1960

-----~~--~--------------

International Finance Corporation

FOURTH ANNUAL REPORT

1959 -1960

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INTERNATIONAL FINANCE CORPORATION

1818 H Street N W

Washington 25 D C

September 29 1960

My DEAR MR CHAIRMAN

In accordance with Section 8 of the By-Laws of the International

Finance Corporation I have been authorized by the Board of Direcshy

tors to submit to the Board of Governors this Fourth Annual Report

of the Corporation This report covers the operations during the

period from July 1 1959 to June 30 1960

Sincerely yours

R L GARNER

President

CHAIRMAN BOARD OF GOVERNORS

INTERNATIONAL FINANCE CORPORATION

GEOGRAPHICAL DISTRIBUTION

OF IFC INVESTMENTS (As of June 30 1960)

bull Members with bull IFe Investment

Number of Number of Investfnents Amount Investments Amount

AUSTRALIA 2 $ 975000 WESTERN HEMISPHERE

AFRICA Argentina 2 $ 6660000 Tanganyika 1 $ 2800000 Brazil 6 10057000

ASIA and MIDDLE EAST Chile 3 5600000

India 2 $ 2215000 Colombia 2 1500000 Iran 1 300000 El Salvador 1 140000 Pakistan 2 1380000 Guatemala 1 200000 Thailand 1 300000 Mexico 2 1120000

6 $ 4195000 Peru 4 4716001

EUROPE Venezuela 1 3000000 Finland Italy

1 1

$ 156000 960000

22 $32993000

2 $ 1116000 Total 33 Investments $42079000

a k

HIGHLIGHTS OF THE YEAR

INVESTMENT OPERATIONS

New Investments 13 investments in 9 countries totaling $21747000

Total Investments 33 investments in 17 countries totaling $42079000 (as of June 30 1960)

First Investments in Argentina Peru Venezuela Tanganyika

Finland Italy (South)

PARTICIPATIONS BY PRIVATE INVESTMENT CAPITAL

Total (in two investments) $6011000

C HAM P ION C E L U LOS E S A (BRAZIL)

Participations Bankers International Corporation $ 200000 Chemical Overseas Finance Corporation $ 750000 Thirteen private investors through investment bankers $2225000

FERTILIZANTES SINTETICOS SA (PERU)

Participations Compagnie Financiere de Suez $ 350000 The Deltec Corporation of New York $1000000 Handelsfinanz AC $1486000

NEW M E M B E R S Argentina Spain

FINANCIAL

Gross Income $3778125

Operating Expenses $1702898

Net Income $2075227

Accumulated Net Income in Reserve Against Losses $7816192

(The Financial Statements are set forth in Appendices A to C)

3

MANAGEMENT OF INDUSTRY

IN THE DEVELOPING COUNTRIES

DURING THE PAST FOUR YEARS IFC has observed the growing interest of business and financial investors both local and foreign in the opportunities for private industry in the developing countries Through its investing activities the Corporation has had first-hand opportunity to appraise many of the problems involved in establishing new enterprises and expanding and modernizing others already in existence

Sound principles of business and finance are the same everywhere but to apply them and to introduce modem business techniques in the developing areas present special difficulties Growth of industry in the modem sense is relatively recent Financial executive and technical exshyperience is limited Political financial and economic conditions are freshyquently less stable than in the more highly industrialized countries These factors plus the usual necessity to obtain funds and equipment from abroad combine to create certain problems Solutions are difficult not only for enterprises originating in the developing countries but also for long-established foreign companies especially those embarking for the first time on operations abroad

Though aware of the obstacles and risks involved IFC is convinced that there are corresponding attractions and rewards In the developing areas are growing markets untapped raw materials and abundant labor able

to acquire modern skills For effiCiently managed enterprises potential profits are greater than in the highly competitive industrialized countries As evidence of its conviction that the rewards can outweigh the risks IFC is investing in the developing areas sharing the risks and participating to an appropriate extent in the potential returns

SOME OF THE SPECIAL CONSIDERATIONS governing investment in the deshyveloping countries are discussed below

Ownership

A common question facing management both national and international concerns the type of ownership of an enterprise For companies from the industrialized areas entering the developing countries there may be a wide

4

choice some insist on complete ownership others attempt to secure local participation a few prefer to take a minority position In a number of instances which have come to IFCs attention the parent company starts with a wholly-owned subsidiary with the intention of seeking local partnershyship when the business has begun to pay dividends This decision to go it alone in the beginning may be based on the difficulty of attracting local shareholders until the enterprise has proved successful or it may be to avoid pressure from local shareholders for dividends at the expense of retaining profits within the business during the early years

Certain advantages of joint ventures are apparent Local shareholders if well chosen can contribute valuable support and experience and estabshylish identity with the local community Such identification has been enshyhanced by certain companies which have sold substantial amounts of shares to the local general public

However there are also considerations which influence some intershynational companies against local participation They fear that differences in business traditions and practices will cause dissension between local and foreign shareholders and that managements freedom of action may be unduly limited

The other side of the coin confronts local businessmen who are starting or expanding enterprises Traditions of family ownership make many busishynessmen reluctant to share it with any outsiders whether the local public or a foreign company However the needs for capital beyond their own resources for foreign exchange and for technical experience are leading more local enterprises to bring international companies into partnership

There is an unquestioned trend toward joint ventures under intershynational and local sponsorship based on growing evidence that the adshyvantages outweigh the difficulties With full realization that each case must be judged in the light of its particular circumstances and of local conditions including appropriate timing IFC considers that wherever practicable joint enterprises are desirable

Executive Management

In the developing countries as elsewhere the increased size and complexity of modem business emphasize the importance of adequate executive manshyagement

In many countries there are successful long-established local business enterprises However in the past most of these have grown slowly with

5

gradually expanding markets The traditional form of ownership and management has been within a family or small related group Expansion has been financed largely by retained earnings or by the controlling group

However in many types of modem industry such as chemicals pulp and paper steel and cement it is no longer practical to start on a small scale Markets are growing more rapidly than ever before Today ecoshynomic production in many lines can be achieved only in an enterprise of a size requiring substantial investment in expensive equipment Operations call not only for complicated technical skills but also for executive manshyagement capable of dealing with the more complex problems of planning financing taxes labor and public relations advancing techniques and the development of new products

Increasing competition is confronting many companies operating in the developing areas This factor alone emphasizes the need for executive management which is experienced informed and receptive to developshyments at home and abroad In many cases this need can be met only by bringing in executives from outside the controlling groups Until more experience has been developed locally it will often be necessary to tum to foreign personnel

Since most companies in the developing areas cannot afford research and development programs comparable to those in the industrialized counshytries local companies are making increasing use of the results of foreign research through licensing or other arrangements

Most of the ownership-management groups accept the need for techshynical operating experience from outside Often they are less ready to recogshynize the importance of strengthening executive management IFC has been concerned in a number of projects designed at least to double current proshyduction and to add new product lines it has usually required considerable persuasion to convince the owners and managers that broadening the executive staff is as essential as adding more machines

Foreign companies operating in the developing areas also face the problem of executive management It is difficult to spare executive personshynel from domestic enterprises unless these companies have had considerable international experience and built up qualified staffs Recruiting new pershysonnel for overseas operations requires more care than for domestic posishytions chiefly because temperament and adaptability to local conditions can be as important in a developing country as professional competence Frequently companies fail to staff adequately their international operashytions or give them full support of management and the headquarters organization

g 4 $

6

Financial Management

In modem business the scope and complexity of financial management have increased as have all management functions However in the developing countries this fact is not widely recognized although there may be many businessmen with wide experience in financing commercial transactions In industrial operations there is more likely to be a shortage of qualified financial experience than of engineering Technical education is much more widespread than training in finance and business

The result is that even where management does recognize the need for strengthening its financial organization it is difficult to recruit qualified personnel especially at the executive level In this situation international accounting and management firms can provide useful assistance and advice on financial policies as well as procedures

