India - Thirteenth Industrial Credit and Investment Corporation Project

Document of The World Bank FOR OFFICIAL USE ONLY Reprt No. 7858 PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRIAL CREDIT AND INVESTMENT PROJECT (LOAN 1843-IN) JUNE 13, 1989 Industry and Finance Division As.ia Country Department IV As,a Regional Office This document has a restricted distribution and may be used by redpients only in the perfornnmce of their officil duties. Its contents may not otherwise be disclosed without World BaA aouthorizafton.  Currencyl zchange lates Name of Currency Indian Rupee (Rs) Appraisal Year Average 1980 US$1.00 - Rs 8.25 Intervening Years Average 1981-1984 US$1.00 - Rs 9.85 Completion Year Average 1983 US$1.00 - Rs 12.30 Acronyms DFI - Development Finance Institution ICICI - Industrial Credit and Investment Corporation of India Limited PCR - Project Completion Report RBI - Reserve Bank of India  FOYOCIAMMLMUSI ONLY THE WORLD BANK Washington. DC 20433 U.S A Ok. Ci DwOvctGMWMI Op.#atumf EvAIiuuwE June 20. 1980 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on India Thirteenth Industrial Credit and Invesument vroJect (Loan 1843-IN) Attached, for information, is a copy of a report entitled Project Completion Report on "India - Thirteenth Industrial Credit and Investment Project (Loan 1843-IN)' prepared by the Asia Regional Office. No audit of this project has been made by the Operations Evaluation Densrtment at this tiae. Yves Rovani by Ram K. Chqpra Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise he disclosed without World Bank authorization.  FOR OCUAL USE ONLY PROJECT COMPLETION REPORT INDIA THIRTEEN INDUSTRIAL CREDIT AND INVESTMENT PROJECT LOAN 1843-IN TABLE OF CONTENTS Page No. Preface ......................................................... i Basic Data Sheet ...i............................................. i Evaluation Sunmary .............................................. iv PROJECT COMPLETION REPORT I INTRODUCTION ............... ........................... 1 II THE PROJECT ................................. 1 III ENVIRONMENT ................................ 1 IV INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED (ICICI) . ..................................... 3 V PROJECT IMPLEMENTATION ................................. 7 VI CONCLUSIONS AND RECOMMENDATIONS ........................ 12 Project Performance .................................... 12 Bank's Role ..... .. ..................................... 13 Lessons Learned .................... .................... 13 ANNEXES 1 ICICI - Financial Data Table 1 - Sunmary of Operations 1982-86 ............. ... 15 Table 2 - Income Statements 1982-86 ................. ... 16 Table 3 - Balance Sheets 1981-86 . ...................... 17 'able 4 - Collection Performance .................... .. . 18 Table 5 - Arrears of Principal ......................... 19 2 Economic Rates of Return ............................... 20 3 Comments Received from the Borrower .................... 21 APPENDIX A ICICI's Project Completion Report ...................... 24 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -i- PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRlIL CREDIT AND INVESTMENT PROJECT LOAN 1843-IN PREFACE This report reviews the achievements under the Thirteenth Loan to the Industrial Credit and Investmer.t Corporation of India (ICICI). It covers ICICI's progress and its relationship with the Bank Group during 1980-1985. The previous completion report (No. 6052 of January 31, 1986) covered Loans 1097-IN and 1475-IN - the Eleventh and Twelfth Loans to ICICI. Loan 1843-IN was approved on May 13, 1980, declared effective on June 27, 1980, and disbursed until September 1985. An undisbursed amount of US$4.3 million was cancelled and the Loan was closed on schedule on December 31, 1985. This Project Completion Report was prepared by the Industry and Finance Division, Asia Country Department IV, based on the draft report prepared by ICICI (attached as Appendix A to the report) and file review. This PCR was read by the Operations Evaluation Department (OED). The draft PCR was sent to the Borrower for comments and they are attached to the Report (Annex 3).  -ii- PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRIAL CREDIT AND INVESTMENT PROJECT (LOAN 1843-IN) BASIC DATA SHEET KEY PROJECT DATA Item Loan Amount (US$ million) 100.0 Disbursed (US$ million) 95.7 Cancelled (US$ million) 4.3 * Repaid to IBRD (US$ million) - to 05/31/88 61.7 Outstanding (USS million) 34.0 Economic Rate of Return varied Financial Performance varied Institutional Performance satisfactory CUMULATIVE DISBURSEMENTS FY81 FY82 FY83 FY84 FY85 FY86 Appraisal estimate 1.4 8.0 35.5 86.9 100.0 (US$ million) Actual 22.0 74.0 85.0 93.6 95.3 95.7 Actual as I of Estimate > lOOZ > lOOZ > lOOZ > lOOZ 952 96? Date of Final Disbursement 09/85 OTHER PROJECT DATA First Mention in Files 10/26/79 Negotiations 04/9-11/80 Board Approval 05/13/80 Loan Agreement Date 05/16/80 Effectiveness Date 06/27/80 Original Closing Date 12/31/85 Actual Closing Date 12/31/65 Borrower ICICI Executing Agency ICICI Fiscal Year of Borrower 12/31 Follow-on Project Name ICICI 14 Loan Number 2051IN Amount ($ million) 150.0 Loan Agreement Date 10/08/81  -1ii- MISSION DATA Report Staff Item Date Staff Weeks Members Appraisal (Ln 1843) 12179 4 2 Supervision (La 1843) 01181 4 2 Appraisal (La 2057) 04/81 4 2 Supervision (Ln 2057) 06182 2 2 Supervision 04/83 2 2 Supervisior 09/84 2 2 STAFF INPUT (Vanw k-) FY79 FY80 FY81 FY82 FY88 FY FY5FY8 FY88 FY87 FY68 TOTAL Preappraiasl - 5.8 - - - - - - - - 5.8 Appraisal .4 20.7 - - - - - - - - 21.1 Negotiation - 1.8 - - - - - - - 1.8 Supervision - .8 19.8 6.8 3.6 8.8 2.0 .7 .1 - 38.6 Other - .1 .7 - - - - - - - .8 TOTAL .4 28.7 20.6 6.8 8.6 6.3 2.0 .7 .1 - 68.1  -iv - PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRIAL CREDIT AND INVESTMENT PROJECT LOAN 1843-IN EVAIUATION; SUAR (M) This Project Completion Report (PCR) reviews the thirteentn Bank loan -- approved in May 1980 -- to Industrial Credit and Investment Corporation of India Ltd. (ICICI). With this loan of $100 million, the total Bank assistauce to ICICI reached $615 million. The project aimed at continuing the use of ICICI as an efficient channel of resource transfer for financing high priority industrial projects in India; assisting ICICI in diversifying its sources of foreign borrowings; and encouraging ICICI to do industrial studies and other developmental activities that would complement its mains-ream activities (paras 2 and 3). (ii) The above objectives were achieved during the project period (para 23). The loan was committed and disbursed ahead of schedule and closed on the due date of December 31, 1985 (para 25). While lending is still concentrated in Western India, some progress has been made in expanding the geographical coverage (para 18). A total of 121 projects were assisted, including 36% to units in industrially backward areas. About 14% of the amounts lent were for new projects, while the balance were for modernization, re.lacement, expansion or diversification (para 26). Sub-loans for metal products and machinery manufacturing projects accounted for 28% of total lendinS, chemicals and petroleum products 26%, automobile and ancillaries 12% and cement 9% (para 27). About 55% of the assistance went to projects in high priority industries. Some 75% of the total number of projects received average assistance of less than one million dollars; on the other hand 25% of the projects received about 60% of the total assistance in value (paras 26-28). (iii) Based on data for fifty-three companies, twenty-nine of them (55%) are currently not earning a minimum financial rate of return on investment of 12% and twenty-two of these companies incurred losses in the projected normal year of activity (when assets are ready for full production). In addition, forty-three sub-loans (36% of total) have been re-scheduled due to difficulties faced and eighteer. sub-loans (including 16 rescheduled) were in arrears at December 1987. The problem is largely due to poorer than expected performance by the sub-borrowers following liberalization of the economy and increased competition. Sub-borrowers' difficulties were compounded and loan repayment burden was made heavier because of: the charging of fixed interest rates during a period of high interest rates;  and the bt.:ing of the foreign exchange risk by them - the Indian rupee has progressively depreciated against foreign currencies (presently about 60% against the US dollar compared with the rate during loan effectiveness) (paras 32-34). (iv) Based on results to date, project performance has been mixed. Although some of the rescheduled companies' performance has improved subsequently, it is too early to predict the overall financial performance under the project. Bank and ICICI should exchange information on project related sub-borrower performance more frequently (para 37). Ex-post economic rates of return on a limited sample of sub-projects ranges between 18% and 39%. ICICI is preparing additional data on the economic perform- ance under the project. About 8770 jobs were created under the project at an average cost per job of $37,900. The sub-projects' contribution to exports has not been significant (para 35). (v) ICICI continues to assume a major role in India's financial system and now accounts for some 45% of institutional foreign exchange financing for industry. Over the last few years it has diversified its activities, and now provides a broad range of financial services including wortking capital finance, mergers and acquisitions, export finance, supplier credit, underwriting, guarantees and leasing. Many of these activities have been quite remfterative and contributed to ICICI's profitability. ICICI has only limited authority to finance working capital and there may be a case for expanding its ability to do so to help ensure that project financing is adequately financed. The corporation has also diversified its resource base and is now an established borrower in international financial and domestic markets. In addition, ICICI is playing an active role in assisting the government in formulating industrial policies, especially those relating to the private sector (para 10). (vi) With Bank support, ICICI has also undertaken a broad range of complementary activities and services such as industrial sub-sector and policy studies; identification and promotion of new projects; and training and advisory support for other domestic and foreign financial institutions (para 20). (vii) Aided by a dynamic management team ICICI continues to earn satisfactory profits and maintain a sound financial condition. However more recently, reduced access to concessional funds and growing reliance on financial markets has begun to reduce lending margins. The overall arrears rate of the Corporation (before rescheduling) has risen in recent years - from 2.4% in 1982 to 2.8% in 1987 - a reflection of the more competitive changing environment. ICICI management is conscious of this aspect and continuously reviews the recovery status of sub-loans and takes appropriate follow up action. An effective loan recovery plan together with collection targets is in place. Continral attention to this issue will be essential (paras 21 and 22).  -vi- (viii) ICICI is a highly sophisticated organization which has responded to increased competition in the financial sector by effectively diversifying both its resources and its activities. However, this environment has also created more challenges in terms of more complex problems of foreign resource mobilization and management; need !or greater flexibility in setting domestic lending rates given greater reliance on commercial sources of finance; more difficult portfolio management problems and need for better information on borrowers and sub-projects; and a need for better project appraisal to assess technology and economic returns as well as risk. The challenges have created a need for acquiring certain specialized skills for which ICICI ;roposes to use the technical assistance component under the Industrial Finance and Technical Assistance Project (Loan 2928-IN) (para 40). (ix) Bank continues to be associated with ICICI, and four subsequent loans have been given to the institution; ICICI XIV - Loan 2051-IN for $150 million (completed); part of Industrial Exports Project - Engineering Products - Loan 2630-IN for $160 million (ongoing); part of Cement Industry Project - Loan 2661-IN for $35 million - ongoing; and part of Industrial Finance and Technical Assistance Project - Loan 2928-IN for $105 million (approved in March 1988). The proposed Industrial Technology Project and the proposed Export Development Project will be vehicles for further assistance (paras 40 and 41). (x) The principal lessons learned from the project are: projects which are attractive during periods of protection can face problems with liberalization and increased competition; and schemes involving fixed interest rates and the sub-borrowers' bearing the foreign exchange risk may work fairly well during periods of stable currencies and interest rates but have adverse effects when both currencies and interest rates are highly variable (as in the early nineteen eighties). And, based on experience, Government has tried to evolve more satisfactory arrangements for relending to sub-borrowers. It is presently finalizing a variable foreign exchange risk absorption scheme together with currency pooling to minimize the risks borne by Government as well as the Development Finance Institutions and their sub-borrowers (paras 43-45).  EROJECT COMPLETION REPORT INDI THIRTEENTH INDUSTRIAL CREDIT AND INVESTMENT POECT LOAN 1843-IN I. INTRODUCTION 1. The Bank assisted twelve industrial credit and investment projects implemented by the industrial Credit and Investment Corporation of India Limited (ICICI) between 1955 and 1980. Total credits/loans during this period amounted to $615 million. This project completion report (PCR) covers the thirteenth loan to ICICI - for $100 million - which was signed on May 16, 1980 and became effective on June 27, 1980. ICICI has prepared a detailed PCR, which is attached as Appendix A, and this report summarizes the main features, problems and achievements of the project. II. THE PROJECT 2. Obiectives of the Project. The objectives of the project were to: build on the progress achieved in previous operations by continuing to use ICICI as an efficient channel of resource transfer for financing high- priority industrial projects in India; assist ICICI in progressively diversifying its sources of foreign exchange by facilitating blending of Bank and commercial funds in its operations; and encourage ICICI in carrying out its program of industrial studies and other developmental activities that would complement mainstream finaticing operations. 3. Proiect DescriRtion. The project was designed to finance the foreign exchange cost of industrial projects carried out by productive enterprises in India. By helping to fill a gap in the availabilitv of foreign exchange resources to finance capital goods imports, the project was expected to contribute to investment in the modernization and expansion of productive.industrial capacity in India. III. ENVIRONMENT 4. Industry has played a central role in India's development efforts since independence. The country's aspirations for industry are firmly rooted in the nation's most basic goals--economic growth, self-reliance and social justice. During the early 1950s, a framework of trade and regula- tory policies was established by the Indian Government for the industrial sector with the following goals in mind: (a) the promotion of heavy industry with an emphasis on the public sector; (b) a quest for economic  -2- self-reliance, which translated into broad efforts at import substitution and restrictions on imports of foreign technology to promote indigenous innovation; (c) subsidies to and protection of the small-scale sector; and (d) balanced regional development. 5. Policy FraMework.1 The system of trade and industrial regulations originated with the import controls introduced during the Second World War. These controls subsequently bcame a permanent instrument of centrally planned industrial development for achieving self-reliance. In addition, resources were allocated according to detailed regulations, which were used to allocate resources to subsectors whose output was intatded to replace the most costly and visfible imports, largely capital and consumer goods. Later, detailed regulations, especially licensing, were used to regulate capacity. Until very recently, these licenses restricted firms to narrowly specified lines of production. 6. The industrial regulatory system reduced domestic competition and limited the ability of firms to improve their performance. Firms had limited flexibility in choosing plant size, altering product lines, reduc- ing the workforce, selecting a location, and making many other choices that are taken for granted in other countries. The above constraints seriously affected industrial performance during the 1970's and in the early eighties. Thus, during the Government's Sixth plan FY81 - FY85, which corresponded to the period of the project, industrial and trade performance was below the targets set in the plan. GDP growth in real terms averaged about 58 p.a. Industrial output grew at an average annual rate of 6.9% which was below the plan target of 7.7%. The growth in the index for manufacturing alone averaged 5.7% as against the target of 7.6%. In value terms the annual average growth rate of exports was 15% and in quantity terms 2.9%; in case of manufactured exports, it was 13.5%. 7. Recognizing the need to improve industrial performance, the Gov- ernment has revised its industrial development strategy to place greater reliance on price signals and market forces. Since the early eighties, the Government has been moving towards a supporting and guiding role through provision of incentives, infrastructure and institutional services. The policy reforms represent a marked change in substance and direction from past policies, and have fostered a more competitive environme,nt and more collaboration with foreign investors, and the rate of growth of both manu- facturing production and exports has risen perceptibly in recent years. 8. The reform process has also stimulated private investment and created a need for industries to adjust to greater competition through modernization of plant and equipment and more efficient management. Liberalization has also affected the development finance institutions (DFIs), which need to respond by diversifying their financial sources and / See Gray Cover Report - INDIA: An Industrialized Economy in Transition (Report No. 6633-IN dated May 6, 1987) for a comprehensive discussion of the subject.  -3- services, improving their capacity to select and appraise economically and financially competitive projects and strengthening the management of their loan portfolios during the adjustment process. 9. The Financial Sector.2 India's monetary and financial policies reflect a strong commitment to macroeconomic stability which has contri- buted to high savings rates and financial deepening. The Reserve Bank of India (RBI) acts as the central bank and the regulatory agency for the financial system. Holdings of its currency issues account for 17% of financial assets. The commercial banks, primarily government-owned, account for 40% of total financial assets, and lend to the agricultural, industrial and commercial sectors on both short and medium term. Govern- ment and privately--sponsored retirement schemes account for 23% of financial assets while 10% correspond to government-owned life and general insurance companies. The equity, debenture and short term money markets have grown rapidly in recent years and these instruments now account for 10% of the assets of the financial system. The DFIs are not significant direct mobilizers of financial savings, obtaining their funds from the central and state governments, the RiI, the commercial banks, and the life insurance companies through loans and bond issues. They are, however, important term lenders to industry contributing some 14% of total industrial financing in the country since 1980. IV. INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA (ICICI) 10. ICICI, established in 1955, has grown to assume a major role in India's financiai system, accounting for 45% of institutional foreign exchange financing for industry. Over the last few years, ICICI has diversified its activities, and provides a broad range of financial services including working capital finance, mergers and acquisitions, export finance, supplier credits, underwriting, guarantees and leasing. In addition, ICICI is playing an active role in assisting the government in formulating industrial policies, especially those related to the private sector. ICICI also has diversified its resource base and is now an established borrower in international financial markets. From 1981 through 1987, ICICI raised the equivalent of about US$700 million from the inter- national financial markets. 