Announcement of Loan to Private Steel Company in India on November 20, 1957

~ I FOR IMMEDIATE RELEASE WO Ill L D • INTERNATJONAL Bt\NK REcor,JSTRUCTIOi\f AN 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. 513 FOR INFORMATION OF PRESS ONLY Joint announcement being made in New York City by World Bank and SUBJECT: Loan to private steel The First Boston Corporation company in India. Wednesday, November 20, 1957 The World Bank, jointly with nine United States and Canadian commercial. banks, today made a loan of $32,500,000 to The Tata Iron and Steel Company Limited, a privately-owned company which is the largest and oldest established steel producer in India. The loan will help to complete an expansion program • aimed at doubling the company's steel ingot producing capacity. The $15 million provided by the banks is the largest participation yet taken in a World Bank loan. It was arranged by The First Boston Corporation, acting as agent for the Tata company. The participants are: The Bank of America N.T. & S.A., The Chase Manhattan Bank, The First National City Bank of New York, The Royal Bank of Canada, Chemical Corn Exchange Bank, Manufacturers Trust Company, The Northern Trust Company, The Philadelphia National Bank, and The National Bank of Washington, D.C. The maturities taken up by the connnercial banks participating in the loan will be the first five semi-annual payments, falling due from October 196o to October 1962. The participations a.re without the guarantee of the Bank. Indian production costs for steel a.re among the lowest in the world, mainly because of the convenient location of abundant resources of coal, high-quality > ' ! · .· •.... iron ore and other necessary materials. Approximately half of India's present  - 2 - ~ requirements of finished steel a.re at present met from abroad, and demand is growing rapidly. The expansion of steel production is therefore being given high priority in the Second Five-Year Plano The aim is to bring domestic steel production abreast of demand by the end of March 1961. A large part of this expansion is to be achieved by programs undertaken with World Bank support by the two privately-owned steel companies in India, The Tata Iron and Steel Company Limited and the Indian Iron and Steel Company. The Tata Company possesses the largest integrated steel mill in Asia and accounts for more than two-thirds of India's present steel production. Its plant, situated at Jamshedpur, 150 miles west of Calcutta, has its own iron ore and coal mines nearby. The company embarked upon a modernization and expansion progra.m in 1951, but by last year it had become clear that still • further additions to cs.paci ty would be required to meet India's rapidly increasing demand for steel. The company, therefore, began a :further program early in 1956 to raise steel ingot capacity to two million tons annually, compared with 1.1 million tons in 1950; the output of finished and semi- finished steel is to be raised to 1.5 million tons. Tata's exp&1sion programs call for total investment, in the five-year period ending March 1960, equivalent to approximately $250 million, more than half in foreign exchange. The company has a long record of profitable opera- tion and is providing much of the total investment from its own resources, which include the proceeds of a recent stock issue in India of 134.5 million rupees ($28 million). Borrowings, both in India and abroad, amounting to about half the required investment, are providing additional finance. In June 1956 the World Bahk lent $75 million for Tata' s expansion program • started in that year, and today's borrowing will enable the company to bring both this and the earlier program to completion. The main installations to be completed are a new battery of coke ovens, an ore crushing and sintering plant, a blast furnace, increased converter and open hearth capacity, a blooming mill,  - 3- • a continuous sheet-bar and billet mill, and a structural mill. Construction has been going forward under the supervision of He11ry J. Kaiser Co. engineers and is approximately on schedule, with all major works expected to be completed by June 1958. Most of the other works are expected to be completed within two years thereafter. The loan to the Tata Company brings to $356 ~llion the amount the Bank . has lent to private enterprises and Government agencies in India. Earlier lending was for railwa.y improvements, electric power, agricultural machinery, jet passenger aircraft, the iron and steel .industry, and the establishment of the Industrial Credit and Investment Corporation of India. Today's loan is for a perioc!. of 13! years with interest, including the 1% connnission credited to the Bank's Special Reserve, at ff/;. • The loan agreement was signed by E.T. WarrenJ president of Tata Incorporated, New York, on behalf of The Tata Iron and Steel Company, Limited, and the guarantee agreement by H. Dayal, Charge d 'Af'faires at the Indian. Embassy, on behalf of the Government of India. Eugene R. Black, President, signed both documents on behalf of the World Bank • •