Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No. 16048

IMPLEMENTATION COMPLETION REPORT Public Disclosure Authorized

INDIA

EXPORT DEVELOPMENT PROJECT (LOANS 3058-IN and 3059-IN)

September 25, 1996 Public Disclosure Authorized

Country Operations, Industry & Finance Division Country Department II South Asia Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (annual average)

Currency unit = Indian rupees (Rs.)

1989-90 $1.00 = Rs. 16.66 Official Rate 1990-91 $1.00 = Rs. 17.95 Official Rate 1991-92 $1.00 = Rs. 24.52 Official Rate 1992-93 $1.00 = Rs. 26.41 Official Rate 1993-94 $1.00 = Rs. 31.36 Unified Rate 1994-95 $1.00 = Rs. 31.40 Unified Rate 1995-96 $1.00 = Rs. 33.46 Unified Rate 1996 (as of March 31, 1996) $1.00 = Rs. 34.45 Unified Rate

Note: A dual exchangerate systemwas created in March 1992,with a freemarket for about 60 percentof foreign exchangetransactions at a rate of $1.00 = Rs. 30.65. The exchangerate was reunifiedat the beginningof March 1993 at the free market rate.

FISCAL YEAR

April 1 to March 31

ABBREVIATIONS AND ACRONYMS

BOB: Bank of Baroda DFI: Development Financial Institutions EDF: Export Development Fund EDP: Export Development Project EMF: Export Marketing Fund ERAS: Exchange Risk Administration Scheme ERR: Economic Rate of Return EXIM: The Export Import Bank of India FRR: Financial Rate of Return GOI: Government of India ICICI: Industrial Credit and Investment Corporation of India Ltd. ICR: Implementation Completion Report IDBI: Industrial Development Bank of India IEP: Industrial Export Project - Engineering Products PCB: Participating Commercial Bank PF: Productivity Fund TAF: Technical Assistance Fund FOR OFFICIALUSE ONLY

IMPLEMENTATION COMPLETION REPORT

INDIA

EXPORT DEVELOPMENT PROJECT (LOANS 3058-IN and 3059-IN)

TABLE OF CONTENTS

Preface ...... i

Evaluation Summary ...... ii

Project Implementation Assessment ...... 1

A. Background . B. Project Objectives .2 C. Achievement of Project Objectives .5 D. Implementation Record and Major Factors Affecting the Project . 7 E. Project Sustainability .9 F. Bank Performance . 1 G. Borrower Performance. 1 H. Assessment of Outcome .1 1 I. Future Operations.12 J. Key Lessons .12

Annex 1: Statistical Tables

Annex 2: Mission's Aide-Memoire

Annex 3: List of Sub-Loans

Annex 4: Borrower Contribution to the ICR

Tis documenthas a restricteddistribution and maybe usedby recipientsonly in the performanceof their |oficial duties. Its contents may not otherwise be disclosedwiLhout World Bank authorization.

IMPLEMENTATION COMPLETION REPORT

INDIA

EXPORT DEVELOPMENT PROJECT (LOANS 3058-IN and 3059-IN)

PREFACE

1. This is the Implementation Completion Report (ICR) for the Export Development Project in India, for which Loans 3058-IN and 3059-IN in the amount of US$295 million equivalent were approved on May 12, 1989, and made effective on September 21, 1989.

2. The loan was closed on March 31, 1996, the original closing date. Final disbursement took place on July 31, 1996, and a balance of US$9,048,946.84 was canceled. Cofinancing for the project was provided by the Japanese Grant Facility.

3. The ICR was prepared by Paulo de Sa (IENIM) under the supervision of Mona Haddad (Task Manager, SA2CI) and reviewed by Luis Emesto Derbez (Division Chief, SA2CI) and Kazuko Uchimura (Project Advisor, SA2DR). The borrower provided comments that are included as an annex.

4. The preparation of this ICR began during the Bank's completion mission, comprising Paulo de Sa (IENIM), Herman Nissenbaum (Consultant), and Lin Chin (SA2CI), who visited India from March 31-April 12, 1996. Paul Beckerman (SA2CI) joined the mission in Bombay. The ICR is based on material obtained during the mission and contained in the project file. The borrower contributed to the preparation of the ICR by contributing views that are reflected in the mission's aide-memoire and by preparing an evaluation of the project's execution and initial preparation.

- 11 -

IMPLEMENTATION COMPLETION REPORT

INDIA

EXPORT DEVELOPMENT PROJECT (LOANS 3058-IN and 3059-IN)

EVALUATION SUMMARY

1. Prior to the Export Development Project, initiated in 1989, the World Bank had made 19 development finance loans totaling US$1.4 billion. These funds were channeled to private Indian firms engaged in all sectors of industrial activity through domestic financial intermediaries, mainly the Industrial Credit and Investment Corporation of India (ICICI) and the Industrial Development Bank of India (IDBI). The Export Development Project is the direct follow-up to an earlier Bank loan of US$250 million for the Industrial Export (Engineering Products) Project (Loan 2629/30-IN). That project had shown the need to strengthen the capabilities of firms and financial institutions in designing, implementing, and appraising export development programs and export-oriented investments. These lessons were incorporated in the Export Development Project.

2. Project operations spanned two important changes, one in the domestic policy environment and the other in the World Bank norms covering lending operations. First, in July 1991 India faced serious fiscal and external imbalances that placed it on the verge of defaulting on its external debt obligations. The authorities responded by implementing a substantial stabilization and adjustment program aimed at liberalizing the economy through unprecedented reforms in the investment regime and in trade, financial, and fiscal policies. As a result the environment for private sector development and export growth improved substantially. Second, since 1991 the Bank has moved away from strengthening specific sectors, increasing domestic resource mobilization, and improving selected groups' access to credit, toward a broader policy effort aimed at improving a country's economic and financial environment as a whole. It is against this background that the Export Development Project is reviewed.

Project Objectives

3. The project was designed to help the Government of India carry out its strategy of increasing the competitiveness and exports of manufactured products, thus providing the basis for continued active dialogue between the Government and the Bank on trade policy and related reforms. In addition, the project was intended to build institutional capacity within the Indian financial system by helping financial institutions improve their abilities to assess export projects, mobilize the resources needed to finance such projects, and provide direction and advice to their clients on export issues and markets. - iii -

4. To achieve its objectives, the project assisted four financial institutions through an export development fund of US$20 million, to finance part of the marketing and technical services and foreign travel expenses associated with the preparation and implementation of client firms' export development programs; a technical assistance fund of US$2.7 million equivalent, to help the financial institutions strengthen their capacity to appraise export projects and advise firms on export strategy issues; and a term lending component to finance export investment projects. This component came under two different loans: a US$175 million loan for the ICICI and a US$100 million loan for three other financial intermediaries (the Export-Import Bank of India, Bank of Baroda, and Canara Bank, referred to collectively as "participating commercial banks").

Project Implementation

5. The loan was approved May 12, 1989, and became effective September 21, 1989. The original closing date was March 31, 1996, and no extensions were required. Total project cost is estimated at US$858 million, of which US$189 million were drawn from IBRD funds. The ICICI term lending component provided US$76 million for subloans to 102 companies; the participating commercial banks' component provided US$96 million for subloans to 240 companies. More than 28,000 jobs were created as a result of this credit line. In addition, the export development fund supported marketing programs for about 450 companies, with an average grant of US$36,725. By the end of fiscal 1996 the ratio of actual incremental export earnings to grants had already largely exceeded the target of 10:1 (102 times in the case of Export-Import Bank). About US$2.6 million was spent on the technical assistance fund.

6. Project implementation proceeded without major problems because the experience acquired by the financial institutions during the Industrial Export Project enabled them to implement the project without making major adjustments to their operations. Additionally, since the project did not target specific industrial sectors, each bank was able to fully direct the available funds to its existing client base or to market aggressively the credit line in order to expand it. Issues affecting implementation related to the design of the technical assistance fund and the exchange risk administration scheme. The technical assistance fund was less successful than the export development fund because its design was inadequate and there was little follow- up to the initial training sessions. After three years with no disbursements, the scope of the technical assistance fund was widened, and most of it was eventually disbursed.

7. The implementation of the two credit lines followed different patterns as a consequence of the separate on-lending terms and conditions. The Government agreed to bear interest rate and foreign exchange risks for the commercial banks but not for the ICICI. The Government was particularly intent on meeting the growing demand for term credit by the small and medium-size clients of the commercial banks because of these clients' potential for stimulating industrial expansion. The Government did, however, require that the terms of this on-lending be revised periodically in order to avoid subsidies. During project implementation interest rates were mostly positive in real terms and were consistent with other lending sources (except in 1991, when the Reserve Bank raised the commercial banks' minimum lending rate to 18.5 percent). Accordingly, the commercial bank component disbursed smoothly, especially when other import financing became scarce during the 1991 foreign exchange crunch. - iv -

8. In the case of the ICICI the authorities' views were determined more by long-term financial sector aims. They believed that it was important to terminate coverage of foreign exchange risk for long-term rupee lending, a view with which the Bank concurred. To this end the Indians proposed a single currency loan system, which was rejected because such systems were not being offered by the Bank at the time. Bank staff believed that the optimum solution was to have a system without foreign exchange controls and with market-determined interest rates. They understood, however, that India was not yet ready for such a system and, in particular, lacked a forward foreign exchange market to help borrowers protect themselves. The Government and the Bank eventually agreed that using the exchange risk administration scheme currency pool arrangement to manage foreign exchange risk was an acceptable second-best solution. The scheme was intended to increase demand for foreign exchange-denominated term lending by providing a measure of protection to borrowers against interest and exchange rate risks and by distributing the cost of such protection equitably among borrowers. The scheme, considered superior to the revised Industrial Export Project's on-lending formula, was introduced by the Government in April 1989 for the foreign commercial borrowings of major development financial institutions.

9. Unfortunately, the designers of the scheme could not anticipate the 47 percent rupee depreciation in 1989-91, which caused annual interest rates under the scheme to rise to 26 percent and rendered effective repayment rates unaffordable. As a result the ICICI's line of credit stalled. The introduction of partial convertibility of the rupee gave exporters no incentive to pay above-market rates on fixed loans, and the borrowing companies' lack of familiarity with the Bank's currency pool made them reluctant to take on exchange rate risk at a time of rapid rupee devaluation. In 1992 the Government and the Bank discussed alternative interest rate formulas that might overcome the shortcomings of the exchange risk administration scheme but failed to reach agreement. Because the ICICI could not assume the foreign exchange risks and the Bank could not retroactively alter currency pool arrangements under existing loans, the scheme was discontinued in February 1993, leading to the cancellation of US$98.7 million.

Project Results

10. The project's objectives were well conceived and have been successfully achieved despite changes in the macroeconomic environment that were difficult to predict at the time of preparation and appraisal. Prospects for project sustainability are very favorable. The term lending component led to substantial investment in India's export industries and contributed to companies' modernization efforts, improving their ability to compete with foreign firms and attenuating resistance to the liberalization of trade policy. In addition, it helped several small and medium-size companies expand aggressively through export-led growth. The loan was particularly useful for new entrepreneurs and new exporters because few other sources of funds were available to them. The export development fund helped Indian companies sharpen their export awareness and penetrate world markets, shifting them away from volume-oriented activities to an approach focused on quality and service to clients.

11. The performance of the four financial institutions involved in the project and the changes observed in their internal procedures and organization--making them more commercially oriented and more responsive to client requirements--are considered satisfactory. The project improved financial institutions' abilities to assist clients in export marketing and quality- enhancing activities, to widen their client base, and to expand the range of services provided.

12. Institutional strengthening efforts were successful. The four banks believe that the project helped them identify shortcomings in their appraisal techniques and contributed significantly to their improvement. Possibly because of that, the subloans extended under the project had higher rates of return and better collection ratios than those in the banks' average portfolios. Term lending in foreign exchange is now an integral part of these financial institutions' operations, especially in operations involving export credit agencies and other bilateral sources.

13. The Bank's performance under the project is also considered satisfactory. Regular dialogue during supervision between Bank staff and the borrower contributed to timely resolution of problems. The project's outcome is rated as satisfactory. The objectives of modernization, retraining, quality awareness, and export growth were largely fulfilled. Exporters have managed to reduce costs, increase productivity, and improve their financial position.

Key Lessons

14. The project provided several important lessons for project operations in India and elsewhere:

* Financial institutions that have been sheltered for a long time by a highly regulated economic framework may need time and assistance to adjust to a changing incentive structure. Commitment by the borrower and the continuous support of its top management in project implementation are essential to project success.

* Gauging the institutional capacity tc, deal with complex export marketing issues is a lengthy process. When designing export credit lines, the Bank should not be overly optimistic about how long it will take to establish this expertise. A key element of this project was the export development fund for export promotion. Efforts should be made to reproduce this kind of arrangement in similar loans, but preferably on a self-sustained basis.

* The World Bank's willingness to finance export promotion activities in parallel with (rather than after) a comprehensive and well-designed program for trade policy reforms enabled it to be an active participant in the evolving policy dialogue.

* Regular dialogue during project supervision between Bank staff and the borrower contributed to timely resolution of problems. IMPLEMENTATION COMPLETION REPORT

INDIA

EXPORT DEVELOPMENT PROJECT (LOANS 3058-IN and 3059-IN)

PROJECT IMPLEMENTATION ASSESSMENT

A. BACKGROUND

1. From independence until 1991, India pursued economic development policies that placed a priority on economic diversification and self-sufficiency. These policies, based on substantial public investment in heavy and medium manufacturing, constrained performance by:

. insulating industry from import competition through high tariffs and quantity controls on imports; * limiting domestic competition through a system of administered pricing, which limited resource generation; * reserving certain activities to the public sector; * restricting entry through a system of investment licensing and intense regulation; * restricting foreign investment through a system of ownership guidelines and technology transfer agreements; and * limiting the operations of foreign-owned enterprises, restraining their growth, diversification, and financial management.

2. These industrial regulations were often coupled with a complex array of incentives and exemptions intended to influence firms' decisions on location, technology, and the mix of labor and capital. In addition, a highly regulated financial sector increased the cost of capital to private firms, while credit allocation policies encouraged inefficient patterns of investment in industry. Publicly owned financial institutions were sheltered from competition, and directed credit to earmarked priority industries and social sectors at subsidized interest rates.

3. The industrial growth and performance that resulted from these policies were disappointing. Although the manufacturing sector achieved self-sufficiency, by the late 1970s it had fallen behind many other developing countries in terms of technology, scale, and efficiency. Moreover, the diversified industrial base was costly to maintain because of the powerful anti- export bias fostered by protectionist trade policies. The domestic market absorbed most output; only the residual was exported, mainly to soft markets in Africa and the former Soviet Union. The only successful exports were in the few sectors that either had easy and duty-free access to imported inputs (like diamonds) or that relied on domestic inputs that were readily available and cheap relative to world prices (like cotton garments and leather products). 2

4. By the mid-1980s the Government of India (GOI) recognized the need to improve industrial performance and began revising its industrial and trade policies to improve the competitiveness and export performance of the manufacturing sector. In March 1985 significant institutional and policy changes were announced, including adoption of a more flexible exchange rate regime conducive to export growth, partial liberalization of the industrial regulatory regime, reduction in taxes and tariffs on imports of capital goods, institutional changes to the import licensing system, and gradual phasing out of quantitative restrictions. These measures set the stage for the World Bank to play an active role in India's transition to a more market-oriented economy through a continuous policy dialogue with GOI and a series of lending operations aimed at increasing the industrial sector's efficiency.

5. The initial reforms, however, were insufficiently comprehensive. In its dialogue with GOI, the Bank advocated further measures, including adopting a more realistic exchange rate, increasing competition through relaxation of import controls, eliminating capacity licensing restrictions for new entrants, and abolishing the system of pricing and distribution controls. GOI committed itself to sustaining and building on the gains obtained from market-oriented policies by providing further incentives to firms to stimulate efficiency and adopt export-oriented strategies.

6. Still it took until 1991, when unprecedented fiscal and external imbalances put India on the verge of defaulting on its external debt obligations, for a more thorough reform effort to be designed and implemented. A comprehensive stabilization program and a major reorientation of India's development strategy saw trade and payment regimes significantly liberalized. Almost all areas of the economy were opened to domestic and foreign private investment. Import licensing restrictions on intermediate and capital goods were virtually eliminated, while tariffs were substantially reduced. In the financial sector, barriers controlling the entry of private banks (domestic and foreign) were lowered, prudential regulations closer to international standards were introduced, banks were given more discretion in making lending decisions, and financial markets were liberalized. In August 1994 the rupee was made fully convertible for current account transactions.

B. PROJECT OBJECTIVES

7. The Export Development Project (EDP) was designed to help GOI carry out its strategy of increasing the competitiveness and exports of manufactured products, thus providing the basis for continued active dialogue between GOI and the Bank on administrative and trade policy reforms. In addition, the EDP was intended to build institutional capacity within the Indian financial system by helping financial institutions improve their abilities to assess export projects, mobilize the resources needed to finance such projects, and provide direction and advice to their clients on export issues and markets.

8. Prior to the EDP, the World Bank had made 19 development finance loans totaling US$1.4 billion to private Indian firms engaged in all sectors of industrial activity. These funds were channeled through domestic financial intermediaries, mainly the Industrial Credit and Investment Corporation of India (ICICI) and the Industrial Development Bank of India (IDBI). 3

The EDP is the direct follow-up to an earlier Bank loan of US$250 million for the Industrial Export (Engineering Products) Project (IEP) (Loans 2629/30-IN), which was implemented through ICICI, the Export-Import Bank (EXIM), and four participating commercial banks. That loan, which became effective on June 23, 1986, and closed on June 30, 1992, included a relending component through the ICICI to support investments in exportable engineering products and through four participating commercial banks to support investments in ancillary engineering enterprises and a productivity fund in the ICICI and an export marketing fund in EXIM to finance the operational upgrading and export marketing activities of engineering enterprises.

9. Implementation of the IEP started slowly because it took most commercial banks some time to put in place procedures and staff to use the loan. Three years after Board approval, loan commitments were only 29 percent of the amounts estimated at the time of Board presentation, and loan disbursements were only 13 percent of appraisal estimates. Moreover, since GOI initially absorbed the foreign exchange risk on subloans to ancillary firms only, initial commitment of the ICICI loan was slow because sub-borrowers were reluctant to assume the foreign exchange risk. In February 1988 the project was modified to allow GOI to bear the foreign exchange risk related to the relending component. The rate of commitment was further improved by widening the use of funds to cover all export projects, rather than focusing primarily on engineering products.

10. Building on the experience gained under IEP, the EDP included three enhanced features in its design. First, it combined the activities covered by the export marketing fund and the productivity fund into a single multipurpose export development fund placed in each participating institution. Second, it established a technical assistance fund to strengthen the capabilities of financial institutions in designing, implementing, and appraising export development projects and export-oriented investments. Third, it included two leading commercial banks in order to diversify project support to smaller and more geographically dispersed firms.

11. To achieve its objectives, the project assisted four financial institutions--the ICICI, EXIM, Bank of Baroda, and Canara Bank--through:

* An export development fund (EDF) of US$20 million allocated to the four financial institutions to finance the marketing and technical services and foreign travel expenses associated with the preparation and implementation of client firms' export development programs. Based on the experience gained under the IEP, the projects financed by this fund were expected to generate incremental exports worth more than ten times the EDF's original investment;

* A technical assistance fund (TAF) to help strengthen the financial institutions' capacity to appraise export projects and advise firms on export strategy issues. The Japanese Grant Facility (Grant 2727) provided an amount equivalent to US$2.7 million to GOI, which passed the funds on to the institutions on a nonreimbursable basis; and 4

* a line of credit for term lending to finance export investment projects conducted under two different loans: a US$175 million loan for the ICICI and a US$100 million loan for EXIM and the two participating commercial banks (collectively referred to as the "participating commercial banks" or PCBs). This component was expected to provide long-tern finance to about 350 subprojects, resulting in total investments of about US$730 million. The subprojects financed by the financial intermediaries were required to have an economic rate of return of 12 percent.

