Announcement of IFC, International Bank Group to Finance Light Truck Project in India July 11, 1986

UtiI1 hiiC Corporation Friday, July 11, 1986 CONTACT Donald Roessner Press Release No. 87/5 (202) 676-0394 IFC, INTERNATIONAL BANK GROUP TO HELP FINANCE LIGHT TRUCK PROJECT IN INDIA The International Finance Corporation (IFC) and two foreign financial institutions will help finance a $52.65 million, major expansion and modernization of Bajaj Tempo Limited, one of the largest manufacturers of light commercial vehicles in India. IFC, the leading multilateral institution that assists the economic growth of developing countries by investing in their private enterprise sectors, is lending SwF48 million ($15.62 million) to Bajaj Tempo. Half of this, SwF24 million, is for IFC's own account and the other half is for two participating banks: Citicorp Investment Bank (Switzerland) and the Zurich branch of Grindlays Bank p.l.c., a wholly owned subsidiary of the Australia and New Zealand Banking Group Limited. The remainder of the project financing consists of approximately $2.72 million equivalent in foreign exchange loans from Indian financial institutions and internal cash generation. Bajaj Tempo's sponsors are the Firodia family of India, and Daimler-Benz Aktiengesellschaft, of the Federal Republic of Germany. The company's shares are widely held and are traded on several Indian stock exchanges. MORE - 2 - The company's existing facilities at Akurdi, near Pune in Mahrashtra State, have a capacity to produce 15,000 vehicles and 3,000 diesel engines a year. It currently is manufacturing some 11,200 diesel powered vans and pickup trucks and 1,600 diesel powered three wheel vehicles annually. The project will consolidate and expand Bajaj Tempo's Akurdi plant to produce parts and sub-assemblies. In addition, a new assembly and painting plant will be built at Pithampur, Madhya Pradesh, to produce up to 18,000 of its current model pickup trucks and 12,000 new van model vehicles. This will upgrade the company's existing line by producing a new family of vehicles, based on Daimler-Benz's T1 model, streamline existing operations to improve quality and reduce costs, and double production to 30,000 vehicles a year. The project is part of the major, overall expansion of India's commercial vehicle industry taking place in response to growing demand and will help meet the pressing need for fuel efficient, inexpensive transport. It is expected to stimulate a parallel expansion of local suppliers and upgrade India's technological capabilities. For Bajaj Tempo, itself, the venture will provide greater flexibility to meet market fluctuations, increase overall efficiency and reduce unit costs, and improve product design and quality. It will also create some 1,000 new jobs and result in estimated net foreign exchange benefits of $52 million a year. - 0 -