Announcement of Investment in India on February 7, 1964

i INTERNATIONAL FINANCE CORPORATION . 1 8 1 8 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 IFC PRESS RELEASE NO. 64/5 For AM Newspapers Friday, February 7, 196h. SUBJECT: Investment in India The International Finance Corporation, an affiliate of the World Bank, has agreed to provide loan and share capital amounting to approximately $1.2 million (the equivalent of Rs. 5.7 million) to Fort Gloster Industries Limited (FGI), of India, to assist in the financing of a Rs. 40 million program for en- 1.arging and diversifying the company's electric cable manufacturing facilities. Continental International Finance Corporation, a subsidiary of the Continental Illinois National Bank and Trust Company of Chicago, is participating with IFC I • in this transactir.n • Other financing for the project is being provided by the privately-owned Industrial Credit and Investment Corporation of India (ICICI), which is lending the company approximately Rs. 6 million, and by a rights offering of shares to existing shareholders of Fort Gloster Industries which is expected to raise an additional Rs. 6 million. ?ort Gloster Industries Limited was established in 1890, and is a leading jute manufacturer in Calcutta. The company at present has a share capital with a total par value of Rs. 8.4 million, consisting of 63,000 equity shares and 21,000 first and second preference shares. Its shares are distributed among approximately 350 holders and are traded on the Calcutta Stock Exchangea Since 1954, the principal shareholder of the company has been the well-known House of Bangurs in India, which has substantial interests in other jute companies, in • cotton and silk textiles, paper, cement and fertilizers, as well as other indus- trial and trading interests.  \ - 2 - As part of a diversification program, the company began the manufacture 4'- of electric cables in 1960 under a technical assistance agreement with British Insulated Callender's Cables Ltd. FGI 1 s cable factory in Calcutta is at present producing various types of high quality, vulcanized rubber-insulated cables. The company now proposes to enlarge these facilities and extend its production to include the manufacture of paper-insulated, lead-covered power cables, railway signaling cables, mining cables and various types of cables insulated with plastic and vulcanized rubber. ·when the expansion program is completed, the company's production will be of direct benefit to the country's power development program and help to satisfy the heavy and increasing demand in India for all types of electric wires and cables occasioned by the country's growing industrialization. By reducing the • need for imported cables, the project should result in a substantial saving of India's scarce foreign exchange resources. The new manufacturinft facilities are expected to be in operation in 1965. Concurrently, the company is engaged in modernizing its jute manufacturing facilities and installing new equipment for the production of wide hessian to meet the rising demand for jute backing for tufted ca!"f,eting in the United States. IFC 1 s investment will consist of a loan of $812,000 repayable in 14 semi- apnual installments, beginning in April 1967, and the purchase of 10,000 equity shares in FGI, at the rights offering price of Rs. 190 each, for a total sub- scription equivalent to approximately $400,000. The shares subscribed to by IFC will form part of the company's new stock issue consisting of 41,500 equity shares, the remainder of 1rrhich is being offered to existing shareholders of FGI. ICICI' s financial contribution to the pro.1ect is in the .form of two long- term loans to FGI, in the total amount of Rs. S.95 million. Of this total, $788,000 (the equivalent of Rs. 3.7 million) will be in foreign exchange from resources that have already been made available by the World Bank to ICICI. •