12. During appraisal project costs were estimated at US$730 million equivalent, of which the International Bank for Reconstruction and Development (IBRD) financed US$295 million to cover the foreign exchange portion of the EDF and the term lending component in the four financial institutions. As mentioned above, the TAF was financed through a grant from the Government of Japan.

13. Export Development Fund. The EDF was designed to encourage Indian firms to purchase foreign expertise and information and to help them develop an export development plan by giving them matching grants to finance export promotion activities. The fund provided firms with grant support on a matching basis for a range of pre-investment promotion and marketing activities within a structured firrn-level export development plan; one-window clearance through an established steering committee for the various Government approvals required for export marketing and product adaptation activities; and term finance and incremental working capital finance to implement an export development plan. Firms were assisted by the advisory services provided by the participating institutions and encouraged to structure their export development plans in three distinct phases comprising market exploration, product adaptation, and sales promotion. The four institutions managed, on behalf of GOI, US$20 million in export development funds allocated as follows: US$7 million through the ICICI, US$7 million through EXIM, US$3 million through Bank of Baroda, and US$3 million through Canara Bank.

14. Technical Assistance Fund. The TAF supported strengthening the financial institutions export programs rather than the exporters themselves. Activities funded through the TAF included training abroad for staff, particularly those involved in managing the export development fund; purchase of marketing and technical information from international data banks to support appraisal activities in cases where an assessment of overseas market potential was required; and fees and travel expenses for hiring of specialist consultants. The Japanese grant financed the foreign exchange costs of the activities, which at appraisal were estimated to be about 75 percent of total costs. The initial budgeted amount was US$2.7 million, allocated as follows: US$1,175,000 to the ICICI, US$675,000 to EXIM, US$425,000 to Bank of Baroda, and US$425,000 to Canara Bank.

15. Term Lending Component. A line of credit of US$275 million was made available to the four institutions to provide term financing to non state-owned enterprises (private, privatized and joint ventures) for balancing, modernization, expansion, and new investment that met financial, economic, and export-orientation criteria. These criteria required that a satisfactory strategic export plan be prepared, that all subprojects have a minimum economic rate of return of 5

12 percent and a financial rate of return of 15 percent, and that subloan maturities be at least 3 years and no more than 15 years.

16. The term lending through financial intermediaries was conducted under two different Bank loans. The first, for US$175 million, was provided to the ICICI (Loan 3059-IN) and was to be relent to large firms as foreign exchange at the Bank's standard variable interest rate plus 2 percent, or as rupees at the prevailing rate under the exchange risk administration scheme (ERAS). This scheme was a currency pool arrangement intended to provide a measure of protection to borrowers against interest and foreign exchange risks and to distribute the cost of such protection equitably among borrowers. Under the ERAS the spread between the interest rate on the Bank loan and the rate under the scheme (less 2 percent for ICICI's spread) would accrue to the ERAS fund to cover the risk of interest and exchange rate fluctuations. The scheme's interest rate was adjusted every six months to ensure that both risks were adequately covered. Under this term lending component the Bank was to finance 40 percent of project costs (representing the average foreign exchange costs of medium-size and large subprojects in India), the ICICI was to finance about 10 percent of sub-project costs from its rupee resources, other capital and credit market sources were expected to provide another 20 percent, and subproject sponsors and other equity subscribers were to provide equity financing for the remaining 30 percent.

17. The second Bank loan (Loan 3058-IN), for US$100 million, was provided to GOI to be passed on as equity to the PCBs (EXIM, Bank of Baroda, and Canara Bank). Their clients were to be small and medium-size firms, and the final interest rates to sub-borrowers were to be consistent with the interest rate structure of the Reserve Bank of India for term lending to these sectors: 13.5 percent for small firms and 14.0 percent for medium-size firms. The original allocation of this lending component was as follows: US$40 million to EXIM, US$30 million to Bank of Baroda, and US$30 million to Canara Bank. All subloans were to be denominated in rupees, and GOI assumed the foreign exchange and interest rate risks. For EXIM subprojects the Bank was to finance 50 percent of the project costs corresponding to the expected foreign exchange requirement, EXIM was to finance about 10 percent of these costs, and the rest was to come from the sponsors and equity sources. For Bank of Baroda and Canara Bank subprojects, the Bank was to finance 35 percent of project costs, the banks would contribute 30 percent, and sponsors and other equity sources would finance 35 percent.

C. ACHIEVEMENT OF PROJECT OBJECTIVES

18. The project's objectives were well conceived and have been successfully achieved despite changes in the macroeconomic environment that were difficult to predict at the time of preparation and appraisal. At project closure US$189 million had been withdrawn and US$2.9 million remained uncommitted. The total foreign cost of the project (including funds provided by domestic sources and cofinancing institutions) was US$202.5 million; the rest was released for payments in local currency. The devaluation of the rupee during project implementation (from Rs. 13.0 to Rs. 31.5 to the US dollar) reduced the local currency component expressed in dollar terms. 6

19. ICICI component. The ICICI component provided US$76.3 million for subloans to 102 companies. Preliminary data available during the ICR mission suggest that the average loan was US$748,000, total investment cost was US$495 million, and 17,050 jobs were created.

20. Participating commercial banks component. This component provided US$96 million for subloans to 240 companies. Based on preliminary data available during the ICR mission, the funds were disbursed as follows:

* EXIM committed US$30.1 million and disbursed about US$28.0 million to 46 small and medium-size companies. The average loan was US$635,000 and the average financial rate of return expected at appraisal was 34 percent. There were three full cancellations and two projects with long-term arrears.

* Bank of Baroda committed US$49.85 million and disbursed US$45.5 million to 113 small and medium-size companies (average sales of about US$7 million). The average loan was US$441,000 and the exports generated over the past three years exceeded US$260 million. About 60 percent of the companies are located in small towns or backward areas. There were 5 full cancellations and 11 projects with long-term arrears. At the end of fiscal 1996, 37 units were performing below expectations, though more than two-thirds of them were regular in meeting their term liabilities.

- Canara Bank committed US$24.8 million and disbursed about US$22.0 million to 84 mostly small and medium-size companies (average sales of about US$6 million). The average loan was US$262,000 and the average financial rate of return expected at appraisal was 31 percent. There were 12 full cancellations, 4 projects with long-term arrears, and 18 defaults.

21. Subprojects financed under the term lending component were expected to have a minimum economic rate of return of 12 percent. The actual performance of subloans varied across subsectors and institutions, with financial rates of return ranging from 12-60 percent and economic rates of return ranging from 13-40 percent. Repayment performance has been satisfactory and consistent with each implementing agency's overall portfolio performance. With the exception of Canara Bank, collection ratios were higher than 85 percent.

22. Export developnent fund component. The EDF supported marketing programs for about 450 companies. Despite a slow start, overall implementation was satisfactory. The average grant was US$36,725. Small, medium, and large firms were assisted. Available data indicate that at the end of fiscal 1996 the ratio of actual incremental export earnings to grants had largely exceeded the target of 10:1. In the case of EXIM the export multiplier during fiscal 1992-1995 was 102 times on a weighted average basis, the ratio of exports to sales among the assisted companies increased from 8.8 percent in fiscal 1992 to 11.4 percent in fiscal 1995, and the average growth in exports of the assisted companies between 1992 and 1995 was 26 percent, compared with average growth of 15 percent for Indian exports during the same period. 7

23. The ICICI committed US$7.5 million under the export development fund and disbursed about 70 percent of this amount to more than 100 companies. EXIM overcommitted its allocation (with Bank approval) to maximize utilization of this fund: US$7.4 million was committed to 118 companies, although only about 85 percent of this amount was disbursed. The average grant was US$61,513. The other participating banks were slower to commit their allocations and to disburse the sanctioned amounts. Bank of Baroda received US$3.38 million under the fund. As of December 1995, 94 projects had been approved but nearly US$1 million remained undisbursed because Bank of Baroda chose to release these disbursements only after receiving proof that incremental exports over the previous five years amounted to ten times the grant. During the ICR mission Bank of Baroda decided to expedite disbursements during the four-month grace period for activities that took place before the closing date. Similarly, Canara Bank disbursed only about 60 percent of its original commitments of US$3.04 million to 100 projects. The average grant was US$17,900.

24. Technical assistance fund component (Japanese Grant Facility). About US$2.6 million was spent on this program from an initial allocation of US$2.7 million. The fund originally supported training for all implementing agencies to upgrade staff skills in the area of exports. After three years with no disbursements, the scope of the fund was widened. EXIM was particularly active, producing studies on sectors with good export potential and establishing two overseas service centers (in Rome and Budapest) in 1994 to collect marketing information for Indian companies and identify joint venture opportunities. EXIM's final utilization of funds amounted to US$1.043 million, as authorized by the Bank. The ICICI disbursed US$0.99 million, mainly for training under the Arthur D. Little program, while Canara Bank used the entire allocated amount for training abroad. Bank of Baroda was slow to submit proposals to the Bank, and used about US$0.15 million.

D. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT

25. Overall assessment of project implementation. The loan was approved on May 12, 1989, and became effective on September 21, 1989. The original closing date of the loan was March 31, 1996, and no extensions were required. Project implementation proceeded without major problems because the experience acquired by the participating financial institutions during the IEP enabled them to implement the project without making major adjustments to their operations. Additionally, since no specific industrial sectors were targeted by the project, each bank was able to fully direct the available funds to its existing client base or to market aggressively the credit line in order to expand it.

26. Issues affecting implementation related to the design of the TAF and the ERAS. First, the technical assistance fund was less successful than the export development fund. Despite a good start in 1991 with a group training scheme for the four banks, the fund's activities were limited because its design was inadequate. After three years with no disbursements the scope of the TAF was widened, and most of it was eventually disbursed. Second, implementation of the two credit lines followed different patterns as a consequence of the separate on-lending terms and conditions. The main factor affecting implementation of the project was the collapse of the 8

ERAS following the rapid depreciation of the rupee. When it became clear that there was no viable alternative, the undisbursed funds were canceled.

27. Dif.ficulties in implementing the ICICI term lending component. Until 1986 foreign currency lending by the major development financial institutions was made on a back-to-back basis, with a markup of 1.5 percent to cover administrative costs and risks. Interest rate and foreign exchange risks were borne by the sub-borrowers. Given the steady depreciation of the rupee and volatility of foreign exchange rates during the second half of the 1980s, however, sub- borrowers found themselves facing extremely high and often unpredictable effective repayment rates. The absence of a well-developed forward foreign exchange currency market in India meant that private borrowers had limited means for protecting themselves against such risks. As a result demand for foreign currency-denominated loans greatly declined, while the weaknesses of the private firms' debt servicing capacities negatively affected the portfolios of the lending institutions.

28. GOI agreed to bear the interest rate and foreign exchange risks for the PCBs, but not for the ICICI. GOI was particularly intent on meeting the growing demand for term credit by the small and medium-size clients of the commercial banks because of these clients' potential for stimulating industrial expansion. GOI required that the terms of this lending be revised periodically in order to avoid subsidies. During project implementation interest rates were mostly positive in real terms and were consistent with other lending sources (except in 1991, when the Reserve Bank raised the commercial banks' minimum lending rate to 18.5 percent).

29. Accordingly, the PCBs' component disbursed smoothly, especially when other import financing became scarce in the 1991 foreign exchange crunch. However, an overcommitment of these funds led to an April 1991 loan amendment that created a pool fund available to all participants on a first-come, first-served basis. This fund was repeated one year later. Bank of Baroda made maximum use of these reallocations. This was, incidentally, doubly advantageous because the funds the PCBs committed ultimately were transformed into equity, helping them to comply with the new Basle capital adequacy standards.

30. In the case of the ICICI, the authorities' views were determined more by long-term financial sector aims. They believed that it was important to terminate coverage of foreign exchange risk for long-term rupee lending, a view with which the Bank concurred. To this end the Indians proposed a single currency loan system, which was rejected because such systems were not being offered by the Bank at the time. Bank staff believed that the optimum solution was to have a system without foreign exchange controls and with market-determined interest. They understood, however, that India was not yet ready for such as system and, in particular, lacked a forward foreign exchange market to help borrowers protect themselves. The Government and the Bank eventually agreed that using the ERAS to manage foreign exchange risk was an acceptable second best solution. In any case, the scheme was considered superior to the revised IEP's on-lending formula.

31. Thus two alternatives were made available to borrowers under this credit line: the Bank's standard foreign currency-denominated lending in a pool of currencies, with the final beneficiary 9 bearing the foreign exchange risk, and the ERAS, a currency pooling system introduced by GOI in April 1989 for the foreign commercial borrowings of major development financial institutions. The ERAS aimed to increase the demand for foreign exchange-denominated term lending by providing a measure of protection to borrowers against interest and exchange rate risk and distributing the cost of such protection equitably among the borrowers. Under the ERAS, borrowers paid a rupee-denominated rate comprising the weighted average interest costs of the development financial institutions' foreign borrowings, a premium based on the estimated foreign exchange risks, and the development financial institutions' intermediation spread of 2 percent. The scheme commenced with an initial rate of 15 percent (1 percent above the prevailing term lending rate of the time), and the rate was reviewed every six months and adjusted to cover the foreign exchange and interest rate costs (based on international interest rate and currency movements). GOI agreed to cover any short-run deficits of the fund caused by large interest rate or exchange rate fluctuations.

32. Unfortunately, the designers of the ERAS could not anticipate the 47 percent rupee depreciation in 1989-91, which caused annual interest rates paid under the ERAS to rise to 26 percent and rendered effective repayment rates unaffordable. As a result the ICICI's line of credit stalled. The introduction of partial convertibility of the rupee gave exporters no incentive to pay above-market rates on fixed loans, and borrowing companies' lack of familiarity with the Bank's currency pool made them reluctant to take on exchange rate risk at a time of rapid rupee devaluation. In 1992 GOI and the Bank discussed alternative interest rate formulas that might overcome the shortcomings of the ERAS but failed to reach agreement. Because the ICICI could not assume the foreign exchange risks and the Bank could not retroactively alter currency pool arrangements under existing loans, GOI and the Bank decided to discontinue the scheme in February 1993, leading to the cancellation of US$98.7 million. This adjustment reduced the amount of the ICICI component financed by the Bank to US$76.3 million.

E. PROJECT SUSTAINABILITY

33. Prospects for project sustainability are very favorable. The project led to substantial investment in India's export industries. It also helped the participating development financial institutions gain valuable experience in promoting export marketing and quality-enhancing activities. Moreover, GOI seems committed to the ongoing reforms.

34. Benefits to sub-borrowers. The EDP was very attractive to sub-borrowers because it provided access to term credit, allowing for the purchase of imported capital goods during a period of extreme scarcity of foreign exchange (especially in 1991) and provided rupee- denominated funds at very reasonable real interest rates relative to other sources of domestic currency. The loan contributed to the export companies' modernization efforts, increasing their ability to compete with foreign during a critical transition period. Additionally, it helped several small and medium-size companies to expand aggressively through export-led growth. The EDP was particularly useful for new entrepreneurs and new exporters because few other sources of funds were available to them. 10

35. The EDF provided several exporting firms with financial and technical assistance in pursuing marketing activities that were crucial to their expansion, but that otherwise were unlikely to have taken place because of constraints in access to foreign exchange. The fund also sharpened the export awareness and penetration of Indian companies in the world market, moving them away from volume-oriented activities to an approach focused on quality and client responsiveness. It helped them formulate structured market entry development plans and encouraged strategic alliances for increased exports and product upgrades. Eleven medium-size companies assisted by EXIM under the program have set up overseas ventures in manufacturing, marketing, or trading in countries like Hungary, Ireland, Malaysia, the Netherlands, Russia, and the United Kingdom.

36. Benefits to financial intermediaries. The performance of the four financial institutions involved in the project and the changes observed in their internal procedures and organization-- making them more commercially oriented and more responsive to the clients' requirements-- must be understood within the context of India's evolving economic environment since 1991. The EDP improved the financial institutions' capabilities to assist clients in export-oriented activities, to widen their client base, and to expand the range of services provided. It played a catalytic role for sub-borrowers with other sources of finance (especially working capital). It also had the additional advantage that the Bank's loan to GOI was passed on to the financial intermediaries as equity.

37. Through their association with the Bank the financial institutions improved their ability to formulate well-conceived lending programs, to adopt a firm-level approach and widen their customer base, to prepare detailed systems and operating procedures, to structure response processes and time schedules, and to implement account administration and monitoring mechanisms. The Bank also helped sharpen financial appraisal skills and introduced the need for appraisal of international markets and strategies.

38. Overall, the implementing banks believe that the project helped them identify shortcomings in their appraisal techniques and contributed a great deal to improving them. Possibly because of that, some of the banks believe that the subloans extended under this credit line had higher rates of return and better collection ratios than other loans in their portfolios. Although they are still Government-owned, the financial institutions are in a position to raise resources from markets, in India and abroad, based on their financial performnance. Term lending in foreign exchange is now an integral part of their operations, especially for operations involving export credit agencies and other bilateral sources.

39. Moreover, institutional strengthening efforts were successful. The implementing banks' technical and financial performance has improved substantially. Under the EDF the financial institutions were expected to develop, strengthen, and broaden the scope of expertise in export- related activities. They are now selling technical expertise in the form of consultancy services:

* The ICICI used the grant funds to redefine its export strategy. It created an export division, now part of the Advisory Services Group, to assist companies in their export strategies. 11

* EXIM has decided to launch a third export development program, including term lending (in dollars) and grant funds, essentially financed by internal funds. EXIM also has created an Exporter's Club and now provides integrated services to potential borrowers for a fee. EXIM also has set up a training center to provide specialized workshops and seminars on international trade and investment-related subjects for export executives of small and medium-size companies. The know-how EXIM developed under the EDF is now being used in other Bank projects.

* Bank of Baroda and Canara Bank created divisions to deal with the financing of export projects and used the TAF to buildup their internal skills. Both banks are planning to expand the advisory services provided to their clients on a fee basis.

F. BANK PERFORMANCE

40. The Bank's performance was satisfactory in identification, preparation, appraisal, and supervision. At the identification stage the Bank correctly diagnosed what was ailing the industry and, working with GOI, identified appropriate solutions. Appraisal identified project goals and established concise project objectives consistent with the overall sector strategy. Supervision missions visited India regularly, obtaining expertise from the same individuals over time. During the ICR mission the four financial institutions and their sub-borrowers expressed satisfaction with the Bank's timely assistance and advice. Additionally, the Bank has maintained a lively dialogue with GOI on trade policy reform.

G. BORROWER PERFORMANCE

41. The performance of the borrower is considered satisfactory. The management of the financial institutions involved were fully committed to successful implementation of the project. Moreover, regular dialogue during supervision between Bank staff and the borrower contributed to timely resolution of problems.

H. ASSESSMENT OF OUTCOME

42. The project outcome is rated as satisfactory. The objectives of modernization, retraining and export growth were largely fulfilled. Exporters managed to reduce costs and increase productivity, improve their financial position, and enhance their international competitiveness. The implied objective of a more competitive market also has been achieved. Many of the industrial, fiscal, and export policy initiatives adopted since 1992 represent marked departures from earlier practice. There has been significant progress in industrial delicensing, in easing regulations on large firms that want to expand or change their product mix, in opening areas previously reserved for small-scale industry, and in deregulating foreign technology and investment collaborations. 12

43. The implementing banks substantially improved both their appraisal and financial performance. Sub-borrowers were satisfied with the overall performance of the financial institutions in terms of timing, service quality, and lending conditions, although most of them regret that there is no real competition in India's banking industry. Finally, it is worth noting that the first projects approved under the EDP faced different economic conditions that raised their cost of capital relative to projects approved after the structural reforms in 1991.

I. FUTUREOPERATIONS

44. In 1991 the World Bank's financial sector operations were considerably reoriented in line with new norms calling for broader sector policies. As a result the Bank has not scheduled any further lending to export development in India. Although most financial intermediaries requested a follow-up operation, they recognize that they now have easier access to other foreign sources of funds. However, Bank intervention would still be helpful to promote new operations similar to the export development fund. These new funds would no longer need to proceed on a matching grant basis, however, but on terms allowing for the self-sustainability of the mechanism. The Bank Group could also assist export development in India by supporting private infrastructure investments with loan and guarantees.

