Announcement of IFC to Assist Four Hundred Million Thirty-Five Thousand US Dollars Commercial Vehicle Project in India on October 22, 1981

11nterimitioia (1/ aiiIce~ Coporatioi IFC Press Release No. 82/8 Thursday, October 22, 1981 IFC to Assist 9435 Million Commercial Vehicle Project in India The International Finance Corporation (TFC) and an international group of financial institutions are joining Indian investors in a project to almost triple the production of Ashok Leyland Limited, the second largest manufacturer of truck and bus chassis in India. The approximately S435 million project comprises the updating of Ashok Leyland's technology and the expansion of its manufacturing capacity to allow the annual production of 40,000 medium-duty truck and bus chassis by 1987. IFC is lending $2P million for the expansion, of which half is being taken up by three participating Banks: Dresdner (South Fast Asia) Limited, Manufacturers Hanover Trust Company and State Bank of India, Nassau Branch. A United Kingdom buyer's credit guaranteed by the Fxport Credits Guarantee Department completes the foreign exchange financing. The local currency needs will be met by loans from the Maharashtra and Rajasthan State Governments, from internal generation and other local sources. Production facilities will be expanded at Ashok Levland's existing factories at Ennore and Hosur, Tamil Nadu, and new plants will be constructed near Bhandara, Maharashtra and Alwar, Rajasthan. Product improvements to be introduced include new fuel-efficient engines, synchromesh gearboxes, strengthened axles and cabs for medium-duty trucks. The Company was established in 1q48. Its shares are widely held by more than 55,000 shareholders and are traded on Tndian stock exchanges. British Leyland Limited of the United Kingdom is technical partner and 50.6 percent -2- shareholder in the enterprise. The project will be implemented in stages over a five-year period and will help alleviate an acute shortage of commercial vehicles in India, where there is presently a three-year wait for delivery. The project is in line with the Government's policy which places high priority on expanding commercial vehicle output to improve road transport. The expansion will also help the economy by generating estimated total net foreign exchange savings of about $1.6 billion and by creating some 11,000 direct jobs in industrially less developed areas. In addition, the project will create substantial employment in the Indian ancillary supplier industries. [Any inquiries strictly relating to IFC's participation in this project should be directed to the IFC Information Office, 181P H Street, N.W., Washington, D.C. 20433, Telephone (202) 676-0394.1