WASHINGTON, D.C., Oct. 11 -- The International Finance Corporation (IFC) has approved US$35 million in financing for Prism Cement Limited (formerly known as Karan Cement Limited), a new company that will build a 2 million tonnes-per-annum greenfield cement plant in the Satna District of north Madhya Pradesh, India. IFC's financing will consist of an equity investment of up to US$5 million, a loan for its own account of up to US$15 million, and an additional loan of up to US$15 million that will be syndicated with other financial institutions. An investment agreement to this effect was signed recently between IFC and the company. F.L. Smidth A/s of Denmark will provide technical assistance for the project including operational support during the first year. F.L. Smidth represents one of the largest designers and suppliers of cement plants and equipment worldwide and has been involved with cement plants in India. Together with the Industrialization Fund for Developing Countries (IFU), Denmark, F.L. Smidth will
participate in the equity of Karan Cement Limited. The US$182.5 million plant is expected to be commissioned in March 1997 and will serve markets in the northern and eastern states in India. It will also export cement to Nepal and Bangladesh. The project is being sponsored by the Bombay-based R. Raheja group which has interests in real estate development, manufacturing, and financial services. Ms. Denise Leonard, Chief of IFC's South Asia Regional Mission in New Delhi, said: "This is IFC's third investment in the Indian cement sector within the last two years. Given reasonable expectations of domestic demand growth, an additional capacity of 25 to 30 million tonnes is likely to emerge in India by the turn of the century. The aggregate incremental investment is projected at about US$2.5 billion. Strong domestic competition, however, calls for sound technology, a good location, and financially resourceful sponsors." Mr. Sanjeev Minocha, Operations Officer at IFC's South Asia Regional Mission added: "The plant i
s well located, is based on state-of-the-art technology, and has the right economies of scale to meet international quality and cost standards. This assumes significance in the emerging scenario where regional markets will be increasingly served by natural supply zones with shifts in market supply patterns stimulating strong domestic competition." IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