Financial Management Tools

Executives responsible for financial management and control of business must have adequate tools just as do those in charge of production Finanshycial tools are primarily accounting (including cost accounting) budgeting and auditing Accounting has been developed to the point where it can promptly supply management with accurate facts and realistic interpretashytions as a sound basis for intelligent planning and decision A reliable record of past sales costs and profits the current status of assets and liashybilities particularly of inventories and other elements of working capital and intelligent projections of future operations in the form of both physical and financial budgets have become an essential part of the operations of the most successful business enterprises

With exceptions IFC has found in the developing countries even in well-established companies accounting practices which do not give manshyagement and potential investors adequate information There is not only lack of substance in financial reports but also delay in preparing them Cost accounting is especially inadequate However IFC has found a gratishyfying response to suggestions for improving accounting and reporting and an increasing realization of their importance to management

From the beginning IFC has required initial and annual audits by independent accountants of all companies in which it invests As ownershyship spreads to the public in the developing areas we foresee the use of independent auditors becoming accepted practice

7

Planning

Many of the specific problems which IFC has observed stem from inadeshyquate planning particularly in the financial field Before embarking on a new project or expansion it is established practice in the best modem business to make intensive studies covering requirements for manageshyment plant location labor supply capital markets and profit margins Comparable studies are relatively rare in projects presented to IFC This is often due to the sponsors inexperience to the lack of properly trained personnel or outside experts or because of reluctance to take the time or spend the money required for such studies Even experienced companies considering foreign industrial ventures often neglect to investishygate factors which they would study as a matter of course in their own countries

Total Capital Requirements

The total amount of capital proposed to be raised frequently falls short of the needs of the project It is the rule rather than the exception to encounter costly delays in construction and in the time required to attain profitable operation Unforeseen increases in costs are particularly frequent as a result of inflation Engineering estimates are rarely on the high side Essential items such as transportation insurance interest during construction technical and other fees may be overlooked Even after a plant is completed there is usually a considerable period before the volume and quality of production result in profitable operation The tendency is to underestimate the time required and the expense of start-up operations

Of the projects in which IFC has invested which are completed and in operation about half had no overruns The others had overruns ranging from 10 to 50 above the estimates in spite of the fact that substantial provisions were made for contingencies

Cost overruns are not peculiar to the developing countries they are a common occurrence everywhere To meet them calls for realistic original estimates and provision for reserve sources of finance Experience has justishyfied IFCs insistence on advance agreement that the shareholders be preshypared to supply whatever additional equity capital may be needed to comshyplete their project

8

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Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

GEOGRAPHICAL DISTRIBUTION

OF IFC INVESTMENTS (As of June 30 1960)

bull Members with bull IFe Investment

Number of Number of Investfnents Amount Investments Amount

AUSTRALIA 2 $ 975000 WESTERN HEMISPHERE

AFRICA Argentina 2 $ 6660000 Tanganyika 1 $ 2800000 Brazil 6 10057000

ASIA and MIDDLE EAST Chile 3 5600000

India 2 $ 2215000 Colombia 2 1500000 Iran 1 300000 El Salvador 1 140000 Pakistan 2 1380000 Guatemala 1 200000 Thailand 1 300000 Mexico 2 1120000

6 $ 4195000 Peru 4 4716001

EUROPE Venezuela 1 3000000 Finland Italy

1 1

$ 156000 960000

22 $32993000

2 $ 1116000 Total 33 Investments $42079000

a k

HIGHLIGHTS OF THE YEAR

INVESTMENT OPERATIONS

New Investments 13 investments in 9 countries totaling $21747000

Total Investments 33 investments in 17 countries totaling $42079000 (as of June 30 1960)

First Investments in Argentina Peru Venezuela Tanganyika

Finland Italy (South)

PARTICIPATIONS BY PRIVATE INVESTMENT CAPITAL

Total (in two investments) $6011000

C HAM P ION C E L U LOS E S A (BRAZIL)

Participations Bankers International Corporation $ 200000 Chemical Overseas Finance Corporation $ 750000 Thirteen private investors through investment bankers $2225000

FERTILIZANTES SINTETICOS SA (PERU)

Participations Compagnie Financiere de Suez $ 350000 The Deltec Corporation of New York $1000000 Handelsfinanz AC $1486000

NEW M E M B E R S Argentina Spain

FINANCIAL

Gross Income $3778125

Operating Expenses $1702898

Net Income $2075227

Accumulated Net Income in Reserve Against Losses $7816192

(The Financial Statements are set forth in Appendices A to C)

3

MANAGEMENT OF INDUSTRY

IN THE DEVELOPING COUNTRIES

DURING THE PAST FOUR YEARS IFC has observed the growing interest of business and financial investors both local and foreign in the opportunities for private industry in the developing countries Through its investing activities the Corporation has had first-hand opportunity to appraise many of the problems involved in establishing new enterprises and expanding and modernizing others already in existence

Sound principles of business and finance are the same everywhere but to apply them and to introduce modem business techniques in the developing areas present special difficulties Growth of industry in the modem sense is relatively recent Financial executive and technical exshyperience is limited Political financial and economic conditions are freshyquently less stable than in the more highly industrialized countries These factors plus the usual necessity to obtain funds and equipment from abroad combine to create certain problems Solutions are difficult not only for enterprises originating in the developing countries but also for long-established foreign companies especially those embarking for the first time on operations abroad

Though aware of the obstacles and risks involved IFC is convinced that there are corresponding attractions and rewards In the developing areas are growing markets untapped raw materials and abundant labor able

to acquire modern skills For effiCiently managed enterprises potential profits are greater than in the highly competitive industrialized countries As evidence of its conviction that the rewards can outweigh the risks IFC is investing in the developing areas sharing the risks and participating to an appropriate extent in the potential returns

SOME OF THE SPECIAL CONSIDERATIONS governing investment in the deshyveloping countries are discussed below

Ownership

A common question facing management both national and international concerns the type of ownership of an enterprise For companies from the industrialized areas entering the developing countries there may be a wide

4

choice some insist on complete ownership others attempt to secure local participation a few prefer to take a minority position In a number of instances which have come to IFCs attention the parent company starts with a wholly-owned subsidiary with the intention of seeking local partnershyship when the business has begun to pay dividends This decision to go it alone in the beginning may be based on the difficulty of attracting local shareholders until the enterprise has proved successful or it may be to avoid pressure from local shareholders for dividends at the expense of retaining profits within the business during the early years

Certain advantages of joint ventures are apparent Local shareholders if well chosen can contribute valuable support and experience and estabshylish identity with the local community Such identification has been enshyhanced by certain companies which have sold substantial amounts of shares to the local general public

However there are also considerations which influence some intershynational companies against local participation They fear that differences in business traditions and practices will cause dissension between local and foreign shareholders and that managements freedom of action may be unduly limited

The other side of the coin confronts local businessmen who are starting or expanding enterprises Traditions of family ownership make many busishynessmen reluctant to share it with any outsiders whether the local public or a foreign company However the needs for capital beyond their own resources for foreign exchange and for technical experience are leading more local enterprises to bring international companies into partnership

There is an unquestioned trend toward joint ventures under intershynational and local sponsorship based on growing evidence that the adshyvantages outweigh the difficulties With full realization that each case must be judged in the light of its particular circumstances and of local conditions including appropriate timing IFC considers that wherever practicable joint enterprises are desirable

Executive Management

In the developing countries as elsewhere the increased size and complexity of modem business emphasize the importance of adequate executive manshyagement

In many countries there are successful long-established local business enterprises However in the past most of these have grown slowly with

5

gradually expanding markets The traditional form of ownership and management has been within a family or small related group Expansion has been financed largely by retained earnings or by the controlling group

However in many types of modem industry such as chemicals pulp and paper steel and cement it is no longer practical to start on a small scale Markets are growing more rapidly than ever before Today ecoshynomic production in many lines can be achieved only in an enterprise of a size requiring substantial investment in expensive equipment Operations call not only for complicated technical skills but also for executive manshyagement capable of dealing with the more complex problems of planning financing taxes labor and public relations advancing techniques and the development of new products

