Announcement of Indian Company Taps International Financial Markets for Modernization Program on October 31, 1980

Intemationa1 Finance Corporation • 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. 202-4 77-1234 IFC Press Release No. 81/20 Friday, October 31, 1980 Indi~n Company Taps International Financial : 'Markets for Modernization Program In an agreement signed in Washington, the Tata Iron and Steel Company Limited (TISCO) completed arrangements to borrow $38 million from the International Finance Corporation (IFC). The package included a $20 million syndication of the IFC loan with five major international commercial banks. The loan, which will support a $263 million modernization program being undertaken by TISCO, marks the first time a private sector Indian industrial com- pany has been able to raise substantial foreign exchange project funds ip the • international capital markets • The loan agreement was signed by J.R.D. Tata, board chairman of TISCO, and Moeen A. Qureshi, Executive Vice President of IFC. In separate agreements, Morgan Guaranty Trust Company of New York, the State Bank of India (Nassau Branch), Chemical Bank, Amsterdam-Rotterdam Bank N.V. (Singapore Branch), and American Express International Banking Corporati.on took up $20 million worth of participa- tions in the IFC loan. IFC, the World Bank affiliate that assists private enter- prise ventures in developing countries, will hold the remaining $18 million of its loan for its own account. The Indian Government's Steel Development Fund, which provides long-term funds for the Indian steel industry, is lending substantially all the local currency requirements of the project. Suppliers' credits from the United Kingdom of $32 million, arranged by Lazard Brothers and Company Limited through the U.K. Ministry of Trade's Export Credit Guarantee Scheme, and term deposits and cash generation complete the financial plan. TISCO, the oldest integrated steel company i:n India and the only integra- ted steel company in the private sector, is modernizing their iron and steel works • at Jamshedpur, Bihar State, which accounts for about 14 percent of India's steel making capacity. The program will maintain that capacity, improve efficiencies,  - 2 - and help meet the rising demand for steel products in India, by replacing two • of the Company's three open-hearth steelmaking shops with a modern 1.1 million metric tons-a-year basic oxygen steelmaking facility. It also involves the installation of a 340,000 tons-a-year continuous billet casting machine, a vacuum degassing unit for secondary refining of steel, a bar forging facility for special quality steels, an oxygen plant, a refractory plant and other ancillary facilities. The project will improve plant efficiencies and reduce operating costs. It will also increase TISCO's output by 190,000 tons a year to approximately 1.7 million tons of products. The project is scheduled for commercial start-up in early 1983. It will result in estimated net foreign exchange savings of about $53 million a year. India's steel industry is based on domestically available coal, iron ore and other raw materials and produces at internationally competitive prices. Over the past five years the industry has supplied most of India's steel needs. steel sector. How- ever, the demand for steel, especially the higher grades, continues to rise and the Government has placed high priority on expansion and modernization of the • {Any inquiries strictly relating to IFC 's participatien in this: project should be directed to the IFC Information Office, 1818 H Street, N.W., Washington, D.C. 20433, Telephone (202) 676-0394.] •