Announcement of IFC to Help Finance Indo-Japanese Motorcycle Joint Venture September 25, 1986

atOnal F,inance Corporation - FOR RELEAS: Thursday, September 25, 1986 CONTACT: Donald Roessner Press Release No. 87/20 (202) 676-0394 IFC TO HELP FINANCE INDO-JAPANESE MOTORCYCLE JOINT VENTURE Phase II of a joint venture between Indian and Japanese interests to establish a 150,000 motorcycles-a-year manufacturing operation located in Dharuhera, Haryana, will be assisted by a loan from the International Finance Corporation (IFC). IFC's investment is being made in Hero Honda Motors Limited, which is sponsored by Hero Cycles Private Ltd., a major Indian bicycle producer, and by Honda Motor Co., the world's largest manufacturer of motorized two-wheel vehicles. IFC, which is the leading multilateral institution that assists the economic growth of developing countries by investing in their private enterprise sectors, is lending $6.8 million for the project. The proposed financial plan also calls for the issue of shares and debentures, bank loans, funding through a sales tax deferment scheme, dealers' deposits and internal cash generation. Phase I - which began operations last year -- was to establish an assembly plant with the capacity to produce 150,000 motorcycles a year. Phase II will primarily indigenize production of Hero Honda's 4-stroke, fuel efficient, 100cc engine which is presently imported in knock-down form from Japan and assembled in India. The company is aiming at almost complete indigenization of production by 1989. MORE - 2 - Hero Honda Phase TI is in line with the Indian Government's policy of encouraging expansion of Tndia's two--wheeler industry and will help meet growing demand for such vehicles. It will also benefit the economy by reducing the need to import components, provide jobs for some 790 workers, introduce new technology into the country and support the parallel expansion and modernization of domestic companies that will supply Hero Honda with components. Hero Honda stock is widely held by local investors and is traded on India's main stock exchanges. - 0 -