J. KEY LESSONS

45. The project provided several important lessons for project operations in India and elsewhere:

e Financial institutions that have been sheltered for a long time by a highly regulated economic framework may need time and assistance to adjust to a changing incentive structure. Commitment by the borrower and the continuous support of its top management in project implementation are essential to project success.

* Gauging the institutional capacity to deal with complex export marketing issues is a lengthy process. When designing export credit lines, the Bank should not be overly optimistic about how long it will take to establish this expertise. A key element of this project was the EDF for export promotion. Efforts should be made to reproduce this kind of arrangement in similar loans, but preferably on a self-sustained basis.

* The World Bank's willingness to finance export promotion activities in parallel with (rather than after) a comprehensive and well-designed program for trade policy reforms enabled it to be an active participant in the evolving policy dialogue.

* Regular dialogue during project supervision between Bank staff and the borrower contributed to timely resolution of problems. 13

ANNEX I

STATISTICAL TABLES

Table 1: Summary of Assessments Table 2: Related Bank Loans and Credits Table 3: Project Timetable Table 4: Loan Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Achievements Table 7: Studies Included in Project Table 8A: Project Costs Table 8B: Project Financing Table 9: Economic Costs and Benefits Table 10: Status of Legal Covenants Table 11: Compliance with Operational Manual Statements Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions Table 14: Selected Indicators of Subloan Achievements Table 15: Selected Indicators of Export Development Fund Achievements 14

Table 1: Suminary of Assessments

A. Achievementof Objectives Substantial Partial Negligible

Macroeconomicpolicies Sector policies / Financialobjectives Institutionaldevelopment Physicalobjectives / Povertyreduction / Genderconcerns / Other social objectives V Environmentalobjectives Public sector management V/ Private sector development V

B. Projectsustainability Likely Unlikely Uncertain

Highly C. Bank performance satisfactory Satisfactory Deficient

Identification V Preparation assistance Appraisal V Supervision V

Highly D. Borrower perfonnance satisfactory Satisfaory Deficie

Preparation V Implementation V/ Covenant compliance V

Highly E. Assessmentof outcome satisfactory Satisfactory Unsatisfactory

I/ 15

Table 2: Related Bank Loans and Credits

Loan or credit name Purpose Year of Status approval

Preceding operations

Industrial Export Project- Supporttrade policy reform and 1986 Closed in 1992;ICR in EngineeringProducts increasethe supplyof 1993;OED audit in 1996. (Loans 2629-INand 2630- investmentfunding for export- IN) orientedprojects and export promotionactivities

Following operations

FinancialSector Greater marketorientation, 1995 Undisbursed$544 million Development(Loans. allocateefficiency, technical 3856/57/58-IN) competence,and competitionin financial system

Table 3: Project Timetable

Actual date/ Steps in projectcycle Date planned latest estimate Identification ; 09/20/87 Preparation 05/20/88 Appraisal 11/12/88 Negotiations 03/27/89 Board presentation _ 05/12/89 Signing _ 05/26/89 Effectiveness 09/21/89 Project completion Loan closing 03/31/96 03/31/96 16

Table 4: Loan Disbursements: Cumulative Estimated and Actual (US$ million)

FY90 FY91 FY92 FY93 FY94 FY95 FY96

Appraisal estimate 33.4 99.4 176.4 262.4 286.4 295.0 295.0

Actual 26.7 56.7 138.0 183.7 186.8 188.9 188.9

Actual as % of estimate 79.9 57.0 78.2 70.0 65.2 64.0 64.0

Date of final disbursement - - - - 6/96

Table 5: Key Indicators for Project Implementation

|. Key implementation indicators in Estimated Actual SAR/President's Report

1. Term lending: number of The project would extend The project has extended some sub-borrowers US$275 million to 350 firms, US$170 million to more than resulting in total investment of 330 firms, resulting in total US$730 million investment of US$858 million

2. Export development fund: US$200 million More than US$800 million incremental exports l

II. Modified indicators (if None applicable)

III. Other indicators (if None

applicable) I ______I__ _ _ 17

Table 6: Key Indicators for Project Operation

Type of Indicator Estimated Actual

I. Key operatingindicators in SAR/President'sReport None

11. Modified indicators(if None applicable)

Ill. Modifiedindicators for None future operation(if applicable) I

Table 7: Studies Included in Project

Purposeas defined Name of study at appraisal/redefined Status Impact of study I =N.A. 18

Table 8A: Project Costs (US$ million)

Appraisalestimate Actual/latestestimate Local Foreign Local Foreign Item costs costs Total costs costs Total TermCredit: ICICI 270.00 175.00 445.00 418.68 76.32 495.00 EXIM 39.60 40.00 79.60 33.23 27.92 61.15 Bank of Baroda 50.95 30.00 80.95 66.28 38.99 105.27 Canara Bank 50.95 30.00 80.95 119.35 40.33 159.68 Subtotal 411.50 275.00 686.50 637.54 183.56 821.10

EDF: ICICI 7.00 7.00 14.00 5.25 5.25 10.50 EXIM 7.00 7.00 14.00 7.44 7.44 14.89 Bank of Baroda 3.00 3.00 6.00 2.00 2.00 4.00 Canara Bank 3.00 3.00 6.00 2.25 2.45 4.70 Subtotal 20.00 20.00 40.00 16.94 17.14 34.09

TAF. ICICI 0.40 1.20 1.60 0.33 0.66 0.99 EXIM 0.30 0.70 1.00 0.35 0.70 1.05 Bank of Baroda 0.15 0.40 0.55 0.11 0.14 0.25 Canara Bank 0.15 0.40 0.55 0.09 0.35 0.44 Subtotal 1.00 2.70 3.70 0.88 1.85 2.73 Total Cost 432.50 297.70 730.20 655.36 202.55 857.91

Table 8B: Project Financing (US$ million)

Appraisalestimate Actual/latestestimate Local Foreign Local Foreign Source costs costs Total costs costs Total

IBRD 295.00 295.00 188.51 188.51 Cofinancing institutions 2.70 2.70 2.70 2.70 Domestic contribution 432.50 432.50 655.36 11.34 666.70

Total Cost 432.50 297.70 730.20 655.36 202.55 857.91 19

Table 9: Economic Costs and Benefits

Subprojects financed by the financial intermediaries were to have a minimum economic rate of return of 12 percent. The actual performnanceof subloans varied across subsectors and institutions, with financial rates of return ranging from 12-60 percent. The average financial rate of return was 28 percent for EXIM and 31 percent for Canara Bank.

Table 10: Status of Legal Covenants

Original Revised Loan Covenant Present fulfillment fulfillment Descriptionof Agreement Section type status date date covenant

3058-IN 4 (a) I C Furnishaudits of project subloans(EXIM, Bankof Baroda, CanaraBank) 4 (b) 1 C Furnishaudits of EDF accounts(ICICI, EXIM, Bankof Baroda,Canara Bank) 3059-IN 4.01 1 C ICICIto providefinancial statements audit report(including on the special account) and Statementof Expenseswithin four monthsof fiscal year end 4.02+ 2 C ICICIto maintaindebt-equity ratio of not more than 12, and DSCRof at least 1.2:1

C - Complied with DSCR - Debt service coverage ratio 20

Table 11: Compliance with Operational Manual Statements

Statement number and title Describe and comment on lack of compliance

No known lack of compliance

Table 12: Bank Resources: Staff Inputs

State of Planned Revised Actual

project cycle Weeks US$ Weeks US$ Weeks US$ 000 000 000

Through appraisal 146.4 315.6 146.4 315.6 146.4 315.6

Appraisal through 18.0 49.7 18.0 49.7 18.0 49.7 Board approval

Board approval through effectiveness

Supervision 35.0 98.8 42.4 86.7 61.3 247.5

Completion 47.3 23.6 11.4 1.1

TOTAL 199.4 464.1 718.2 475.6 225.7 623.8 21

Table 13: Bank Resources: Missions

Performance rating

Stage of Number Days Specialized Implemen- Develop- project Month/ of in staff skills tation ment Types of cycle year persons field represented status impact problems

Through appraisal

Appraisal through Board approval

Board approval through effective- ness

Super- 02/90 3 24 Econ. 1 1 vision 02/91 3 45 Econ. I 1 07/92 2 14 Fin. Econ. 2 1 Exchange Rate 12/92 1 20 Fin. 3 3 Exchange Rate 08/93 1 10 Fin. 2 2 12/93 1 17 Fin. 2 2 07/94 1 5 Fin. HS HS 07/95 1 5 Fin. HS HS

Comple- tion 04/96 3 35 Econ. Fin. HS HS

1=HS - Highly satisfactory 2 - Satisfactory 3 - Problem Project 22

Table 14: Selected Indicators of Subloan Achievements

Indicator ICICI Bank of Canara EXIM Total Baroda Bank Amount committed (US$ million) 112.8 49.9 24.8 30.1 217.6 Amount disbursed (US$ million) 76.3 45.5 22.0 27.9 171.7 Number of loans 102 113 84 47 346 Number of companies 102 113 83 46 344 Average loans (US$) 748,000 441,000 262,000 635,000 496,000 Average sales of companies (Rs. million) n.a. 228 187 1,862 Average financial rate of return (percent) n.a. n.a. 31 34 Number with long-term arrears or n.a. 11 4 2 l reschedulingsa l Number of full cancellations 17 5 12 3 3 Additional jobs created 17,050 5,000 4,500 1,500 28,050 a -- long-termnarrears are arrears over one year.

Table 15: Selected Indicators of Export Development Fund Achievements

ICICI Bank of Canara EXIM Total Baroda Bank l Amount commnitted(US$ million) 7.50 3.38 3.04 7.44 21.36 Amount disbursed (US$ million) 5.25 2.00 1.79 7.44 16.48 Number of loans 131 89 100 129 449 Number of companies 123 89 97 121 430 Average loans (US$) 40,100 26,900 17,900 65,500 36,700 Incremental exports n.a. n.a. 42 times 102 times ANNEX2

IMPLEMENTATION COMPLETION REPORT OF: EXPORT DEVELOPMENT PROJECT (LOANS 3058/3059-IN) INDUSTRIAL FINANCE AND TECHNICAL ASSISTANCE PROJECT (LOAN 2928-IN)

AIDE-MEMOIRE

1. A World Bank mission consisting of Messrs. Paul Beckerman (SA2CI) (who accompanied the mission only in Bombay), Paulo de Sa (IENIM), Herman Nissenbaum (Consultant), and Ms. Lin Chin (SA2CI) visited India from March 31 to April 11 to prepare the Implementation Completion Report (ICR) of the Export Development Project (Loans 3058/3059- IN) as well as the Industrial Finance and Technical Assistance Project (Loan 2928-IN). It also met with the management of the Steel Authority of India Ltd. (SAIL) in New Delhi. The mission met with all five implementing financial institutions -- Industrial Development Bank of India (IDBI), Industrial Credit & Investment Corporation of India (ICICI), Export-Import Bank of India (EXIM), Canara Bank, and Bank of Baroda (BOB), as well as with a sample of about 30 loan recipients in Bombay, Bangalore and Delhi. This aide-memoire records the views of the Bank mission, the implementing agencies and of a sample of sub-borrowers, and discusses the implementation performance for each component. Preliminary commitment and disbursement figures based on the data provided by the administering agencies are also included. The mission would like to thank the implementing agencies for their hospitality and assistance.

2. The Export Development Project had four components: (i) a US$175 million credit line administered by ICICI (later reduced to US$76.3 million); (ii) US$100 million for term loans through three participating banks, the Export-Import Bank of India (EXIM), Canara Bank, and Bank of Baroda; (iii) US$20 million for matching grants to exporters for export promotional activities, the Export Development Fund (EDF); and (iv) a US$2.7 million Japanese Grant (No. 2727) available for technical assistance to the implementing agencies.

3. ICICI Loan Component: The ICICI component has provided US$76.3 million for sub-loans to 102 companies. Original plans were for a US$175 million loan that would be relent to sub-borrowers in foreign exchange at the Bank's standard variable interest rate plus 2% or in rupees at the prevailing exchange rate under the Exchange Rate Administration Scheme (ERAS). During implementation, however, the line of credit stalled because of the collapse of the ERAS scheme, following the 47% depreciation of the rupee between 1989-1991, and the introduction of partial convertibility of the rupee. These developments impaired the exporters' incentive to pay above-market rates on fixed loans. On the other hand, the lack of familiarity of the borrowing companies with the currency pool arrangement made them reluctant to take on exchange rate risk at a time of repeated devaluation. Borrowers also found the mechanism difficult to understand. As a result, in February 1993, the Bank and the Government of India (GOI) agreed to cancel the remaining undisbursed amounts, totaling US$98.7 million. Preliminary data provided to the mission show that the average loan size was US$748,000, and total investment costs were US$495 million, which generated 17,057 jobs.

4. Participating Banks Loan Component: This component has provided US$97.3 millions for sub-loans to 235 companies. The US$100 million loan was originally to be allocated among the participating banks as follows: Eximbank, US$40 million; Bank of Baroda, US$30 million; and Canara Bank, US$30 million. At the request of GOI, in April 1991 the Bank reallocated US$10 million from the share of each participating financial institution to create a 2 pool fund for all the banks to be made available on a first-come, first-served basis. In July 1992, at the request of GOI, the Bank reallocated the remaining uncommitted funds under this component on a first-come first-served basis. Bank of Baroda took maximum advantage of this reallocation of funds.

5. Based on the preliminary data transmitted to the mission, the disbursement status of this component is as follows:

- EXIM committed US$30.1 million and disbursed about US$27 million to 43 small and medium companies. The average loan size was US$635,000 and the average financial rate of return expected at appraisal was 34 percent. There were 3 full cancellations, and 3 projects with long-term arrears.

- Bank of Baroda committed US$49.85 million and disbursed US$45.5 million to 108 small and medium companies (with average sales of about US$7 million). The average loan size was US$441,000 and exports generated over the past three years exceed Rs 8.6 billion. About sixty percent of the companies are located in small towns or backward areas. There were 5 full cancellations, and 11 projects with long-term arrears. At the end of FY 1995/96, 37 units were performing below expectations, although more than two thirds of them were regular in meeting their term loan obligations.

- Canara Bank committed US$24.8 million in 84 loans, of which about US$22 million were disbursed mainly to small and medium companies (with average sales of about US$6 million). The average loan size was US$262,000 and the average financial rate of return expected at appraisal was 31 percent. There were 12 full cancellations, 4 projects with long term arrears, and the number of defaults totaled 18.

9. Export DevelopmentFund (EDF) Grant Component: The EDF component has supported marketing programs for about 450 companies. The original allocation of funds among the participating banks was as follows: ICICI, US$7 million; Eximbank, US$7 million; Bank of Baroda, US$3 million; and Canara Bank, US$3 million. Overall implementation was highly satisfactory. The average size of the grant was US$451,190. The firms assisted were small, medium and large in size. On the basis of the available data, the ratio of actual incremental export earnings to grants at the end of the FY 1995/96 had largely exceeded the target of I 0-to- 1 (37-to-I in the case of EXIM).

10. ICICI committed US$7.5 million and disbursed about 70 percent of this amount to more than one hundred companies. EXIM overcommitted its allocation with the agreement of the Bank US$7.4 million was committed to 118 companies, although only about 85 percent of this amount was actually disbursed. The average grant size was US$61,513. The other participating banks were slower to commit their allocations and to disburse the sanctioned amounts. Bank of Baroda has received an allocation of US$3.38 million under the EDF. As of December 1995, 94 projects had been approved but nearly US$1 million remained undisbursed because Bank of Baroda decided to only release these disbursements after proof that incremental exports amounting to ten times the grant over five years had taken place. Similarly, Canara Bank only disbursed about 60 percent of its original allocation.

11. Japanese Grant Technical Assistance Fund (TAF) Component: About US$2.6 million was spent on this program from an initial allocation of US$2.7 million, distributed as 3 follows: ICICI, US$1.175 million; Eximbank, US$675,000; Bank of Baroda and Canara Bank, US$425,000 each. The grant originally supported a training program for all implementing agencies to upgrade staff skills in the area of exports. After three years of virtually no disbursements, the component's scope was widened to include sector studies and establishment of two overseas service centers by EXIM (in Rome and Budapest) to collect market information for Indian companies and identify joint-venture opportunities. EXIM's final utilization of funds amounted to US$ 1.043 million, as authorized by the Bank. ICICI disbursed US$990,000, mainly for training under the ADL-CTP program, while Canara Bank utilized virtually the entire allocated amount for training abroad. Bank of Baroda was somewhat slow to submit final proposals to the Bank, even though it was allowed to do so irrespective of the original allocations, and utilized approximately US$150,000.

12. Overall Project Implementation: General implementation of the project proceeded without major problems, especially as the financial institutions' previous experience under the Industrial Engineering Project enabled them to disburse the term credit more rapidly. Slow initial disbursement of the two Funds was compensated by intense activity during the last year of the Loan. The most important problem during implementation was the failure of the ERAS scheme (because of macroeconomic circumstances that were not foreseen at the time the loan was prepared) and cancellation of the remaining funds. In this connection, the borrowing agencies and the financial institutions and sub-borrowers expressed their satisfaction with the Bank's timely advice on this problem.

13. During the discussions with the financial institutions, the mission provided advice and support for the preparation of their respective portions of the ICR.

14. Proiect Results: During the visit to India, the mission was only able to obtain partial information on the final results of the project. Information was especially limited in the case of ICICI. All the financial institutions agreed to make available to the Bank the complete list of sub-borrowers, costs and financing for each project, expected financial and economic rates of return, as well as their performance in improving the banks' collection records no later than M4ay15. Nevertheless, the project can be considered to have achieved its main objectives, in spite of the changes in the macroeconomic environment that could not be foreseen at the time of preparation and appraisal.

15. The sub-borrowers told the mission that the EDP presented very attractive conditions. They stressed that (i) provided access to term credit enabling them to purchase of imported capital goods in a period of extreme scarcity of foreign exchange (especially in 1991); and (ii) made available rupee-denominated funds at reasonable real interest rates. The Loan contributed to the companies' modernization efforts, and helped them prepare to meet foreign competition. They said it helped several small and medium companies expand aggressively through exports, at a time when domestic growth was relatively sluggish (1990-1993). It was felt that the EDP was particularly useful for new entrepreneurs and starting exporters, as it was then the single source of funds available to them.

16. The sub-borrowers were also generally satisfied with the perfornance of the financial institutions in terms of timing, service quality, and lending conditions. Most noted that the banking industry in India then provided no comparable sources of finance. It should be noted, however, that the changes in the economic environment during the implementation phase adversely affected the financial performance of the first projects approved. In effect, they 4

incurred high capital costs as a result of: (i) the effect of the devaluation on the costs of imported equipment; (ii) high duties for imported equipment that were subsequently considerably reduced; and (iii) delays in obtaining of Governmental licenses, especially during the period of foreign- exchange scarcity.

17. Under the EDP, several beneficiaries were assisted both financially and with technical assistance in marketing activities that proved valuable for their export expansion. This could not otherwise have taken place because of restrictions on access to foreign exchange. The Fund also contributed to sharpening export awareness and penetration by Indian companies in world markets. It encouraged them to move away from volume-oriented activities toward a focus on quality and on client service.

18. The performance of the financial institutions and the changes observed in their internal procedures and organization -- making them more commercially-oriented, and more responsive to clients' requirements -- must be understood within the context of the evolution of India's economic environment and sector deregulation since 1991. The EDP contributed to improving their abilities to assist clients in export-oriented activities, to widening their client base, and to expanding the range of services provided. It also had a catalytic role for the sub- borrowers in enabling them to secure other sources of finance (particularly for working capital).

19. Overall, the banks feel that the EDP helped them identify the shortcomings in their appraisal techniques, and helped them improve internal operating procedures. This may help explain why sub-loans extended under this credit line had higher rates of return and better collection ratios when compared to the average performance of their portfolio. Term lending in foreign exchange, especially from export-credit agencies and other bilateral sources, is now an integral part of these financial institutions' operations.

