New Delhi, India, May 7, 2007 —
IFC, the private sector arm of the World Bank Group, is supporting an expansion in production capacity at OCL India Limited, a cement producer in one of the most underdeveloped states of India. IFC will provide a loan of $50 million to the company, formerly known as Orissa Cement Limited.
The IFC financing will help OCL build and operate a new kiln line of 1,300,000 tons per year clinker production capacity at OCL’s existing cement plant site at Rajgangpur, Sundergarh District of Orissa. It will also help the company set up a cement grinding unit of 900,000 tons per year at Kapilas, Cuttack district, Orissa.
Sujoy Bose, Regional Manager for IFC South Asia, said, “IFC’s loan will help one of India’s oldest cement producers grow and remain competitive while enhancing employment opportunities in the region. This will also increase the availability of cement, a critical raw material for infrastructure development. In addition to providing long-term funds, IFC will advise the company on developing and implementing an integrated community development plan and on adoption of higher environmental, health, and safety standards.” The project is particularly significant given a growing demand for cement and a corresponding shortfall in capacity in eastern India.
Gaurav Dalmia, Joint President of OCL, said, “IFC, with this long tenor financing, will help us consolidate OCL’s position in a capital intensive industry, manage our risks and costs vis-à-vis global players and serve our chosen markets more effectively. We also look forward to IFC’s guidance in the improvement of our environmental and social standards.” IFC’s loan of 10 years’ tenor will also encourage other local banks to make long-term project finance available to manufacturing companies such as OCL.
The Indian cement industry is fragmented, with over 40 players, although recent years have seen a trend towards consolidation. IFC’s funding comes at a time when cement demand has been outpacing the increase in supply.
IFC in India
In India, IFC’s current held portfolio is $1.3 billion (as of June 2006) making it IFC’s fourth-largest country of operations. Since 1956, IFC has committed financing to projects in India, amounting to $3.3 billion. IFC focuses on supporting the private sector–led development through direct investment and advisory services that promote growth and competitiveness in India. In FY06, IFC committed over $400 million in new investments in India.
Infrastructure is central to IFC's strategy in South Asia. In recent years, IFC has supported manufacturing companies aspiring to global competitiveness. IFC also supports innovation in financial services, including expansion of consumer and housing finance for lower-income groups. IFC provides advisory services and equity finance to microfinance institutions that provide loans to farmers and small nonfarm enterprises in rural areas. IFC is helping companies overcome the limited availability of long-term financing by using its strong credit rating and financial structuring expertise to encourage domestic investors to buy longer-term commercial paper. IFC has also focused on the innovative application of technology by backing IT companies whose products offer potential for important contributions to economic development.
About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products have committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit
www.ifc.org
.
About OCL
OCL started operations in 1950, when its first cement plant had a production capacity of 0.165 million tonnes a year. The company has steadily increased its capacity over the past 10 years and today has a cement production capacity of 1.85 million tonnes a year. While cement is the company’s core business, OCL also produces refractory bricks, sponge iron, and steel billets.
