Financing Opportunity for Japan-India Collaboration Projects

Japan Bank for International Cooperation (JBIC)New Delhi Office

April 16, 2010

2

Introduction

Japan Bank for International Cooperation (JBIC) is a

Japanese Government Financial Institution.

JBIC conducts its operations with a mission to

contribute to the sound development of the Japanese

and international economy.

JBIC, has made a new start since October 1, 2008, as

the international wing of Japan Finance Corporation

(JFC), Japan’s policy-based financing institution.

3

Overview of Organizational Restructuring

（ Crisis Response ）ODA

Operation

October 1999

(Note 1) Established based on the “Japan Finance Corporation* Law”

(Note 2) Okinawa Development Finance Corporation will be merged into JFC* in FY2012 or later.

Japan Finance Corporation (JFC)* 　（ Notes 1, 2 ）

（ Domestic Finance ）

National Life Finance Corporation

Agriculture, Forestry and Fisheries Finance Corporation

Japan Finance Corporation for Small and Medium Enterprise

Japan International Cooperation Agency (New JICA)

Technical Assistance

ODA Loan

Grant Assistance

October 2008

International Finance Operation

(“IFO”)

JBIC

Exp

ort-Im

port

Ban

k o

f Jap

an

(JE

XIM

)

Overs

eas E

con

om

ic

Coop

era

tion

Fu

nd

(O

EC

F)

ODA: Official Development Assistance

（ International Finance ）

4

New JBIC’s Mission

(1) Supporting and promoting overseas operation of Japanese companies

(1) Supporting and promoting overseas operation of Japanese companies

(2) Supporting development and acquisition of important natural resources to Japan

(2) Supporting development and acquisition of important natural resources to Japan

(3) Corresponding to financial turmoil in the international economy

(3) Corresponding to financial turmoil in the international economy

5

Relations: India & Japan (“JP”) 　 　 　－ Japanese Company in India －

555838

1049

438 550 627

0

500

1000

1500

J an. 2008Oct. 2008

Oct. 2009

No. of companies No. of Branch/ Offices

(1) Number of Japanese Companies in India(1) Number of Japanese Companies in India

(Source: Embassy of Japan)

6682

94 88 91 89 88 96105

118

147

174

210

242

0

50

100

150

200

250

(JCCII: Japan Chamber of Commerce and Industry in India)

(Source: JCCII)

Delhi NCR(DL/ HR/ UP)

337

Maharashtra219

Tamir Nadu169

Karnataka123

West Bengal52

Others96

Gujarat31

Rajasthan22

J P Companies by Sates

Total: 1,049 office（ ）

Auto/ Component24%

Machinery16%

Electric Equipment14%

Service11%

Chemical8%

Transport5%

Others17%

PrecisionEquipment

5%

Type of BusinessJ P Companies

in India

(2) Number of JCCII Member Companies(2) Number of JCCII Member Companies

(3) Existence of JP Companies by States (3) Existence of JP Companies by States (4) Type of Business JP Companies(4) Type of Business JP Companies

6

Survey: Promising Countries for overseas business of JP Companies Survey: Promising Countries for overseas business of JP Companies

(Source: Survey Report on Overseas Business Operations by JBIC)

Relations: India & Japan (“JP”) － Japanese Investors’ View －

(Fiscal Year)

(Percentage shares)

BRICsReport

China’s entry

into the WTO

Bursting of the IT Bubble

SARS outbreak

00 01 02 03 04 05 06 07 08 09

China

USA

Russia

Vietnam

India

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lehman Shock

(Fiscal Year)

(Percentage shares)

BRICsReport

China’s entry

into the WTO

Bursting of the IT Bubble

SARS outbreak

00 01 02 03 04 05 06 07 08 09

China

USA

Russia

Vietnam

India

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lehman Shock

1.　Future　growth　potentialof　local　market

248 90.2%

2.　Inexpensive　source　of　labour 106 38.5%3.　Supply　base　for　assemblers 53 19.3%4.　Qualified　human　resources 51 18.5%5.　Current　size　of　local　market 51 18.5%(Total　number　of　respondent　companies: 275)