- ICICI used the grant funds to redefine its strategy in the export business. It created an export cell, now part of the Advisory Services Group, to assist companies in their export strategies.

- EXIM has decided to launch a third export development program -- including term lending (in dollars) and grant funds -- financed essentially through internal funds. The bank has also created an Exporter's Club and now provides integrated services to potential borrowers at a fee.

- Participating commercial banks consolidated permanent cells within their organizations to deal with financing of export projects and used the TAF to build-up their staff skills. They are now planning to expand the advisory services provided to their clients on a fee basis.

20. On return to Bank headquarters, the mission will prepare the Implementation Completion Reports for Loans 2928, 3058 and 3059, drafts of which will be sent to the GOI for review. 5

Attachment

Selected Indicators of Subloan (Lns.3058/59-IN) Achievements

Indicator ICICI Bank of Canara EXIM Total Baroda Bank Amount committed (US$ million) 112.8 49.9 24.8 30.1 217.6 Amount disbursed (US$ million) 76.3 45.5 22.0 27.9 171.7 Number of loans 102 113 84 47 346 Number of companies 102 113 83 46 344 Average loans (US$) 748,000 441,000 262,000 635,000 496,000 Average sales of companies (Rs. million) n.a. 228 187 1,862 Average financial rate of return (percent) n.a. n.a. 31 34 Number with long-term arrears or n.a. 11 4 2 reschedulingsa Number of full cancellations 17 5 12 3 3 Additional jobs created 17,050 5,000 4,500 1,500 28,050 a - long-term arrears are arrears over one year.

Selected Indicators of EDF (LnsL 3058/59-IN) Achievements

ICICI Bank of Canara EXIM Total Baroda Bank Amount committed (US$ million) 7.50 3.38 3.04 7.44 21.36 Amount disbursed (US$ million) 5.25 2.00 1.79 7.44 16.48 Number of loans 131 89 100 129 449 Number of companies 123 89 97 121 430 Average loans (US$) 40,100 26,900 17,900 65,500 36,700 Incremental exports n.a. n.a. 42 tines 102 times Export Development Project - Lns.3058/59-IN Industrial Finance and Technical Assistance Project - Ln.2928-IN

Implementation Completion Report Mission (April 1 - 12,1996)

List of Officials Met

Industrial Development Bank of India

Mr. S.H. Khan Chairman and Managing Director Mr. G.P. Gupta Executive Director Mr. P.S. Subramanyam Chief General Manager Mr. K. Sivaprakasam General Manager Mr. J. John Deputy General Manager Ms. Mythili Ravi Assistant General Manager Mr. K.X.M. John Chief General Manager (Delhi Office) Mr. R. Satyamurthi General Manager (Delhi Office) Mr. Smriti Dhaon Deputy Manager

The Industrial Credit and Investment Corporation of India Ltd.

Ms. Lalita D. Gupte Executive Director Mr. Ambikapratap Singh Senior Vice-President Mr. Mahinder Chugh Senior Vice-President Mr. Suneet K. Maheshwari Senior Vice-President Mr. N. Sridhar Assistant Vice-President Ms. Shubha Kamalsurya Assistant Vice-President Mr. Mahesh Rao Deputy Manager Mr. T. Raghavendran Vice-President (Bombay Zonal Office) Mr. S. Ragothaman Zonal Manager (BZO) Mr. Mohit Chaturvedi Assistant Manager (BZO) Mr. N.P. Subramnanian Deputy Manager (BZO) Mr. T.R. K Deputy General Manager

Export-Import Bank of India

Mr. T.C. Venkat Subramanian General Manager Mr. Shankarnarayan R. Rao Deputy General Manager Mr. Rajshekar Singh Manager Mr. Dipankar Basu Assistant Manager Mr. Vinod Goel Manager (Delhi Office) Mr. S. Sridhar Regional Resident Representative Export Development Project - Lns.3058/59-IN Industrial Finance and Technical Assistance Project - Ln.2928-IN

Implementation Completion Report Mission (April 1 - 12, 1996)

List of Sub-Borrowers Interviewed

Aro Granite Industries Ltd. Parasrampuria Synthetics Ltd. Ballarpur Industries Ltd. Flex Foods Ltd. CT Cotton Yarn Ltd. Kajaria Ceramics Ltd. Eicher Motors Ltd. AKG Acoustics (india) Ltd. Indo - American Hybird Seeds Namaste Exports Ltd. Shenoy Granites (P.) Ltd. Mangal Arts & Crafts Amit Spinning Industries Ltd. Keshavial Talakchand Kaytee Corporation Ltd. Patodia Eurotex Group Onida Electronics Ltd. DCL Polyesters Ltd. The Andhra Petrochemicals Ltd. Repl Engineering Ltd. Vidyut Metallics ltd. Jain Irrigation Systyms Ltd. The Zandu Pharmaceutical Works Ltd. AFM India Ltd. Protecto Engineering Ltd. Lyka Labs Ltd. Royal Cushion Vinyl Products Ltd. Foundation Software Associates P. Ltd. Inter Gold (India) Ltd. Enkay Texofood Industries Ltd. Bausch & Lomb India Ltd. Triveni Oilfield Services Ltd. Surya Roshni Ltd.

The Asia IT Center M:\LIN\ICRLIST.DOC Bank of Baroda

Mr. G.A. Nayak General Manager (Zonal Office) Mr. V.B. Lal Seksena Assistant General Manager Mr. Arun Tiwari Senior Manager Mr. Hemant K. Parikh Chief Manager (Project Finance) Mr. M.M. Modi Senior Manager Mr. K. Kalidas Manager

Canara Bank

Mr. K.P. Pai General Manager Mr. M.V. Karnath General Manager Mr. A.R. Jayaprakash Senior Manager Mr. C.G. Adwalpalker General Manager Mr. K.P.Y. Rao Deputy General Manager

Steel Authority of India Ltd.

Mr. Arun J. Malhotra Senior Manager (Consultancy Division) Mr. S.C. Suri Executive Director (Planning) Mr. U.S. Jam Director (Finance) Mr. S.D.M. Nagpal Addl. Director (Finance & Account) Mr. R.K. Garg Senior. Manager (Vice-Chairman Secretariat) ANNEX 3

Export Development Project - Ln.3058-IN Bank of Baroda Lint of Sub-Loans

Sub-Loan No. Name Amt. Authorized Amt. Disbursed .S$ US$

A-1.01 HINDUSTAN MAGNETICS LTD. 568,400 0 A-1.02 FABROCRATS 538,093 482,219 A-1.03 HIKAL CHEMICALS 1,080,000 959,675 A-1.04 CIRE OAREBTAKS 821,205 821,205 A-1.05 VIVID CHEMICALS 1,150,000 0 A-1.06 SUBBURAJ COTTON 1,030,000 1,020,404 A-1.07 VJ EQUIPMENTS 884,138 754,532 A-1.08 AMAJIN AGRO EXPORTS 730,000 0 A-1.09 DIGITRON COMPUTERS 1,055,000 0 A-1.10 JYOTI CERAMICS 714,521 714,521 A-1.11 DIMEXON EXPORTS 531,230 516,474 A-1.12 MENON PISTONS LTD. 491,480 492,539 A-1.13 PURITY FLEXIPACK LTD. 574,000 556,380 A-1.14 SARLA GEMS LTD. 580,000 455,428 A-1.15 FLORAM SHOES 822,700 0 A-1.16 PRANAVADITYA SPG 577,440 539,712 A-1.17 VISTA ORGANICS LTD. 420,187 402,127 A-1.18 THIRANI CHEMICALS 539,767 539,767 A-1.19 TRUMAC ENGG 706,682 807,994 A-1.20 BUSH BOAKE ALLEN 895,132 634,990 A-1.21 NUCOR WIRES 1,069,700 0 A-1.22 HANUMAN MINERAL OILS 512,000 508,563 A-1.23 RIVEIRA KNITWEAR P LTD 412,300 486,615 A-1.24 SRI BHARATI COTTON MILLS 520,037 517,426 A-1.25 VISHALDEEP SPG. MILLS 508,100 448,738 A-1.26 EAGLE FLASK (I) LTD. 623,770 658,710 A-1.27 ENGINE COMPONENTS 602,248 675,702 A-1.28 AHMEDNAGAR FORGINGS LTD. 624,400 624,400 A-1.29 PERFECT PROCESSORS 757,900 0 A-1.30 ANKIT GRANITES LTD. 956,025 966,075 A-1.31 ADDISON & CO. LTD. 750,000 593,347 A-1.32 PHARMACIA 803,657 0 A-1.33 IDEAL EXPO FABRICS 1,021,833 1,015,270 A-1.34 LOTUS CHOCALATES LTD. 1,000,000 947,372 A-1.35 MARAL OVERSEAS 1,000,000 944,223 A-1.36 CIMCO SPINNERS 1,000,000 1,032,045 A-1.37 AUROKNIT TEXTILES 942,408 1,042,900 A-1.38 BAXUL CHEMICALS P. LTD. 758,000 0 A-1.39 RAUSH & LAMB 1,000,000 947,570 A-1.40 TUDOR INDIA 1,000,000 0 A-1.41 NARASUS SPINNING 559,070 586,284 A-1.42 SREE RADHAKRISHNA EXPORTS 1,050,000 1,153,097 A-1.43 ENKAY TEXOFOOD 592,000 529,059 A-1.44 CORAMANDAL GARMENTS 920,000 915,977 A-1.45 KRYPTON INDUSTRIES 1,000,000 680,000 A-1.46 JAMNA AUTO INDUSTRIES 925,000 738,425 A-1.47 SARARE AUTOMOULDERS 581,887 221,199 A-1.48 HYT MACHINES P. LTD. 640,000 0 A-1.49 BHARATI TELECOM 500,000 474,876 A-1.50 RAMCO SUPER LEATHERS LTD. 733,960 0 A-1.51 PREMIER POLYTRONIC 1,000,000 1,003,634 A-1.52 SRI NARASIMHA TEXTILES 580,000 802,150 A-1.53 ORO LEATHERS LTD. 751,300 0 A-1.54 TYCHE BIO MEDICA 800,000 689,842 A-1.55 DEWAN RUBBER LTD. 775,200 776,000 A-1.56 INDIA FORGE & DROP 763,157 738,437 A-1.57 GUJARAT POLY AVX 788,000 771,130 A-1.58 WALLMEK IND. LTD. 950,000 950,000 A-1.59 TRINITY DIE FORGERS LTD. 875,000 818,427 A-1.60 SALZER TEXTILES LTD. 1,000,000 1,033,300

B-1.01 C. MAHENDRA EXPORTS 128,000 123,966 B-1.02 TRAVANCORE CHEMICALS 139,776 134,026 B-1.03 CHAM ICE 116,733 116,733 B-1.04 PATODIA SYNTAX 175,000 124,717 B-1.05 NIPPON DEKOR 209,754 209,754 B-1.06 KANTILAL CHOTTALAL 306,000 0 B-1.07 SWISS HEALTH FOODS 547,300 547,000 B-1.08 VISNAGAR TALUK 132,594 132,594 B-1.09 ATLAS AUTO 115,899 115,899 B-1.10 AUSTIN ENGG 309,605 309,606 B-1.11 ANIL COLOUR 115,000 117,536 B-1.12 GEMSTAR & CO. 140,000 168,938 B-1.13 PEMBRIL FLUIDRIVE 215,000 82,004 B-1.14 COLOR CARTONS LTD. 724,700 581,629 B-1.15 TOP EXPORTS 245,000 160,914 B-1.16 FINLANDIA CUTLERY 144,000 80,024 B-1.17 GUJARAT DYESTUFF INDUSTRIES 186,480 186,480 B-1.18 WESTCOAST INDUSTRIES 331,748 290,340 B-1.19 POLYSPIN EXPORT 165,797 165,797 B-1.20 DURAMETALLIC INDIA LTD. 201,375 201,375 B-1.21 JASUBHAI RICHARD SIMON 193,700 193,700 8-1.22 ROKADIA CHEMICALS 96,000 0 B-1.23 NOBEL SYSTEMS 145,609 145,609 B-1.24 ACCORN INDUSTRIES 109,720 0 B-1.25 SUDEEP PHARMA 70,167 70,167 8-1.26 PAPILON EXPORTS 118,198 118,798 B-1.27 EXCELSIOR LEATHER 93,500 41,773 B-1.28 KANNAN TEXTILES LTD 400,000 0 B-1.29 HOLWART ENGG 137,361 131,361 8-1.30 T. ABDUL WAHID AND CO. 335,000 0 8-1.31 AJAY METACHEM 223,000 0 B-1.32 ARIAN TEA INDUSTRIES 46,829 46,829 B-1.33 SHANKAR KUPPLUNGS 356,000 0 B-1.34 KESAR MARBLES & GRANITES 283,000 110,285 B-1.35 CADILLA HOSPITAL 89,774 89,734 B-1.36 KPP KNITS 41,620 41,620 B-1.37 K.PATEL DYECHEM IND. 92,616 92,616 B-1.38 COLOUR CARTONS LTD. 322,200 0 B-1.39 MILTON LTD. 446,000 478,074 B-1.40 CILLULOSE PRODUCTS 232,800 232,800 B-1.41 TOSHINIWAL AGROCHEM 329,600 293,348 B-1.42 JYOTI CERAMIC INDUSTIRES 205,520 0 B-1.43 BRAINWARE SOFTWARE 41,055 0 8-1.44 CREATIVE OUTWEAR 455,000 473,365 B-1.45 S&H GEARS LTD. 104,000 104,000 B-1.46 POWER OHM RESISTORS 102,407 102,407 B-1.47 TECHITRAN POLYLENSES 389,000 389,200 B-1.48 SUNDEK (I) LTD. 358,900 270,793 B-1.49 NOBEL SYSTEMS 49,600 0 B-1.50 STITCHCRAFT 84,000 83,585 B-1.51 PRAGATI ENGG WORKS 196,800 107,184 B-1.52 KIRTLAL KALIDAS 216,000 176,159 B-1.53 ADITYA MAGNETICS 497,380 0 B-1.54 ARVITEX SYNTHETICS LTD. 125,000 0 B-1.55 APPLICON HOLDING 127,000 0 B-1.56 ANAR CHEMICALS 77,600 77,600 B-1.57 INDUS SACHARIDES 224,000 0 B-1.58 NILKAMAL JEWELLERY 400,000 241,025 B-1.59 ROSY JEWELLERY EXPORTS 72,200 70,645 B-1.60 INDUS WOVEN LABELS 408,000 0 B-1.61 INTERGOLD (I) LTD. 350,000 172,900 B-1.62 DUPHAR INTERFRAN 168,000 126,439 B-1.63 MIKRONIX ASSOCIATES 72,000 64,415 B-1.64 SRINIVAS SHOES 168,360 116,513 B-1.65 PILLAIYAR PATTIYAR 342,000 294,860 B-1.66 SUNDARAM ABEX 384,770 42S,402 B-1.67 FOUNDATION SOFTWARE 76,380 74,111 B-1.68 VXL INSTRUMENTS 160,000 153,820 B-1.69 NUBAL INSTRUMENTS 89,000 37,424 B-1.70 JANATICS 80,000 64,438 B-1.71 TRAK LEATHER 38,760 0 B-1.72 SAI LABELS 240,000 240,018 B-1.73 SUPERTEX LABELS 215,510 229,299 B-1.74 HITECH HALOGEN BULBS LTD. 442,707 0 B-1.75 FUTEX STEEL 478,460 498,024 B-1.76 BEAUTIFUL JEWELLERY 350,000 259,086 B-1.77 ADDISON JEWELLERY 10,000 9,488 B-1.78 MOHAN LEATHER 210 0 B-1.79 JAI KAUSHAL PLASTICS 383,000 369,088 B-1.80 GUJAMAT NARMADA KNITWEAR 350,000 335,000 TOTAL 63,702,001 45,491,094 Export Development Project - La.3058-IN Bank of Baroda List of EDF Sub-Loans

Sub-Loan No. Nams Amt. Authorized Amt. Disbursed*

USS US$

TA-1.01 Yojana Systems P. Ltd. 76,000 47,045 TA-1.02 Data System Services P. Ltd. 47,500 14,030 TA-1.03 Information Services P. Ltd. 25,500 2,657 TA-1.04 Brainware Software P. Ltd. 27,000 776 TA-1.05 Bharati Telecom 24,770 19,104 TA-1.06 Sun Pharmaceticals 48,520 36,716 TA-1.07 Men at Work 47,700 6,388 TA-1.08 Janatics 44,800 0 TA-1.09 Pragati Eng. works 47,250 23,284 TA-1.10 Flavours & Fragrances 8,000 0 TA-1.11 Yojana Systems P. Ltd. 0 0 TA-1.12 India Forge & Drop Stampings Ltd. 4,000 0 TA-1.13 Marwell Leathers (P) Ltd. (MLPL) 5,000 1,881 TA-1.14 Elcelsior Leather 45,000 18,925 TA-1.15 Arun Exports 33,000 0 TA-1.16 Gupta Chemicals 40,000 27,672 TA-1.17 Comutec Robotics 17,000 7,821 TA-1.18 Holwart Engg. Co. 10,000 0 TA-1.19 Toshniwal Agrochem Ltd. 21,000 8,299 TA-1.20 Isibars Ltd. 42,000 9,343 TA-1.21 Agogranite Inds. Ltd. 50,000 33,970 TA-1.22 Trinity Die Forgers Ltd. 50,000 38,299 TA-1.23 Pacific Granites Ltd. 50,000 0 TA-1.24 Mikrmix Associates 18,000 2,149 TA-1.25 Yojana System Ltd. 0 0 TA-1.26 Micro Plantae Ltd. 40,000 37,851 TA-1.27 Royal Cushion Vinyl Ltd. 46,000 21,731 TA-1.28 Blue Star Ltd. 50,000 1,433 TA-1.29 Vignesh Impex Ltd. 29,600 26,507 TA-1.30 Think Systems P. Ltd. 50,000 13,552 TA-1.31 Ajanta Pharma Ltd. 40,000 0 TA-1.32 Atco Industries Ltd. 50,000 0 TA-1.34 Jyoti Ceramics Ltd. 45,000 40,299 TA-1.35 Gupta Jewel Corp. 36,000 16,060 TA-1.36 Srei Int'l Ltd. 33,000 0 TA-1.37 Acknit Knitting P. Ltd. 16,500 9,522 TA-1.38 Indchem ATL Ltd. 40,000 0 TA-1.39 Pratap Kapur 10,000 7,313 TA-1.40 Man Aluminium 31,000 10,299 TA-1.41 Bindu Synthetics 35,700 6,806 TA-1.42 Pharma Machine Mfg. Co. 15,000 4,179 TA-1.43 Himgiri Industries 32,000 42,119 TA-1.44 Hiralal Printing Works 50,000 0 TA-1.45 Sarare Automoulders Ltd. 27,000 7,493 TA-1.46 K. Patel Chemo Pharma P. Ltd. 10,000 0 TA-1.47 Shiva Medicare Ltd. 33,350 0 TA-1.48 Satnam Overseas Exports 46,000 17,194 TA-1.49 Hind Automount Ltd. 49,000 7,313 TA-1.50 Armour Polymers Ltd. 37,000 0 TA-1.51 Rajastham Spg & Wvg Mills Ltd. 50,000 12,866 TA-1.52 Electronica Exports P. Ltd. 31,500 17,970 TA-1.53 Precision Gears P. Ltd. 50,000 32,955 TA-1.54 Competent Computer Corp. 14,000 12,537 TA-1.55 Proteck Circuits & systems P. Ltd. 50,000 41,791 TA-1.56 Indus Software P. Ltd. 33,000 29,701 TA-1.57 Ajay Metachem P. Ltd. 50,000 27,463 TA-1.58 Haq Brothers 34,000 21,373 TA-1.59 Lanz Laboratories 28,000 0 TA-1.60 Nandadeep Papers 50,000 0 TA-1.61 Globe Metal Industries 33,500 26,179 TA-1.62 Highlands Exports 34,000 31,493 TA-1.63 Rubamin P. Ltd. 32,000 28,358 TA-1.64 C.L. Talwar & Sons 27,500 10,239 TA-1.65 Phoneix Overseas Ltd. 50,000 46,269 TA-1.66 Argus Cosmetics Ltd. 29,000 0 TA-1.67 Multiplex Handicrafts 26,000 15,970 TA-1.68 Rokadia Chemicals Ind. Ltd. 50,000 0 TA-1.69 India Nippon Elect Ltd. 50,000 0 TA-1.70 Rajendra Mech. Ind Ltd. 50,000 9,104 TA-1.71 Holwart Engg Company 20,000 13,134 TA-1.72 Shreyas Intermediates Ltd. 43,350 2,896 TA-1.73 Fair Exports I Pvt. Ltd. S0,000 0 TA-1.74 N.K. Oil Mills Ltd. 50,000 0 TA-1.75 Polymechplast Machines Ltd. 50,000 11,522 TA-1.76 Greengold Exports Pvt. Ltd. 16,000 0 TA-1.77 Stallion Impex Pvt. Ltd. 46,000 36,657 TA-1.78 India Fashions 46,500 43,821 TA-1.79 Punjab Chemicals & Pharm Ltd. 50,000 46,269 TA-1.80 Juthika Exports 50,000 28,925 TA-1.81 Dhoudhary Fashions 50,000 43,881 TA-1.82 Bangalore Knitwear P. Ltd. 15,000 13,433 TA-1.83 Gujarat Narmada Knitwear Ltd. 50,000 32,448 TA-1.S4 West Coast 50,000 43,821 TA-1.85 Solsons 50,000 36,657 TA-1.86 Awim Exim 31,500 0 TA-1.87 Polybond (I) P. Ltd. 50,000 25,881 TA-1.88 Saraf Spg. & Wvg. Mills Ltd. 40,000 0 TA-1.89 Auroknit Exports (I) Ltd. 33,000 0 TA-1.90 Rupal Chemicals Inds. Ltd. 50,000 0 TA-1.91 Axles India Ltd. 50,000 0 TA-1.92 Vijay Wires & Fil. Ltd. 40,500 21,791 TA-1.93 Paper Products Ltd. 50,000 42,209 TA-1.94 Anil Steel and Inds. Ltd. 36,500 9,463 TOTAL 3,425,040 1,385,104