Increasing competition is confronting many companies operating in the developing areas This factor alone emphasizes the need for executive management which is experienced informed and receptive to developshyments at home and abroad In many cases this need can be met only by bringing in executives from outside the controlling groups Until more experience has been developed locally it will often be necessary to tum to foreign personnel

Since most companies in the developing areas cannot afford research and development programs comparable to those in the industrialized counshytries local companies are making increasing use of the results of foreign research through licensing or other arrangements

Most of the ownership-management groups accept the need for techshynical operating experience from outside Often they are less ready to recogshynize the importance of strengthening executive management IFC has been concerned in a number of projects designed at least to double current proshyduction and to add new product lines it has usually required considerable persuasion to convince the owners and managers that broadening the executive staff is as essential as adding more machines

Foreign companies operating in the developing areas also face the problem of executive management It is difficult to spare executive personshynel from domestic enterprises unless these companies have had considerable international experience and built up qualified staffs Recruiting new pershysonnel for overseas operations requires more care than for domestic posishytions chiefly because temperament and adaptability to local conditions can be as important in a developing country as professional competence Frequently companies fail to staff adequately their international operashytions or give them full support of management and the headquarters organization

g 4 $

6

Financial Management

In modem business the scope and complexity of financial management have increased as have all management functions However in the developing countries this fact is not widely recognized although there may be many businessmen with wide experience in financing commercial transactions In industrial operations there is more likely to be a shortage of qualified financial experience than of engineering Technical education is much more widespread than training in finance and business

The result is that even where management does recognize the need for strengthening its financial organization it is difficult to recruit qualified personnel especially at the executive level In this situation international accounting and management firms can provide useful assistance and advice on financial policies as well as procedures

Financial Management Tools

Executives responsible for financial management and control of business must have adequate tools just as do those in charge of production Finanshycial tools are primarily accounting (including cost accounting) budgeting and auditing Accounting has been developed to the point where it can promptly supply management with accurate facts and realistic interpretashytions as a sound basis for intelligent planning and decision A reliable record of past sales costs and profits the current status of assets and liashybilities particularly of inventories and other elements of working capital and intelligent projections of future operations in the form of both physical and financial budgets have become an essential part of the operations of the most successful business enterprises

With exceptions IFC has found in the developing countries even in well-established companies accounting practices which do not give manshyagement and potential investors adequate information There is not only lack of substance in financial reports but also delay in preparing them Cost accounting is especially inadequate However IFC has found a gratishyfying response to suggestions for improving accounting and reporting and an increasing realization of their importance to management

From the beginning IFC has required initial and annual audits by independent accountants of all companies in which it invests As ownershyship spreads to the public in the developing areas we foresee the use of independent auditors becoming accepted practice

7

Planning

Many of the specific problems which IFC has observed stem from inadeshyquate planning particularly in the financial field Before embarking on a new project or expansion it is established practice in the best modem business to make intensive studies covering requirements for manageshyment plant location labor supply capital markets and profit margins Comparable studies are relatively rare in projects presented to IFC This is often due to the sponsors inexperience to the lack of properly trained personnel or outside experts or because of reluctance to take the time or spend the money required for such studies Even experienced companies considering foreign industrial ventures often neglect to investishygate factors which they would study as a matter of course in their own countries

Total Capital Requirements

The total amount of capital proposed to be raised frequently falls short of the needs of the project It is the rule rather than the exception to encounter costly delays in construction and in the time required to attain profitable operation Unforeseen increases in costs are particularly frequent as a result of inflation Engineering estimates are rarely on the high side Essential items such as transportation insurance interest during construction technical and other fees may be overlooked Even after a plant is completed there is usually a considerable period before the volume and quality of production result in profitable operation The tendency is to underestimate the time required and the expense of start-up operations

Of the projects in which IFC has invested which are completed and in operation about half had no overruns The others had overruns ranging from 10 to 50 above the estimates in spite of the fact that substantial provisions were made for contingencies

Cost overruns are not peculiar to the developing countries they are a common occurrence everywhere To meet them calls for realistic original estimates and provision for reserve sources of finance Experience has justishyfied IFCs insistence on advance agreement that the shareholders be preshypared to supply whatever additional equity capital may be needed to comshyplete their project

8

k

Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

HIGHLIGHTS OF THE YEAR

INVESTMENT OPERATIONS

New Investments 13 investments in 9 countries totaling $21747000

Total Investments 33 investments in 17 countries totaling $42079000 (as of June 30 1960)

First Investments in Argentina Peru Venezuela Tanganyika

Finland Italy (South)

PARTICIPATIONS BY PRIVATE INVESTMENT CAPITAL

Total (in two investments) $6011000

C HAM P ION C E L U LOS E S A (BRAZIL)

Participations Bankers International Corporation $ 200000 Chemical Overseas Finance Corporation $ 750000 Thirteen private investors through investment bankers $2225000

FERTILIZANTES SINTETICOS SA (PERU)

Participations Compagnie Financiere de Suez $ 350000 The Deltec Corporation of New York $1000000 Handelsfinanz AC $1486000

NEW M E M B E R S Argentina Spain

FINANCIAL

Gross Income $3778125

Operating Expenses $1702898

Net Income $2075227

Accumulated Net Income in Reserve Against Losses $7816192

(The Financial Statements are set forth in Appendices A to C)

3

MANAGEMENT OF INDUSTRY

IN THE DEVELOPING COUNTRIES

DURING THE PAST FOUR YEARS IFC has observed the growing interest of business and financial investors both local and foreign in the opportunities for private industry in the developing countries Through its investing activities the Corporation has had first-hand opportunity to appraise many of the problems involved in establishing new enterprises and expanding and modernizing others already in existence

Sound principles of business and finance are the same everywhere but to apply them and to introduce modem business techniques in the developing areas present special difficulties Growth of industry in the modem sense is relatively recent Financial executive and technical exshyperience is limited Political financial and economic conditions are freshyquently less stable than in the more highly industrialized countries These factors plus the usual necessity to obtain funds and equipment from abroad combine to create certain problems Solutions are difficult not only for enterprises originating in the developing countries but also for long-established foreign companies especially those embarking for the first time on operations abroad

Though aware of the obstacles and risks involved IFC is convinced that there are corresponding attractions and rewards In the developing areas are growing markets untapped raw materials and abundant labor able

to acquire modern skills For effiCiently managed enterprises potential profits are greater than in the highly competitive industrialized countries As evidence of its conviction that the rewards can outweigh the risks IFC is investing in the developing areas sharing the risks and participating to an appropriate extent in the potential returns

SOME OF THE SPECIAL CONSIDERATIONS governing investment in the deshyveloping countries are discussed below

Ownership

A common question facing management both national and international concerns the type of ownership of an enterprise For companies from the industrialized areas entering the developing countries there may be a wide

4

choice some insist on complete ownership others attempt to secure local participation a few prefer to take a minority position In a number of instances which have come to IFCs attention the parent company starts with a wholly-owned subsidiary with the intention of seeking local partnershyship when the business has begun to pay dividends This decision to go it alone in the beginning may be based on the difficulty of attracting local shareholders until the enterprise has proved successful or it may be to avoid pressure from local shareholders for dividends at the expense of retaining profits within the business during the early years

Certain advantages of joint ventures are apparent Local shareholders if well chosen can contribute valuable support and experience and estabshylish identity with the local community Such identification has been enshyhanced by certain companies which have sold substantial amounts of shares to the local general public

However there are also considerations which influence some intershynational companies against local participation They fear that differences in business traditions and practices will cause dissension between local and foreign shareholders and that managements freedom of action may be unduly limited

The other side of the coin confronts local businessmen who are starting or expanding enterprises Traditions of family ownership make many busishynessmen reluctant to share it with any outsiders whether the local public or a foreign company However the needs for capital beyond their own resources for foreign exchange and for technical experience are leading more local enterprises to bring international companies into partnership

There is an unquestioned trend toward joint ventures under intershynational and local sponsorship based on growing evidence that the adshyvantages outweigh the difficulties With full realization that each case must be judged in the light of its particular circumstances and of local conditions including appropriate timing IFC considers that wherever practicable joint enterprises are desirable