Reasons　for　India　Being　Viewed　asPromissing for　Overseas　Operations

No.　ofcompanies Ratio

1.　Future　growth　potentialof　local　market

248 90.2%

2.　Inexpensive　source　of　labour 106 38.5%3.　Supply　base　for　assemblers 53 19.3%4.　Qualified　human　resources 51 18.5%5.　Current　size　of　local　market 51 18.5%(Total　number　of　respondent　companies: 275)

Reasons　for　India　Being　Viewed　asPromissing for　Overseas　Operations

No.　ofcompanies Ratio

1.　Underdeveloped　infrastructure 122 46.9%2.　Security/social　instability 78 30.0%3.　Intense　competition　with

other　companies77 29.6%

4.　Execution　of　legal　system　unclear 76 29.2%5.　Complicated　tax　system 61 23.5%

Pending　IssuesNo.　of

companies Ratio

[ Reasons & Pending Issues ]

7

(1) Number of UN Registered CDM (1) Number of UN Registered CDM

(Source: IGES)

Relations: India & Japan (“JP”) － CDM Projects in India －

Biomass; 136

;Energy Saving53

Metan Avoid; 10

Biogas; 13

Fuel Shift; 11

Cement; 17

Others; 11

Waste Gas andHeat; 64

Wind Power; 91

Hydro Power; 57

,Others335

,Malaysia66

,Philippine40

Chili, 35

,Mexico119 Brasil, 164

China, 652

India, 463

(2) Breakdown of Indian Registered CDM (463) (2) Breakdown of Indian Registered CDM (463)

8

JBIC Financing Menu

(1) Export Loan(1) Export Loan

(2) Overseas Investment Loan(2) Overseas Investment Loan

(3) Untied Loan & Guarantees(3) Untied Loan & Guarantees

(4) Equity Investment(4) Equity Investment

Funding to imports from Japan as per OECD guidelines

Funding to Japanese subsidiaries & joint ventures in India

Funding to projects improving investment climate for Japanese companies in India

Capital Contribution to Infrastructure or Eco-Friendly Projects where Japanese companies participate

9

60%

40%Co-Financiers

(1) Export Loan　　-　Export　Loan　through　SBI　or　ICICI-

Loan

Indian company

Japanese Company

Export

Credit Line

Approach　and　arrange　the　finance

(JPY or USD)

ExportExport

Indian Company imports Machinery, Equipments, etc.　from Japanese Company

State Bank of India (SBI)($70mil)ICICI Bank ($100mil)

Export　Insurance

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Features　-　Export　Loan　-

Eligible Borrower: All Indian companies that are importing capital goods & services from

Japanese companies Borrowing Amount: Up to 85% of Foreign Export Portion

Local expenditure can also be financed as part of overall contract, not exceeding 30% of export portion.

Financial Coverage

Foreign　Portion

Local　Cost

If　the　contract　value　is　160　(foreign　portion　is　100　and　local　cost　is　60),　　maximum　financial　coverage　is　115.

100

60

15

30

Financial Coverage by export loan = 115

100　X　85%　=　85

100　x　30%　=　30

Down　payment　=　15　(100　X　15%)

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Features　-　Export　Loan　-

Down Payment: 15% of Foreign Portion Repayment Period: up to 10 years

Currency: Japanese Yen or US Dollar

Interest Rate :

CIRR + OECD Risk Premium + SBI/ICICI Margin

*1:　CIRR　(Commercial　Interest　Reference　Rate):Interest　rate　applied　to　Officially　Supported　Export　Credit　as　per　OECD　Guidelines,　which　will　change　on　15th　of　each　month

*2:　OECD　Risk　Premium:To　be　calculated　based　on　repayment　terms,　CIRR　rate　etc.　according　to　OECD　Guidelines

*3:　SBI/ICICI　Margin:Only　applied　to　Global　Bank　Loan　(SBI/ICICI　two　step　loan)

Environment: JBIC Environmental Guidelines

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(2) Overseas Investment Loan

FactoryFactory

Equity

CAPEX

Indian　CompanyIndian　Company

Equity/Subsidiary

Japanese　Japanese　CompanyCompanyOperation

Joint　Venture　CompanyCo-FinanciersCo-Financiers

J B I CJ B I C

Loan ($/\/€)

13

Features　-　Overseas　Investment　Loan　-

Eligible Borrower: JV company between Indian company & Japanese company, or Subsidiary of Japanese company

Loan Amount: Depends on the Project & Cash flow

Tenor: Long Term (more than 1 year), depends on Cash flow

Repayment Period: Determined by taking account of Cash flow

Currency: Japanese JPY, USD or Euro

14

Sell out SPVs

(3)Untied Loan-　DMIC　/　Project　Development　Fund　(PDF)　-

＊１ :　Delhi　Mumbai　Industrial　Corridor　Devlpt.　Corp.