11. Ownershig. Ownership of ICICI is dominated by public sector corporations, including the Life Insurance Corporation, the Unit Trust of India and a number of nationalized commercial banks. Of ICICI's issued share capital of Rs 800.5 million, public institutions hold 80.8%, foreign shareholders (mainly commercial banks) hold 9.3% and the remaining 9.9% is held by more than 7,000 private Indian investors. 2/ See Green cover report - INDIA: Credit and Capital Markets Study (Report No. 6661 dated February 27, 1987) for a fuller discussion of the subject.  -4- 12. Oganization. ICICI is well-managed and operates effectively under a competent and experienced Board. The fifteen members of the Board represent GOI (2 members), public financial institutions (1), foreign shareholders (1), the professions and business (8), and include three full- time executives of ICICI: the Chairman and two Deputy Managing Directors. The Board meets regularly to set out ICICI's overall financial and opera- tional policies and to decide on individual project proposals resulting in single enterprise exposure over Rs 35 million. Mr. N. Vaghul, an experienced banker, became Chairmar. and Managing Director in September 1985. Under him the Corporation continues to benefit from the able leadership that has characterized it for many years. 13. Organizationally, ICICI is divided into various groups headed by senior executives under the overall supervision of the two Deputy Managing Directors. Mr. B. V. Bhargava supervises the Project Finance group which is responsible for appraising new projects and monitoring the loan portfolio. This group is the largest in terms of professional staff as well as volume of business. The Branch Co-ordination group and the Operations Coordination & Policy group coordinate the project finance activities of the branches and fulfill MIS requirements respectively. The Administration and Services Group is responsible for the Secretarial, Administrative and HRD activities. Mr. N. J. Jhaveri supervises the Financial Services group which includes Merchant Banking, Leasing and Venture Capital activities. The Finance group is responsible for all accounting and billing functions, foreign exchange operations, and the Corporation's investment portfolio. Mr. Jhaveri also supervises the Corporate Planning & Policy and Resource mobilization activities, Rehabilitation and Corporate Legal Advisory functions as also Technology Development activity. The Technology Adviser and the Internal Auditor interact directly with the Chairman. 14. Operating Policies and Procedures. Prior to 1977, ICICI had no formal policy statement, but relied on its Memorandum of Association, together with Government guidelines and the periodic resolutions of its Board, to provide a satisfactory operating policy framework. That year, ICICI's Board adopted a Statement of Financial and Operational Strategy in which six broad areas were specified for priority attention: export indus- tries; power and transport; agriculture related enterprises; industries basic to industrial growth; mass consumption goods; and balancing and modernization projects. With the Fourteenth Loan (Loan 2051 IN - approved in June 1981), ICICI updated this Statement principally to reflect ICICI's intention to diversify its foreign exchange resources. Subsequently, under the Industrial Export Project, (Loan 2629/2630 IN - approved in October 1985), ICICI placed expanded emphasis on export-oriented projects, with a particular focus on engineering products. ICICI's current Corporate Policy Statement, updated during appraisal of the Industrial Finance and Technical Assistance Project (Loan 2928 IN, approved in March 1988), continues ICICI's earlier basic lending policies, but gives new importance to supporting sunrise industries, fostering technology development and protecting the environment. It also places added emphasis on contributing  -5- to the modernization of existing industries. Internally, the build-up of capital reserves, the adequacy of provisions for doubtful accounts, and minimization of the foreign exchange risk on its operations are all more clearly defined. 15. Appraisal and Supervision Standards: ICICI's appraisals continue to be of a high standard and incorporate a thorough treatment of technical, financial, market and economic aspects. Follow-up procedures and project supervision standards also are satisfactory. Clients submit detailed quarterly progress reports to ICICI for review and follow-up. Projects are visited at least once a year and a satisfactory system of reporting and management review exists. ICICI also reserves the right to appoint a director on its clients' board and has done so selectively to intensify the supervision of certain projects. 16. On-lending Terms. ICICI's standard rate of interest for subloans from euro-currency sources bear a spread of 1.5% over the borrowing cost. Interest rates on domestic currency loans also range from 11.5% to 14% with a 1% p.a. surcharge on interest levied on companies whose shares are not listed on a stock exchange. ICICI charges a 1% p.a. commitment fee on foreign currency loans, and a commitment fee ranging between 0.25% and 1% p.a. on domestic currency loans. ICICI's standard terms provide for maxi- mum loan maturities of up to 15 years, including up to 3 years grace, which conform to those offered by the other all India term-lending institutions. Until recently (this includes the project under review), ICICI's sub- borrowers bore the exchange risk on foreign currency loans, but recently, Government has decided to assume this risk under some foreign loans. 17. Recent Performance. A summary of ICICI's operational performance for the last five years (1982-1986) is shown in Annex 1. Table 1. As of December 31, 1986, ICICI had approved cumulative financing since its found- ing totalling Rs 54 billion for some 4,850 projects. For the year ending on that date, disbursements were Rs 6.0 billion, reflecting a 25% average annual growth over the level of disbursements in 1982. The sub-sectoral distribution of assistance reflects ICICI's concentration on non-tradi- tional and technologically more advanced industries. The engineering sector, including metal products, mechanical and electrical machinery and transport equipment, accounted for about 25% of the total, followed by the chemical and petrochemical industries (22%). Other more traditional sub- sectors receiving a significant proportion of ICICI financing were: tex- tiles (13%); basic metal (9%); and pulp and paper (6%). ICICI's clients are predominantly medium to large-sized private enterprises. In 1986, ICICI's average assistance per project was about Rs 13.9 million (US$1.1 million). However, only 45% of the firms financed had net fixed assets of less than Rs 100 million (US$7.8 million). 18. ICICI has emphasized the modernization and upgrading of clients' plant and equipment to improve overall industrial efficiency and improve  -6- competitiveness. These efforts involve advising clients at the appraisal stage on technology choice. ICICI also provides technical assistance, through its merchant banking and rehabilitation divisions, to industries which need financial restructuring. The geographical distribution of assisted projects is somewhat skewed toward the more industrialized states in Western India; however, ICICI is making progress in diversifying its portfolio geographicallv. 19. ICICI carries out an annual. review of the financial performance of companies in its portfolio. Of the sample of 417 companies analyzed for the year 1985-86, the average return on equity after tax was 15.3%, and return on capital employed was about 15.7% which is an improvement over the return of 14.9% obtained in 1984-85. Most companies financed by ICICI have a sound capital base with an average debt:equity ratio of 0.68. The economic impact of ICICI financed projects has also been satisfactory. The simple average ex-ante economic rate of return for 80 projects approved in 1986 was 34%. These investments are expected to create about 38,000 new jobs at an average investment cost per job of about US$19,400; this is reasonable in view of the concentration on balancing and modernization. Furthermore, a significant proportion of ICICI's clients export at least part of their output, contributing 20% to India's manufactured exports. 20. Other Developmental Activities. ICICI undertakes a broad range of complementary activities and services aimed at enhancing its overall devel- opmental impact. These activities include: industrial subsector ;-Id policy studies; Identification and prcmotion of new projects; and training and advisory support for other domestic and foreign financia'l institutions. Most of these activities were initiated following the joint Bank/ICICI study of ICICI's development impact in 1973. The Technology Development and Information company of India Limited (TDICI) has been established to assist existing industry in adopting advanced technologj ventures. Venture capital operations were started in 1986. In addition, a credit rating agency has been promoted. 21. Financial Results and Position. !CICI's financial results for the 1981-1986 period are summarized in Annex 1 Tables 2 and 3. ICICI's total assets passed the Rs 20.0 billion mark for the first time in 1985 and increased further to Rs 28.0 billion at the end of 1986. Assets were financed by rupee borrowings (54%), foreign currency borrowings (33%), other liabilities (4%) and net worth (9%). The rapid growth in assets correspond to the surge in ICICI's business since 1981. This was due to an improved investment climate and ICICI's concerted efforts to diversify and promote new business. Net profits after tax as a percentage of average net worth during the 1982-1986 period averaged 20% compared with 16% in 1980. The Improvement in net profit was due to higher volume of operations and lower effective tax rate on profits. The interest rate spread increased from 2.5% in 1980 to 3.2% in 1983 and declined to 2.8% in 1986 due to the  -7- rapid increase in ICICI's borrowing from commercial markets at higher costs and increased interest rates on GOI-guaranteed bond issues. Administrative expenses measured as percentage of average total assets declined from 0.6% in 1981 to 0.3% in 1987-88. Due to the increase in profit, ICICI's debt: equity ratio as defined in the latest Bank loan agreement, declined from 10.5:1 in 1981 to 9.8:1 by the end of 1984, and to 9.5:1 by the end of 1986. The debt service coverage ratio also remained favorable at 1.7. 