Executive Management

In the developing countries as elsewhere the increased size and complexity of modem business emphasize the importance of adequate executive manshyagement

In many countries there are successful long-established local business enterprises However in the past most of these have grown slowly with

5

gradually expanding markets The traditional form of ownership and management has been within a family or small related group Expansion has been financed largely by retained earnings or by the controlling group

However in many types of modem industry such as chemicals pulp and paper steel and cement it is no longer practical to start on a small scale Markets are growing more rapidly than ever before Today ecoshynomic production in many lines can be achieved only in an enterprise of a size requiring substantial investment in expensive equipment Operations call not only for complicated technical skills but also for executive manshyagement capable of dealing with the more complex problems of planning financing taxes labor and public relations advancing techniques and the development of new products

Increasing competition is confronting many companies operating in the developing areas This factor alone emphasizes the need for executive management which is experienced informed and receptive to developshyments at home and abroad In many cases this need can be met only by bringing in executives from outside the controlling groups Until more experience has been developed locally it will often be necessary to tum to foreign personnel

Since most companies in the developing areas cannot afford research and development programs comparable to those in the industrialized counshytries local companies are making increasing use of the results of foreign research through licensing or other arrangements

Most of the ownership-management groups accept the need for techshynical operating experience from outside Often they are less ready to recogshynize the importance of strengthening executive management IFC has been concerned in a number of projects designed at least to double current proshyduction and to add new product lines it has usually required considerable persuasion to convince the owners and managers that broadening the executive staff is as essential as adding more machines

Foreign companies operating in the developing areas also face the problem of executive management It is difficult to spare executive personshynel from domestic enterprises unless these companies have had considerable international experience and built up qualified staffs Recruiting new pershysonnel for overseas operations requires more care than for domestic posishytions chiefly because temperament and adaptability to local conditions can be as important in a developing country as professional competence Frequently companies fail to staff adequately their international operashytions or give them full support of management and the headquarters organization

g 4 $

6

Financial Management

In modem business the scope and complexity of financial management have increased as have all management functions However in the developing countries this fact is not widely recognized although there may be many businessmen with wide experience in financing commercial transactions In industrial operations there is more likely to be a shortage of qualified financial experience than of engineering Technical education is much more widespread than training in finance and business

The result is that even where management does recognize the need for strengthening its financial organization it is difficult to recruit qualified personnel especially at the executive level In this situation international accounting and management firms can provide useful assistance and advice on financial policies as well as procedures

Financial Management Tools

Executives responsible for financial management and control of business must have adequate tools just as do those in charge of production Finanshycial tools are primarily accounting (including cost accounting) budgeting and auditing Accounting has been developed to the point where it can promptly supply management with accurate facts and realistic interpretashytions as a sound basis for intelligent planning and decision A reliable record of past sales costs and profits the current status of assets and liashybilities particularly of inventories and other elements of working capital and intelligent projections of future operations in the form of both physical and financial budgets have become an essential part of the operations of the most successful business enterprises

With exceptions IFC has found in the developing countries even in well-established companies accounting practices which do not give manshyagement and potential investors adequate information There is not only lack of substance in financial reports but also delay in preparing them Cost accounting is especially inadequate However IFC has found a gratishyfying response to suggestions for improving accounting and reporting and an increasing realization of their importance to management

From the beginning IFC has required initial and annual audits by independent accountants of all companies in which it invests As ownershyship spreads to the public in the developing areas we foresee the use of independent auditors becoming accepted practice

7

Planning

Many of the specific problems which IFC has observed stem from inadeshyquate planning particularly in the financial field Before embarking on a new project or expansion it is established practice in the best modem business to make intensive studies covering requirements for manageshyment plant location labor supply capital markets and profit margins Comparable studies are relatively rare in projects presented to IFC This is often due to the sponsors inexperience to the lack of properly trained personnel or outside experts or because of reluctance to take the time or spend the money required for such studies Even experienced companies considering foreign industrial ventures often neglect to investishygate factors which they would study as a matter of course in their own countries

Total Capital Requirements

The total amount of capital proposed to be raised frequently falls short of the needs of the project It is the rule rather than the exception to encounter costly delays in construction and in the time required to attain profitable operation Unforeseen increases in costs are particularly frequent as a result of inflation Engineering estimates are rarely on the high side Essential items such as transportation insurance interest during construction technical and other fees may be overlooked Even after a plant is completed there is usually a considerable period before the volume and quality of production result in profitable operation The tendency is to underestimate the time required and the expense of start-up operations

Of the projects in which IFC has invested which are completed and in operation about half had no overruns The others had overruns ranging from 10 to 50 above the estimates in spite of the fact that substantial provisions were made for contingencies

Cost overruns are not peculiar to the developing countries they are a common occurrence everywhere To meet them calls for realistic original estimates and provision for reserve sources of finance Experience has justishyfied IFCs insistence on advance agreement that the shareholders be preshypared to supply whatever additional equity capital may be needed to comshyplete their project

8

k

Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

MANAGEMENT OF INDUSTRY

IN THE DEVELOPING COUNTRIES

DURING THE PAST FOUR YEARS IFC has observed the growing interest of business and financial investors both local and foreign in the opportunities for private industry in the developing countries Through its investing activities the Corporation has had first-hand opportunity to appraise many of the problems involved in establishing new enterprises and expanding and modernizing others already in existence

Sound principles of business and finance are the same everywhere but to apply them and to introduce modem business techniques in the developing areas present special difficulties Growth of industry in the modem sense is relatively recent Financial executive and technical exshyperience is limited Political financial and economic conditions are freshyquently less stable than in the more highly industrialized countries These factors plus the usual necessity to obtain funds and equipment from abroad combine to create certain problems Solutions are difficult not only for enterprises originating in the developing countries but also for long-established foreign companies especially those embarking for the first time on operations abroad

Though aware of the obstacles and risks involved IFC is convinced that there are corresponding attractions and rewards In the developing areas are growing markets untapped raw materials and abundant labor able

to acquire modern skills For effiCiently managed enterprises potential profits are greater than in the highly competitive industrialized countries As evidence of its conviction that the rewards can outweigh the risks IFC is investing in the developing areas sharing the risks and participating to an appropriate extent in the potential returns

SOME OF THE SPECIAL CONSIDERATIONS governing investment in the deshyveloping countries are discussed below

Ownership

A common question facing management both national and international concerns the type of ownership of an enterprise For companies from the industrialized areas entering the developing countries there may be a wide

4

choice some insist on complete ownership others attempt to secure local participation a few prefer to take a minority position In a number of instances which have come to IFCs attention the parent company starts with a wholly-owned subsidiary with the intention of seeking local partnershyship when the business has begun to pay dividends This decision to go it alone in the beginning may be based on the difficulty of attracting local shareholders until the enterprise has proved successful or it may be to avoid pressure from local shareholders for dividends at the expense of retaining profits within the business during the early years

Certain advantages of joint ventures are apparent Local shareholders if well chosen can contribute valuable support and experience and estabshylish identity with the local community Such identification has been enshyhanced by certain companies which have sold substantial amounts of shares to the local general public

However there are also considerations which influence some intershynational companies against local participation They fear that differences in business traditions and practices will cause dissension between local and foreign shareholders and that managements freedom of action may be unduly limited

The other side of the coin confronts local businessmen who are starting or expanding enterprises Traditions of family ownership make many busishynessmen reluctant to share it with any outsiders whether the local public or a foreign company However the needs for capital beyond their own resources for foreign exchange and for technical experience are leading more local enterprises to bring international companies into partnership

There is an unquestioned trend toward joint ventures under intershynational and local sponsorship based on growing evidence that the adshyvantages outweigh the difficulties With full realization that each case must be judged in the light of its particular circumstances and of local conditions including appropriate timing IFC considers that wherever practicable joint enterprises are desirable

Executive Management

In the developing countries as elsewhere the increased size and complexity of modem business emphasize the importance of adequate executive manshyagement

In many countries there are successful long-established local business enterprises However in the past most of these have grown slowly with

