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.
India’s infrastructure sector and Canada’s aerospace and clean technology industries are EDC’s three key corporate priorities for the ongoing 2011-15 five year term. India is the only country to be designated a corporate priority by EDC, reflecting its potential and importance to Canada as a growing trading partner.
In 2011, around 280 Canadian companies used EDC products and services to undertake nearly USD 2.5 billion worth of business in India, according to the agency. EDC financed several major deals last year, including the USD 450 million order for 15 Bombardier aircraft by SpiceJet. It also announced financing of up to USD 100 million each for automobile companies Tata Motors and Mahindra & Mahindra and up to USD 50 million each for Tata Communications and Idea Cellular to help the Indian companies procure various goods and services from Canadian exporters.
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 Ltd 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 Mr 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.
He said that “If I went a few years ago, I could have dinner with all the Canadian companies and I could have them all at once. 40 to 50 companies, you could almost have one dinner and still talk to everybody. Now there’s over 300 and all that growth is in SMEs.”
