India - Idbi Joint - Public Sector Project : Loan 1511 - Project Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1511 IN Project Agreement (IDBI Joint/Public Sector Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and INDUSTRIAL DEVELOPMENT BANK OF INDIA Dated March 1, 1978 LOAN NUMBER 1511 IN PROJECT AGREEMENT AGREEMENT, dated March 1, 1978, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and Industrial Development Bank of India (hereinafter called IDBI). WHEREAS (A) by the Loan Agreement of even date herewith between India, acting by its President (hereinafter called the Borrower) and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to twenty-five million dollars ($25,000,000), on the terms and conditions set forth in the Loan Agreement, but only on condition that IDBI agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary loan agreement to be entered into between the Borrower and IDBI, the proceeds of the loan provided for under the Loan Agreement will be made available to IDBI on the terms and conditions therein set forth; and WHEREAS IDBI, in consideration of the Bank's entering into the Loan Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project; Management and Operations of IDBI Section 2.01. IDBI shall carry out the Project described in Section 3.01 (a) of the Loan Agreement and maintain its financial position, conduct its operations and affairs, and plan its future expansion with due diligence and efficiency and in conformity with -2- sound business and financial standards and practices, under the supervision of experienced and competent management assisted by experienced and competent technical staff and in accordance with the IDBI Act. Section 2.02. (a) In accordance with and subject to the pro- visions of the Loan Agreement, IDBI shall submit to the Bank (i) sub-loans for approval or for authorization to make withdrawals from the Loan Account in respect thereof, and (ii) requests for authorization to make withdrawals from the Loan Account in respect of expenditures under Part B (1) of the Project. (b) When submitting a sub-loan (other than a free-limit sub-loan) to the Bank for approval, IDBI shall furnish to the Bank an application, in form satisfactory to the Bank, together with a description of the Investment Enterprise and an appraisal of the Investment Project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan, the proposed terms and conditions of the sub-loan, including the schedule of amortization of the sub-loan, and such other infor- mation as the Bank shall reasonably request. (c) Each request by IDBI for authorization to make with- drawals from the Loan Account in respect of a free-limit sub-loan shall contain a summary description of the Investment Enterprise and the Investment Project, including a description of the expen- ditures proposed to be financed out of the proceeds of the Loan, and the terms and conditions of the sub-loan, including the schedule of amortization therefor. The Bank shall be entitled to require IDBI to submit to the Bank for its review the appraisal of the Investment Project for which authorization to make withdrawals from the Loan Account has been requested. (d) (i) Each request by IDBI for authorization to make withdrawals from the Loan Account pursuant to Section 2.02 (a) (ii) of the Loan Agreement in respect of Part B (1) of the Project shall be accompanied by a summary of the reasons for the proposed technical assistance, the process for selection of the consultants and proposed follow-up action by IDBI. The terms of reference issued by IDBI shall be attached to the summary, and (ii) within three months after the funds for said Part of the Project shall have been fully withdrawn, IDBI shall send to the Bank a report including a summary of the technical assistance features of the various studies undertaken, the results of these studies, the problems encountered and the likely technical assis- tance needs in the future. -3- (e) Except as the Bank and IDBI shall otherwise agree, applications and requests made pursuant to the provisions of paragraphs (b), (c) and (d) of this Section shall be presented to the Bank on or before September 30, 1980. Section 2.03. (a) IDBI undertakes that, unless the Bank shall otherwise agree, each sub-loan shall be made under terms and conditions satisfactory to the Bank and IDBI, including *the principal terms and conditions set forth in the Schedule to this Agreement, and under which IDBI shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Bank and IDBI, including the right of IDBI to: (i) require the Invest- ment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) require that: (1) the goods and services to be financed out of the proceeds of the Loan shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them and (2) such goods and services shall be used exclusively in the carrying out of the Investment Project; (iii) inspect, by itself or jointly with representatives of the Bank if the Bank shall so request, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (iv) require that: (1) the Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (2) without any limitation upon the foregoing, such insurance shall cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Loan to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (v) obtain all such information as the Bank or IDBI shall reasonably request relating to the foregoing, to the administration, operations and financial condition of the Invest- ment Enterprise and to the benefits to be derived from the Invest- ment Project; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Loan upon failure by such Investment Enterprise to perform its obligations under its contract with IDBI. -4- (b) IDBI shall: (i) exercise its rights in relation to each Investment Project in such manner as to protect the interests of the Bank and IDBI, to comply with its obligations under this Agreement, and to achieve the purposes of the Project; and (ii) transmit to the Bank for its prior approval, any substantial changes proposed to be made by IDBI in respect of the repayment provisions of any sub-loan. Section 2.04. (a) IDBI shall furnish to the Bank at regular intervals all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan, the Project, the Investment Enterprises, the Investment Projects, the sub-loans and, where appropriate, the benefits to be derived from the foregoing. (b) Within six months following the last withdrawal from the LoanAccount in respect of sub-loans or by such later date as the Bank shall request, IDBI shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operations