5

gradually expanding markets The traditional form of ownership and management has been within a family or small related group Expansion has been financed largely by retained earnings or by the controlling group

However in many types of modem industry such as chemicals pulp and paper steel and cement it is no longer practical to start on a small scale Markets are growing more rapidly than ever before Today ecoshynomic production in many lines can be achieved only in an enterprise of a size requiring substantial investment in expensive equipment Operations call not only for complicated technical skills but also for executive manshyagement capable of dealing with the more complex problems of planning financing taxes labor and public relations advancing techniques and the development of new products

Increasing competition is confronting many companies operating in the developing areas This factor alone emphasizes the need for executive management which is experienced informed and receptive to developshyments at home and abroad In many cases this need can be met only by bringing in executives from outside the controlling groups Until more experience has been developed locally it will often be necessary to tum to foreign personnel

Since most companies in the developing areas cannot afford research and development programs comparable to those in the industrialized counshytries local companies are making increasing use of the results of foreign research through licensing or other arrangements

Most of the ownership-management groups accept the need for techshynical operating experience from outside Often they are less ready to recogshynize the importance of strengthening executive management IFC has been concerned in a number of projects designed at least to double current proshyduction and to add new product lines it has usually required considerable persuasion to convince the owners and managers that broadening the executive staff is as essential as adding more machines

Foreign companies operating in the developing areas also face the problem of executive management It is difficult to spare executive personshynel from domestic enterprises unless these companies have had considerable international experience and built up qualified staffs Recruiting new pershysonnel for overseas operations requires more care than for domestic posishytions chiefly because temperament and adaptability to local conditions can be as important in a developing country as professional competence Frequently companies fail to staff adequately their international operashytions or give them full support of management and the headquarters organization

g 4 $

6

Financial Management

In modem business the scope and complexity of financial management have increased as have all management functions However in the developing countries this fact is not widely recognized although there may be many businessmen with wide experience in financing commercial transactions In industrial operations there is more likely to be a shortage of qualified financial experience than of engineering Technical education is much more widespread than training in finance and business

The result is that even where management does recognize the need for strengthening its financial organization it is difficult to recruit qualified personnel especially at the executive level In this situation international accounting and management firms can provide useful assistance and advice on financial policies as well as procedures

Financial Management Tools

Executives responsible for financial management and control of business must have adequate tools just as do those in charge of production Finanshycial tools are primarily accounting (including cost accounting) budgeting and auditing Accounting has been developed to the point where it can promptly supply management with accurate facts and realistic interpretashytions as a sound basis for intelligent planning and decision A reliable record of past sales costs and profits the current status of assets and liashybilities particularly of inventories and other elements of working capital and intelligent projections of future operations in the form of both physical and financial budgets have become an essential part of the operations of the most successful business enterprises

With exceptions IFC has found in the developing countries even in well-established companies accounting practices which do not give manshyagement and potential investors adequate information There is not only lack of substance in financial reports but also delay in preparing them Cost accounting is especially inadequate However IFC has found a gratishyfying response to suggestions for improving accounting and reporting and an increasing realization of their importance to management

From the beginning IFC has required initial and annual audits by independent accountants of all companies in which it invests As ownershyship spreads to the public in the developing areas we foresee the use of independent auditors becoming accepted practice

7

Planning

Many of the specific problems which IFC has observed stem from inadeshyquate planning particularly in the financial field Before embarking on a new project or expansion it is established practice in the best modem business to make intensive studies covering requirements for manageshyment plant location labor supply capital markets and profit margins Comparable studies are relatively rare in projects presented to IFC This is often due to the sponsors inexperience to the lack of properly trained personnel or outside experts or because of reluctance to take the time or spend the money required for such studies Even experienced companies considering foreign industrial ventures often neglect to investishygate factors which they would study as a matter of course in their own countries

Total Capital Requirements

The total amount of capital proposed to be raised frequently falls short of the needs of the project It is the rule rather than the exception to encounter costly delays in construction and in the time required to attain profitable operation Unforeseen increases in costs are particularly frequent as a result of inflation Engineering estimates are rarely on the high side Essential items such as transportation insurance interest during construction technical and other fees may be overlooked Even after a plant is completed there is usually a considerable period before the volume and quality of production result in profitable operation The tendency is to underestimate the time required and the expense of start-up operations

Of the projects in which IFC has invested which are completed and in operation about half had no overruns The others had overruns ranging from 10 to 50 above the estimates in spite of the fact that substantial provisions were made for contingencies

Cost overruns are not peculiar to the developing countries they are a common occurrence everywhere To meet them calls for realistic original estimates and provision for reserve sources of finance Experience has justishyfied IFCs insistence on advance agreement that the shareholders be preshypared to supply whatever additional equity capital may be needed to comshyplete their project

8

k

Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

choice some insist on complete ownership others attempt to secure local participation a few prefer to take a minority position In a number of instances which have come to IFCs attention the parent company starts with a wholly-owned subsidiary with the intention of seeking local partnershyship when the business has begun to pay dividends This decision to go it alone in the beginning may be based on the difficulty of attracting local shareholders until the enterprise has proved successful or it may be to avoid pressure from local shareholders for dividends at the expense of retaining profits within the business during the early years

Certain advantages of joint ventures are apparent Local shareholders if well chosen can contribute valuable support and experience and estabshylish identity with the local community Such identification has been enshyhanced by certain companies which have sold substantial amounts of shares to the local general public

However there are also considerations which influence some intershynational companies against local participation They fear that differences in business traditions and practices will cause dissension between local and foreign shareholders and that managements freedom of action may be unduly limited

The other side of the coin confronts local businessmen who are starting or expanding enterprises Traditions of family ownership make many busishynessmen reluctant to share it with any outsiders whether the local public or a foreign company However the needs for capital beyond their own resources for foreign exchange and for technical experience are leading more local enterprises to bring international companies into partnership

There is an unquestioned trend toward joint ventures under intershynational and local sponsorship based on growing evidence that the adshyvantages outweigh the difficulties With full realization that each case must be judged in the light of its particular circumstances and of local conditions including appropriate timing IFC considers that wherever practicable joint enterprises are desirable

Executive Management

In the developing countries as elsewhere the increased size and complexity of modem business emphasize the importance of adequate executive manshyagement

In many countries there are successful long-established local business enterprises However in the past most of these have grown slowly with

5

gradually expanding markets The traditional form of ownership and management has been within a family or small related group Expansion has been financed largely by retained earnings or by the controlling group

However in many types of modem industry such as chemicals pulp and paper steel and cement it is no longer practical to start on a small scale Markets are growing more rapidly than ever before Today ecoshynomic production in many lines can be achieved only in an enterprise of a size requiring substantial investment in expensive equipment Operations call not only for complicated technical skills but also for executive manshyagement capable of dealing with the more complex problems of planning financing taxes labor and public relations advancing techniques and the development of new products

Increasing competition is confronting many companies operating in the developing areas This factor alone emphasizes the need for executive management which is experienced informed and receptive to developshyments at home and abroad In many cases this need can be met only by bringing in executives from outside the controlling groups Until more experience has been developed locally it will often be necessary to tum to foreign personnel

Since most companies in the developing areas cannot afford research and development programs comparable to those in the industrialized counshytries local companies are making increasing use of the results of foreign research through licensing or other arrangements

Most of the ownership-management groups accept the need for techshynical operating experience from outside Often they are less ready to recogshynize the importance of strengthening executive management IFC has been concerned in a number of projects designed at least to double current proshyduction and to add new product lines it has usually required considerable persuasion to convince the owners and managers that broadening the executive staff is as essential as adding more machines

Foreign companies operating in the developing areas also face the problem of executive management It is difficult to spare executive personshynel from domestic enterprises unless these companies have had considerable international experience and built up qualified staffs Recruiting new pershysonnel for overseas operations requires more care than for domestic posishytions chiefly because temperament and adaptability to local conditions can be as important in a developing country as professional competence Frequently companies fail to staff adequately their international operashytions or give them full support of management and the headquarters organization

g 4 $

6

Financial Management

In modem business the scope and complexity of financial management have increased as have all management functions However in the developing countries this fact is not widely recognized although there may be many businessmen with wide experience in financing commercial transactions In industrial operations there is more likely to be a shortage of qualified financial experience than of engineering Technical education is much more widespread than training in finance and business