LoanLoan （（ $75Million$75Million ））

Consultant Project　Developers

INDIA　ACCOUNT($75million)

JAPAN　ACCOUNT($75million)

＊２： IIFCL ： India　Infrastructure　Finance　Company　Ltd.

Project　Development　Fund　(PDF)

DMIC　DC　*1

Govt.　of　India 　　IIFCL　*2

Transfer　the　Loan　Transfer　the　Loan　to　PDF　Accountto　PDF　Account

JBIC

Guarantee

Utilize　funds　to　conduct　Feasibility　Study　(F/S)　for　prospective　projects

Submit F/S Report

Payment for sales of SPVs

＜ Project　Outline ＞-Establish　SPVs　to　take　all　necessary　permissions　for　DMIC　Project　Developments.　-Sell　out　SPVs　to　Project　Developers.

Fund　PDF　Fund　PDF　Account　Account　（（ $75million$75million ））

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(3)Untied Loan (Guarantee)-　NTPC　/　Power　Generation　Project　-

N T P CN T P CN T P CN T P C Private　BanksPrivate　BanksPrivate　BanksPrivate　Banks

Supply　Electricity　to　Japanese　Company　Complexes　

Supply　Electricity　to　Japanese　Company　Complexes　

（（ $380million$380million ））

GuaranteeGuarantee

Syndicated LoanSyndicated Loan

J B I CJ B I CJ B I CJ B I CBarh (Stage-I) Super Thermal Barh (Stage-I) Super Thermal

Power Project in BiharPower Project in BiharBarh (Stage-I) Super Thermal Barh (Stage-I) Super Thermal

Power Project in BiharPower Project in Bihar

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(3)Untied Loan

Factory

JV　Co.

Japanese　Japanese　CompanyCompany

CAPEX

Local　JP　CompanyLocal　JP　Company

Indian Company（ Supporting Industry ）

Local　JP　Local　JP　CompanyCompany

Components Supply

-　ICICI　Bank　/　Supporting　Industry　Loan　-

$350million(Equivalent amount JPY)

Co-FinanciersCo-Financiers

J B I CJ B I CCredit LineICICI　BankICICI　Bank

Loan($/\)

17

(3)Untied Loan-　ICICI　Bank　/　CDM　Loan　-

CDM　ProjectCDM　Project

JP　CompanyJP　Company

Loan ($/\)

CAPEXSales of Sales of

CERCER

$200 million(Equivalent amount JPY)

CDM　Project　Company

ICICI　BankICICI　Bank Co-FinanciersCo-Financiers

J B I CJ B I C

Credit Line ($/\)

18

(3)Untied Loan(Corresponding to International Financial Turmoil)

-　ICICI　Bank　/　Trade　Finance　Support　Loan-

Indian or Local JP Company(Exporter)

Indian or Local JP Company(Exporter)

Supporting India’s Supporting India’s Trade TransactionsTrade Transactions

Loan($)Loan($)

（（ $100million$100million ））

J B I CJ B I CJ B I CJ B I C

Third Country Company

（ Importer ）

Third Country Company

（ Importer ）

Indian or Local JP Company(Importer)

Indian or Local JP Company(Importer)

Third Country Company

（ Exporter ）

Third Country Company

（ Exporter ）

Trade Trade FinanceFinance

ICICI BankICICI BankICICI BankICICI Bank

Trade Trade FinanceFinance

Trade Trade FinanceFinance

TradeTradeTradeTrade

19

Project A,B,C ・・・

J B I C

Equity/Loan

PrivateBanks

PrivateBanks

Equity

Gu

ara

nte

e

Asia　Infra.　Fund １Asia　Infra.　Fund １

Energy　Efficiency　Fund　 １Energy　Efficiency　Fund　 １

Energy　Efficiency　Fund　 ２Energy　Efficiency　Fund　 ２

Asia　Infra.　Fund　2Asia　Infra.　Fund　2

Equity

Projects　in　Asia（ Infrastructure　&　Energy ）

Projects　in　Asia（ Infrastructure　&　Energy ）

Energy　Conservation　ProjectEnergy　Conservation　ProjectPrivateBanks

PrivateBanks Loan

Equity

Equity

Equity

Project A,B,C ・・・

Project A,B,C ・・・

Project A,B,C ・・・

(4) Equity Invest. / FACE Scheme （ Facility for Asia Cooperation and Environment ）