* Exchange rate USS1 * Rs. 33.5 Export Development Project - Ln.3058-IN Canara Bank List of Sub-Loane

Sub-loan No. mane Ant. Authorized Ant. Diabursed US$ US$

A-2.01 Nova Blectromagnetics Ltd. 1,198,752 592,272 A-2.02 Indocount Industries Ltd. 1,182,000 726,874 A-2.03 Bhiwani Denims & Apparels Ltd. 736,875 571,630 A-2.04 Wellknit Apparells (P) Ltd. 540,540 414,496 A-2.05 Tichtron Polylens Ltd. 500,000 500,000 A-2.06 Maral Overseas Ltd. 1,000,000 902,684 A-2.07 Perfect Spinners Ltd. 1,000,000 697,675 A-2.08 Flex Foods Ltd. 880,000 868,123 A 2.09 Lotus Chocolates 1,000,000 0 A-2.09 Kesar Marbles & Granites Ltd. 505,521 505,521 A-2.11 Ct Cotton Yarn Ltd. 1,000,000 1,000,000 A-2.12 Tudor India Ltd. 1,000,000 849,082 A-2.13 Indo American Hybrid Seeds Ltd. 584,847 171,803 A-2.14 Namasthe Leather Garments Ltd. 1,000,000 1,000,000 A-2.15 Jamna Auto Industries Ltd. 1,000,000 1,000,000 A-2.16 Ankit Granites Ltd. 590,000 586,588 A-2.17 TTK Biomed Ltd. 668,000 559,252 A-2.18 Mid (East) India Ltd. 1,000,000 0 A-2.19 Windsome Yarns Ltd. 1,000,000 1,000,000 A-2.20 Nucor Wires (India) Ltd. 746,155 0 A-2.21 Shenoy Granites 775,000 702,456 A-2.22 Tien Yuan India Ltd. 540,000 535,475

B-2.01 Divya Jewellers Pvt. Ltd. 55,000 46,575 B-2.02 Tufex Leather & Allied Ind. Pvt. Ltd. 317,000 262,797 B-2.03 Amigo Exports 120,175 0 B-2.04 Siba Software P. Ltd. 55,000 50,795 B-2.05 Bounnarraj & Co. 58,000 12,678 B-2.06 Intron LTd. 211,500 174,817 B-2.07 Pegaso. Inhouse Manufacturing Unit 73,000 0 B-2.08 Agarwal Dresses 80,960 52,387 B-2.09 J R S Exports 54,650 44,696 B-2.10 Classic Rugs 480,000 331,982 B-2.11 Gomukhi Charma Kendra 44,200 44,200 B-2.12 Sapri Garments Pvt. Ltd. 64,700 58,172 B-2.13 Bharat & Co. 73,050 0 8-2.14 Jain Marble 342,050 0 B-2.15 Infosys Consultants 148,546 56,027 B-2.16 Dattareya Textiles 255,025 210,155 B-2.17 Lirf Mills LTd. 292,600 259,370 B-2.18 Forward Leather Co. 95,500 80,132 B-2.19 Intermode International 83,592 71,724 B-2.20 Gaja Shoes 69,000 51,219 B-2.21 Terry Knits 474,800 401,395 B-2.22 Siba Software 172,875 76,354 B-2.23 Icicon Electronics Ltd. 367,081 352,748 B-2.24 Shivalika Int'l 388,250 313,826 B-2.25 Veriforne Software Systems 250,000 250,000 B-2.26 Kundan Rice & Oil Mills 345,860 261,482 B-2.27 Precision Equipments 150,000 0 B-2.28 Sensortronics (I) Ltd. 334,000 334,000 8-2.29 KRM Int'l 244,210 244,210 B-2.30 Premier Leather 68,000 0 B-2.31 Lexpo Int'l 76,235 76,235 B-2.32 Neha Exports 113,903 85,697 B-2.33 Coromantal Leather P. Ltd. 522,490 522,490 B-2.34 Texport Int'l 60,000 60,000 B-2.35 R. Tulastidas Exports P. Ltd. 116,000 94,986 B-2.36 Srinivas SHoes P. Ltd. 115,000 0 B-2.37 R.T. Agro P. Ltd. 115,000 85,000 B-2.38 Lynx Optics Ltd. 395,000 342,332 B-2.39 Prema Fashions 149,254 103,261 B-2.40 Kadi Garments 115,256 79,629 B-2.41 Senior Garments 55,149 0 B-2.42 Rohini Garments 68,487 60,987 B-2.43 Swami Screen Printers 75,099 62,717 B-2.44 Maini Precision Products 87,341 87,341 B-2.45 .Autolec Industries Ltd. 74,269 64,769 B-2.46 Renewable Energy Systems P. Ltd. 90,609 89,490 B-2.47 Makers & Sellers Union 86,379 72,971 B-2.48 Iver Hosiery 70,767 70,767 B-2.49 Kewal Ramani Exports Ltd. 140,634 140,634 B-2.50 Nycil Knitware 88,607 88,607 B-2.51 Flat Products Equipments I Ltd. 347,000 347,000 B-2.52 Disco Stone INdo P. Ltd. 388,000 388,000 B-2.53 Sarup Tanneries 456,230 0 B-2.54 Apparel & Leather Technics P. Ltd. 116,488 0 B-2.55 Latmipriya Global Garments S7,607 54,957 B-2.56 8.P. Export Corporation 48,130 46,126 B-2.57 Akbar Knitting Co. 201,640 190,240 B-2.58 B. Arunkiumar Int'L Ltd. 172,600 129,308 B-2.59 Aries Apparels P. Ltd. 119,115 0 B-2.60 Greeting Knitware 52,010 52,010 B-2.61 Alps Innovators P. Ltd. 67,000 0 B-2.62 Toy-N-Toy Int'l 327,706 327,706 B-2.62 Abhimanyu Garments 78,000 78,000 3-2.63 Knkal Exports 125,000 125,000 B-2.64 Aristo Int'l 74,500 70,508 B-2.65 Yescee Knitware 176,500 16,389 B-2.66 Swamy & Co. 144,000 144,000 B-2.67 Senthil Mills 142,500 142,500 B-2.68 Chandra Trading Corporation 133,500 133,500 B-2.69 Radha Textiles 160,000 160,000 B-2.70 ARthur Knitting 183,000 183,000 B-2.71 Spectrum Embrodiary 88,000 85,265 B-2.72 Dustkar Apparels 110,000 110,000 B-2.73 Pearl Shoes 50,000 50,000 B-2.74 Indian Connections 5,000 5,000 B-2.75 Asma Export 13,000 13,000 TOTAL 30,667,319 22,265,094 Export Development Project - Ln.3058-IN Canara Bank List of EDF Sub-Loans

Sub-Loan No. Name Ant. Authorized Amt. Disbursed US$ us$

TA-2.01 Liberty Exports Ltd. 0 0 TA-2.02 Mathur & Co. 20,280 8,606.00 TA-2.03 Ashwini Engineering Industries 1,594 1,511 TA-2.04 Kumar Metal Industries 26,500 25,767 TA-2.05 Duroflex Coir Industries 17,750 14,306 TA-2.06 Forward Leather Company 4,000 4,000 TA-2.07 Weikfield International 50,000 16,444 TA-2.08 Unique Valves Private Ltd. 0 0 TA-2.09 Classic Diamonds India Ltd. 0 0 TA-2.10 Next Fashion Creators 0 0 TA-2.11 Precision Rubber Industries 48,000 48,000 TA-2.12 New Tech Industries 0 0 TA-2.13 Ferrous Forgings Pvt. Ltd. 27,312 15,752 TA-2.14 Shantivijay Jewels P. Ltd. 22,650 22,529 TA-2.15 Laura Leathers 10,769 3,290 TA-2.16 Eros Pharma P. Ltd. 19,173 10,452 TA-2.17 Govind Rubber Ltd. 32,269 22,732 TA-2.18 Shoes East 30,700 12,385 TA-2.19 Meco Instruments Pvt. Ltd. 36,420 36,420 TA-2.20 Kemtrode Pvt. Ltd. 38,465 13,999 TA-2.21 Blechem (Inter. Div.) 47,520 28,247 TA-2.22 Shahibabad Impex Pvt. Ltd. 0 0 TA-2.23 Scruples (I) Pvt. Ltd. 29,581 614 TA-2.24 Gujarat Vacuum Coaters (P) Ltd. 29,401 1,495 TA-2.25 Sarju Int'l P. Ltd. 24,547 24,546 TA-2.26 Riba Textiles P. Ltd. 44,712 29,312 TA-2.27 Golden Peakock Overseas P. Ltd. 32,279 32,279 TA-2.28 Proseal Closures Pvt. Ltd. 23,589 26,725 TA-2.29 Siba Software Pvt. Ltd. 12,696 6,300 TA-2.30 Young Style Hosieries 2,058 2,058 TA-2.31 Everknit Hosiery Mill 10,795 4,576 TA-2.32 Siyaram Silk Mill 28,590 28,589 TA-2.33 Regent Chemicals 0 0 TA-2.34 Alpha Flock 0 0 TA-2.35 Raj Impex Ltd. 15,155 15,153 TA-2.36 Enginemates Heat Transfer P. Ltd. 0 0 TA-2.37 Treviso Exim (India) 0 0 TA-2.38 TamilnaduDrugs & Pharmaecuticals 13,295 0 TA-2.39 Incowax Pvt. Ltd. 10,880 10,867 TA-2.40 Autolec Industries Ltd. 15,123 15,114 TA-2.41 Rohini Garments 8,960 8,960 TA-2.42 Voage Exports 0 0 TA-2.43 Refox Engg. (I) Ltd. 12,139 2,160 TA-2.44 Nirmachal Engg. P. Ltd. 14,720 9,751 TA-2.4S Pace Elcot Automation Ltd. 25,209 9,672 TA-2.46 Pratibha Processors P. Ltd. 14,978 7,309 TA-2.47 Mercury Software Services P. Ltd. 6,580 0 TA-2.48 Sapri Garments P. Ltd. 8,720 8,713 TA-2.49 Bharat Trading Corp. 11,742 10,585 TA-2.50 Suria Images 13,200 3,516 TA-2.51 Elforge Ltd 19,133 19,118 TA-2.52 Akar Tools P. Ltd. 25,854 25,848 TA-2.53 Mercury Leather Pvt. Ltd. 30,434 8,520 TA-2.54 Nuchem Engg. Ltd. 43,936 35,832 TA-2.55 Raperi Engg. Ltd. 40,270 35,998 TA-2.56 Subadra Exports 15,480 0 TA-2.57 Stylewerk Clothing Pvt. Ltd. 18,885 18,010 TA-2.58 Mathur & Co. 48,960 48,960 TA-2.59 Vinayaka Synthetics Ltd. 33,617 3,683 TA-2.60 Pferd Tools Pvt. Ltd. 35,525 29,914 TA-2.61 Nandan Exports 6,308 2,969 TA-2.62 Ampersand Software Applications 49,238 49,237 TA-2.63 Wiltech 49,720 34,556 TA-2.64 Vivy Fashions 5,000 1,546 TA-2.65 Concept Pharmaceuticals Ltd. 15,551 6,036 TA-2.66 Mukund Chemicals P Ltd. 39,250 1,694 TA-2.67 Ramjidas Chemicals P Ltd. 49,167 5,147 TA-2.68 Bangalore Commercial Corpn. 28,125 28,123 TA-2.69 S.B. & T Gems and Jewellery Exports Pvt. 25,545 17,604 TA-2.70 Salora International Ltd. 29,787 18,681 TA-2.71 Rare Wear Enterprises 5,890 5,890 TA-2.72 Shivalika International 32,500 0 TA-2.73 M K Impex Corporation 26,434 26,434 TA-2.74 TTK Bio-Med Ltd. 46,813 0 TA-2.75 Y S Syntex Projects 35,692 11,476 TA-2.76 Ultra Dry Tech Engg P. Ltd. 32,667 25,501 TA-2.77 Sarju Casual Wear P. Ltd. 29,725 29,701 TA-2.78 Indication Instruments 26,650 17,608 TA-2.79 Gokuldas Images 13,350 0 TA-2.80 Exotica Exports 33,069 33,068 TA-2.81 Golden Threads P. Ltd. 38,026 0 TA-2.82 Century Twenty One Exports 19,730 6,557 TA-2.83 Electro Carbonium P. Ltd. 5,426 5,200 TA-2.84 Warsaw International 9,300 9,300 TA-2.85 Liberty Exports 11,062 6,694 TA-2.86 Unicorn Agro Tech Ltd. 13,506 11,791 TA-2.87 Doorvani Cables P. Ltd. 49,484 20,736 TA-2.88 ABC Fashions 35,970 34,736 TA-2.89 Rewadale Precision Tools 46,079 46,071 TA-2.90 Omni Exports 47,106 0 TA-2.91 Acumac Machine Tools P. Ltd. 50,000 39,821 TA-2.92 Odyssey Information Technologies P. Ltd. 34,847 3,954 TA-2.93 Cosmo Films Ltd. 26,207 4,781 TA-2.94 Astra Microwave Prducts Ltd. 29,007 19,519 TA-2.95 Samuthralakshmi Textiles 25,283 25,283 TA-2.96 Auto Ignition Pvt. Ltd. 28,435 4,393 TA-2.97 Sudhir Sheth 18,705 9,685 TA-2.98 Sarita Handa Exports 23,866 13,019 TA-2.99 Gyan Silk Traders 35,409 35,409 TA-3.00 Gold King Exports 21,452 10,693 TA-3.01 Asis Apparels 20,986 6,310 TA-3.02 Duroflex Coil Industries 19,745 19,727 TA-3.03 Vishnu Exports International 12,243 4,888 TA-3.04 Indo Count Industries Ltd. 46,389 19,102 TA-3.05 Vlkram Overseas Pvt. Ltd. 10,972 0 TA-3.06 Riba Marketing Pvt. Ltd. 26,857 20,633 TA-3.07 Triage Overseas 30,027 30,025 TA-3.08 VST Tillers Tractors Ltd. 49,075 49,075 TA-3.09 SRG Systems Pvt. Ltd. 27,630 27,588 TA-3.10 Brothers Granites (I) Ltd. 36,708 7,224 TA-3.11 United Catalyst India Ltd. 44,641 0 TA-3.12 Unchem Engineering Ltd. 23,097 11,413 TA-3.13 Pearl Insulations P. Ltd. 41,332 32,214 TA-3.14 K R M International Ltd. 28,918 13,768 TA-3.15 Ficom Organics Ltd. 45,567 0 TA-3.16 Processware Systems P. Ltd. 12,575 12,510 TA-3.17 -Bemco Jacks & Allied Products 11,787 0 TA-3.18 Orient International 12,696 12,364 TA-3.19 Commo Ferrites LTd. 28,492 10,526 TA-3.20 Kirloskar Computer Services Ltd. 25,800 25,798 TA-3.21 Overseas Exports 25,238 0 TA-3.22 Garware Plastics & Polyester Ltd. 28,225 0 TA-3.23 Pharm Products Pvt. Ltd. 42,987 42,987 TA-3.24 Temptation Foods Ltd. 41,233 40,275 TA-3.25 International Instruments Ltd. 28,298 16,498 T&-3.26 Continental Engines Ltd. 3S,142 0 SOTAL 3,064,086 1,794,455 Export Development Project - Ln.3058-IN EXIM Bank List of Sub-Loans

Sub-Loan No. Nang Ant. Authorized Ant. Disbursed USS US$

A-3.01 Needle Industries India Ltd. 415,000 379,103 A-3.02 Citicorp Overseas Software Ltd. 640,000 770,353 A-3.03 Hitkari Potteries Ltd. 510,000 497,844 A-3.04 Ponds India Ltd. 852,000 524,031 A-3.05 Nochem Engineering 440,000 0 A-3.06 Brakes India Ltd. 925,000 826,826 A-3.07 Gomathi Mills 1,000,000 1,033,428 A-3.08 Lumax 640,000 543,119 A-3.10 Transpek Industry Ltd. 1,000,000 814,269 A-3.11 Tube Investment of India Ltd. 1,000,000 773,787 A-3.12 Bawa Skin Co. 895,800 708,422 A-3.13 Ramco Super Leather 0 0 A-3.14 Dabur India 576,000 484,966 A-3.15 Widia Ltd. 1,000,000 863,214 A-3.16 India Ports Ltd. 808,000 771,340 A-3.17 SWIL Ltd. 0 0 A-3.18 Eicher 763,077 724,617 A-3.19 L.G. Balakrishnan 923,077 810,811 A-3.20 Arvind Mills Ltd. 966,000 984,116 A-3.21 Motor Industries Ltd. 1,000,000 1,035,912 A-3.22 Kirlskar Cummins Ltd. 970,667 940,265 A-3.23 Best Built Leather 663,334 680,109 A-3.24 Jain Irrigation System Ltd. 1,000,000 1,035,912 A-3.25 Titan Watches 1,000,000 1,035,912 A-3.26 Fidyut Metallics 944,000 910,553 A-3.27 Sundaram Fasteners 1,000,000 979,432 A-3.28 Yokogawa Bluestar 640,000 677,736 A-3.29 Amalgam Foods 934,000 930,233 A-3.30 MRF Ltd. 1,000,000 955,718

