BS reported that Aditya Birla Group Company Hindalco will receive USD 100 million in financing from Export Development Canada or EDC, the country's export credit agency for its Mahan Aluminium Project in Madhya Pradesh. The agreement, signed a few days ago will support the supply of technology and capital equipment to the project by subsidiaries of Canada's Rio Tinto Plc, operating under the umbrella of Aluminum Metals Group of Rio Tinto Plc.
The Mahan Aluminium Project consists of 359 kilo tonne per annum aluminium smelter and 900 MW captive thermal power plant. The project was classified as Category-A by EDC, defined as projects likely to have significant adverse environmental effects that are sensitive, diverse or unprecedented according to the agency's website. All project sponsors of Category A projects not located in G7 countries are required to publicly release available environmental impact information.
EDC develops and supports Canada's exports by providing insurance and financial services to Canadian exporters and investors and their international buyers.
Mr Stephen Poloz president & CEO of EDC said that financing for the Mahan project would be the agency's first non-recourse project finance support in India which means it's being financed without collateral. The EDC's USD 100 million financing is part of a larger financing package for the Mahan project by several parties. This is the largest financing deal approved by EDC in India this year. Earlier this year, it also announced it would provide up to USD 50 million in financing to Reliance Industries to support the Indian company's engagement with Canadian exporters in the energy sector to meet its procurement needs.
Apart from providing insurance, financing and loan guarantees, EDC has also invested around USD 110 million with four Indian fund managers: Avigo SME Fund II and III; Infrastructure Development Finance Company India Infrastructure Fund; Kotak India Private Equity Fund Limited and Everstone Capital Partners II, LLC. EDC leverages its investment to introduce Canadian small and mid size exporters to the portfolio companies of the funds.
Mr Poloz, who was in India as part of Canadian Prime Minister Stephen Harper's state visit last month, said there is tremendous enthusiasm for strengthening business, ties in both countries. He has been to India about half a dozen times. The prime ministers of the two countries have set a target of growing bilateral trade to USD 15 billion by 2015 from around USD 5 billion at present.
