Mahindra Infrastructure Company

completed

Description of CompanyMahInfra is a new company that will be incorporated in India prior to the IFC investment. It would be an infrastructure holding company that will be formed as a result of a spin-off of MRIDL''s Infrastructure Privatization Group. Purpose of Project The project involves an IFC equity investment in a new company in India, which would develop, finance and operate infrastructure projects. At the outset, the company will take over two infrastructure projects which are currently being undertaken by MRIDL. The projects are as follows:(i) SOFTOP: Mahindra Knowledge Park is a US$55.6 million greenfield industrial park development in the Mohali suburb of Chandigarh, the capital city of Punjab. It is in an area which houses other industrial parks, complexes and residential compounds. The project aims to develop a 15 acre site into a software technology park which will attract research and technology enterprises by offering modern facilities, well-developed data and communications links as well as financial / tax incentives. At present, the plot in Mohali has been allocated and an architectural firm has been selected for master planning. There is an accessible road to the park, where construction is expected to begin in June 2001, and another road which circumscribes the entire rectangular plot;(ii) Tirupur Water is a greenfield bulk water supply and distribution project in Tirupur, a mid-sized municipality in Tamil Nadu. Tirupur is an industrial town covering 27 square kilometers located 450 kilometers from the state capital, Chennai. The current population of the Tirupur municipality and the surrounding area covered by the project is estimated at 270,000 and 414,000 persons respectively. The US$287 million project involves the construction and operation of a potable water supply system that will abstract at least 185 million litres of water a day of water from the River Cauvery. The water will be treated and transmitted to (i) industrial and household consumers in the municipality of Tirupur; (ii) household consumers in 792 habitations spread over 4 Panchayat Unions, 4 Town Panchayats and 15 Village Panchayats; and (iii) industrial consumers (textiles) in the surrounding area. MahInfra will invest in India''s infrastructure industry, mainly but not exclusively in the following sectors: (1) water supply and wastewater management, (2) solid waste management, (3) transportation and logistics, (4) industrial parks and (5) power generation and distribution. It will play various roles in the projects it invests in, including the roles of developer, financier, operator and manager. Development ImpactThe company will have a significant development impact by bringing private sector investment to India''s poorly managed infrastructure sector. This, in turn, should improve the quality of service and give access to the much needed infrastructure facilities to a larger percentage of the population. Better transportation facilities, water, wastewater services, and industrial parks will help reduce transportation costs, increase employment opportunities and strengthen local social and environmental practices. The company''s investments will also develop the economies where projects are located and provide an infrastructure network that will make India a more attractive emerging market for foreign investment. IFC RoleMahInfra will be IFC''s first investment in India''s water and transport infrastructure sectors. The development of local companies, where appropriate with international technical expertise, is the only real solution to sustained development of the infrastructure sector. The company wants to tap IFC''s experience in determining appropriate project structures, their financial viability and risk profiles. The proposed investment would give IFC the opportunity to get involved in infrastructure projects in India at the structuring stage. IFC''s presence in MahInfra would demonstrate the Corporation''s commitment to the infrastructure sector in India and enable IFC to have a stronger role in demonstrating the benefits of a more market-based concession criteria. Participation in the MahInfra investment would also allow IFC to reach and influence a number of smaller infrastructure projects, which IFC may not have been able to participate in directly. Lastly, IFC’s investment in MahInfra would provide IFC with the ability to promote greater sustainability and social responsibility with respect to India''s infrastructure projects.