B-3.01 Reed Relays Ltd. 200,000 0 B-3.02 Thermax Ltd. 397,142 205,469 B-3.03 Akg Acoustics 147,555 108,541 B-3.04 Tanjavar Textiles 245,100 0 B-3.05 Super Tannery 360,000 280,483 B-3.06 Autolite 360,000 244,316 B-3.07 Index Computing 428,600 263,350 B-3.08 PMP Auto Industries Ltd. 416,000 292649 B-3.09 Wipro Information Tech. Ltd. 150,000 131,215 B-3.10 Himatsingke Seide Ltd. 413,000 440,539 B-3.11 Florind Shoes 161,538 143,785 B-3.12 Ramco Super Leather 488,461 518,579 B-3.13 Zandu Pharmaceutical Works 331,000 285,193 B-3.14 T.I. Diamond Chains Ltd. 369,230 328,205 B-3.15 Apeego Corporation 369.235 331,492 B-3.16 Tanjavur Textiles Ltd. (change A-3.09 24S,100 190,315 B-3.17 India forge & Drop Stampings Ltd. 346,154 310,773 B-3.18 EXCEL Industries Ltd. 200,000 198,757 B-3.19 Index Computing Pvt. Ltd. 342,880 376,006 B-3.20 Tubo Energy Ltd. 200,000 207,182 TOTAL 28,676,950 25,548,877 Export Development Project - Ln.3058-IN HXIM Bank List of EDF Sub-Loans

Sub-Loan No. Name Ant. Authorized Amt. Disbursed us$ 088

TA-3.01 Azndu Pharmeceutical Works Ltd. 27,855 28,007 TA-3.02 Thermax Ltd. 68,600 41,465 TA-3.03 Kadri Mills Ltd 58,900 50,527 TA-3.04 Jan Irrigation Systems Ltd. 72,715 36,347 TA-3.05 Lumax 68,665 68,549 Ta-3.06 Dabu India Ltd. 96,000 61,632 TA-3.07 Fykays Engineering P. Ltd. 21,870 0 TA-3.08 Lectrotek Systems 30,726 13,862 TA-3.09 Indfrag Pvt. Ltd. 15,810 11,735 TA-3.10 Balsara Hygiene Products 41,295 28,446 TA-3.11 RSI India PRivate Ltd. 72,560 16,984 TA-3.12 Transpok Industries Ltd. 55,825 46,121 TA-3.13 PMP Auto Industries Ltd. 7,500 7,869 TA-3.14 SWIL Ltd. 57,776 37,035 TA-3.15 Mysore Kirloskar Ltd. 120,000 106,353 TA-3.16 Needle Industries India Ltd. 100,000 90.245 TA-3.17 Dabur India Ltd 105,500 0 TA-3.18 Zandu Pharmeceutical Works 220,600 222,570 TA-3.19 Modern Malleable Casting 59,776 39,319 TA-3.20 Kinetic Engineering 87,490 79,115 TA-3.21 Aqua Bearings Ltd. 35,019 36,286 TA-3.22 Chendur Forgings 24,000 16,238 TA-3.23 Su-Raj Diamonds India Ltd. 98,400 86,358 TA-3.24 Surat Diamonds Industries Ltd 31,240 3,099 TA-3.25 Sanarpan Fabricators Ltd. 59,180 48,628 TA-3.26 Atlas Cycle Ind. 49,486 43,944 TA-3.27 L.G. Balakrishnan & Bros Ltd. 72,500 61,674 TA-3.28 Revathicp Equipment Ltd. 41,000 35,300 TA-3.29 Indian Aluminium Co. Ltd. 57,731 30,866 TA-3.30 SSB Industries Ltd. 32,000 26,155 TA-3.31 EXCEL Industries Ltd. 93,350 79,708 TA-3.32 Pond's India Ltd. (Mushroom Div.) 55,000 45,608 TA-3.33 Motor Industries Ltd. 52,000 38,494 TA-3.34 Pond's India Ltd.(Thermometer Div.) 100,000 83,356 TA-3.35 India Seamless Metal Tubes Ltd. 53,980 13,992 TA-3.36 Arvind Mills Ltd. 62,800 22,903 TA-3.37 Taarika Exports 95,380 97,658 TA-3.38 Timeless Toys 17,500 6,963 TA-3.39 English Electric Co. of India Ltd. 25,000 24,812 TA-3.40 Ion Exchange (India) Ltd. 90,765 51,546 TA-3.41 T.I. Diamon Chain Ltd. 100,000 98,921 TA-3.42 OM Health Care Products 17,900 14,742 TA-3.43 T & L Gould Ltd. 30,833 0 TA-3.44 Hindustan Gas & Ind. Ltd. 89,763 70,164 TA-3.45 Suri Computers Pvt. Ltd. 35,000 4,877 TA-3.46 Tital Watches Ltd. 70,000 66,978 TA-3.47 Tube Investment of India Ltd. 200,000 195,950 TA-3.48 Shalaka Electronics Pvt. Ltd. 49,971 44,455 TA-3.49 India Forge & Drop Stampings Ltd. 50,000 47,737 TA-3.50 India Chain Pvt. Ltd. 28,834 16,811 TA-3.51 Business Forms Ltd. 50,959 47,977 TA-3.52 Biocon India P. Ltd. 83,340 68,781 TA-3.53 Koluthara Exports Ltd. 51,625 34,797 TA-3.54 Fusegera Electric Ltd. 50,000 0 TA-3.55 ITC Bhadrachalam Paperboards Ltd. 100,000 54,447 TA-3.56 REPL Engineering (India) Ltd. 99,667 80,753 TA-3.57 Fouress Engineering (India) Ltd. 41,400 34,951 TA-3.58 Manugraph Industries Ltd. 99,300 81,153 TA-3.59 Kirloskar Electric Ltd. 95,716 83,215 TA-3.60 Madras Engineerings Industries Ltd. 31,115 14,166 TA-3.61 RS Software India Ltd. 54,417 0 TA-3.62 Mairs Pharma (India) Ltd. 7,500 4,546 TA-3.63 Nath Bros Exim International Ltd. 28,530 16,677 TA-3.64 Yokogawa Keonics Ltd. 30,000 26,157 TA-3.65 Elgi Equipments Ltd. 100,000 91,020 TA-3.66 Business Universal Incorporated 84,000 66,883 TA-3.67 Accurate Products Corp. 12,000 11,311 TA-3.68 )L0-GWB Cardan Shafts Ltd. 35,000 22,545 TA-3.69 The Sheveroy Estates Ltd. 100,000 49,765 TA-3.70 Intech Systems Pvt. Ltd. 79,350 0 TA-3.71 Himmatsingka Seide Ltd. 100,000 91,277 TA-3.72 Madras Motor Ltd. 75,000 81,153 TA-3.73 GEC of India Ltd. 54,017 0 TA-3.74 Rico Auto Industries Ltd. 51,695 36,893 TA-3.75 ABS Industries Ltd. 68,325 34,703 TA-3.76 Ramco Super Leathers Ltd. 47,500 44,797 TA-3.77 Shasun Chemicals (Madras) Ltd. 90,000 60,650 TA-3.78 Super Auto Forge (P) Ltd. 26,000 14,167 TA-3.79 Index Computing (P) Ltd. 82,500 43,638 TA-3.80 O/I/N Connectors Ltd. 58,250 45,289 TA-3.81 Hindustan Gas & Industries Ltd. 51,267 47,017 TA-3.82 Shyam Ahuja Ltd. 98,800 97,618 TA-3.83 Gangadharam Appliances Ltd. 100,000 56,436 TA-3.84 Ramesh Flowers Pvt. Ltd. 42,500 40,899 TA-3.85 Vikrant Auto Susponsions 22,833 22,268 TA-3.86 Concert Spices & Exports Ltd. 38,700 33,648 TA-3.87 Dyna Mechanical and Engg. Co.P.Ltd. 67,900 46,290 TA-3.88 Roots Industries Pvt. Ltd. 55,000 52,553 TA-3.89 International Informatics Solutions 73,945 19,116 TA-3.90 Hindustan Electro Graphites Ltd. 53,335 23,990 TA-3.91 Auto Pins (India) Ltd. 40,125 37,907 TA-3.92 Lamina Suspension Products Ltd. 55,000 51,758 TA-3.93 Atlas Cycle Industries Ltd. 44,500 30,314 TA-3.94 Grasim Industries Ltd. 68,400 24,514 TA-3.95 Parishudh Sadhan Yantra Ltd. 73,820 34,005 TA-3.96 PMT Machine Tool Automatics Ltd. 99,700 64,852 TA-3.97 OMC Computer Ltd. 72,666 4,792 TA-3.98 Jay Shree Textiles 75,520 66,233 TA-3.99 Carborundvm Universal Ltd. 58,865 29,439 TA-4.00 TTK Pharma Ltd. 80,000 39,761 TA-4.01 Balsara Hygiene Products Ltd. 35,985 37,144 TA-4.02 Echjay Forgings Ltd. 60,000 45,674 TA-4.03 Sri Sarbati Steels Ltd 50,000 46,292 TA-4.04 Flgi Polytex Ltd. 21,000 0 TA-4.05 Chloride Industries Ltd. 98,814 93,718 TA-4.06 Technocraft Industries (India) Ltd. 26,700 22,211 TA-4.07 Inca Hammock Mfg. & Exp. Ltd. 20,000 16,099 TA-4.08 Kalyani Agro Corpn. P. Ltd. 98,842 58,854 TA-4.09 Pyramid Business Systems (P) Ltd. 15,000 12,950 TA-4.10 Usha Martin Industries Ltd. 44,708 23,320 TA-4.11 Sulakshana Circuits Ltd. 34,500 26,350 TA-4.12 Kabsons Gas Equipment (P) Ltd. 30,000 0 TA-4.13 Unique Pharmeceutical Laboratories 53,340 4,459 TA-4.14 W.S. Industries (India) Ltd. 1,419 0 TA-4.15 P.S. Electricals Pvt. Ltd. 2,179 0 TA-4.16 Unicorn Biotek Ltd. 10,440 0 TA-4.17 Nirmanchal Engineer Pvt. Ltd. 4,799 0 TA-4.18 Premier Instruments and Controls Lt. 4,557 0 TA-4.19 Devendra Exports Pvt. Ltd. 4,373 0 TA-4.20 Best & Crompton Engineering Ltd. 1,587 0 TA-4.21 T T Ltd. 90,650 0 TA-4.22 L G Balakrishnan & Bros. Ltd. 4,127 0 TA-4.23 Wideia (India) Ltd. 7,513 0 TA-4.24 Autolec Industries Ltd. 5,978 0 TA-4.25 Zchjay Forgings Ltd. 7,558 0 TA-4.26 Sundaram Clayton Ltd. 9,424 0 TA-4.27 St-elcast Ltd. 4,185 0 TA-4.28 Compro Services (India) Pvt. Ltd. 3,723 0 TA-4.29 Dewas Tools Pvt. Ltd. 7,949 0 TA-4.30 Mascot Tools & Forgings Pvt. Ltd. 2,473 0 TA-4.31 Ceekey Daikin Ltd. 1,755 0 TA-4.32 Eicher Goodearth Ltd. 59,589 0 TA-4.33 Precision Transmatic Devices Pvt.L 1,592 0 TA-4.34 Suri Computers Pvt. Ltd. 3,757 0 TA-4.35 Mekins Agro Products Pvt. Ltd. 1,059 0 TA-4.36 Future Software Pvt. Ltd. 1,910 0 TA-4.37 Vibromech Engineers Pvt. Ltd. 407 0 TA-4.38 The Indian Seemless Metal Tubes Ltd 2,698 0 TA-4.39 Chowgule Matrix Hobs Ltd. 5,668 0 TA-4.40 Bharat Forge Ltd. 68,852 0 TA-4.41 Wadco Tools Ltd. 4,847 0 TA-4.42 DCM Data Products Ltd. 12,727 0 TA-4.43 Indchem Electronics Ltd. 2,110 0 TA-4.44 Audco India Ltd. 33,689 0 TA-4.45 Khimline Pumps Ltd. 1,390 0 TA-4.46 Jamna Auto Industries Ltd. 7,204 0 TA-4.47 Clutch Auto Ltd. 8,228 0 TA-4.48 Kipha Exports (P) Ltd. 10,251 0 TA-4.49 Usha Martin Industries Ltd. 4,352 0 TA-4.50 Technofour 5,153 0 TA-4.51 Indo-Schottle Auto Parts Pvt. Ltd. 2,940 0 TA-4.52 P S Power Controls 6,169 0 TA-4.53 Gremach Cnc Ltd. 4,857 0 TA-4.54 Lamina Suspension Products Pvt. Ltd. 7,937 0 TA-4.55 Crompton Greaves Ltd. 54,563 0 TA-4.56 India Pistons Ltd. 1,581 0 TA-4.57 Cortica Manufacturing Co. 2,347 0 TA-4.58 Murugappa Morganite Ceramic Fibres 6,902 0 TA-4.59 Permanent Magnets Ltd. 11,222 0 TA-4.60 East India Hotels Ltd. 600 0 TA-4.61 Wipro Infotech Ltd. 35,361 0 TA-4.62 Jamna Auto Industries Ltd. 68,964 0 TA-4.63 Eicher Goodearth Ltd. 50,000 42,641 TA-4.64 Jaya Shree Insulators 66,010 64,624 TA-4.65 Cutch Auto Ltd. 62,166 57,926 TA-4.66 IFB Industries Ltd. 82,769 38,959 TA-4.67 Hical Magnetic (P) Ltd. 18,900 17,219 TA-4.68 Bharat Industries 26,000 16,337 TA-4.69 Neptune Equipments (P) Ltd. 76,788 0 TA-4.70 Normak Fashions (P) Ltd. 30,000 11,986 TA-4.71 Covema Filaments Ltd. 25,633 20,978 TA-4.72 New Tech Services (P) Ltd. 37,167 0 TA-4.73 Data Software Research Co. Ltd. 70,250 40,479 TA-4.74 Sumitra Pharmaceuticals & Chemical 97,465 S,959 TA-4.75 Mideast (India) Ltd. 72,300 3,912 TA-4.76 Wockhardt Ltd. 99,613 95,171 TA-4.77 Multimetals Ltd. 32,250 47,500 TA-4.78 Techtran Polyenses Ltd. 37,200 36,144 TA-4.79 Vikrant Tyres Ltd. 79,900 57,523 TA-4.80 Priya Chemicals 17,500 0 TA-4.81 Tata BP Solar (India) Ltd. 55,400 0 TA-4.82 Bombay Burmah Trading Corp. Ltd. 40,000 0 TA-4.83 The Gomathy Mills 25,000 0 TOTAL 8,692,997 5,372,699 Export Development Project - Ln.3059-IN The Industrial Credit mnd Investment Croporation of India Ltd. List of Sub-Loans

Sub-loan No. Name Amt. Authorized Amt. Disbursed U1$ US$

A-1.01 TISCO 11,290,346 592,272 8-1.01 Somany Pilkington 642,000 642,000 B-1.02 Kamla Ceramic Tiles 0 0 B-1.03 Classic Rugs 305,000 269,000 B-1.04 Indo Matsushita App. 433,000 433,000 B-1.05 Modern Woollen 2,240,000 2,228,000 B-1.06 Fag Precision 276,000 236,000 B-1.07 Shah & Mahajan 232,000 232,000 B-1.08 Al-Kabeer Exp-Fuji 1,734,000 1,734,000 B-1.09 J.K. Chemicals 662,000 662,000 B-1.10 Bombay Dyeing 712,000 712,000 B-1.11 Coventry Cil-O-Mat 783,000 783,000 B-1.12 Nijjer Agro Food 519,000 519,000 B-1.13 Bombay Dyeing 1,602,000 1,602,000 B-1.14 BPL sanyoutil 3,038,000 3,038,000 B-1.15 J.K. Industries 4,511,000 4,511,000 B-1.16 Motor Indust. 2,172,000 2,172,000 B-1.17 Eagle Flask Cancelled 0 B-1.18 0 E N Connectors Cancelled 0 B-1.19 Datamatics Cancelled 0 B-1.20 Chevro Leather 535,000 395,000 B-1.21 Riba Textiles 364,000 364,000 B-1.22 Somany Pilkington 274,000 236,000 B-1.23 Mukund Limited 414,000 414,000 B-1.24 BPL Sanyo II 327,000 327,000 B-1.25 Dhunseri Tea 721,000 613,000 B-1.26 Ind. Aluminium 213,000 213,000 B-1.27 Bojaraj Textiles 250,000 245,000 B-1.28 R.B. Rodda 107,000 107,000 B-1.29 Tri-Marine Foods 211,000 211,000 B-1.30 Heaven Diamonds Cancelled 0 B-1.31 L.T. Karle & Co. 60,000 58,000 B-1.32 Sri Ramakrishna Mill 308,000 308,000 B-1.33 MRF Ltd. 1,411,000 1,106,000 B-1.34 Ayyappan Textiles 171,000 188,000 B-1.35 Salem Textiles 312,000 312,000 B-1.36 Sundaram Fastners 496,000 496,000 B-1.37 Sree Ayyanar Spg. 484,000 484,000 B-1.38 Eastern Spg. Mills 377,000 377,000 B-1.39 Shankar Produce 21,000 21,000 B-1.40 TISCO 2,932,000 2,932,000 B-1.41 Gajra Gears 450,000 24,000 B-1.42 Stencil Apparels 739,000 648,000 B-1.43 Mafatlal Fine 487,000 487,000 B-1.44 Taurus Leather 61,000 61,000 B-1.45 Lotus Chocolate 806,000 782,000 B-1.46 TISCO IV 7,844,000 4,387,000 B-1.47 Tractor & Farm Equip. 590,000 590,000 B-1.48 Secals Limited 85,000 85,000 B-1.49 Ashok Leyland 2,195,000 1,120,000 B-1.50 Perfect Circle 269,000 269,000 B-1.51 Kinetic Engineering 859,000 859,000 B-1.52 Brakes India 775,000 393,000 B-1.53 GTN Textiles 524,000 524,000 B-1.54 Sree Meenakshi Mills Cancelled 0 B-1.55 Asher Textiles 346,000 245,000 B-1.56 Godrej & Boyce 1,213,000 1,012,000 B-1.57 SKF Bearings 2,043,000 2,043,000 B-1.58 Mahindra & Mahindra 3,666,000 3,666,000 B-1.59 Waczech Leather 152,000 0 B-1.60 Tata Tea 467,000 467,000 B-1.61 Soni Leathers 44,000 44,000 B-1.62 Guj spinners 207,000 0 3-1.63 Ax-vind Mills 3,970,000 0 B-1.64 Higashimaru Feeds 73,000 82,000 B-1.65 Armour chemicals 172,000 169,000 B-1.66 Thambi Modern 94,000 87,000 B-1.67 Sree Vadivambigai 229,000 29,000 B-1.68 India Foils 2,312,000 2,177,000 B-1.69 Madura Coats 222,000 222,000 B-1.70 Suryalakshmi Cotton Cancelled 0 B-1.71 Tube Investments 234,000 234,000 B-1.72 TISCO III 2,157,000 1,734,000 B-1.73 Maneklal Harilal 259,000 259,000 B-1.74 Foremost Ceramics 502,000 502,000 B-1.75 Forbes Forbes Cancelled 0 B-1.76 Addison & Co. 53,000 53,000 B-1.77 widia India 230,000 227,000 B-1.78 Special Steels 219,000 80,000 B-1.79 Ranbaxy Labs 98,000 0 B-1.80 Vardhman Spg. Cancelled 0 B-1.81 Salem Textiles Cancelled 0 B-1.82 Gabriel India 1,463,000 878,000 B-1.83 Shin-a-Chemicals Cancelled 0 B-1.84 E. Merck India Cancelled 0 B-1.85 Goradia Forge Cancelled 0 B-1.86 Spic Fine Chem. 439,000 0 B-1.87 Accra pac 18,000 18,000 B-1.89 Hindusthan Dev. Corp 2,068,000 2,032,000 B-1.90 Jaipur Polyspin 118,000 126,000 B-1.91 Dawn Mills 23,000 23,000 B-1.92 Mafatlal Fine 94,000 94,000 B-1.93 Kirloskar Bros. 97,000 97,000 B-1.94 Kopran Limited 53,000 53,000 B-1.95 Kirloskar Cummins 1,080,000 1,005,000 B-1.96 Bombay Dyeing III 11,423,000 838,000 B-1.97 Gokak Patel Volkart 16,000 16,000 B-1.98 Motor Industries II 2,156,000 2,156,000 B-1.99 Prashant Textiles Cancelled B-2.00 FagPrecision 3,577,000 2,601,000 B-2.01 Larsen & Toubro 83,000 83,000 B-2.02 Flender Macneil 70,000 70,000 B-2.03 Kunal Engg. Cancelled B-2.04 Vegetable Vitamins 214,000 214,000 B-2.05 VST Industries 99,000 99,000 B-2.06 Century Textiles 4,522,000 4,522,000 B-2.07 Bajaj Auto 1,456,000 1,456,000 B-2.08 Toscana Shoes 31,000 31,000 B-2.10 Ballarpur Ind. 1,786,000 1,786,000 B-2.11 Atic Industries Cancelled B-2.12 Mysore Kirloskar 34,000 0 B-2.13 Procter & Gamble 92,000 0 B-2.14 ION Exchange 20,000 0 B-2.15 Rallis India 101,000 0 B-2.16 Lupin Laboratories 94,000 83,000 B-2.17 Sri Shanmugavel Mill Cancelled 0 B-2.18 D.C. Synthetics Cancelled 0 B-2.19 Dicitex Industries Cancelled 0 B-2.20 Brakes India 289,000 0 B-2.21 Asian Cables 49,000 0 B-2.22 Salem Textiles Cancelled 0 B-2.23 Krohne Marshall 33,000 0 B-2.24 Goldtex Furnishing 84,000 84,000 B-2.25 Sree Rajendra Mills Cancelled 0 B-2.26 Ifiunik Pharma 189,000 189,000 B-2.27 Adi Hi-Tech Cancelled 0 B-2.28 Bausch & Lomb 924,000 0 B-2.29 Parasrampuria Synth 161,000 161,000 B-2.30 National Leather Cancelled 0 B-2.31 Madura Coats 1,591,000 0 B-2.32 Soundararaja Mills 173,000 0 B-2.33 Kirloskar Brothers 68,000 0 B-2.35 TVS Sewing Needles Cancelled 0 B-2.36 Bharat Gears Cancelled 0 B-2.37 MRF Limited 1,937,000 0 B-2.38 Orient Syntex Cancelled 0 B-2.39 Leela Fashions 134,000 0 B-2.40 Palani Andavar Cancelled 0 B-2.41 ITC Limited 957,000 0 B-2.42 Best Built Leather Cancelled 0

