JBIC prepared to finance additional $500 mn to SBI for Maruti Suzuki's supply, value chain

The Japan Bank for International Cooperation (JBIC) has disbursed USD 1.5 billion to SBI to finance Maruti Suzuki's supply and value chain in the country, and it is ready to facilitate USD 500 million more, a key official of the Japan government's funding agency said.

JBIC is a policy-based financial institution of Japan, and conducts lending, investment and guarantee operations while complementing private sector financial institutions.

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Since the first wave of the pandemic, JBIC has committed USD 8 billion investment in India of which USD 5 billion is for acquisition financing along with commercial banks, Toshihiko Kurihara, Chief Representative, Representative Office in New Delhi, JBIC said in an interaction.

"We have USD 2 billion financial (commitment) to State Bank of India (SBI) towards financing of Maruti Suzuki's supply and value chain. We already disbursed USD 1 billion in November-December 2020 and additional USD 500 million is done...We have additional limitation of USD 500 million. We are prepared to finance the additional USD 500 million," Kurihara said.

As its mandate, he said JBIC can only finance those projects and investments where Japanese companies are involved.

"JBIC is trying to fund as much Japan-related projects in India. That's the first (requirement) because without the Japanese involvement, we are not allowed to finance any projects. We helped acquisition financing for Nippon Steel to acquire Essar Steel," he added.

In December 2019, Global steel giant ArcelorMittal completed acquisition of Essar Steel and formed a joint venture with Nippon Steel to own and operate debt-ridden Essar Steel for Rs 42,000 crore.The joint venture with Nippon Steel Corporation (Nippon Steel) is called ArcelorMittal Nippon Steel India Limited (AM/NS India).

ArcelorMittal holds 60 percent of AM/NS India, with Nippon Steel holding the balance 40 percent.

In January this year, the Gujarat government said AM/NS India, which owns a steel mill at Hazira in Surat, will invest Rs 1,66,000 crore in six different projects in the state.

As per the agreement, the steel giant will invest Rs 4,200 crore for the expansion and modernisation of their captive jetty in Hazira and Rs 45,000 crore to increase the Hazira plant's steel production capacity from the current 8.6 MMTPA to 18 MMTPA.

ArcelorMittal Nippon Steel has announced the additional expansion of the Hazira steel plant. May be additional USD 5 billion (investment may happen)...JBIC is one of the candidates among the financiers. We go along with Japanese partners to achieve such targets.

"For any investment, 40 percent of it has to be by Nippon Steel and 60 percent by ArcelorMittal," he said speaking on the sidelines of New Energy and Industrial Technology Development Organisation (NEDO) Activity Report launch last week here.

He said JBIC is fully committed to funding Japanese companies' investment in India.

"We do not have a quantitative target of investment, but qualitative target is there. India is a very important country (for us)," he added.

JBIC is mandated to invest in four key areas : development and securement of resources which are important for Japan; maintaining and improving international competitiveness of Japanese industries; business engaged in preserving global environment and; preventing disruptions to international financial order or taking appropriate measures with respect to damages caused by such disruption.

Established on April 1, 2012, the agency aims to contribute to sound development of Japan and international economy and society by conducting financial operation.