IFC to invest up to $25 million in Electrotherm India

Electrotherm India Ltd has announced that IFC, the private sector arm of the World Bank Group, will invest up to $25 million in the Company, to help the Company undertake projects in Gujarat including expanding the production of environment-friendly vehicles and enhancing their competitiveness. Out of USD 25 million, the debt part is USD 15 million repayable in 10 years and the balance USD 10 million are bonds with IFC having option to convert them into equity.

Within Gujarat, the project is expected to have a particularly strong positive impact in the Kutch region, which is one of the state's most underdeveloped districts. This is the first IFC investment within State of Gujarat.

The Company will use the funds to expand its electric vehicles business; upgrade its induction furnace business; design value-added iron and steel products to its existing product line; and increase its competitiveness and energy efficiency by building a 30 megawatt captive power plant.

Electric bikes are a relative novelty in India, with annual sales of around 50,000 vehicles current (compared to China's market of around 10 million units per annum). The growth of the electric vehicles market will help reduce pollution in urban areas and provide access to more affordable means of basic transport to low and middle income households across the country.

"We hope to increase our range of products and improve our competitiveness with IFC's support," explained Shailesh Bhandari, Managing Director of the Company. "An association with IFC will allow us to leverage its global expertise, and help us improve our social & environmental practices," he added.

The project will improve the competitiveness of the Company and help it to achieve economies of scale as a result of capacity expansion, backward integration, diversification and increased value addition. The project is expected to facilitate the economic growth of the region as a result of increased product availability, employment creation and local supply linkages.

Source : Equity Bulls

Keywords