of the Investment Projects, their costs and the benefits derived or to be derived from them, the performance by the Bank and IDBI of their respective obligations under the Project Agreement and the accom- plishments of the purposes of the Loan. Section 2.05. If IDBI establishes or acquires any subsidiary, IDBI shall cause such subsidiary to observe and perform the obli- gations of IDBI hereunder to the extent to which such obligations shall or can be applicable thereto, as though such obligations were binding upon such subsidiary. Section 2.06. IDBI shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, IDBI shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.07. (a) The Bank and IDBI shall cooperate fully to ensure that the purposes of the Loan will be accomplished. To that end, the Bank and IDBI shall from time to time, at the request of either party, exchange views through their representatives with regard to the progress of the Project, the performance by IDBI of its obligations under this Agreement and under the Subsidiary Loan Agreement, the administration, operations and financial condition of IDBI and other matters relating to the purposes of the Loan. -5- (b) IDBI shall promptly inform the Bank of any condition which interferes or threatens to interfere with, the progress of the Project, the accomplishment of the purposes of the Loan, the maintenance of the service thereof or the performance by IDBI of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.08. Except as the Bank and IDBI shall otherwise agree, IDBI: (i) shall not sell, lease transfer or otherwise dispose of any of its property or assets, except in the ordinary course of business, and (ii) shall take all action necessary to maintain its corporate existence and right to carry on opera- tions and to acquire, maintain and renew all rights, powers, privileges and franchises necessary or useful in the conduct of its business. ARTICLE III Financial Covenants Section 3.01. IDBI shall maintain procedures and records adequate to monitor and record the progress of the Project and of each Investment Project (including its cost and the benefits to be derived from it) and to reflect in accordance with consis- tently maintained sound accounting practices the operations and financial condition of IDBI. Section 3.02. IDBI shall: (i) have its accounts and financial statements (balance sheets, profit and loss accounts and related statements) for each fiscal year audited in accordance with sound auditing principles consistently applied, by independent and qualified auditors;* (ii) furnish to the Bank, as soon as available but in any case not later than five months after the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of IDBI and the audit thereof as the Bank shall from time to time reasonably request. Section 3.03. IDBI shall not make any repayment in advance of maturity in respect of any outstanding debt of IDBI which, in the judgement of the Bank, would materially affect IDBI's ability to meet its financial obligations. -6- Section 3.04. IDBI shall take such steps as shall be neces- sary to protect itself against risk of loss resulting from changes in the rates of exchange between the currencies (including Rupees) used in its operations. Section 3.05. The Bank and IDBI shall from time to time, at the request of either party, exchange views through their repre- sentatives with regard to the administration, operations and financial condition of IDBI and its subsidiaries, and IDBI shall furnish to the Bank all such information as the Bank shall reason- ably request concerning the administration, operations and finan- cial condition of IDBI and its subsidiaries. Section 3.06. IDBI shall enable the Bank's representatives to inspect the records referred to in Section 3.01 of this Agreement and any relevant documents. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section 4.01. This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section 4.02. This Agreement and all obligations of the Bank and of IDBI thereunder shall terminate on the date upon which the Loan Agreement shall terminate in accordance with its terms. Section 4.02. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address herein- after specified or at such other address as such party shall -7- have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For IDBI: Industrial Development Bank of India Jolby Makers Chambers No. 1 227, Backbay Reclamation Scheme Bombay 400021, India Cable address: Telex: INDBANKIND 011-2193 Bombay Section 5.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of IDBI, or by IDBI on behalf of the Borrower under the Loan Agreement, may be taken or executed by its Chairman or such other person or persons as said Chairman shall designate in writing, and IDBI shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. -8- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Robert Picciotto Acting Regional Vice President South Asia INDUSTRIAL DEVELOPMENT BANK OF INDIA By /sf J.S. Baijal Authorized Representative -9- SCHEDULE Principal Terms and Conditions of Sub-Loans Except as the Borrower, the Bank and IDBI may otherwise agree, the principal terms and conditions of the sub-loans to be made by IDBI under the Project shall be as follows: (1) In respect of sub-loans for Investment Projects within classified backward areas, IDBI shall charge interest at a rate of not less than nine and one-half per cent (9-1/2%) per annum on the principal amount of each such sub-loan withdrawn and outstanding. (2) In respect of sub-loans for Investment Projects within areas outside classified backward areas, IDBI shall charge interest at a rate of not less than eleven per cent (11%) per annum on the principal amount of each such sub-loan withdrawn and outstanding. (3) IDBI shall charge a commitment charge at a rate of not less than one per cent (1%) on the principal amount of each sub-loan under both (1) and (2) above not withdrawn from time to time. (4) The amortization schedule applicable to each sub-loan under both (1) and (2) above shall provide for an appropriate period of grace, and, unless the Borrower, the Bank and IDBI may otherwise mutually agree (i) shall not extend beyond fifteen years from the date of approval by the Bank of such sub-loan, or in the case of a free-limit sub-loan, of authorization by the Bank to make withdrawals from the Loan Account in respect uiereof, and (ii) shall provide for approximately equal semi-annual, or more frequent, aggregate payments of principal and interest or approximately equal semi- annual, or more frequent, payments of principal.