State Joint/public Sector Industrial Projects -India

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6557 PROJECT (COMPLETION REPORT INDIA - I1DI PUBL.IC/JOINT SECTOR PROJECT (LOAN 1511-TN) December 19, 1986 Tndriutrial De elopmtent and Finance ')ivi sicBn SoTith As i a Pro' ic t s Department Thi% document ha% a restricted distribution and ryaw bt used hb recipients onlx in tht, perforniancce tif their official duties. Its eontents man not otherwise be disclosed Aithout Aorld Harik authori,ation.  ACRONYMS BPRF - Business Plan and Resource Forecast DFr - Development Finance Institutions EDP - Entrepreneurial Development Program ED1 - IBRD - Economic Development Institute cIc - General Insurance Corporation COI - Government of India ICICI - Industrial. Credit and Investment Corporation of India. [DBI - Industrial Development Bank of India TFCI - Industrial Finance Corporation of India IRBI - Industrial Reconstruction Bank of India LIC - Life Insurance Corporation of India NIlD -- No-lindustry District RBI - Reserve Bank of India SF'C - State Finance Corporation STDC - State Industrial Development Corporation 1! Si LC - Stare Industrial Investment Corporation 7 W'CC - rechnical Consultancy Organization U '. U- Unit Trustc o)t India CUJRRENCY EQUIVAILENTS "S$ '..00 = Rs 12.50 (July 85) RA;. 1 = USS0.083 Dalring .'e disbursemen!. peri)d this Pro;ect (July 1, 1980 - November 30, .'384', .he excharnge rate ranged from Rs. 7.90 to Rs. 12.36 =US$1.00. The avora rd rate was Rs. 9.78 US$'..0. r SC, 'mYA Y`RS (,)1nSd Ap)r - Apri I - I ;4r-rh .31 .u, - !!v ! - _aile .30  LFOR OMCIAL USE ONLY THE WORLtD BiANK Washington, DC 20431 U S A O#ce of DOtectcvCAeneral Operatorm Evakithnm Decemt r 19, 1986 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRES.DENT SUBJECT: Project Completion Report: India - IDBI Public/Joint Sector Project (Loan 1511-IN) _ Attached, for information, is a copy of a report entitled "Project Completion Report: India - IDBI Public/Joint Sector Project (Loan 1511-IN)" prepared by the South Asia Projects Department. Under the modified system for project performance auditing further evaluation of this proJect by the Operations Evaluation Department has not been made. Attachment This document has a restricted distributton and may be used by recipients only in the performance ox their offic!al duties Its contents may not otherwise be disclosed witnout World Bank authorizationI  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT INDIA - IDBI PUBLIC/JOINT SECTOR PROJECT (LOAN 1511-IN) TABLE OF CONTENTS Page No. PREFACE ...................................... ..................... i BASIC DATA SHEET .. ............ ..... ...... *** ......t.i HIGHLIGHTS .........,.,.,.............ss ..........iv I. INTRODUCTION .................. #...o ............. I Ii . THE ECONOMIC ENVIRONMENT ............................. ........ 2 III. THE INSTITUTIONAL FRAMEWORK FOR INDUSTRIAL FINANCE ........... 4 IV. IDBI's ROLE AND BANK GROUP OBJECTIVES ... ............... ... 6 Background ........ ...... ... .............. .......... .#** 6 Evolution of the Public/Joint Sector Project ................. 7 Project Objectives ............... ......#.so .......... 8 V. UTILIZATION OF THE BANK LOAN ................................. 10 Rate of Utilization and Project Review Process ..........0 .... 10 Subproject Characteristics and Performance ................... 13 VI. INSTITUTIONAL ASPECTS ...... .. ............. t ............ 18 IDBI and the All-India Consortium . ......... 18 Institution Building at the State Level . ............... 19 Technical Assistance Impact ............. ................. 21 VII. OPERATIONAL AND FINANCIAL PERFORMANCE .............. .......... 23 IDBI oo. . . . . . . . . . . . . . ........................ ,,o,, 25 SIDCs/SIICs ......... , 29 VIII. THE BANK GROUP'S ROLE .. ....................... 31 TX. SUMMARY AND CONCLUSIONS .................... 