Total 113,601,346 72,048,272 Export Development Project - Ln.3058-IN Industrial Credit and Investment Corp. of India Ltd. List of EDF Sub-Loans

Sub-Loan No. Name Amt. Authorized Amt. Disbursed (US$) (US$) TA-4.01 Roto Dumps 57,692 28,615 TA-4.02 Sona Steering Systems 129,395 129,411 TA-4.03 The Arvind Mills Ltd. 60,595 21,407 TA-4.04 Gold Seal Engg. Prod. Pvt. Ltd. 22,225 25,630 TA-4.05 Amphetronix Ltd. 38,890 36,592 TA-4.06 Coventry Springs & Eng. Co. 40,740 40,667 TA-4.07 Ring Gears India Ltd. 38,890 38,890 TA-4.08 Scientific Fertilizers P. Ltd. 18,520 16,074 TA-4.09 Infotech Enterprise Pvt. Ltd. 18,520 18,519 TA-4.10 Pond's (I) Ltd. 107,407 103,296 TA-4.11 Thapar Waterbase Ltd. 118,519 10,926 TA-4.12 Lucas TVS Ltd. 148,148 135,889 TA-4.13 Hi-Rel Components 17,852 13,148 TA-4.14 Teletubes electronics LTd. 165,185 160,889 TA-4.15 ICC CAD Center 25,926 25,926 TA-4.16 Ranbaxy Laboratories Ltd. 274,074 274,027 TA-4.17 Mahindra & Mahindra Ltd. 481,481 413,852 TA-4.18 ITC Ltd. 81,481 81,481 TA-4.19 Batliboi & Co. Ltd. 75,222 488,889 TA-4.20 Khimline Pumps Ltd. 51,852 9,259 TA-4.21 Perfect Circle Victor Ltd. 55,556 55,556 TA-4.22 Godrej & Boyce Mff. Co. Ltd. 51,852 43,889 TA-4.23 O/E/N Connectors Ltd. 27,111 0 TA-4.24 General Optics (Asia) Ltd. 44,444 47,481 TA-4.25 Royal Cushion Vinyl Prod. Ltd. 37,037 37,037 TA-4.26 Autolec Industries Ltd. 22,222 26,037 TA-4.27 Gabriel India Ltd. 62,963 62,963 TA-4.28 Nath Seeds Ltd. 19,185 10,703 TA-4.29 Veera Treatwood Ltd. 2,963 2,963 TA-4.30 GSL (India) Ltd. 7,407 7,407 TA-4.31 S.S. Miranda Ltd. 33,333 33,333 TA-4.32 Stellar Modular Systems Pvt. Ltd. 9,423 9,423 TA-4.33 Sundram Fasterners Ltd. 26,923 26,923 TA-4.34 Crompton Greaves Ltd. 34,615 34,615 TA-4.35 Garware Wallropes Ltd. 88,462 88,462 TA-4.36 Nahar Spinning Mills Ltd. 8,077 1,767 TA-4.37 New Plastomers India Ltd. 5,192 0 TA-4.38 Asher Textiles 12,308 4,077 TA-4.39 Nirup Synchrome 5,385 5,000 TA-4.40 Sundram Fasterners Ltd. 92,308 68,923 TA-4.41 Ashok Leyland 150,000 150,000 TA-4.42 Ballarpur Industries Ltd. 87,900 53,323 TA-4.43 Toscana Shoes Ltd. 48,390 0 TA-4.44 Engine valves Ltd. 100,000 96,354 TA-4.45 Hindoostan Spg. & Weaving Mills Ltd. 200,000 173,133 TA-4.46 Wires and Fabriks Ltd. 58,065 58,226 TA-4.47 Brass Smiths 11,300 5,909 TA-4.48 Grapco Granites Ltd. 33,333 0 TA-4.49 Weston Electronick Ltd. 13,750 0 TA-4.50 Arun Opticals LTd. 2,900 2,900 TA-4.51 Atul PRoducts Ltd. 9,774 2,355 TA-4.52 Transpek Industries Ltd. 7,260 3,388 TA-4.53 Alkyl Amines Ltd. 5,000 0 TA-4.54 Paushak Ltd. 16,130 7,677 TA-4.55 Bhagat Fine Chemicals 8,870 8,870 TA-4.56 Praj Counseltech Pvt. Ltd. 30,645 30,645 TA-4.57 CIBATUL 1,996 1,996 TA-4.58 Morris Electronics Ltd. 50,000 50,000 TA-4.59 Infosys Technologies Ltd. 76,700 76,692 TA-4.60 Kilburn Engineering 50,000 46,933 TA-4.61 Blow Plast Ltd. 89,340 89,333 TA-4.62 Larsen & Toubro 200,000 0 TA-4.63 Nichrome Metalworks P. Ltd. 62,000 62,037 TA-4.64 Bakelite Hylam Ltd. 92,000 42,630 TA-4.65 Protecto Engineering Ltd. 55,560 55,555 TA-4.66 Taj Rhein Shoes Ltd. 92,600 82,815 TA-4.67 Hico Products Ltd. 57,000 5,555 TA-4.68 Vir Rubber Pvt. Ltd. 55,560 8,407 TA-4.69 Sundaram Clayton Ltd. 76,000 43,148 TA-4.70 Electronica Sales & Services 10,500 555 TA-4.71 Rathi Dye Chem Pvt. Ltd. 6,500 5,926 TA-4.72 Lakshmi Precision Screws Ltd. 9,300 0 TA-4.73 Automotive Component Mfrs. 103,700 0 TA-4.74 South India Viscose Ltd. 29,000 29,004 TA-4.75 Lakme Exports Ltd. 27,000 0 TA-4.76 Ultratek Devices Ltd. 74,000 73,991 TA-4.77 Mukund Ltd. 40,000 25,158 TA-4.78 Isha Steel Processors Ltd. 6,100 6,100 TA-4.79 Hindustan National Glass Industries 8,800 8,800 TA-4.80 Purolator India Ltd. 43,000 43,003 TA-4.81 Salem Textiles Ltd. 54,839 645 TA-4.82 Parasrampuria Industries Ltd. 6,452 3,871 TA-4.83 CEAT Ltd. 19,276 0 TA-4.84 GML Chip Components Ltd. 44,936 3,005 TA-4.85 Secals Ltd. 28,775 0 TA-4.86 Talbros Automotive Component Ltd. 17,729 17,727 TA-4.87 Silicon Valley Technology 18,900 8,591 TA-4.88 S. Kumar Enterprises 25,806 0 TA-4.89 Talbros Automotive Components 32,600 0 TA-4.90 E.I.D. Parry (I) Ltd. 50,000 50,000 TA-4.91 The National Leathercloth Mfg. Co. 32,258 32,258 TA-4.92 Mafatlal Fine spg. & Mfg. Co. Ltd. 37,337 37,341 TA-4.93 The Morarjee Goculdas Spinning & Weaving Co 35,032 5,185 TA-4.94 Mafatlal Industries Ltd. 37,337 37,341 TA-4.95 Majestic Auto Ltd. 66,667 66,667 TA-4.96 Startek Ceramic India 100,000 100,000 TA-4.97 Rathi Dye Chem Pvt. Ltd. 32,258 36,741 TA-4.98 Patheja Forgings & Auto Parts Mfg. 50,000 0 TA-4.99 Miranda Tools 16,129 13,548 TA-5.00 Flakt India Ltd. 16,667 18,200 TA-5.01 S & S Power Switchgears Ltd. 100,000 100,000 TA-5.02 E.L.F. Filament Pvt. Ltd. 35,000 35,005 TA-5.03 Paranjape Metal Shaper Pvt. Ltd. 35,000 22,598 TA-5.04 Precision Tools & Castings Pvt. Ltd. 100,000 100,000 TA-5.05 Garware Wallropes Ltd. 12,600 8,766 TA-5.06 Cibatul Ltd. 21,700 10,608 TA-5.07 Widia (India) Ltd. 67,000 67,000 TA-5.08 BHL Aircraft Batteries Ltd. 43,750 0 TA-5.09 Basant Wire Industries Pvt. Ltd. 40,000 40,000 TA-5.10 Tamarai Mills Ltd. 48,438 43,817 TA-5.11 Pentaplast Electronics Ltd. 7,226 5,355 TA-5.12 Tata Industries Ltd. 200,000 193,750 TA-5.13 Infotech Enterprises Pvt. Ltd. 31,250 25,750 TA-5.14 Intech Exports 55,650 57,871 TA-5.15 Inapex Auto Products Exports Ltd. 30,645 19,709 TA-5.16 Syngene Int'l Private Ltd. 50,000 0 TA-5.17 Cosumer Electronics & TV Manufactures 109,375 0 TA-5.18 Sundaram Fasteners Ltd. 100,000 0 TA-5.19 Hi-Tech Investment Castings Ltd. 15,873 0 TA-5.20 Surya Morphy Richards Ltd. 100,000 0 TA-5.21 Raajratna Metal Industries Ltd. 36,000 0 TA-5.22 Real Value Appliance Ltd. 100,000 0 TA-5.23 Srinisons Cables Ltd. 23,188 0 TA-5.24 The Gramaphone Co. of India Ltd. 69,682 0 TA-5.25 Geometric Software Services Ltd. 14,493 0 TA-5.26 Neuland Laboratories Ltd. 39,450 0 TA-5.27 Lyka Laboratories Ltd. 87,942 0 TA-5.28 Dolphin Laboratories Ltd. 17,715 0 TA-5.29 Triumph Research and Holdings 14,493 0 TA-5.30 Speck Systems Ltd. 39,057 0 TA-5.31 Thirumani Auto Ancillaries 15,217 0 TA-5.32 Britannia Industries Ltd. 45,972 0 TA-5.33 Fortune Bio-Tech Ltd. 29,278 0 TA-5.34 Manufacturers Asso. of Info. Tech. 100,000 0 TA-5.35 Famy Care Ltd. 34,222 0 TA-5.36 Access Information Systems Pvt. Ltd. 32,277 0 TA-5.37 Montana International Ltd. 19,639 0 TA-5.38 Technova Imaging Systems Ltd. 35,556 0 TA-5.39 Targof Pure Drugs Ltd. 15,237 0 TA-5.40 Galaxy Surfactants Ltd. 13,500 0 TOTAL 7,371,084 5,123,098 ANNEX 4

EXPORT DEVELOPMENT PROJECT (IBRD3058 IN) IMPLEMENTATION COMPLETION REPORT EXPORT IMPORT BANK OF INDIA

EXECUTIVE SUMMARY

BACKGROUND

Export development project loan (IBRD 3058 IN.) was extended by World Bank to Government of India vide agreement dated May 26, 1989. The purpose of the loan was to enhance the export competitiveness of Indian manufactured products in the global market through upgradation of production facilities and implementation of strategic and structured export market development activities. This project was a follow up programme to the earlier World Bank project, Industrial Exports (Engineering Products) IBRD 2629 IN, implemented between 1986 to 1992 which produced very encouraging results. The second loan comprised a component of US$ 100 million for upgradation of production facilities, USS 20 mission for export market development activities and Japan grant component of US$ 2.7 million as technical assistance fund (TAF) for implementation of the project. There were four implementing agencies viz. Exam Bank, ICICI, Bank of Baroda and Canara Bank. Exim Bank was allocated US$ 27.92 million for extending rupee term loans to eligible Indian companies for supply side upgradation, US$ 7 million for extending as matching grant to eligible companies towards export marketing activities and USS 1.04 million as TAF for strengthening the Bank's own capabilities. The project commenced on August 18, 1989 and concluded on March 31, 1996. PROJECT IMPLEMENTATION

Exim Bank extended rupee term loans to 43 companies for 44 projects for enhancing the manufacturing facilities through setting up of new projects, expansion, diversification and modernization. The total amount sanctioned was USS 27.92 million. The first sanction occurred on March 16,1990 and the last sanction on April 15, 1993. The major industrial subsectors supported by Exim Bank under the loan include auto parts, light, engineering, textiles, chemicals, pharmaceuticals, consumer products and computer software. The total amount disbursed was Rs. 707 million, equivalent to US$ 27.69 million based on average exchange rates prevailing at the time of disbursal of loans. The total investment made by the participating companies amounted to Rs 1525 million. While an amount of Rs. 707 million was invested out of World Bank funds, the balance was met out of internal accruals as well as loans from Exim Bank out of its own funds.

Sector wide disbursement in case of Loan component is given below. Number of Amount disbursed % of total projects Rs. million disbursement Auto ancillaries 9 153.2 21.6% Consumer goods 5 100.7 14.2% Textiles 5 74.1 10.5% Software 5 66.2 9.7% Engineering 5 94.2 13.3% Chemicals 3 32.3 4.6% Leather 5 61.3 8.7% Pharmaceuticals 2 23.6 3.4% Others*** 5 101.6 14.0% Total 44 707.37 100.0% *** Others include Rubber, plastics, Food processing and Electronics 2

As can be seen above, Auto ancillaries accounted for maximum utilization of the loan amount. This sub-sector also was the highest in terms of number of projects and amount committed. disbursement was made in equivalent Indian rupees. The disbursement amount indicated above is the approximate rupee equivalent of US$ amount debited against each loan account in the World Bank records. Our calculation is based on average exchange rate prevailing in the year of disbursement. Grant component of US$ 7 million was utilized to support 121 export market development plans of 118 companies. three companies were sanctioned multiple grants to implement stagewise export entry plans. The major industrial sectors and subsector covered included auto parts (19), machine parts (16), electrical components (14), pharmaceuticals (10), consumer goods (I1), computer software (8), casting and forging (7), textiles (7), chemicals (4), biotech (4) and miscellaneous products (21), which included products like dried flowers, photovoltaic cells, fishing nets, hard polymer lenses, cork based leisure goods, etc. The total sanctions amounted to US$ 7.44 million and the disbursement were Rs. 169.44 million. An additional amount of Rs. 19.4 million was adjusted for disbursement under IBRD 2629 IN. Thus total utilization amounted to Rs. 188.9 million. In terms of sanctions and disbursements, auto parts accounted for 14% and 16%. while pharmaceuticals at 13% and 12%, machine parts at 13% and 12% were close behind. Miscellaneous products accounted for 16% of the sanctions and 17% of the disbursements. Nearly 60% of the Grantee companies were first time exporters embarking upon market entry operations. 28% of the grantee companies were expanding their export operations and the balance diversifying from former Soviet markets.

The major activities under the grant programme include market research (13%), product adaptation (10%), product inspection (8%), Quality certification (7%), training (4%). business promotion travel (22%). Others include trade fair participation. ISO 9000 certification, promotional materials, buyer's visit, etc. (16%).

Under the TAF (Japan grant JG 2727) an amount of US$ 1.04million was utilized by Exim Bank. The activities covered under the TAF included Group training programme, Arthur D'Little marketing seminar, case book advertising, Exim staff training, books and training material, setting up export service centers at Romeand Budapest. The above activities greatly helped Exim Bank to upgrade the professional skills of its officers, mount promotional activities to market the EMF programme. set up two export service centers at Romeand Budapest to provide value added information and advisory services to exportin, companies.

Disbursement of funds from World Bank to EXIM Bank was through Government of India (GOI). Term loan component of US$ 27.9 million was reimbursed by way of contribution to the equity capital of Exim Bank. Between 1990 to 1996, an amount of Rs. 856.7 million was paid to Exim Bank by the Government of India as equity capital UT of World Bank funds. The reimbursements by GOI was made at exchange rates prevailing at the time of reimbursement. The grant component and TAF were reimbursed as expenditure. As on March 32, 1996 an amount of Rs. 183.4 million was reimbursed by GOI to Exim towards grant and TAF disbursements.

