financing opportunity for japan-india collaboration projects japan bank for international...
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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 )
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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
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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 ]
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(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)
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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
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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 ($100mil)
Export Insurance
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Features - Export Loan -
Eligible Borrower: All Indian companies that are importing capital goods & services from
Japanese companies Borrowing Amount: Up to 85% of Foreign Export Portion
Local expenditure can also be financed as part of overall contract, not exceeding 30% of export portion.
Financial Coverage
Foreign Portion
Local Cost
If the contract value is 160 (foreign portion is 100 and local cost is 60), maximum financial coverage is 115.
100
60
15
30
Financial Coverage by export loan = 115
100 X 85% = 85
100 x 30% = 30
Down payment = 15 (100 X 15%)
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Features - Export Loan -
Down Payment: 15% of Foreign Portion Repayment Period: up to 10 years
Currency: Japanese Yen or US Dollar
Interest Rate :
CIRR + OECD Risk Premium + SBI/ICICI Margin
*1: CIRR (Commercial Interest Reference Rate):Interest rate applied to Officially Supported Export Credit as per OECD Guidelines, which will change on 15th of each month
*2: OECD Risk Premium:To be calculated based on repayment terms, CIRR rate etc. according to OECD Guidelines
*3: SBI/ICICI Margin:Only applied to Global Bank Loan (SBI/ICICI two step loan)
Environment: JBIC Environmental Guidelines
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(2) Overseas Investment Loan
FactoryFactory
Equity
CAPEX
Indian CompanyIndian Company
Equity/Subsidiary
Japanese Japanese CompanyCompanyOperation
Joint Venture CompanyCo-FinanciersCo-Financiers
J B I CJ B I C
Loan ($/\/€)
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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
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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).
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(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
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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
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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: [email protected]
Financing Opportunity for Japan-India Collaboration Projects