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(4) Equity Invest. / FACE Scheme （ Outline of FACE ）

ObjectivesObjectives

- To　mobilize　private　capital　by　using　JBIC’s　equity　participation　To　mobilize　private　capital　by　using　JBIC’s　equity　participation　and　guarantee　functions.and　guarantee　functions.

- To　support　the　projects　politically　important　to　Japan　in　view　of　To　support　the　projects　politically　important　to　Japan　in　view　of　the　G8　Hokkaido　Toyako　Summit　:　(1)　projects　contributing　to　the　G8　Hokkaido　Toyako　Summit　:　(1)　projects　contributing　to　mitigating　climate　change　(including　for　energy　efficiency,　mitigating　climate　change　(including　for　energy　efficiency,　renewable　energy,　etc.);　and　(2)　projects　in　Asia.renewable　energy,　etc.);　and　(2)　projects　in　Asia.

PeriodPeriod FY2008-2012　(April　2008-March　2013)FY2008-2012　(April　2008-March　2013)

FundingFunding

To　fund　this　facility,　JBIC　is　to　receive　20　billion　yen　to　its　To　fund　this　facility,　JBIC　is　to　receive　20　billion　yen　to　its　International　Financial　Operation　account　from　the　Japanese　International　Financial　Operation　account　from　the　Japanese　government’s　Fiscal　Loan　Fund　Special　Account　(investmentgovernment’s　Fiscal　Loan　Fund　Special　Account　(investmentaccount).account).

21

(4) Equity Invest. / FACE Scheme （ FACE Applicable Condition ）

- Less　Capital　Contribution　Ration　than　Japanese　Biggest　Less　Capital　Contribution　Ration　than　Japanese　Biggest　Shareholder,　andShareholder,　and

- Less　than　25%Less　than　25%

Japanese Japanese Company’s Company’s

ParticipationParticipation

- Japanese　Company’s　Equity　Participation　in　the　Project,　orJapanese　Company’s　Equity　Participation　in　the　Project,　or- Japanese　Company’s　Equity　Participation　in　Foreign　Companies　Japanese　Company’s　Equity　Participation　in　Foreign　Companies　for　Business　Alliance,　or　for　Business　Alliance,　or　

- Japanese　Company’s　Equity　Participation　in　Funds　(Operation　&　Japanese　Company’s　Equity　Participation　in　Funds　(Operation　&　Investment　Policy　should　be　lead　by　Japanese　General　Partner　in　Investment　Policy　should　be　lead　by　Japanese　General　Partner　in　the　Funds),　orthe　Funds),　or

- Japanese　consortium’s　Equity　Participation　in　International　Funds　Japanese　consortium’s　Equity　Participation　in　International　Funds　

CountryCountryDeveloping　Country　onlyDeveloping　Country　only　　(In　case　of　Natural　Resource　Finance,　Developed　Country　is　covered)(In　case　of　Natural　Resource　Finance,　Developed　Country　is　covered)

JBIC’s Equity JBIC’s Equity ParticipationParticipation

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New Finance Initiative -GREEN-　

　　　　((GGlobal　action　for　lobal　action　for　RReconciling　econciling　EEconomic　growth　&　conomic　growth　&　EnEnvironment　conservation)vironment　conservation)

JBIC　supports　environmental　investments　in　Solar　Power,　Energy-Efficient　Power　JBIC　supports　environmental　investments　in　Solar　Power,　Energy-Efficient　Power　Plant,Plant, Energy-Saving　Equipment,　etc.Energy-Saving　Equipment,　etc. for　global　environment　conservation,　utilizing　for　global　environment　conservation,　utilizing　advanced environment technologyadvanced environment technology in　developing　countries　in　developing　countries　

Supports　through　Loans　or　Equity　Investments.Supports　through　Loans　or　Equity　Investments.