22. These results have been supported by the general high quality of ICICI's portfolio. Principal in arrears at the end of 1987, at Rs 620 million, is about 2.2% of total loans outstanding (2.8% before rescheduling). However, there is an emerging unfavorable trend in collection performance. The arrears ratio indicated above has actually climbed steadily in recent years. The collection ratio before rescheduling has dropped from 75% in 1983 to 74% in 1987-88 (details are in Annex 1, Tables 4 and 5). Industries in the cotton and synthetic textiles, cement, paper, chemicals and sugar subsectors account for 68% of portfolio in arrears. ICICI identifies adverse market developments, prolonged labor trouble, inadequacies in management and low capacity utilization as the prilicipal causes of companies falling back in their payments. Rapid corrective measures to prevent further deterioration in these companies have not always been possible because of difficulties in agreeing with other creditors and the enterprises' management of actions necessary. As of the end of 1986, 24% of accounts in arrears were behind payments for more than 12 months and an additional 28% were behind for more than 24 months. These figures represent a hard core of difficult accounts and are receiving ICICI's intensive attention, particularly in view of more difficult competitive conditions for Indian industrial enterprises. V. PROJECT IMPLEMENTATION 23. Objectives. During implementation close contact continued to be maintained between ICICI and the Bank. As reflected in the project objectives (para 2) several non-Bank commercial loans were raised by ICICI thus diversifying its resources (para 10). Industrial studies in "Energy Utilization in Industry", "Electric Equipment Industry" and Automotive Products were also carried out and discussed with the Bank. In addition ICICI, with Bank support and assistance developed new initiatives particularly in policy-oriented sector work. Such work has served as a basis and led to the formulation of the Bank's Industrial Exports Project - Engineering Products - Loan 2630-IN and to a Cement Industry Project - Loan 2660-IN.  .8- 24. Interest Rates. On-lending rates to sub-borrowers were raised to 11.85% in July 1980 and later to 14% in March 1981 (from 11% at appraisal) to provide a reasonable spread to ICICI following imposition by Government of an interest tax and increased borrowing costs. This increase took place during a time of high global interest rates which however fell sharply during succeeding years. 25. Loan Commitment and Disbursements. Due to strong demand for for- eign currency assistance, the entire loan was committed by ICICI during 1980 and 1981. Net of cancellations, a total of 121 projects were assisted. Diabursements amounted to $95.7 million ($91.5 million or 96% were disbursed by end 1983) and were completed by September 1985. The balance $4.3 million was cancelled and the loan was closed on schedule on December 31, 1985. Details are in the basic data sheet. The foreign currency loan assistance was supplemented with rupee assistance in some cases in the form of loan and underwriting and/or direct subscription of shares/debentures. Such assistance by ICICI was small compared to the foreign currency loans - a ratio of 1:9. 26. Assistance By Location and TyIe. Of the 121 projects, 43 or 36% of the total number were located in industrially backward areas and received 40% of the foreign exchange assistance provided. Details of assistance by type of project are given in table 1. TABLE 1: ASSISTANCE BY TYPE OF PROJECT Balancing New Project/ Diversi- Modern- Equipment/ Total New Companies fication Expansion ization Replacement No. of Projects 121 17 18 28 28 30 % of Foreign Currency Loans 100 14 21 30 22 13 Thus, expansion, modernization and balancing/replacement (including equip- ment for research and development) accounted for 71% of the total number of projects and 65% of the foreign currency assistance, while new projects/new companies (17% of projects and 14% of foreign assistance) and diversifi- cation (18% of projects and 21% of foreign exchange) accounted for the balance.  -9- 27. Assistance by Sub-Sector. Table 2 gives details of assistance by sub-sector. Table 2: ASSISTANCE BY SUB-SECTOR (Rs million) Underwriting Industry Foreign Rupee and Direct Group Currency Loans Subscription Total Mining 10.3 - 10.3 Automobile & Ancillaries 194.1 6.7 - 200.8 Food Manufacturing 6.3 - - 6.3 Textiles 124.6 4.1 4.0 132.7 Paper & Paper Products 97.0 - 6.0 103.0 Chemicals & Petroleum Products 372.3 39.8 11.7 423.8 Basic Metal Products 161.1 8.5 2.8 172.4 Fabricated Metal Products & Machinery Manufacturing 264.2 13.9 9.5 287.6 Electrical Machinery 120.0 2.9 4.5 127.4 Cement 116.0 25.4 14.2 155.6 Other Industries 31.6 6.5 - 38.1 Total 1.497.5 107.8 52.7 1.658.0 Sub-loans for basic and fabricated metals products and machinery manufacturing received the largest assistance - Rs 460 million or 28%, followed by chemicals and petroleum products (Rs 424 million or 26%), automobile and ancillaries (Rs 200 million or 12%), and cement (Rs 156 million or 9%). These four groups together accounted for some 75% of the total assistance.  -10- 28. Assistance bX Loan Size. An analysis of sub-loans by size is given in Table 3. UABLE 3: ANALYSIS BY LOAN SIZE Amount of Loan Number of Amount ($ millior.) Projects ($ million) Less than 0.250 26 3.5 0.251 to 0.500 30 11.8 0.501 to 0.750 27 16.3 0.751 to 1.000 8 6.9 1.001 to 2.000 21 30.1 2.001 to 4.000 9 27.1 4.001 to 6.000 Above 6000 The average size of assistance per project was about $791,000. Twenty-six projects (21% of total) received assistance of less than $250,000 ane 30 projects (25%) received assistance between $250,000 million and $500,000. A further 30 projects were provided assistance of more than $1 million. Thus, a large number of projects were extended small amounts of assistance mainly for replacement, modernization and diversification; on the other hand, 25% of the projects received about 60% of the total assistance in value. 29. Based on Government's guidelines for assistance to priority sectors (export orientation, backward areas, etc.) assistance was given to 62 projects in high priority industries (Rs 903 million or 55% of total assistance) and to 30 projects in other priority industries (Rs 432 million or 26% of total assistance). 30. Time and Cost Over-runs Based on data for 113 projects, 53 projects (47%) were completed on scb -,le, while 18 (16%) were completed with a delay of over 12 months. The other 42 projects (37%) were completed with delays ranging up to one year. 46 projects (41%) had cost over-runs, while 53 (47%) had no over-runs and 14 (12%) hal savings. The aggregate over-runs for the 113 projects was about 19% while for the specific projects having over-runs the percentage was almost 30%. Intensity of  -11- over-runs has been marked in the case of new and diversification projects due largely to lack of comprehensive details at the time of sub-project appraisal. 31. The delays in implementation were due to problems such as arrang- ing necessary governmental approvals, obtaining financing including promoters' contributions and equipment delivery schedules. In addition to these delays, cost over-runs were due mainly to increases in excise and customs duties, price increase of steel and cement and lack of detailed engineering designs during sub-project appraisal. 32. Financial Performance. Based on available data for 53 companies, 31 earned profits as estimated while 22 incurred losses in the projected normal year (when assets are ready for full production). Thirteen of the 22 companies have actual capacity utilization of less than 50%. Of the 31 profit making companies 24 are estimated to earn a return on investments of over 12%. Thus, 29 (or 55%) of the 53 companies are currently not earning a minimum return of 12%, which is not satisfactory. 33. Sub-loan Repayments. Fourteen of the 121 project sub-loans have been fully repaid. Of the balance of 107, forty-three sub-loans (or 36% of total loans) were rescheduled due to difficulties faced by them. Eighteen sub-loans (including 16 rescheduled) were in arrears as of December 1987. The most common problem faced by the majority of the 43 cases is marketing. Seven of these are in the textile industry (clothing and machinery) while three are in the jute industry and both industries were affected by recession. Other problems reported include time and cost over runs and technical. Although some of the rescheduled companies' performance has improved subsequently, it is too early to judge the overall results. 34. The princJpal reason for sub-borrowers' difficulties is poorer than expected performance largely due to the consequences of liberalization and increased competition. However their loan repayment burden is heavier because of two reasons: the charging of fixed interest rates to them at a time when global interest rates were high (para 24); and the bearing of the foreign exchange risk by them - the Indian rupee has depreciated by about 60% against the US dollar since loan effectiveness. 35. Economic Indicators. Annex 2 gives data on economic rates of return for 6 projects financed under the loan. Those range from 18% to 39% and are satisfactory. However the sample is small and further evaluations are being worked out by ICICI for the othez projects. Data on employment in 33 cases was estimated at 8,771 workers at a cost per job of about Rs 474,000 or $37,900 (compared with $32,000 under the previous two ICICI loans financed by the Bank) which is reasonable. The sub-projects' contribution to exports has not been significant.  -12- VI. CONCLUSIONS AND RECOMKENDATIONS Project Performance 36. Loan sanctions and commitments were completed by 1981, less than 2 years after effectiveness; and the bulk of disbursement were also completed by 1982 (para 25) - a noteworthy achievement. New capacity has been created in different priority sectors of the industry, new units have been set up in backward areas and modernization of existing units has been assisted (paras 26 through 29). 37. Financial performance of the project sub-borrowers, however, is not satisfactory (para 32). In additioa, under the project, 43 accounts (35% of total number) had to be rescheduled (para 33) and this is high. Sixteen of them are still in arrears. The problem is largely due to poorer than expected performance largely due to the consequences of liberalization and increased competition; but the difficulties have been compounded and the loan repayment burden made heavier because of fixed interest rate charging and the bearing of the foreign exchange risk by the sub-borrowers (para 34). Although it is too early to judge the overall project financial performance, the results so far have been mixed. Bank and ICICI should exchange information on project related sub-borrower performance more frequently. 38. ICICI. ICICI's overall portfolio arrears rate (before rescheduling) has also risen in recent years - from 2.4% in 1984 to 2.8% in 1987 - a reflection of the changing environment. ICICI management is conscious of this aspect and continuously reviews the recovery status of its sub-loans. Where a client encounters difficulties, relief (including rescheduling) is allowed; at the same time concerted efforts are made to improve the operations of the clients. 39. Institutionally, ICICI diversified its sources of foreign exchange and carried out industrial studies as desired (para 23); and, as indicated in previous PCRs, ICICI has continued to develop well and to expand its operations. Led by a dynamic management team, the Corporation continues to earn satisfactory profits and maintain a sound financial condition. ICICI continues to fulfill its role as a leading development bank and to promote the acceleration of industrial development of the country. 40. ICICI is a highly sophisticated organization which has responded to increased competition in the financial sector by effectively diversifying both its resources and its activities. However, this environment has also created more challenges in terms of more complex problems of foreign resource mobilization and management; need for greater flexibility in setting domestic lending rates given greater reliance on commercial sources of finance; more difficult portfolio management problems  -13- and need for better information on borrowers and sub-project; and a need for better project appraisal to assess technology and economic returns as well as risk. These challenges have created a new need for institution building which is being provided under a technical assistance component under the Industrial Finance and Technical Assistance Project (Loan 2928-IN). Bank's Role 41. Bank has been associated with industrial development in India for over three decades. In addition to financing specific projects, it has had an active industrial sector work program and prepared a number of sector reports. It has also supported and assisted ICICI in its policy-oriented sector work, which led to the formulation of some of the more recent projects. Following the present pLOject, four subsequent loans have been given to the ICICI: ICICI XIV - Loan 2u51 for $150 million (completed); part of Industrial Exports Project - Engineering Products - Loan 2630 for $160 million (ongoing); part of the Cement Industry Project - Loan 2660-IN for $81.75 million (ongoitig) and Loan 2661-IN for $35 million - ongoing; and part of Industrial Finance and Technical Assistance Project - Loan 2928-IN for $105 million (approved in March 1988). 42. Three new projects involving ICICI are also being prepared: an Industrial Technology Development Project, an Export Development Project and an Electronics Industry Development Project. Government is keen to obtain Bank support for building the links between the technology infrastructure and the industrial sector and for developing effective financial instruments and institutions for technology financing. The Export Project will, in addition to giving finance for viable projects, provide technical assistance to ICICI's staff for training in the administration of Export Development Funds, and to purchase information and consultancy services in appraising export programs and investments. Lessons Learned Projects which are attractive during periods of protection with strong demand for foreign exchange assistance can face problems with liberalization and increased competition. This problem was not foreseen at appraisal. 44. Schemes involving fixed interest rates and the sub-borrowers bearing the foreign exchange risks worked reasonably well during periods of stable currencies and interest rates. However, this policy has had adverse effects during the nineteen eighties when both currencies and interest rates have been highly variable.  -14- 45. Bank adopted the variable interest rate policy from July 1982. And, based on the experience gained from the present and subsequent loans (Loans 2051, 2630 and 2661 - para 41), Government has tried to evolve more satisfactory arrangements for relending to sub-borrowers. As an interim measure, the Government, for a fixed foreign exchange premium, has recently absorbed the foreign exchange risk for the ongoing Bank funded projects involving DFIs. In addition, Government is finalizing a more general and flexible system covering all foreign exchange borrowings involving the DFIs. This system will be a variable foreign exchange risk absorption scheme together with currency pooling so as to minimize the risks borne by the Government as well as the DFIs and their sub-borrowers. The details will be discussed with the Bank shortly.  -15 - AM=t1 1 Table 1 PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRIAL CREDIT AND INVZSTHINT PROJECT (LOAN 1843-IN) THE INDUSTRIAL CREDIT AND INVESTMSNT CORPORATION OF INDIA LTD. Sumary of Operations 1982-88 Fiscal Year Ending 1982 1983 1984 1985 1986 1988* ---------------- Rs million ---------------- Sanctions Rupee 1,816 1,903 2,381 2,971 3.918 7,952 Lines of credit 296 337 550 871 1,357 2,234 Foreign currency 915 1,254 1,447 1,700 3,568 2,455 . Direct Subscription 40 92 63 82 149 191 Underwriting 188 220 370 327 569 677 Leasing - 121 196 278 994 1,456 Guarantees 166 260 236 184 230 275 Others - - - - - 48 Total 3.421 4.187 5,243 6.413 10,785 15,288 Disbursements Rupee 1,697 1,775 2,117 2,218 2,840 5,120 Lines of credit 102 293 315 544 808 9ao Foreign currency 1,018 1,096 1,204 1,345 1,792 2,510 Direct Subscription 60 80 51 77 132 135 Underwriting 45 72 45 38 80 214 Leasing - 32 120 159 373 795 Guarantees - - 3 5 7 19 Others - - - - - 30 Total 2,922 3,348 3,855 4,386 6.032 9.803 ** Fifteen months March 1988. NOTE: If equity investments and bonds/deb. investments are required, the figures would be as follows: 1982 1983 1984 1985 1986 1988 Sanctionss Equity 158 235 389 337 477 777 Deb. 70 77 44 72 241 91 Disbursements: Equity 45 76 67 54 73 226 Deb. 60 76 29 61 139 83  - 16 - ANNEX 1 Table 2 PROJECT COMPLETION REPORT INDIA THIRTZENTH INDUSTRIAL CREDIT AND INVESTMENT PROJECT (LOAN 1843-IN) THE INDUSTRIAU CREDIT AND INVESTHENT CORPORATION OF INDIA LTD. Income Statements 1982-88 I& FYE December 31st 1982 1983 1984 1985 1986 1988** ----------------- Rs Billion ----------------- Income Interest on loans & 1.12 1.30 1.54 1.96 2.51 3.63 disbursements Fees and commission 0.04 0.05 0.07 0.14 0.27 0.30 Other income 0.01 0.01 0.01 0.01 0.15 0.40 Total Income 1.17 1.36 1.62 2.11 2.93 4.33 Expenses Interest 0.80 0.90 1.16 1.44 1.82 3.08 Provisions/write offs lb 0.01 0.03 0.00 0.00 0.15 0.00 Salaries & porsonnel 0.02 0.03 0.03 0.04 0.05 0.11 Depreciation 0.01 0.02 0.02 0.02 0.11 0.18 Other 0.02 0.04 0.05 0.07 0.07 0.04 Total Expenses 0.86 1.02 1.26 1.57 2.20 3.41 Profit before tax 0.31 0.34 0.36 0.54 0.73 0.92 Tax 0.12 0.13 0.15 0.16 0.12 0.15 Profit after tax /c 0.19 0.21 0.28 0.38 0.61 0.77 Dividends 0.04 0.04 0.06 0.08 0.09 0.16 Reserves 0.15 0.17 0.22 0.30 0.52 0.61 Returns On equity 22.52 21.3? 23.2? 24.72 28.9? 27.11 On assets 1.8? 1.6? 1.8? 1.9? 2.42 2.4? la The financial year of ICICI vas changed from a calendar year basis to March 31 from 1988. Hence the next set of accounts covered a period of 15 months from January 1987 to March 1988. /b Interest income for 1984, 1985 is net of provisions and write-offs. /c 1984 figure includes write backup of Rs. 70 million from doubtful debt reserve. ** For fiften months. C *  - 17 - ANNEX 1 Table 3 PROJECT COMPLETION REPORT INDIA INDUSTRILL CREDIT AND INVESTMENT PROJECT (LOAN 1843-IN) THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LTD. Balance Sheets 1982-88 FYE December 31st 1982 1983 1984 1985 1986 1988** ----------------- Re Billion ----------------- Assets Cash and bank balances 0.89 0.40 0.42 1.47 1.51 3.56 Other assets and advances 0.92 0.80 1.05 1.27 1.53 2.02 Current Assets 1.81 1.20 1.47 2.74 3.04 5.58 Loans (Rp) 5.78 7.#' 9.40 11.40 14.12 19.04 Loans (fx) 3.70 4.60 5.50 6.83 9.27 10.96 Investments 0.75 0.80 1.00 1.20 1.29 1.64 Net fixed assets 0.04 0.05 0.20 0.24 0.41 0.86 Total Assets 12.08 14.35 17.57 22.41 28.13 38.08 Liabilities and Networth Payable 0.60 0.76 0.97 ..09 1.23 1.65 CPLTD 0.54 0.41 0.67 0.99 1.22 3.03 Current liabilities 1.14 1.17 1.64 2.08 2.45 4.68 Rupee debt 6.90 8.40 10.00 12.70 14.96 19.69 Foreign currency debt 3.15 3.70 4.60 5.88 8.25 10.50 Net long term debt 10.05 12.10 14.60 18.58 23.21 30.19 Share capital 0.27 0.27 0.41 0.50 0.67 0.80 Reserves 0.62 0.81 0.92 1.25 1.80 2.41 Total Equity 0.89 1.08 1.33 1.75 2.47 3.21 Total Liabilities 12.08 14.35 17.57 22.41 28.13 38.08 and Networth Ratios DebtsEquity (Times)/a 9.60 10.30 9.80 10.40 9.50 9.50 /a Based on agreed formula between Bank and ICICI. ** March and 1988 after fifteen months from the previous year. Source: ICICI.  -18- ANNE 1 Table 4 PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRIAL CREDIT AND INVESTMENT PROJECT (LOAN 1843-IN) THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LTD. Collection Performance Collection Performance Before Rescheduling /a Year 1982 1983 1984 1985 1986 1987-88** ---------------- (Rs. billions) ---------------- Amount overdue at 0.27 0.27 0.31 0.37 0.56 0.83 beginning of year Amount falling due 1.53 1.72 2.36 3.00 3.73 6.00 during year Amount collected 1.32 1.49 1.96 2.46 3.10 5.08 during year Collection ratio 73.3Z 74.9Z 73.42 73.02 72.32 74.42 Collection Performance After Rescheduling la Amount overdue at 0.27 0.27 0.31 0.37 0.56 0.83 beginning of year Amount falling due 1.53 1.72 2.36 3.00 3.73 6.00 during year Amount collected 1.32 1.49 1.96 2.46 3.10 5.08 during year Amount rescheduled 0.20 0.19 0.35 0.35 0.35 0.62 during year Collection ratio 82.5Z 82.82 84.52 81.5? 