The India Auto Ancillary Fund (IAAF)

completed

Summary Of Project Information (SPI)Project NameIndia-The India Auto Ancillary Fund     RegionAsiaSectorProject No008143Projected Board DateJune 14, 1997Company NameIL&FS Venture Corporation Limited (IVC)Technical Partner and/or Major Shareholders Local sponsor: Infrastructure Leasing and Financial Services Limited (7%) Mahindra and Mahindra (7%) Bank of India (7%) IFC (15%) Indian institutional investors (7%) Offshore institutional investors (15%) Project Cost Including proposed IFC investment Initial corpus of the Fund of at least $42 million. IFC is expected to take up to 15% of the equity or an amount equivalent to US$6.5 million. Location of project and Description of site IVC, the Fund Management Company, is located in Bangalore, India. IVC will make direct investments in auto ancillary and component companies throughout India. Description of Company and Purpose of ProjectThe project involves the establishment of an auto ancillary fund of corpus of at least US$42 million that will focus on investment opportunities in India’s rapidly growing auto ancillary sector. The Fund is being promoted by IL&FS (Infrastructure Leasing and Financial Services) Venture Corporation (IVC), a fund management company currently managed by IL&FS, an Indian non-bank financial institution engaged in commercial development of infrastructural services and provision of financial services, including investment banking, asset management, venture capital management, financial advisory and project development, and infrastructure project promotion and finance.The liberalization of restrictions on capacity, licensing requirements and foreign ownership has spurred growth in India’s automotive industry, and with it the ancillary sector with sales of US$2.6 billion in 1995/96 and with growth averaging over 26% p.a. in the last three years. There has been a spate of joint ventures in the last three years between Indian companies and the automobile majors intent on establishing a presence in the Indian vehicle market. Indications are that the new and existing auto players in India plan to operate from a platform of global competitiveness and will require from the ancillary companies they source from components that are internationally competitive in quality, price and delivery. The proposed Fund seeks to exploit investment opportunities in the new environment through direct equity and quasi-equity investments in ancillary companies undertaking expansions, upgradation as well as in greenfield projects.Environmental Category and Issues This is a Financial Intermediary (FI) category project. The Fund will be required to undertake an environmental review of eligible investee companies’ operations. IVC will assign two officers to undertake environmental reviews of investee companies. In addition, IVC will provide IFC with an annual environmental monitoring report.     Date SPI sent to PIC May 14, 1997For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 974-4384