Applicable Business (Applicable Conditions)(1) Projects for Global Environment Conservation (e.g.　　Projects　contributing　

to　significant　reduction　of　Greenhouse　Gas　Emissions)(2) Projects　agree　to　“MEASURE”　the　effect,　“REPORT”　the　effect　to　JBIC　and　

accept　the　“VERIFICATION”　of　the　effect　by　JBIC.

　　 Co-operation(Co-finance,　Information　Sharing,　etc)

Loans /

Loan, etc

Catalytic　Role Loan, etc

MDBs（ ADB, World Bank Group, etc ）Private Financial

Institutions

J B I C

Equity Investment

23

New Finance Initiative -GREEN-　

　　　　((GGlobal　action　for　lobal　action　for　RReconciling　econciling　EEconomic　growth　&　conomic　growth　&　EnEnvironment　conservation)vironment　conservation)

Main Targeted Sectors

(1) Renewable Energy Solar,　Wind,　Hydro,　Geothermal,　Biomass　Energy,　etc

(2) Energy Conservation Industrial Sector; Modernization　and　Heat　Recovery　in　Steel,　Cement,　

Chemical,　Nonferrous　Metal　and　Paper　&　Pulp sectors,　etc Power Sector; Clean　Coal　/　Gas-Fired　/　Biomass　Power,　Rehabilitation

of Power　Plant,　Cogeneration, Fuel　Battery,　Smart　Grid,　etc Transport Sector; Urban　Transportation Civilian Sector; ESCO　(Energy　Service　Co.),　Introduction　of　Energy　

Saving　Appliance,　etc Water Treatment; Water　Purification　and　Supply,　etc

(3) Other Greenhouse Gas Emission Reduction ProjectsMethane/CFC　Emission　Reduction,　Nitrous　Oxide　Degradation,　etc　

24

Recent Activity in India

1. Export Loan (Export Credit Line)Borrower Loan　Amont Signing　Date Memo

State　Bank　of　India　(Tokyo) USD70mil Sep.　2006 Two　Step　Loan　for　Export　Finance

ICICI　Bank　(Hong　Kong) USD100mil Mar.　2009 Two　Step　Loan　for　Export　Finance

2.Overseas Investment Loan Borrower Loan　Amont Signing　Date Memo

MHI-L&T　JV　Company USD154mil Jul.　2009 Loan　for　manufacturing　Turbaine,　Generator　andBoilar

Toshiba-JSW　JV　Company USD90mil Oct.　2009 Loan　for　manufacturing　Turbaine　and　Generator

3.Untied Loan/Gurantee Borrower Loan　Amont Signing　Date Memo

ICICI　Bank　(Hong　Kong) USD350mil Apr.　2006 Two　Step　Loan　for　Supporting　Industry

EXIM　Bank　of　India USD100mil Nov.　2006 Two　Step　Loan　for　Indian　Co.　to　import　goodsfrom　Japanese　Co./JV　in　　other Countries.

ICICI　Bank　(Hong　Kong) USD200mil Aug.　2007 Two　Step　Loan　for　CDM　Projects

NTPC　Limited USD380mil Dec.　2007 JBIC　Guarantees　syndicated　loan　to　NTPC

IIFCL USD75mil Dec.　2009 Two　Step　Loan　to　DMICDC　for　using　ProjectDevelopment　Fund

ICICI　Bank　(Hong　Kong) USD100mil Mar.　2010 Two　Step　Loan　for　supporting　Trade　Finance　inIndia

4. Mutual Cooperation Agreement Cooperation　Partner Signing　PlaceSigning　Date Purpose

ICICI　Bank　 Hyderabad May,　2006 Mutual　Cooperation　for　CDM、InfrastructureProjects

Government　of　India Tokyo Dec.　2006 Promotion　and　facilitation　of　Direct　Investmentfrom　Japan　to　India

TERI Tokyo Sep.　2008 Cooperate　to　Mobilize　Private　Sector　Investmentin　Japan　&　India　for　Clomate　Change

25

Thank you very much

Mr. Hiromichi Miyamoto, Representative, Ms. Deepa Salvan, Int’l Financial SpecialistJapan Bank for International Cooperation, New Delhi Office1st Floor, Metropolitan Hotel New Delhi, Bangla Sahib Road,New Delhi-110 001Tel : +91-11-4352 2900, Fax: +91-11-4352 2950Email: h-miyamoto@jbic.go.jp

Financing Opportunity for Japan-India Collaboration Projects