Exim Bank implemented the project by setting up a special cell at its headquarters in Bombay, headed by a senior executive. Product officers, specially trained to handle the export marketing, project appraisal and monitoring were posted at HO in Bombay (Mumbai) and its various offices at New Delhi. Madras, Calcutta and Bangalore. The product officers using extensive database and back up support from Exim's overseas office at Washington D.C. and Singapore were able to provide valuable advisory services to the companies in designing and implementing export marketing plans. An elaborate software system based on Relational Database management software (RDBMS) was developed to maintain and monitor the Grant and loan accounts and asses the progress of implementation and export performance. Periodic visits were made to the assisted companies and corrective action, whenever required was taken. Constant interaction with World Bank was maintained through Exim's Washington D.C. office. Progress was monitored jointly with the WB review missions that visited at regular intervals during the project cycle. Excellent co-operation and guidance were received from the World Bank throughout the project period. Exim bank was able to sponsor many innovative promotional activities like conducting work shops for 3 companyexecutives, case book advertisementcampaign, publication of sector studiesetc. underTAF due to the positive attitude and responseof WorldBank. PERFORMANCE OF ASSISTED COMPANIES

The impact of the programmeon the exportperformance of the assistedcompanies has been impressive. a) The total incrementalexports registeredby the assistedcompanies during the four year period 1992 to 1995 amountedto Rs. 17.2billion giving an exportmultiplier factor (incrementalexports to grant disbursed)of 102in real terms on weightedaverage basis. b) The exportsof the assistedcompanies grew at a rate of 39% during 1992-95in rupeeterms and 26.2% in dollar terms as againstnational export growthat CAGR 15.2%in dollarterms during the same period. c) Whilethe assistedcompanies registered a sales growthof 18.9%CAGR, their exportsgrew at a faster rate at 39% during 1992-95,thereby making exports as engineof growth. d) exports to sales ratio of the assistedcompanies increased from 8.85 on 1992-95to 11.4%in 1994- 95. e) Sub-sectorindustry comparison indicates that companiesassisted under EMF programme performedbetter in exportsthan the subsector as a whole. Exportsof textile companiesassisted under the programmeregistered CAGR 77%as against CAGR24.2% of the textilesector. Similarly,auto parts units showed 44% per annul growthas against26% growth for the sub- sector. Pharmaceuticalcompanies clocked 36% p.a. export growthas against20% for the subsector. One gold jewelry unit assistedunder the programmeregistered an exportgrowth of 365 p.a. as against9% growth rate for the subsectoras a whole. This analysisclearly indicates that the companieswho implementedstrategic export development plans performedmuch better in exports than the others in the same industrysub-sector. f) Ten assistedcompanies have moved up the value chain and havejoint venturesor subsidiaries overseasto consolidateand expandtheir exportoperations. Thesesoverseas venturesin manufacturingand/or marketing are located in variouscountries like U.K., Ireland,Netherlands, Hungary,Malaysia, Singapore, Mauritius, Uzbekistan, Russia. The productscovered include quartz and jewelry watches,herbal products, telecomperipherals, pharmaceuticals, PVC sheets, haberdasheryitems, fineblanking tools, computersoftware. Almostall of these companiesare mediumsized industries,professionally managed and who have gained confidenceto play in the global marketplace through strategicand systematicmarket development approach. g) The companiesassisted under the loan programmefor expansion, diversificationor modernizationhave shown impressiveprojection of financialrate of returns. The averageIRR is 27.6%. The maximumIRR at 41% is for softwareunits while IRR at 20% for pharmaceuticals units. The sales and profitabilityof the assistedcompanies registered for the period 1992to 1995 indicatethat the projectionsestimated at the time of appraisalhave been realistic. The 43 companiesassisted under the loan programmehave registeredsales growth at 22.4% p.a. (CAGR) and exports growthat 30.1%p.a. (CAGR). All loan accountsexcept two are servicedregularly with no overdueposition. h) The 44 investmentprojects included setting up new manufacturingfacilities, expansion. diversificationor balancingthe capacity. Approximately1500 additional jobs have been created by these projects. i) Out of the 118grantee companies, 114 belongsto SME category whosenet fixed assets were less than USS30 mission. 104 of these companieshad net fixed assets lessthan US$ 15millions which indicatesthat 88% of the grant beneficiarieswere really small and mediumsized enterprises. In the case of loan facility,36 out of 43 companieswere case of loan facility,36 of 43 companieswere SME's with net fixed assets less than USS 15 million. j) The total exports generatedby the 118 granteecompanies during the four year period(1992-95) amountedto Rs. 48.7 billion (USS 1.6 billion). Similarly,the total exportsgenerated by 43 loan companiesamounted to Rs. 21.35 billion (USS730 million). However,there were 20 companies which utilized both loan and grant facilities. 4

BENEFITS OF TAF SUPPORT

The technical AssistanceFund (JapanGrant) enabled Exim Bank to carry out numberof innovativeactivities aimed at buildingexport competitiveness of assistedcompanies. Part of the fundswas also utilized to enhancethe skillsof Exim officersand equip them to implementthe projectsuccessfully. EXIM Bankwas able to engagethe servicesof experts from Arthur D'Little instituteof managementto conduct specializedworkshops on Internationalmarketing strategy" at two centers in India for the benefit of chief executivesand export Directorsof assistedcompanies.

Exim Bank utilized the grant to carry out sectorstudies on emergingexport products using the servicesof internationalconsultants and specialists. Valueadded jute productsand floriculturewere the two subjects where foreign expertsfrom Denmarkand Netherlandswere involvedin marketstudy. The other subjects covered under the TAF grant fundinginclude dyestuff, electroniccomponents, consumer electronics,computer software. Theseresearch and marketstudies were found very useful by the exporters.

The most innovativeuse of JapanGrant was to set up two export servicecenters at Budapestand Rometo provide value added informationand advisoryservices to Indiancompanies to internationalize their operations. The fee basedservices have becomevery popular with Exim's clienteleand are being used extensively.

Partof the grant was utilized to bring out a case analysis book (AchievingExcellence: Tata McgrawHill publication)highlighting the successfulexport efforts of six mediumsized companies supportedunder EMF programme. The book, first of its kind dealing with Indiancase studieshas been found very useful by potentialexporters and has also receivedacclaim from various internationalagencies. LESSON LEARNT

As an implementingagency, Exim bank was closelyinvolved in monitoringthe operationsof assistedcompanies. Informationand advisoryservices appeared to be an importantarea where the companieswere not getting adequatesupport from professionalagencies. This motivatedEXIM Bank to set up its own Export services group to provideproactively value added informationand advisoryservices to help companiesin their internationalizationefforts. Settingup two export servicecenters overseas and creatingand EximiusClub for providingspecialized proactive services includingpartner search, joint venture facilitation,etc. were the results of the experiencegained from implementingthe EMFprogramme. Exim Bank was able to expand the range of its financingprograms and introducednew schemesto provide financialsupport to motivatecompanies to obtain ISO 14000certification for environmentalsafety, QS 9000 for auto exportsto USA and GE/GS certificationfor export to capitalgoods/equipment to EU. Thus EXIM Bankwas able to respond quicklyto the challengingneeds of the internationalmarket. In the case of investmentprojects, Exim gave equal importancet EconomicRate of Return(ERR) and social cost benefit analysisapart from the financialreturns of the project. Environmentalprotection and pollutioncontrol aspects were given highest considerationwhile approvingthe investmentprojects. Internationalstandards were insistedupon wheneverthe project/processresulted in environmental pollution.

Close interactionswith the WorldBank review missionsenhanced the project monitoring capabilitiesof the Bank. Periodicproject reviews and monitoringresulted in excellentcollection record. Excepttwo accounts there have been no overdues. PROJECT SUSTAINABILITY

The companieswhich have benefited fromthe programmeand shown good export performance are likely to be long term players in the internationalmarket. These companieswill be in a positionto generate internal funds to carry on the exportdevelopment activities. Some of the assistedcompanies have clearly globalisedtheir operationsby settingup manufacturingand marketingventures overseas to 5 strengthen their presence in the target market. These have been assisted by Exim's overseas investment finance programme.

Due to demonstration effect, more and more medium sized companies are now in the process of making strategic entry into overseas market. These new entrants would need support initially. Low interest/soft term loans would be needed to support the initial operations. EXIM currentlv provides funds from its own resources to support such activities. However a new loan from World Bank for export development activities would go a long way in concretizing the gains from the earlier projects. This is particularly important in view of the liberalization of Indian economy, where Indian companies are beginning to encounter stiff competition not only abroad, but in India also. A new export sector loan would strength the efforts of the Indian companies to stay and progress in a changing environment. BANK OF BARODA CENTRAL OFFICE, MLDMBAI-23

E XPORT DEVE LOPrMENT PFROJEC T (L OA 3=05E8-IN)

RE'VIELW NOTE:

1.0 BACKGROUND

1.1 Industrial Bank for Reconstruction and Development (IBRD) has been providing lines of credit for many years for supporting industrial projects in India.

1.2 Initially the line of credit was confined only to financial institutions like ICICI, IDBI etc and subsequently e.-tended to the commercial Banks. The four participating banks (PCBs) which were selected for extending the line of credits were BOB, Canara Bank,Punjab National Bank and SBr under the first line of credit IEP (Industrial Export Projects) Loan -629-IN which were extended to units serving as ancilliary to DEMs (Original equipment manufacturers), import substitute or export oriented units.

1.3 The first sch-me IEP which started from January 1986 and completed during 1992 was successfully implemented by BOB. BOB _ubmitted a completion report on IEP to World Bank during November 1992 on IEP to World Bank.

?.4 The present note is to review the performance under the second line of credit viz.. Export Development Project (EDP) loan 3058-IN which commenced from Sept.1989 and ended in March 1996. This line of credit provides Term loan to units having export orientation and unlike the first scheme even Rupee expenditure towards fixed assets were reimbursed to the extent of 80% of the term loan and 100% in case of foreign component sdbject to a ceiling of * I Million.

1.5 BOB took steps and obtained net approval of the Bank subprojects totalling US S 30/- Million being the entire amount allotted by 31.1.91.

1.6 The Bank supported the efforts of BOB and provided an additional US S 20/- Million among PCB to be utilised on first come first serve basis.

1.7 BOB which had exhausted the allocation of US $ 30/- Million much faster; could identify more projects and obtained approval for them taking the total approval to nearly US $ 50/- Million.

1.8 As on 31.3.94, BOB had obtained approval for 112 subprojects with a total amount of US * 49.85 million and by 31.3.95 disbursed $ 45.48 Million.

1.9 BOB had identified 11 major industries for support under EDP which include among others Textile,Dyes and Chemicals, Pharmaceuticals, Engineering, Gem and Jewellery, Granite and few others. I'~~~~~~~~~~~ 2.o OBJECTIVE:

2.1 The basic objective of EDP was to support the efforts of Indian Financial Institutions and Banks in term lending to industries mostly in small and medium sector which would help them to cater to the export market.

- 2 Realising the need to save foreign exchange the scheme supported projects which had export orientation. The support under EDP was for existing and new units to acquire fixed assets, indigenous or imported. Canara Bank, Exim Bani. and BOB were the participating Banks for EDP.

2.3 In addition to the above, the implementation of EDP was directed in improving the appraisal skills of PCBs.

2. 4 The Bank had also allotted an amount of $ 3.381 Million under the grant assistance scheme EDF (a component-of EDP) towards the export promotional efforts financing by way of reimbursement 50% of the expenditure incurred subject to a maximum of S 50,000.

3.0 GEOGRAPHICAL COVERAGE:

3.1 BOB has been able to disburse the amount of $ 45.49 Million to various industries out of the total authorisation of $ 49.85 with and the geographical spread as under:

$ MILLION ZONE AUTHORISED, DISBURSED NO.QF UNITS Maharashtra & Goa I GB Z ) 5.92 5.47 12

Eastern (EZ) 2.72 2.33 4

Northern (NZ) 4.26 3.21 5

Eastern UP (EUP) 0.58 0.22 1

Bombay Main (BDO) 4.56 3. 7 13

North Gujarat (NGZ) 3.06 3.07 10

Western UP (WUP) 0.77 0.78 1

Central Gujarat(CGZ) 1.85 1.81 6

Greater Bombay (GBZ) 10.12 9.09 24

Southern Zone (SZ) 16.01 15.79 32

T O T A L 49.85 45.49 108

3.2 About 60% of the units are located in smaller towns/ backward area and the balance in largeri towns/metropolis/developed areas.

4 4.0 STATUS & PERFORMANCE OF SUSPROJECTS:

4.1 Around 96% of the subprojects approved by the Bank as on date have implemented the scheme fully ( 108 subprojects implemented out of 113 approvals received. 5 projects, viz. MIs Oro Leathers, Trak Leathers, Indus Woven Labels , Indus Saccharides and Mohan Leathers did not avail the assistance totalling S 1.42 Million. One sub-project had an authorisation of only S -10 and did not avail the same.

4.2 A complete detailed statement of EDP units zonewise is given in the Annexure II . BOB has also allocated these units health code number according to their performance viz. units whose term commitments are not defaulted & those with unsatisfactory operations given higher codes.

4.3 Of the 108 units in operation, 98 units are classified as Health Code 1; 7 units have Health Code 2 and only _ units have Health Code 3 & above.

4.4 While some of the projects have performed satisfactorily and are regular in servicing their term liabilities certain units like granite, food and electronics are functioning below expectations due to management problems, recession both in domestic and international markets and due to delay in implementation resulting in low level operations. It is observed that 37 units are performing below expectations though some of these sub-borrowers are regular in meeting their term liabilities.

4.5 There are about 20 cases where BOB has rescheduled the repayment of instalments in projects where there has been a delay in the implementation or for some other reasons. There are certain projects which have already repaid their term liabilities prior to schedule.

4.6 Out of the term loan disbursed 80% was utilised for purchase of machineries and the balance for other fixed assets. Out of this, nearly 50% has been utilised for import of equipments. 5.0 TYPES OF SUBPROJECTS

5.1 The subprojects identified by BOB and approved by the Bank, covers wide range of 11 industry groups. The details of industry-wise exposure is as under:

I N D U S T R Y NO. OF UNITS AMOUNT ( US S lacs)

1. Chemicals 12 41.79

2. Textile/Garments 25 144.62

3. Engineering 23 101.47

4. Electronics 4 14.43

5. Pharma 5 17.97

6. Software 2 2.20

7. Food 4 20.72

8. Gems 10 21.94

9. Granite 2 10.76

10. Packing 3 13.04

11. Leather 3 2.77

12. Others 15 63.26

108 454.80

5.2 Out of the 113 subprojects approved by the Bank; 65 are below the free limit US S 500,000/- and the remaining 48 are above the free limit.

5.3 The average lending size of the subproject is around US S 4,41,169/-.

6.0 EXPORT DEVELOPMENT FUND (EDF)

6.1 BOB with an allocation of US $ 3.381 Million for Grant support to export marketing activities had also taken steps to utilise this amount.

6.2 As on Dec.93, BOB had obtained approval for 94 subprojects for EDF assistance to units in various regions in the country.

6.3 BOB's grant support also covers wide range of industr:al

products like Software, Pharmaceutical, Chemical, '( co w Engg.items, Leather, Textiles etc. and has disbursed around Rs.500 lacs so far. _

6 6.4 The activities covered under BOB's grant assistance include Market Research,.Travel, Participation in Trade Fairs, ISO 9000 Certification, Product Registration etc. and the exposure is as follows:

Travel Y5.

Trade fairs s 25%

Sampling s 10%

Advertising : 10%

Buyers- visits 5%

Others : 15% (Consultancy, ISO certification, Product adaptation etc) 100%

6.5 BOB is strictly monitoring the disbursement of grant which are made based upon their incremental export especially in hard currency area.

6.6 The zonewise authorisation under EDF is as under

NhsZone No of Authorised Amount Units (S lacs)

1. Mah & Boa Zone 17 6.71

2. Central Guj.Zone 4 1.80

3. Rajasthan Zone 5 1.92

4. Western UP Zone 5 1.55

5. Eastern UP Zone 1 0.27

6. South Zone 13 4.15

7. Eastern Zone 3 0.94

8. Bombay Main Office 2 0.87

9 North Zone 5 2.04

10. North Guj.Zone 2 1.00

11. Greater Bombay Zone 32 12.55

89 33.81 F ------cf*~ **

Iet,"I 6. 7 The industrywise-authorisation is given as under:

No. Industry No. of Authorisation Amount Units (S lacs)

1. Engineering 22 8.89

2. Electronics 4 1.46

3. Software 11 3.98

4. Leather 4 1.27

5. Granite 2 1.00

6. Handicraft 7 2.15

7. Chemical 16 5.70

8. Textile 11 4.45

9. Packaging 1 0.50

10. Others 11 4.41

89 33. 81

6.8 BOB requests Bank's support to continue EDF for atleast one more year considering the balance (nearly S 1 million) available and as the criteria of monitoring incremental exports is stipulated by IBRD for 5 years.

7.0 TECHNICAL ASSISTANCE FUND:

7.1 BOB had sent 6 officials for training under EDP to Arthur D Little, Cambridge, between Aug. '90 to Dec. 90 in Boston and

other places . Subsequently during August 1995, 4 officers have been sponsored to the course on Project Finance, conducted by Euromoney in Bangkok and Jakarta.

7.2 Out of total allocation of US * 0.4-5 million to BOB under TAF for training purpose only S 0.150 Million (approx) has been utilised. BOB proposes to utilise the balance for training its officers on the Environmental aspects, a high priority area of both GOI & the World Bank.

7 3 BOB is keen to utilise the balance amount and currently working on plans in identifying specific short duration training programmes to benefit large number of officials in environment for which BOB has already indicated to IBRD and response is awaited.

'c 7.4 BOB will be appproaching the Bank shortly with a concrete plan in this regard once we receive approval. BOB also requests extension of TAF for utilising the balance available.

8.0 BENEFITS OF THE SCHEME:

8.1 BOB has been targetting under EDP Loan, only clients with strategic export plans.

8.^ The selected industry groutps assisted by BOB under EDP and the estimated net foreign exchange earnings are as under

(Rs.Million)

Industry Group Appro x. Exports Approx.FE earnings in 3 years saved ______------…__------

1. Engineering 8BO 300

2. Textile (including Garments ) 1500 1050

3. Chemical i000 500

4. Drugs/Pharmaceu- ticals 600) 25C'

5. Gem/Jewellery 3000) 100')

6. Software 300 180

7. Others(incl leather) 50 50

S. Packing lVO 20

S. Electronics 250 50

10. Granite 5 0) zoo

il. Food 200 100

8600 3800

9.0 SUBMISSION

9.1 BOB after careful examination and keeping in view the objective of promotion of export oriented units has selected only such industries having strategic export expansion plans covering a variety of industrial groups and wide geographical spread for funding under EDP.

$.2 The World Bank and its officials in the India Division have been encouraging and supporting the efforts of BOB, but for which, it would not have been possible for BOB not to only commit. this line qiick ly, btt. also tca disburse 19r% of ' ita-thorised amount. *

q 9.3 The investment has helped the industries in upgrading technology and in saving / earning net foreign exchange for the country.

9.4 A large portion of the exports made by the units is to develop countries reflecting the quality and competitiveness achieved by the Indian entrepreuners in the overseas market.

9.5 The investment has been located mostly in small towns/ villages and the benificiaries are by and large small and medium industries.

9.6 10 officers were benefitted with training under TAF which helped them play an active role in identifying and appraising projects under EDP/EDF and Project Finance.

9.7 BOB has requested IBRD to extend the Grant Assistance Scheme (EDF) for at least one more year as the incremental exports criteria is fixed by Bank for 5 years and disbursements are being made by monitoring performance; and also the extension of TAF for utilising the balance available.

9.8 The objectives of the scheme on the overall appear to have been achieved considering -

a) Satisfactory performance of the majority of subprojects under EDP and assisted under EDF.

b) Net foreign exchange savings of Rs 3800 Million over a period of -3- years.

c) Wide industrial land geographical spread of the utnits assisted under the schemes.

d) The projects being supported mostly in the small and medium sector.

CENTRAL OFFICE PROJECT FINANCE DIVN. MUMBAI It

03.04.96 CANARA BANK

INDIA EXPORT DEVELOPMENT PROJECT (LOAN 3058-IN)

IMPLEMENTATION COMPLETION REPORT

World Bank during 1989 designed the Export Development Project (EDP) to assist Govt. of India in its efforts to sustain and build upon the success in export growth of manufactured goods. The project intended to support the task of the Country's key developmental Financial Institutions & Commercial Banks for increasing their finances to exporters. The project was expected to complement the institution's work in two important areas. One, to help them build up their capabilities for providing direction and advise their clients on export issues and markets. Second, to help them improve their own capabilities to assess export projects as well as to mobilize additional resources needed to support such projects. The project was also expected to provide a basis for continuation of active dialogue between Govt. of India and World Bank on export policy.

This integrated program (EDP) had three components - Export Development Fund (EDF), Technical Assistance Fund (TAF) and Term Lending component (TL). Canara Bank was one of the participating Banks to implement the program. This report deals with the performance of Canara Bank in implementation of the project and the experience gathered on implementing the program.

Term Lending Component

Canara Bank was allocated an amount of US$ 30 million under this component to assist export oriented projects in their investments to upgrade technologies, achieve cost competitiveness and to enlarge export performance. From the allocated funds, the Bank has financed 83 clients spread across the country and disbursed US$ 22 million (Rs.619.50 million). Major projects assisted were expansion and new ones. The statewide dispersion of the number of projects reflect that the concentration was in Southern States. However, the amount disbursed under the loan shows a better spread. Overall the resources of the projects were enhanced to the extent of nearly 20 percent. The focus of Bank's assistance was towards traditional manufactured goods like Apparels, Textiles, Electrical Equipment, Mining Products, etc. On an analysis of the feed back from the assisted clients, it has been found that they are able to enlarge their export performance substantially by upgrading technology and reducing cost whereby quoting competitive price to their products. Moreover, the projects generated substantial employment especially in Tirupur and the beneficiaries were successful in enlarging their export markets.

The assistance under this project was mainly for expansion of the activities of existing clients. With higher scale of operation and cost competitiveness achieved, it is expected that these clients will sustain their export performance in future. Overall, the project has been implemented successfully and the objectives were fairly achieved. I IMAGING

Report No: 16048 Type: ICR