32 This document has a restricted distribution and ma) be used by recipients only :n the performance of their official duties. Its contents may not otherwise be disclosed without World Bank auihorization,  ANNEXES I. Schedule of Estimated and Actual Disbursements ..... ............. 35 II. Total Disbursements ........................................... 36 III. Appraisal Review of 'A' Subprojects ............................. 39 IV. Summary of Subproject Performance and Status .40 V. Names of SIDCs/SIICs .42 VI. SIDCs and other Financial Institutions . 44 - Operational Trends - Share of Joint Sector Projects VII. SIDCs Trends in Industrywise Assistance and Flow of Assistance to Backward Areas .45 VIII. SIDCs Sectorwise Flow of Assistance and Purposewise Sanctions of Assistance ................ 46 IX. SIDCs Financial Position, Income and Expenditure, and Key Performance Indicators .47 X. SIDCs Trends in Business and Growth, and Resource Mix. 48 XI. SIDCs Sanctions and Disbursements 1978-84 ....................... 49 XII. SIDCs T'rend in Arrears 1978-84 . ................................ 50 XIII. SIDCs Collection Performance 1982-84 ..............1.......... XIV. SIDCs Debt Service Coverage 1978-84 ............................. 5a XV. Summary of Status of Institutional Upgrading Program for S[DCs/SIlCs ......... 53 XVI. IDBI - Consoilidated Balance Sheet and Synopsis of Growth of Operations 1975/76 - 1983/84 .54 XVII. IDBI - Principal Sources and Use of Funds 1978 - 1985 ..... ..... 55 XVIII:. IDBI - Key Performance Indicators ............................... 57 XIX. List of Documents for Project Completion Report . .. 5 Ar'TACHMENT Comments Received trom, the Borrowe 59  - i - PROJECT COMPLETION REPORT INDIA - IDBI PUBLIC/JOINT SECTOR PROJECT (LOAN 1511-IN) PREFACE This report reviews the achievements under the public/joint sector project of the Industrial Development Bank of India, which was supported by Loan 1511-IN. The appraisal of the Project was made in December 1976. The Loan of US$25 million was signed on March 1, 1978, and became effective May 31, 1978, w;.h final disbursements processed by November 1984. The origirnal Closing Date (March 31, 1983) was extended by one year to allow all disbursements on ongoing subprojects to be made. A remaining unused balance of US$1.4 million was cancelled on July 23, 1985. This report focuses on the relationship of the Bank Group wiLh IDBi's direct lending activity relating to the state public/joint sector in which State Industrial Development Corporations (SIDCs), State Industrial Investment Corporations (SIICs) and Public Sector Corporations with majority state-government equity holdings, functioned as industrial entrepreneurs, or as project promoters together with private entrepreneurs. The all-India financial institutions, Industrial Credit and Investment Corporation of India (ICICI), Industrial Finance Corporation of India (IFCI) and IDBI provided local financing for the public/joint sector subprojects under consortium arrangements in which each of them assumed lead-management for individual projects which received foreign-exchange resources under Lcan 1511-IN. The PCR was written by staff of the Regional IDF Division following a project completion mission to India in June 1985. IDBI staff provided the mission with comprehensive analytical comments and relevant data for incor- poration in the PCR. The PCR, however, is the sole responsibility of Bank staff based on information provided by IDBI, selected SIDCs/SlICs and project units, as well as relevant reports, correspondence and interviews during Fhe pr-paration and execution of the project. A file index of source materi which is part of the Project Implementation File, is attached as Annex XiX. Comments received from the Borrower have been taken into account as appropriate in finalizing the report and are reproduced as an Attachment. This project has not been audited by the Operationc; Evaluariwn !,eart