Tata Engineering Ltd

completed

TELCO is among the top ten commercial vehicle (CV) manufacturers in the world and the market leader in the Indian automobile sector. The project consists of a $397.8 million capital expenditure and debt restructuring program, which is an integral part of the operating and financial restructuring of TELCO. This restructuring program intends to make TELCO a globally competitive automobile manufacturer. The project is divided into a $256.3 million program for product development and modernization, and a $141.5 million debt retirement/refinancing program. The main objective of the product development program is to introduce new products and variants of existing products to the commercial vehicle and passenger car segments. IFC has an important role to play in this project. Through its investment, IFC will assist TELCO in moving toward a regional and/or global presence, and will help the company to restructure and modernize in order to become internationally competitive. By providing a partial guarantee, IFC will enhance the credit rating of TELCO''s proposed bond issue and enable the company to access the capital market for long-term funding and obtain more appropriate pricing for long-term risk. By facilitating the development of a market for structured instruments, IFC will also play a key role in promoting the growth and liquidity of the domestic debt market. The development impact of the project is expected to be significant. If TELCO is able to successfully restructure its operations and become globally competitive, it will generate significant economic benefits. The main quantifiable, economic gains will derive from increased production volumes and quality, with lower costs of production at or close to international levels, for passenger vehicles. In addition, as TELCO expands its subcontracting capacity, SME suppliers and other vehicle manufacturers will gain value from improved competitiveness and economies of scale in the domestic auto component industry. TELCO’s global restructuring will also have a significant demonstration effect on other vehicle manufacturers operating in India, as well as on the auto-component industry.