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     1818 H STREET, N.W., WASHINGTON      D. C. 20433           TELEPHONE:               EXECUTIVE   3-6360

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          Bank Press Release No. 66/35                          Subject: $30 million loan to steel
          July 8, 1966                                                   company in India

                The World Bank has made a loan equivalent to $30 million to The Indian Iron

          and Steel Company Limited (II'SCO), a privately owned steel company.                                  The loan will

     11   help to finance a project ,\which will enable the Company to :Lncz-ease its output of

          sal~able steel by about a third by 1970, to a total of 1,050,000 tens.

                Se•1en commercial banks are participating in the loan, without ~the World Bank's

          guarantee, for a total amount of $900,000;represetiting the first m:aturity and part

          of the second maturity which fall due between November 15, 1971 a~d May 15, 1972.
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•         The participants are Bankers Trust Company, New York; Fidelity-Philadelphia Trust

          Company; The First Pennsylvania ijanking & Trust Company, Philadelphia; The Phila-

          delphia National Bank; Girard Trust Elank, Philadelphia; Deutsche Bank, A.G.,
                                                                                                                                          '.)




          Frankfurt/Main; and Dresdner Bank, A.G., Frankfurt/Main.

                IISCO operates an integrated steelworks in Burnpur, about l='-~p miles northwest

          of Calcutta, a foundry at nearby Kulti, and iron ore and coal mines irt eastern

          India.    The World Bank has been closely associated with IISCO for the past 14                                           (=)
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          years;,   Two loans, totaling $51.5 million, provided the Company with the foreignll

          exchange needed to carry out successfully two major expansion programs.                                     The objec-

          tiveo vf th~se programs were achieved in 1962 when production reached 800,~00,e tons

          of saleable steel annually, compared with 317,000 tons in 1952.                                     A loan of $19.5
                      J"r-
          million is,})resentJy assisting in the development of the Company's coal mines and

          the building of a coal ropeway from mine to mill.                              Incre~~ed production from the

:.        Company's collieries is expected to start in 1968; when in full operation in 1972,
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the mines will produce about 1. 9 million tons of high-grade cokin ~ coal annually,

enough to satisfy IISCO's expected requirements at that time.

     II~CO's expansion in the 1950's resulted in surplus capacity ~n Burnput·'s
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finishing mills, a type of imbalance often encountered in the expan ;ion of ste,el

plants.     The project now being financed, known as the Balancing Scheue, will make

it possible for IISCO to utilize this excess capacity by increasing t'1e output of

the primary ~roduction facilities.      Iron production will be increased through im-

proved raw materia.ls and blast furnace practice and existing steel·•making facili-

ties will be modified and exp~tnded.     These developments w.ill permit the production

of 300,000 additional tons of crude steel.

    · As   a result of major expansion since the mid-1950 1 s, the Indi.an steel industry

has about quadrupled its steel-making capacity to a present level of over six mil-

lion ingot tons.     The two pri~ate companies, whose plants have been operating for

several decades, participated in this expansion, but the bulk of the increase came          41·
from three new Government-owned plants.      Further expansion is und~r way and conse-

quently the capaci.ty of India I s five integrated steelworks is expected to reach near-

ly 9 million ingot tons, or about 6.3 million tons of saleable steel, by late 1967.

The Indian steel industry, both public and private, is looking to another round of

e~~pans ion during the next decade.    IISCO I s steel products are in great demand and

the Company should be able to market without difficulty the /~dditional saleable

steel output of nearly 250,000 tons, consisting mainly of billets, structurals,

bars and sections.

     The Bank loan of $30 million will cover most of IISCO's foreign exchange re-

quirements during the construction period, 1966-70.      The rupee needs will be met

from IISCO's own resources and from long-term borrowings in India.

     The Bank loan is for'a term of 18 years and bears interest at the rate of 6%

per annum.

by India.
               Amortization will begin on November 15, 1971.    The loan is guaranteed
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