The result is that even where management does recognize the need for strengthening its financial organization it is difficult to recruit qualified personnel especially at the executive level In this situation international accounting and management firms can provide useful assistance and advice on financial policies as well as procedures

Financial Management Tools

Executives responsible for financial management and control of business must have adequate tools just as do those in charge of production Finanshycial tools are primarily accounting (including cost accounting) budgeting and auditing Accounting has been developed to the point where it can promptly supply management with accurate facts and realistic interpretashytions as a sound basis for intelligent planning and decision A reliable record of past sales costs and profits the current status of assets and liashybilities particularly of inventories and other elements of working capital and intelligent projections of future operations in the form of both physical and financial budgets have become an essential part of the operations of the most successful business enterprises

With exceptions IFC has found in the developing countries even in well-established companies accounting practices which do not give manshyagement and potential investors adequate information There is not only lack of substance in financial reports but also delay in preparing them Cost accounting is especially inadequate However IFC has found a gratishyfying response to suggestions for improving accounting and reporting and an increasing realization of their importance to management

From the beginning IFC has required initial and annual audits by independent accountants of all companies in which it invests As ownershyship spreads to the public in the developing areas we foresee the use of independent auditors becoming accepted practice

7

Planning

Many of the specific problems which IFC has observed stem from inadeshyquate planning particularly in the financial field Before embarking on a new project or expansion it is established practice in the best modem business to make intensive studies covering requirements for manageshyment plant location labor supply capital markets and profit margins Comparable studies are relatively rare in projects presented to IFC This is often due to the sponsors inexperience to the lack of properly trained personnel or outside experts or because of reluctance to take the time or spend the money required for such studies Even experienced companies considering foreign industrial ventures often neglect to investishygate factors which they would study as a matter of course in their own countries

Total Capital Requirements

The total amount of capital proposed to be raised frequently falls short of the needs of the project It is the rule rather than the exception to encounter costly delays in construction and in the time required to attain profitable operation Unforeseen increases in costs are particularly frequent as a result of inflation Engineering estimates are rarely on the high side Essential items such as transportation insurance interest during construction technical and other fees may be overlooked Even after a plant is completed there is usually a considerable period before the volume and quality of production result in profitable operation The tendency is to underestimate the time required and the expense of start-up operations

Of the projects in which IFC has invested which are completed and in operation about half had no overruns The others had overruns ranging from 10 to 50 above the estimates in spite of the fact that substantial provisions were made for contingencies

Cost overruns are not peculiar to the developing countries they are a common occurrence everywhere To meet them calls for realistic original estimates and provision for reserve sources of finance Experience has justishyfied IFCs insistence on advance agreement that the shareholders be preshypared to supply whatever additional equity capital may be needed to comshyplete their project

8

k

Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

gradually expanding markets The traditional form of ownership and management has been within a family or small related group Expansion has been financed largely by retained earnings or by the controlling group

However in many types of modem industry such as chemicals pulp and paper steel and cement it is no longer practical to start on a small scale Markets are growing more rapidly than ever before Today ecoshynomic production in many lines can be achieved only in an enterprise of a size requiring substantial investment in expensive equipment Operations call not only for complicated technical skills but also for executive manshyagement capable of dealing with the more complex problems of planning financing taxes labor and public relations advancing techniques and the development of new products

Increasing competition is confronting many companies operating in the developing areas This factor alone emphasizes the need for executive management which is experienced informed and receptive to developshyments at home and abroad In many cases this need can be met only by bringing in executives from outside the controlling groups Until more experience has been developed locally it will often be necessary to tum to foreign personnel

Since most companies in the developing areas cannot afford research and development programs comparable to those in the industrialized counshytries local companies are making increasing use of the results of foreign research through licensing or other arrangements

Most of the ownership-management groups accept the need for techshynical operating experience from outside Often they are less ready to recogshynize the importance of strengthening executive management IFC has been concerned in a number of projects designed at least to double current proshyduction and to add new product lines it has usually required considerable persuasion to convince the owners and managers that broadening the executive staff is as essential as adding more machines

Foreign companies operating in the developing areas also face the problem of executive management It is difficult to spare executive personshynel from domestic enterprises unless these companies have had considerable international experience and built up qualified staffs Recruiting new pershysonnel for overseas operations requires more care than for domestic posishytions chiefly because temperament and adaptability to local conditions can be as important in a developing country as professional competence Frequently companies fail to staff adequately their international operashytions or give them full support of management and the headquarters organization

g 4 $

6

Financial Management

In modem business the scope and complexity of financial management have increased as have all management functions However in the developing countries this fact is not widely recognized although there may be many businessmen with wide experience in financing commercial transactions In industrial operations there is more likely to be a shortage of qualified financial experience than of engineering Technical education is much more widespread than training in finance and business

The result is that even where management does recognize the need for strengthening its financial organization it is difficult to recruit qualified personnel especially at the executive level In this situation international accounting and management firms can provide useful assistance and advice on financial policies as well as procedures

Financial Management Tools

Executives responsible for financial management and control of business must have adequate tools just as do those in charge of production Finanshycial tools are primarily accounting (including cost accounting) budgeting and auditing Accounting has been developed to the point where it can promptly supply management with accurate facts and realistic interpretashytions as a sound basis for intelligent planning and decision A reliable record of past sales costs and profits the current status of assets and liashybilities particularly of inventories and other elements of working capital and intelligent projections of future operations in the form of both physical and financial budgets have become an essential part of the operations of the most successful business enterprises

With exceptions IFC has found in the developing countries even in well-established companies accounting practices which do not give manshyagement and potential investors adequate information There is not only lack of substance in financial reports but also delay in preparing them Cost accounting is especially inadequate However IFC has found a gratishyfying response to suggestions for improving accounting and reporting and an increasing realization of their importance to management

From the beginning IFC has required initial and annual audits by independent accountants of all companies in which it invests As ownershyship spreads to the public in the developing areas we foresee the use of independent auditors becoming accepted practice

7

Planning

Many of the specific problems which IFC has observed stem from inadeshyquate planning particularly in the financial field Before embarking on a new project or expansion it is established practice in the best modem business to make intensive studies covering requirements for manageshyment plant location labor supply capital markets and profit margins Comparable studies are relatively rare in projects presented to IFC This is often due to the sponsors inexperience to the lack of properly trained personnel or outside experts or because of reluctance to take the time or spend the money required for such studies Even experienced companies considering foreign industrial ventures often neglect to investishygate factors which they would study as a matter of course in their own countries

Total Capital Requirements

The total amount of capital proposed to be raised frequently falls short of the needs of the project It is the rule rather than the exception to encounter costly delays in construction and in the time required to attain profitable operation Unforeseen increases in costs are particularly frequent as a result of inflation Engineering estimates are rarely on the high side Essential items such as transportation insurance interest during construction technical and other fees may be overlooked Even after a plant is completed there is usually a considerable period before the volume and quality of production result in profitable operation The tendency is to underestimate the time required and the expense of start-up operations

Of the projects in which IFC has invested which are completed and in operation about half had no overruns The others had overruns ranging from 10 to 50 above the estimates in spite of the fact that substantial provisions were made for contingencies

Cost overruns are not peculiar to the developing countries they are a common occurrence everywhere To meet them calls for realistic original estimates and provision for reserve sources of finance Experience has justishyfied IFCs insistence on advance agreement that the shareholders be preshypared to supply whatever additional equity capital may be needed to comshyplete their project

8

k

Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

Financial Management

In modem business the scope and complexity of financial management have increased as have all management functions However in the developing countries this fact is not widely recognized although there may be many businessmen with wide experience in financing commercial transactions In industrial operations there is more likely to be a shortage of qualified financial experience than of engineering Technical education is much more widespread than training in finance and business

The result is that even where management does recognize the need for strengthening its financial organization it is difficult to recruit qualified personnel especially at the executive level In this situation international accounting and management firms can provide useful assistance and advice on financial policies as well as procedures

