Announcement of Investment in India on May 1, 1963

]W \\,\ !;!( \"Fl/ \\~, . \\ HOLD FOR RELEASE \,\ ,',1\<\ I: ,,~" 'i \\ ~,\ INTERNATIONAL FINANCE CORPORATit:)lL~ \~., - 1818 H STREET, N.W., WASHINGTON 25, 0. C. TELEPHONE: EXECUTIVE 3-6360 \' ~ ~ IFC Press Release No. 63/7 Sub,1ect: Investment in India For AM Newspapers Wednesday, May 1 1 1963 The International Fine.nee Corporation, an affiliate of the World B&!lk.1 and No1:ma.-H6ffma.nn Bearings Company, a. division of Universal American Corporation of New York, have a.greed to join with Indian a.nd European interests to establish a new industrial company in India.. The company, Precision Bea.rings India Ltd. of Bombay, will manufacture a wide variety of anti-friction ball and roller bearings fr, ' a.nd components for use in industrial machinery1 t~;actors an~ vehicles, pumps, \! motors and oth.~r types) of engines. The output of the company will help meet the rising demand for bearings in India, occasioned by the growth of manufacturing ina.u1try,in recent yea.rs, and will be a positive element in India's international • balance of payments by saving foreign exchange that otherwise would have to be, spent on imports of bearings. The Precision Bea.rings investment agreement wa.s signed yesterday in New York, fl ..=-:-:._.:_-) by Martin M. Rosen, Executive Vice President of the Interna.tiona.l Finance Corpora- tion, by Francis S. Levien, President of' Universal American Corporation of New York., and by Dr. Harry M. Day., Chairman of the Executive Committee of N9rma.-Hoff- mann Bea.rings Company, acting in his ca.pa.city as a. member of the Board of Preci- sion Bea.t"ings India. Harry E. Gould, Chairman of the Board of Univ~rsa.l American Corporation, was present tor the occasion. The origins.tor of the Precision Bea.rings project is K. P. Joshi & Co. of Bombay, a. family partnership established in 1931 which is an importer and distri- butor of ba.ll and roller bearings in India. The third sponsor, in addition to •• Norman-Hoffmann Bearings Company and the Joshi company, is East Asia.tic India. (Private) Ltd • ., of Bombay, a wholly owned subsidiary of East Asiatic Company Ltd. w .,, - ... 2 - • of Denmark. Additional financing will be provided'. 'by the International Fina.nee Corporation, by the privately-owned Industrial Credit and Investment Corporation of India, by the United States Agency for International Development, and by the proceeds of a share offering to the Indian public. Irving International Financing Corpor~tion, an affiliate of Irving Trust Company of New York, is participating in .,' r part of the IFC investment. The Precision Bearings plant will be situated at Baroda,! about 300 miles north of Bombay, and is expected to come into operation early next year. Norma- Hoffmann Bearings Company technicians will assist in the planning and construction of the plant, and the American company also will provide an eight-man management and production staff for an initial period of operations. The whole output will be sold in India. Plant capacity will amount to Boo, 000 bearings a year on a single-shift basis. After the start-up period, however, the plant will run on • two shifts, and once the operating personnel has acquired, the necessary sldlls, the plant's output may reach as nru.ch as 2,400,000 bearings annually. is ~epigned to produce bearings of ABEC Class l quality, the United States The plant standard. The total cost of the Precision Bearings project is e·stimated at $4,800,000, of which $2,200,000 will be share capital. Norma-Hoffmann Bea.rings Company will participate in the shares of the new company to the ex·tent of $630,000, East Asiatic will participate to the extent of $240,000 and Joshi & Co. $16o,ooo. IFC will invest $900,000 in the new company -- $380,000 in shares and $520,000 in the form of a loan repayable over a 10-year period. ICICI will invest $835,000, \~ \\ of which $105,000 will be in shares, $520,000 equivalent in a rupee loan and $210,000, derived from a loan from the United States Agency for International De- velopment, in a foreign-exchange loan. ICICI will also manage the offering to the • public of $590,000 worth of rupee shares, and together with a. group of Indian brokerage firms, ' will underwrite the offering. Short-term loans and a.n AID loan of rupees from PL 480 counterpart funds will complete the financing.