78.7? 81.82 la Actuals to 1986 and fifteen months for 1987-88. Source: ICICI.  - 19 - ANE 1 Table 5 PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRIAL CREDIT AND INVESTMENT PROJECT (LOAN 1843-IN) THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LTD. Arrears of Principal Arrears of Principal Before Rescheduling /a Year 1982 1983 1984 1985 1986 1987-88** I --____--------- (Rs. billions) ---------------- Amount rescheduled 0.10 0.09 0.17 0.17 0.19 0.30 during year Arrears at year end 0.13 0.16 0.20 0.31 0.44 0.63 Loans outstanding 9.60 12.52 15.26 18.65 23.88 30.36 Arrears ratio 2.42 2.02 2.42 2.62 2.62 3.12 Arrears of Principal After Rescheduling la Arrears at year end 0.13 0.16 0.20 0.31 0.44 0.63 Loan outstanding 9.60 12.52 15.26 18.65 23.88 30.36 Arrears ratio 1.4Z 1.32 1.32 1.72 1.82 2.12 La Actuals to 1986 and fifteen months for 1987-88. Source: ICICI.  -20 - ANNEX 2 PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRIAL CREDIT AND INVESTMENT PROJECT (LOAN 1843-IN) THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LTD. ECONOMIC RATES OF RETURN Economic Rate Return (ERR) Loan No. Name of Company Expected Actual B034 Bhoruka Aluminum 43.00 28.00 B052 Nicco Orissa 28.00 19.00 B053 Crompton Greaves 40.00 36.00 B1027 Kirloskar Cunmins 36.00 39.00 B1032 Raymond Woolen 34.00 34.00 B1060 Micro Pack 22.00 18.00  ANNEX 3 - 21 - _ Page 1 of 3 TMO *dStfCedit & JySgft CM"Uf of " L1jdgd Om N. J. JHAVERI \_ / we 11 of DEPUTY MANAGING DIRECTOR COM4ENTS RECEIVED FROrI ICICI RES/I332.9 May 4, 1989 Mr. Alexander Nowicki Division Chief Policy Based Lending, Industry Public Utilities & Urban Sector Operations Evaluation Department The World Bank 1818 H. Street Washington D.C. U.S.A. Dear Mr. Nowicki: Please refer to your letter dated March 23, 1989 requesting for comments on Project Completion Report for Loan 1843-IN. We do not have any substantive comments. Some minor suggestions and corrections are attached for your consideration. Annex Tables 1 to 5 have been corrected/updated in ink so that changes can be easily identified. We trust you will find the comments useful and request you to incorporate the same in your final copy of the report. With kind regards, Yours f ith L , N. J. Jhaveri  ANNEX 3 -22 - Page 2 of 3 Comments on IBRD 13th Industrial Credit and Investment Project Loan 1843-IN (Project Completion Report) --------------------------------------- Evaluation Summary Page iv - Para (i) : With the 13th loan the total bank assistance to ICICI reached $ 615 million and not $ 865 million as given in the draft. Page v - Para (iv) . The average cost per job should read $ 37,900 and not $ 32,000 as given in the paragraph. Please also refer para 35 of the text. Page vi - Para (viii) : Last sentence beginning this challenges ........ may be substi- tuted by the following: "The challenges have created a new need for acquiring certain specialised skills for which ICICI proposes to make use of technical assistance component under the Industrial Finance and Technical Assistance Project (Loan 2928-IN) (Para 40)". Project ComDletion ReDort Para 1 : Substitute $ 765 with $ 615 million to be consistant with the evaluation summary. Para 20 : The last sentence under Other Development Activi- ties beginning "In addition, a credit rating Agency.'.... may be modified by deleting from "and ICICI is planning to establish an information services Agency". Para 21 : Administrative expenses ....... declined from 0.6% in 1981 to 0.3% in 1987-88. Para 22 : The collection ratios before rescheduling has dropped from 75% in 1983 to 74% in 1987-88. Para 13 : Line six, sentence begins with "The Operations Coordination ....... fulfills MIS requirements" may be substituted by the following: "The Branch Co-ordination group and The Operations Co-ordination & Policy group co-ordinates the project finance activities of the branches and fulfills MIS requirements respectively".  *~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ANNEX 3 Page 3 of 3 - 23 - Para 41 : Insert the following after $ 35 million ongoing, "and Loan 2660-IN for $ 81.75 million ongoing". Page 42 : Substitute two new projects by three new projects; delete "and" in line 2. Add after projet in line 3, "an Electronics project". Appendix A : Kindly change the page numbers ar follows: Page 26 of 41 should actually be numbered page 24. Page 25 of 41 should read page 25. Page 24 of 41 should read page 26. As regards Annex 1, Tables 1, 2, 3, 4, and 5 corrected copies are attached for your ready reference.  - 25 - PROJECT COMPLETION REPORT INDIA THIRTEENTH INDUSTRIAL CREDIT AND INVESTMENT PROJECT LOAN 1843-IN Industrial Credit and Investment Corporation of India Limited  -26- June 1, 198 APPENIX A IID - PROJECT COMPLETION REPORT (Ln. 1843-fI) - 13th Line of Credit ($100 million) PREPARUD BY TE INDUSTRIAL CRDIT AND INVESTMENT CORPORATION oF INDIA LIUTD I. INTBODVCEZZ. II. P2JE,CT 12ENTIFICATION A) Objectives and Expectations 8) Economic Environment III. IMPLEMENTATION A) Overall Operations of the Loan B) Analysis of Assistance IV. OPERATING PERFORMANCE A) Schedule of Completion of Projects B) Cost Overruns V. FINANCIAL PERZORMACE VI. iCgNOMIC PERFORMANCE VrI. CfUlNT STATUS OF PROJECTS VIll. CONCL lION  -27- -PP a A Pasl I of 4. THU INDUSTRIAL CRXDZT AND INVESTMENT CORPORATION OF INDIA LIMITSD COMPLETION REPORT on ISRD THIRTEENTH LIND OF CREDIT (1843-IN) I. INTRODUCTION A loan of USS 100 million (Thirteenth Line of Credit) carrying interest at 8.25% per annum was sanctioned by the World Bank (Bank) to ICICI in 1980 for augmenting its foreign exchange resources required for its operations. The loan agreement was signed on May 16, 1980 and the loan came into operation with effect from June 27, 1960. The origihal terminal date for completing withdrawals was December 31, 1985. However, the Bank authorised the last payment to be effected on March 4, 1986. The total amount disbursed under this line was USS 95.671 million and the balance amount of USS 4.329 million was cancelled. Annexure I gives the list of sub-projects. commitment dates and the amount disbursed and outstanding under the Thirteenth Line of Credit. Though the assistance under the Thirteenth Loan was originally sanctioned to 132 projects comprising 2 A projects and 130 B projects, the actual number of projects utilising the assistance (after exclusion of 8 3 projects for which assistance was cancelled / transferred and  -28- APPWDIX A Psae 2 of 41 3 r projects which have been given two subloans each for the same project - ACC Sabcock, Nicco Orissa and Crompton Greaves) amounted to 121. I. PROJECT IDENTXFICATFN A. Obiectives and Expectations Negotiations for the Thirteenth Line of Credit from IDRO were held in Washington oan Aril 9-11. 1980 following technical discussions on April 7-8. The major points of understandings reached by the delegation representing Government of India, ICICI and IBRD were as follows 1. 2iversificat4qn of rareign Exchanae Resogrcest The ICICI representatives confirmed that ICICI would continue to see opportunities to diversify its sources of foreign currency, within the guidelines laid down by the Government o;1 India, wherever resources could be obtained on terms and conditions appropriate to ICICI's operations. In this regard, the ICICI representatives reported that negotiations had been completed to raise a syndicated euro-currency loan of approximately S 30 million equivalent. Based on its financial projections,  - 29- APPEDIX A Pale 3 of 41 and taking into account the amount of the prop'sed IIRD Loan and amounts expected to be available from traditional sources such as KIM ICICI would expect to raise at least another 5 25 million from commercial or other sources before September 1982. 2. Dlendina o Ln Commercial funds: The ICICI represntatives presented memorandum outlining the procedures ICICI intended to adopt in the utilization of its different sources of foreign exchange to avoid incurring foreign exchange risks in respect of its commercial borrowings and to provide adequate repayment terms to its clients. In some cases, this would mean making parallel subloans for the same project out of commercial funds and out of the IBRD loan. IBRD confirmed that procedures set out in the memorandum were acceptable and that in those cases where parallel subloans were made for the same project, IBRD would allow ICrCX to set the repayment schedule of the IBRD financed subloan so that the shorter maturity commercial funds would be repaid relatively more rapidly. In such cases. ICICI would allocate relatively rore of the early  -30- APPUDZX A Page 4 of 41 disbursements to the commercial subloans so as to permit the commercial borrowings to be drawn down within the specified contractual period. The ZCZCZ representativeu confirmed that in the case of Bank financed subloans for projects not involving a parallel commercial subloan, ICICI would follow its normal practice of setting the repayment schedula so as to require approximately equal somi-annual payments of principal or approximately equal semi-annual payments of principal and interest. 3. IC C Us Statement L ofinancial and Coeratina Stratoav: The Bank had desired ICZCX to adopt a Statement of Financial and operating Strategy relating to its lending policies satisfactory to the Bank, not later than July 31. 1960. The ZBRD team confirmed that the draft statement submitted by IClCI would be regarded as satisfactory by the Bank for the purposes. The ICICI representatives stated that it was their intention to submit the revised statement to th- ICICI Board for formal approval before the end of April 1980. 4. Protect Comoletion Reort: The IBRD confirmed that the report referred to in Section 3.03b of the Draft Loan Agreement need not incorporate a full ex-post evaluation  - 31- PaMg 3 of 41 of all subprojects financed out of the Loan. ICICI would consult with ZURD regarding the choice of a suitable sample out of the subprojects in operation for full ex- post analysis. 