Financial Management Tools

Executives responsible for financial management and control of business must have adequate tools just as do those in charge of production Finanshycial tools are primarily accounting (including cost accounting) budgeting and auditing Accounting has been developed to the point where it can promptly supply management with accurate facts and realistic interpretashytions as a sound basis for intelligent planning and decision A reliable record of past sales costs and profits the current status of assets and liashybilities particularly of inventories and other elements of working capital and intelligent projections of future operations in the form of both physical and financial budgets have become an essential part of the operations of the most successful business enterprises

With exceptions IFC has found in the developing countries even in well-established companies accounting practices which do not give manshyagement and potential investors adequate information There is not only lack of substance in financial reports but also delay in preparing them Cost accounting is especially inadequate However IFC has found a gratishyfying response to suggestions for improving accounting and reporting and an increasing realization of their importance to management

From the beginning IFC has required initial and annual audits by independent accountants of all companies in which it invests As ownershyship spreads to the public in the developing areas we foresee the use of independent auditors becoming accepted practice

7

Planning

Many of the specific problems which IFC has observed stem from inadeshyquate planning particularly in the financial field Before embarking on a new project or expansion it is established practice in the best modem business to make intensive studies covering requirements for manageshyment plant location labor supply capital markets and profit margins Comparable studies are relatively rare in projects presented to IFC This is often due to the sponsors inexperience to the lack of properly trained personnel or outside experts or because of reluctance to take the time or spend the money required for such studies Even experienced companies considering foreign industrial ventures often neglect to investishygate factors which they would study as a matter of course in their own countries

Total Capital Requirements

The total amount of capital proposed to be raised frequently falls short of the needs of the project It is the rule rather than the exception to encounter costly delays in construction and in the time required to attain profitable operation Unforeseen increases in costs are particularly frequent as a result of inflation Engineering estimates are rarely on the high side Essential items such as transportation insurance interest during construction technical and other fees may be overlooked Even after a plant is completed there is usually a considerable period before the volume and quality of production result in profitable operation The tendency is to underestimate the time required and the expense of start-up operations

Of the projects in which IFC has invested which are completed and in operation about half had no overruns The others had overruns ranging from 10 to 50 above the estimates in spite of the fact that substantial provisions were made for contingencies

Cost overruns are not peculiar to the developing countries they are a common occurrence everywhere To meet them calls for realistic original estimates and provision for reserve sources of finance Experience has justishyfied IFCs insistence on advance agreement that the shareholders be preshypared to supply whatever additional equity capital may be needed to comshyplete their project

8

k

Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

Planning

Many of the specific problems which IFC has observed stem from inadeshyquate planning particularly in the financial field Before embarking on a new project or expansion it is established practice in the best modem business to make intensive studies covering requirements for manageshyment plant location labor supply capital markets and profit margins Comparable studies are relatively rare in projects presented to IFC This is often due to the sponsors inexperience to the lack of properly trained personnel or outside experts or because of reluctance to take the time or spend the money required for such studies Even experienced companies considering foreign industrial ventures often neglect to investishygate factors which they would study as a matter of course in their own countries

Total Capital Requirements

The total amount of capital proposed to be raised frequently falls short of the needs of the project It is the rule rather than the exception to encounter costly delays in construction and in the time required to attain profitable operation Unforeseen increases in costs are particularly frequent as a result of inflation Engineering estimates are rarely on the high side Essential items such as transportation insurance interest during construction technical and other fees may be overlooked Even after a plant is completed there is usually a considerable period before the volume and quality of production result in profitable operation The tendency is to underestimate the time required and the expense of start-up operations

Of the projects in which IFC has invested which are completed and in operation about half had no overruns The others had overruns ranging from 10 to 50 above the estimates in spite of the fact that substantial provisions were made for contingencies

Cost overruns are not peculiar to the developing countries they are a common occurrence everywhere To meet them calls for realistic original estimates and provision for reserve sources of finance Experience has justishyfied IFCs insistence on advance agreement that the shareholders be preshypared to supply whatever additional equity capital may be needed to comshyplete their project

8

k

Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

Capital Structure

Traditionally in the industrialized countries new enterprises have been launched largely with equity capital Only as they have attained some maturity have they incurred substantial long-term debt However IFC sees many projected capital structures for new enterprises proposing debt as high as 75 of the total As a matter of policy IFC will not invest in projects where debt carrying fixed-interest charges are larger than the equity In the more developed countries even this proportion of debt is usually considered too high

A number of reasons influence the tendency to heavy debt financing particularly in short-term debt The preponderant financing by public agencies is in the form of loans Credits for supply of equipment often with some governmental guarantee are ordinarily short-term these credits are pushed strongly by manufacturers trying to sell equipment When commercial banks both foreign and local extend credit it is at short term Finally many owners of enterprises are attracted by the higher earnings which may accrue to relatively small equity capital if they can get cheap credits from governmental sources Even sponsors who understand the risks of too much debt may not have sufficient resources to provide adeshyquate equity nor opportunities to secure it from others It has become clear to IFC that for private industrial development in the growing countries there is a greater shortage of equity capital than of loans

In many projects presented to IFC financing has already been arranged with an excessive amount of suppliers credits or other short-term debt This makes it difficult to meet the remaining needs and maintain a sound capital structure

Working Capital

Sponsors of new enterprises or expansions can usually determine within reasonable limits the amount and cost of plant and equipment Frequently they overlook the fact that physical assets without adequate working capital to finance operations are about as useful as automobiles without gasoline

However sponsors are often hard pressed to obtain funds to cover the cost of fixed assets The most readily available credits are limited to purchase of eqUipment Thus there is temptation to push aside or minimize the requirements for working capital on the assumption that they can be met by short-term bank credits Although it may be obvious that such credits cannot be repaid within their terms there prevails widespread

9

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

optimism that the banks will renew the credits indefinitely Such reliance can be dangerous

Many proposals which come to IFC underestimate working capital requirements Provision for permanent capital should include reasonable amounts for working funds which will be needed continuously limiting the use of bank credit to seasonal peaks and unforeseen contingencies

After operations start even the best estimates of working capital reshyquirements can be undermined by inflation which increases the cost of operations thus requiring more and more units of currency to finance the same physical volume of production

Inflation likewise increases the risks in carrying assets such as cash and receivables Thus the tendency in countries with a record of inflation is to keep working capital to the minimum and to offset depreciating cash assets by short-term bank borrowing It is accepted practice in most of the developing areas for even the best companies to have much weaker working capital ratios than is customary in the industrialized countries

Determination of the most desirable amount of working capital is a difficult and continuing problem of financial management calling for a skillful balance between the risks and costs of too little or too much

Foreign Exchange Borrowing

In developing countries one of the problems peculiar to new and expanding industries arises from the fact that foreign exchange borrowing is usually necessary In countries with weak currencies it is clearly desirable to finance to the maximum in local currencies provided funds are available for sufficiently long term and at a cost which is not excessive However the scarcity of local equity capital or of long-term loans in local currency may force businessmen to choose between borrowing longer-term foreign curshyrency or of relying too heavily on short-term bank credit

If the amount of foreign currency debt is not excessive in relation to the investment in capital equipment or other fixed assets the increase in their value in terms of the depreciating local currency may be a compenshysating factor Whether for fixed assets or for working capital the amount of foreign exchange debt which can safely be incurred must be carefully judged The size and earning capacity of the enterprise in relation to the amount of debt the degree of probable inflation and the type of business all bear on the amount of foreign exchange obligations which may be assumed without too great risk from currency depreciation

P 1Q

10

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

Preparation of Investment Proposals

Good financial management requires analysis of full and accurate informashytion as the basis for decision to launch a new enterprise or to expand an existing business This preparation is essential when seeking funds from informed investors

In four years IFC has made investments in 17 countries and has inshyvestigated projects in 17 others prOViding a varied experience in helping to solve such problems as discussed above The Corporation has also conshytinued to work with its business partners in solving subsequent problems Regardless of whether its financing is sought the Corporation is preshypared to put its experience at the disposal of businessmen both in the inshydustrialized and the developing countries

