones for India's domestic market. IFC, an affiliate of the World Bank, is the largest multilateral source of financing for private investment in developing countries. The IFC investment in Keltron Telephone Instruments Ltd. (KTIL) will enable the startup operation to eventually assemble up to 500,000 telephone instruments using state-of-the-art technology from Siemens. The $3.31 million project is being sponsored by the Kerala State Electronics Development Corporation (KSEDC), which will own 26.0 percent of the company, and Tata Industries Ltd., which has taken a 24.8 percent stake. KSEDC manufactures a range of consumer electronics products under the Keltron brand name. Tata Industries is a holding company in the Tata Group, which enjoys an excellent reputation for the quality of its products and its professional management. KSEDC, Tata Industries and IFC will be represented on KTIL's board. In addition to these investors, Canara Bank and The Unit Trust of India will subscribe to 29.2 percent of the equity. The project is one of the first responses by the private sector to the Government of India's recent decision to open up the manufacture of telephone equipment to the private sector. Although KTIL will begin - MORE - - 2 - operations as a closely held public company, once it has established an operating track record, it is envisaged that it will go public. The licensing agreement with Siemens entitles KTIL to obtain technology to manufacture and sell a range of telephone instruments and components in India and in other countries, including Japan and the United States. Since 1959, when IFC made its first investment in India in a steel forging plant, it has approved over $500 million in loans and equity to some 35 companies there in industries ranging from motor vehicles and chemicals to shipping and capital markets. - END -