5. Industrial Studies: The ICICI representatives presented outline descriptions of two major industrial studies that ICICI intended to undertake during the course of the next two years and confirmed that they would continue to discuss with the Bank the design of detailed terms of reference for theso studies. The ICIC1 representatives also confirmed that they would continue to discuss with the Bank possible extensions to their recent studies of the automotive products subsector. 6. Interest Rates: The IBRD team raised the question of tihe recent rises in the annual rates of inflation in India and abroad and rising world interest rates and their possible effects on ICICI's borrowing costs. The ICICI representative stated that ICICI had recently initiated a review of its rupee and foreign currency lending rates taking into account the above factors. However the timing of any action to make an upward adjustment in ICICIVs lending rates would have to be determined in consultation with the other financial institutions serving the industrial sector in India.  - 32- APPENDIX A Pal. 6 of 41 7. .C; Cs Free LimiSt: It was agreed that the free limit for sanctions by ICICI would be USS 6 million. For the purpose of determining whether a proposed subloan is below or above the free limit of USS 6 million. the amount of such subloan or investment shall be aggregated with "any other amounts financed or proposed to be financed out of proceeds of the loan or prior loans for the same project or for any project directly or materially related thereto". it was also agreed that the broad criteria for deteraining as to whether the project is materially related to the earlier projects are (a) the project under reference will be substantially under the same corporate structure as the earlier project(s); (b) the success or failure of the project under reference will have a direct effect on that of the earlier project(s): (c) the project under reference relates to the expansion, replacement. improvement of facilities financed under the earlier project(s) or to the production of similar or complementary items or items forming part of a vertically integrated production process:  - 33- APPENDTX A Psie 7 of 41 (d) the date of sanction of the subloan for the project under reference is withit 3 years of completion of the last of the earlier project(s); (e) in cases where the Bank has already approved a subloan for an investment project and ICici proposes to make a further subloan for the same investment project to cover minor cost overruns or equipment changes, the Bank's prior review and approval of the further subloans would not be requireed if the amount of the further subloan is less than S 500.000 equivalent. 8.Date wh,en Exoenditurus ar Made: The IBRD team confirmed that the date on which expenditures would be deemed to have been made would be the date on which payment is made to the supplier for goods and services required for an Investment Project. In the case of letters of credit for payment on a post-shipment basis. IBRD would interpret the date of expenditure to be the date on which payment is actually made to the supplier and not the date of opening of the letter of credit.  - 34- APPNIX A Pate 8 of 41 9. ssegial Disbursement Procedur: The Indian negotiating team brought up the quegtion of continuance of tho Special Disbursement Procedure (SDP) announced by the Dank in March 1979 in regard to disbursements on outstandinag DFC loans beyond July 1, 1980 when the new currency pooling system was to be given effect. The rndian team indicated that most ICICI clients were aware of the SDP, and that availability of facilities under SOP had been a factor inducing revival of foreign currency applications during the last year, as also helping in r*etoration of the confidence of ICXCI clients in using the World Bank funds, as in their perception SOP helped to contain the exchange risks on the funds so borrowed. The Indian teas, therefore, strongly urged that the foregoing be pointedly brought to the attention of the Bank's management so that ICICr*s anxiety on this important question receives due attention when the matter comes up for review. ICICI's team's specific proposals wero that: i) all the undisbursed portions of existing World Bank loans to ICICI up to and inclusive of the 12th loan should continue to qualify for SOP beyond July 1, 1980;  - 35 - APPENDIX A Pate 9 of 41 ii) availability of SOP be ensured for the 13th loan as most of ICICI clients who were in zcicr . application pipeline would have taken into account availability of this facility, and that many others intending to approach ICICI for financial assistance would be making their plans on that basis. The IBRD team took note of ICXCI's concern regarding the continuance of the SOP scheme and confirmed that the concern would be brought to the attention of Bank management. An per the understandings at the time of negotiations for the loan, ICICI took the following steps to implement or comply with the same. 1. Diversification of fgreian exchanae resources: AS indicated at the time of negotiations. ICICI concluded a borrowing of syndicated Euro Currency Loan for DM 20 million and USS 20 million in April 1980. In addition. ICICI raised Euro Currency loan in three currencies viz. DM 30 million. SF 30 million and JY 3000 million in October 1981 and US $ 30 million by way of Floating Rate Note issue in December 1981. Further, ICICI arranged for an ECGD export line of credit  - 36- APPENDIX A Page 10 of 41 for Pounds S million in March 1982. In addition, IcICI raised USS 12 million in September 1982 to prepay the outstanding loan raisod ifn 1978 and thus roduced the interest rate from "LIBOR + 1%" to "SIBOR + 3/8V. Apart from commercial borrowings, ICICI signed three agreemonts of DM 5 million, DM 25 million and DM 25 million with KfW in 1980, 1981 and upto September 1982 respectively to augment the resources for meeting its increasing needs. 2. Blendina of Bank and Commercial Funds: As indicated earlier, ICICI raised funds from commercial sources. With the funds available from both the sources, ICICI did provide funds for some projects, whose requirement vas sizeable, from both the sources and thus resorted to blending of Bank funds and commercial funds. Whenever funds were provided under both the sources for the same projocts, repayment of commercial borrowings had shorter maturity period than IBRD sub-loans. If the sub-loans were provided entirely out of Bank finances, ICICI followed the normal practice of setting the amortization schedule in such a manner chat amounts were moro or less recovered in equal semi-annual payments.  -37- APPENDIX A Page 11 of 41 3* xCIC2 Statement o FIinancial and O2pratina LUate. y: As indicated to the Bank, ICICI placed before the Board in April 1980 a paper 'ICZCX's Financial and Operating Strategy' relating to its lending policies and the same was approved by the Board. It was indicated in the paper that as in the past, ICICI would continue to follow financing strategy, aimed at subserving national objectives in industrial sphere and needs of the economy. It further stated that ICICI's financial assistance would be directed towards a) priority sectors of industry; b) modernisation of existing industries; c) fulfillment of socio economic objectives such as assistance to projects in backward areas, encouraging new entrepreneurs and providing assistance to such industries which show favourable economic indicators. The priority sectors identified for assistance are (i) export oriented industries and supporting activities, (ii) power and transport including ancillaries connected therewith, (iii) industries related to agricultural inputs and outputs, (iv) industries basic to industrial and infrastructure expansion (v) petrochemicals and down stream  - 38 - APPENDIX A Pass 12 of 41 units and (vi) mass consumption goods which need to be available in adequate quantity for the general well being and containing inflation. Likewise. to fulfill the socio economic objectives, it was decided to extend continued assistance for (a) backward area development and (b) encouragement of new entrepreneurs. 4. Prolect COM210tion report: rCICI has taken steps to undertake ex-post analysis of selected projoct financed out of the 13th line of credit. A sample of projects has been selected and a questionnaire for eliciting necessary information has been sent to the concerned units. A reminder letter has also been sent to them and response to the same is awaited. 5. Industrial studies: As suggested by the Bank, ICICI carried out studies on Energy Utilisation in Industry' and Electric Equipment Industry'. The former study was undertaken in the areas of (i) paper and cement industry: (ii) caustic soda, soda ash aluminium, ferro alloy. electric arc furnace and stoel industries and (iii) energy utilisation and conservation equipment, boilers, furnaces. electric motors and instrumentation. Seminars were also organised to discuss the studies, detailed proceedings cc which were published. ICICI also undertook a study -n Automotive Products'.  -39 - APPENDIX A Page 13 of 41 6. larest Rates: ICICI reviewed the interest rate structure of its rupee and foreign currency loans in the context of increase in cost of borrowing and inflation in India. In consultlation with the Reserve Bank of India, the Central Government and the other financial institutions, the rate of interest on rupee and foreign currency loan was raised from 11% to 11.85S from July 1. 1980 (to cover the interest tax imposed by the Central Government) and later to 14% from March 2, 1981 mainly to cover the increase in cost of borrowings. 7. ICICV s Free Limit: It would be observed from the Annexure I that of the assisted projects, only two projects were 'A category projects i.e. beyond the free limit'-t 6 million, while all the other projects were within the free limit. 8. DaJt when Exonditures are Made 9. Special Disbursement Procedure The requirements under these items were complied with.  -40- APPENDIX A Page 14 of 41 B Scngmic Environment The period 1980-81 to 1984-85 during which the 13th line of credit was utilised by ICICl, coincided with the country's Sixth Five Year Plan. During this period th- economy achieved the growth target of 5.2 per cent set for the plan period. While the growth rate of industrial production was below the plan target, agricultural production was broadly as anticipated and the plan target was, by and large, achieved. Gross National Product at constant (1980-81 - 100) prices grew at an annual average rate of 5.2 per cent. However, there were wide annual variations. The highest growth rate of 7.7 per cent was achieved in 1983-84 and the lowest of 2.6 per cent in 1982-83. the previous year. Aarclu1tral Production The average annual growth rate in agricultural production was 3.5 per cent between 1980-81 and 1984-85. However, as a result of uneven rainfall conditions. agricultural production exhibited sharp annual fluctuations. Agricultural production which was depressed in 1979-80 due to severe drought recovered fully in 1980-81 and the grcwth rate was 15.6 per cent when the weather conditions were  -41- APPENDIX A Page 15 of 41 normal in most part of the country. In 1981-82 the rate of growth in agriculture was 5.6 per cent. In the following year, 1982-83. agricultural production suffered from unfavourable weather conditions and insufficient rainfall with the result that agricultural production declined by 3.3 per cent. The exceptionally good monsoon in the next year. 1983-84. took the growth rate far above the long term trend to 13.7 per cent. In 1984-85 agricultural production increased marginally by 1.2 per cent. Industrial Production Industrial production averaged an annual increase of around 7.7 per cent between 1980-81 and 1984-85. The index of industrial production (1980-81 - 100) rose by 9.3 per cent in 1981-82 on top of the growth of 4.0 per cent in 1980-81. This turn around was mainly due to the substantial improvement in the availability of power and coal and better movement of goods traffic by railway. Substantial recovery in agricultural production leading to improved availability of agricultural inputs also provided impetus to industrial production. The year 1982-83 marked by a severe drought affecting agricultural performance cast its shadow an industrial production and the growth rate decelerated to 3.2  -42- APPENDIX A Pale 16 of 41 per cent during the year. Thg textile strike which started in January 1982 also had its adverse impact- Industrial growth accelerated in the next year, 1983-84. to 6.7 per cent; this momentum was maintained in 1984-85 when the growth rate reached 8.6 per cent. Prices In 1979-80 severe drought resulted in a fall in agricultural and industrial production; this led to wholesale prices rising by about 20 per cent during the year. The upward trend in prices which began in March 1979 continued in 1980 also, though the intensity of inflationary pressures was significantly reduced in 1980-81 and the rise in the wholesale price index (1970-71 - 100) was contained at 16.7 per cent in 1980-81 despite the fact that the full impact of the doubling of the OPEC oil prices was felt during the year. Control of inflation was the major objective of economic policy and tho impact could be seen in 1981-82 when the wholesale price index moved up only marginally by 2.4 per cent. During the next three years ending 1984-85. stability in prices has been maintained with the index moving up by about 8 per cent in each of the years.  -43 - APPENDIX A Page 17 of 41 International Traed As regards interntional trade, in value terms.exports have risen from Rs. 67107.0 million in 1980-81 to Rs. 117437.0 million in 1984-85, that is, by almost 15 per cent per annum despite unfavourable international environment. Exports grew marginally in 1980-81 by 4.6 per cent above the 1979-80 level. However, export activity picked up in 1981- 82 with exports rising by 16.3 per cent. There was an increase in exports of 12.8 per cent and 11.0 per cent in 1982-83 and 1933-84 respectively. In 1984-85, the terminal year of the sixth plan, exports increased by 20.2 per cent to reach Rs. 117437.0 million Although imports have grown at a slower rate than exports, the adverse trade balance has been- at about Rs. 60000.0 million in each of the years between 1980-81 and 1984-85. However, due to a sizeable inflow of invisibles, the current account deficit was much less at Rs. 34590.0 million in 1984-85. Also the country's foreign exchange reserves (including gold and SDRs) which declined from Rs. 55440 million in 1980-81 to Rs. 40240 million in 1981-82 has since been continuously rising each year reaching the figt-e of Rs. 72430 million in 1984-85.  -44 - APPUDIU A PaS 18 of 41 Ilxt. k ATION A. SYrall op2rations z atU IM A table giving the details of sanction, commitments and disbursements is presented below TABLE - I Sanction Commitments an Disbursements (US Dollars in million) Year Sanctions Commitments Disbursements 1980 94.160 39.994 2.559 1981 22.776 56.727 46.734 1982 (12.086) 1.379 33.167 1983 ( 5.219) 1.258 9.042 1984 ( 0.901) (0.856) 3.373 1985 ( 1.489) (1.313) 0.750 1986 ( 1.570). (1.518) 0.046 95.671 95.671 95.671 Note Parenthesis indicates negative figures.  -45- APPENDIX A Page 19 of 41 It will be observed from Table I that the entire amount of the 13th Line of Credit was sanctioned by ICICI during 1980 and 1981. This was possible because there was strong demand for the foreign currency loans for projects awaiting sanctions. After adjustments for cancellation made during the subsequent years, the net sanction from the line aggregated to VSS 95.671 million. it is noteworthy that as in the case of sanctions almost the entire loan was committed by 1981. Likewise, major part of the disbursement was completed by 1982. The terminal date for completing the withdrawals was December 31. 1985 and the final disbursement was made by the Bank in March 1986. B. Analysis o assistance a) 11Y_e of Proiects - Details of assistance by type of projects are given in Table IT.  -46 - APPEDZX A Pea. 20 of 41 &IaahLm Iumtnaigd &weordiua I tt ha L aroL et gIn U59 UOL (Is. In million) foreign UnWerwitins Olrect Subscriotian 1M. of Currency Rume ........*-..... ..................... total Twoe ot Project Projects Loans Loans C4uit Pret. Coos. Cmity Pret. Oes. hooet tpa,! ot bi ae 17 209.19 60.0" 21.650 0.250 .- 6 - . 1.M Ul.219 c$and#) (16.0) (38.5) (16.31 Olversification t1 $20.522 24.725 1.750 - 7.000 2.090 2.50Q 6-.06*5 3t6.587 (21.6) (17.51 12t. Laausion 2 6*5.700 13.948 I.?S0 5.002 O.Mo - . 21.606 665.J 129.61 (13.5) (:s.: Roerwniwtiton 28 335.7U 27.99 . .000 - 31.m 30S. W 122.31 (1t9.91. 1:: Ualancig (taioantI 30 '.10.0i3 1.015 1.015 cl1 Reolaceaa: l(12.7) ( . 0.6 ::. total l21 1197.512 to0.786 50.950 0.250 16.0:3 2.9% 2.500 * 160.S12 4.05.. ... . FE assistance atntilone cu jnbcj ej *s:,:an:e tor the SslU ar;Jt;t Sanct:oar.q 1:O Ovilf line are I to tctsl.  -47 - APPENDIX A Page 21 of a1 It would be observed from the Table that of the 121 projects assisted under the 13th line of credit, 17 were new projects by new companies, 18 were new projects by existing companies by way of diversification; 28 projects were for expansion, 28 projects were for modernisation and 30 projects were for replacement and balancing equipment, including equipment for research and development, quality control etc. In terms of the quantum of foreign currency assistance provided, the new projects by new companies accounted for 14.0% of assistance, new projects by way of diversification for 21.4% and those under expansion, modernisation and balancing equipment for 29.6%. 22.3% and 12.7% respectively. In addition to foreign currency loan assistance. ICICI also provided rupee assistance to some of the 121 projects covered under the 13th line in the form of loan and underwriting and/or direct subscription of shares/debentures to meet a part of the rupee requirement of the cost of project. Such assistance was of the order of Rs. 160.482 million comprising of Rs. 107.786 million ^ee loans, Rs. 36.696 million  -48- APPENDIX A Pane 22 of 41 uncerwriting/direct subscription of shares and Rs. 16.0ou million underwriting/subscription of debentures. It would be seen that out of the rupee loans assistance extended to projects under 13th line. assistance to new projects promoted by new companies was 38.5% of the total rupee assistance whereas for diversification, it was about 27.5% and for expansion, maodernisation etc. the assistance was 34.0%. The rupee loan assistance from ICICI to the projects was rather small as compared to the foreign currency loans. it may be noted that out of the 18 new projects by new companies assisted out of this line of credit, 2 projects were set up by new entrepreneurs who had no previous experience of setting up an industrial unit. The foreign currency assistance sanctioned to these 2 projects amounted to Rs. 15.089 million which formed 7.2% of assistance sanctioned to new projects. b) Size of Assistanc: Table III gives below details of sizewise assistance extended to different projects.  -49 - APDIX A Pale 23 of 41 TABLZ - III AssustCance sanctioned a4 &in 9 lI under Illi ULk I Amount of loan No. of Amount (USS in million) Projects (USS in million) Less than 0.250 26 3.533 0.251 to 0.500 30 11.746 0.501 to 0.750 27 16.276 0.751 to 1.000 8 6.874 1.001 to 2.000 21 30.111 2.001 to 4.000 9 27.131 4.001 to 6.000 - - Above 6000 - 121 95.671 The average size of assistance extended per project works out to S 0.791. It would be observed from the table that 26 projects (21.5% of total projects) received assistance of less than S 0.250 million and 30 projects (24.2w) received assistance between S 0.25' million and S 0.500 million. 30 projects (24.8%) were provided assistance of more than S 1.000 million. It would thus be seen that large number of projects were extended small assistance mainly for replacement. modernisation and diversification under the line.  APtZWDU A Pass z4 of 41 c) Zndustrv hin c-liissiLfLctiLn 9 assistan. - A Table giving industrywise assistance to projects under 13th line of credit is given below : TABLE IV Industry-wise assistanS& anctioned (Rs. in million) Foreign Onderwriting Sr. currency Rupee and Direct No. Industry Group Loans* Loans Subscription Total 1. mining 10.301 - 10.301 2. Automobile & 194.144 6.707 200.851 Ancillaries 3. Food Manu- 6.279 - - 6.279 facturing 4. Textiles 124.580 4.115 4.000 132.695 5. Paper & Paper 96.981 - 6.000 102.981 Products 6. Chemicals & 372.336 39.756 11.700 423.792 Petroleum Products 7. Basic Metal 161.074 8.440 2.750 172.264 Products 0. Fabricated Metal 264.235 13.880 9.500 287.615 Products and Machinery Manufacturing 9. Electrical 120.028 2.908 4.500 127.436 Machinery 10. COment 116.009 25.480 14.246 155.735 11. Other indus- 31.545 6.500 - 38.045 tries