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
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.
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.
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.