Washington D.C., May 18, 2006
—International Finance Corporation, the private sector arm of the World Bank Group, will provide a $20 million financial package to LG Balakrishnan and Bros. Limited. The investment comprises an equity investment of $5 million equivalent and a loan of $15 million. It will support the improvements at the company’s existing facilities as well as the development of a greenfield hot forging facility near Coimbatore.
LGB Limited is one of India’s leading manufacturers of transmission chains for two-wheelers and for other automotive and industrial applications. The company also offers fine-blanked and forged parts for the automotive and other industries.
LGB is in the process of implementing a $44.5 million expansion that will help the company strengthen its asset base and sales in all its product lines (transmission chains, fine-blanked parts, and forgings) with the goal of retaining and enhancing its market share. The project is aimed at helping the company improve its cost competitiveness – an outcome expected from a larger production capacity, better quality and availability of products, economies of scale, and other improvements.
Iyad Malas, IFC’s Director for South Asia, commented, “LGB is pursuing an expansion strategy to keep up with the fast-growing automotive components sector, and we are pleased to be a part of this process. In addition, the upgrades and expansion are expected to help improve the economic and employment situation in small and midsize towns where LGB’s facilities are located.” He elaborated, “IFC finances private sector investments in transition and developing economies, mobilizes capital in international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses.”
Mr B Vijay Kumar, Managing Director of LGB, noted, “We are delighted to be associated with IFC as partners and are thankful to Mr Muthukumaran of Exim Bank for bringing us together. This association is indeed an excellent platform for LGB in its global aspirations. With the support that IFC can provide, LGB is sure to accelerate its global presence and enhance its customer base.”
The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.
In India, IFC's current held portfolio is $1.2 billion, making India IFC's second largest country of operations. IFC has been focused on supporting private sector led growth through direct investment and technical advisory support to promote growth and competitiveness in India. In FY2005 alone, IFC committed $413 million in new investments in India. For more information, visit
www.ifc.org
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International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates activities with other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