As contacts with private industry both in the industrialized and the developing countries increase the Corporation should be in a better posishytion to bring together businessmen from the two areas who are seeking partners for joint ventures

One of the practical hindrances to the investment of foreign capital in the developing areas is the expense involved and time required to apshypraise projects at a distance If sponsors furnish complete and reliable information they increase their chances of favorable and rapid decision by investors IFCs own financial legal engineering and accounting staff is supplemented by consultants in its investigations and in follOWing up projects The Corporation can furnish information to private investment institutions which may be interested in participating with it in such investshyment with the minimum of time and expense to them

11

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

SUMMARY OF INTERNATIONAI FINANCE CORPORATION COMMITMENTS

Expressed in United States Dollars-As of June 30 1960

Investments for Fiscal Year ended June 30 1960 are indicated in bold face type

Country Date of Obligor and Type of Business Commitment Terms Net Commitment ~ ~~~~~~~ -~~--

ARGENTINA

Acindar Industria Argentina de June 1960 10 interest maturities 1965-70 option on shares Aceros SA (Steel)

Papelera Rio Parana SA June 1960 7 interest and additional payments contingent on (Pulp and paper) profits maturities 1962-71 option on shares

AUSTRALIA

Duncans Holdings Ltd Sept 1957 7 interest and additional payments contingent on (Lumber and mill products) profits maturities 1961-67 option on shares

Rubbertex (Australia) Proprietary Jan 1959 6 interest and additional payments contingent on Ltd (Rubber products) profits maturities 1961-70 option on shares

(Same) June 1960 6 interest and additional payments contingent on profits maturities 1961-71 option on shares

BRAZIL

Siemens do Brasil Cia de Eletricishydade (Electrical equipment)

June 1957 6 interest maturities 1962-68 option on shares

OIinkraft SA Celulose e Papel (Pulp and paper)

Jan 1958 7 interest maturities 1963-70 option on shares

DLR Plasticos do Brasil SA April1958 7 interest maturities 1961-68 participation in profits (Automotive parts) option on shares

Willys-Overland do Brasil SA Inshydustria e Comercio (Motor vehicles)

June 1958 7 interest maturities 1963-66 participation in profits option on shares

Companhia Mineira de Portland SA (Cement)

Cimento Dec 1958 7 interest maturities 1963-69 participation in profits option on shares

Champion Celulose SAI (Pulp)

June 1959 7 interest and additional payments contingent profits maturities 1965-69 option on shares

on

CHILE

Cementos Dio-Bio SA (Cement)

July 1959 7 interest and additional payments contingent profits maturities 1966-71 option on shares

on

Empresa Minera de Mantos Blancos SA (Copper mining and smelting)

Aug 1957 7 interest and additional payments related to dividends maturities 1964-68 option on shares

(Same) June 1959 (same terms)

Compania Molinos y Fideos Carozzi (Pasta products)

June 1959 6 interest and additional payments contingent profits maturities 1963-70 option on shares

on

COLOMBIA Fabrica de Galletas y Confites ~oel

SA (Food produets) July 1959 6 interest and additional payments contingent

profits maturities 1964-69 option on shares on

Laminas del Caribe SA (Fibreboard)

June 1959 7 interest and additional payments contingent profits maturities 1962-67 option on shares

on

EL SALVADOR

Industrias Textiles SA (Textiles)

May 1959 7 interest and additional payments contingent profits maturities 1962-69 option on shares

on

FINLAND

Oy Kutomotuote (Textiles)

Ab Tricol Oy June 1960 6yen interest and additional net sales maturities 1962-68

payments contingent on

GUATEMALA

Industria Harinera Guatemalteca Oct 1958 5 interest and additional payments contingent on SA (Flour milling) profits maturities 1963-66 option on shares

1 Of this amount participations through IFC were Participation by 13 investors through investment bankers Chemical Overseas Finance Corporation Bankers International Corporation

12

$ 3660000

3000000

660000

225000

90000

1000000

957000

450000

2450000

1200000

4000000 1

1000000

2200000

900000

1500000

1000000

500000

140000

156000

200000

$2225000 $ 750000 $ 200000

31i j lM n

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

SUMMARY OF COMMITMENTS (Continued)

Country Obligor and Type of Business

INDIA Kirloskar Oil Engines Ltd

(Diesel engines)

Assam Sillimanite Ltd (Refractory bricks)

IRAN

Sherkate Sahami Kahkashan (Ceramic tiles)

ITALY Magrini Meridionale SpA

(Electrical equipment)

MEXICO Industrias Perfect Circle SA2

(Industrial equipment)

Bristol de Mexico SA (Aircraft engine overhaul)

PAKISTAN

Steel Corporation of Pakistan Ltd (Steel products)

Adamjee Industries Ltd (Cotton textiles)

PERU

Fertilizantes Sinletleos SA) (Synthetic ammonia and fertilizers)

Industrias Reunidas SA (Household appliances)

Luren SA and Ladrillos Calcareos SA (Limestone and bricks)

Durisol del Peru SA (Building material)

TANGANYIKA Kilombero Sugar Company Ltd

(Sugar)

THAILAND Concrete Products amp Aggregate Co

Ltd (Concrete products)

VENEZUELA

Siderurgica Venezolana SA (Steel)

Date of Commitment

~~----~

April1959

June 1960

June 1959

June 1960

Aug 1957

Sept 1957

June 1958

July 1958

Nov 1959

Sept 1959

Sept 1959

Oct 1959

June 1960

June 1959

June 1960

Terms Net Commitment ~~~ -~~-~ ~~~-~~~ --shy~~~--

6Yl interest and additional payments contingent on profits maturities 1965-70 option on shares

6lh interest and additional payments contingent on profits maturities 1965-74 option on shares

7 interest and additional payments contingent on profits maturities 1962-68

No fixed interest 6 interest contingent on profits and additional payments related to dividends maturities 1976-79 option on shares

9 interest and profits maturities 1961-67

additional payments contingent on

7 interest and additional payments contingent on profits maturities 1960-66 option on shares

7 interest and additional payments contingent on profits maturities 1964middot68 option on shares

7 interest maturities 1964middot68 option on shares

7 interest and additional payments contingent on profmiddot its maturities 1965-69 option on shares Payments contingent on profits without fixed interest maturities 1970-74 option on shares

6 interest and profits maturiti

additional payments contingent es 1962middot67 option on shares

on

7 interest and profits maturitie

additional payments contingent s 1963-69 option on shares

on

7 interest and additional payments contingent on profits maturities 1965-69 option on shares

7 debentures (pound250000 and $1400000) maturities 1967-73 option on shares

No fixed interest on pound250000 convertible notes payshyments contingent on profits maturities 1973-75 option on shares

6 interest and profits maturities 1961-69

additional payments contingent on

7 Interest and additional payments contingent on profits maturities 1962-70 option on shares

$3186000

700000

$2100000

700000

$ 850000

1365000

300000

960000

600000

520000

630000 750000

250000

280000

300000

2800000

300000

3000000

$42079000

2 Formerly Engranes y Productos Industriales SA terms adjusted 3 Of this amount participations through IFC were Handelsfinanz AG

The Deltec Corporation of New York Compagnie Financiere de Suez

$1486000 $1000000 $ 350000

13

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

OPERATIONS

Investments Number and Amount

Number

of

Investments

Dollars

of

Investments (Millions)

1 st 2nd 3rd 4thFiscal Years

1956-57 1957-58 1958-59 1959-60

During the year ended June 30 1960

the Corporation made

13 investments for projects located in

9 countries totaling

the equivalent of U S$21 747000

This brought total investments

to 33 for projects

located in 17 countries

totaling the equivalent of U s$42079000

14

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

NEW INVESTMENTS

ARGENTINA

Acindar Industria Argentina de Aceros SA-US$3660OOO

ACINDAR incorporated in 1942 produces and distributes a wide range of steel products Its production accounts for about 45 of the total output of the primary steel converting companies in Argentina The locally-owned company has plants in Rosario and Villa Constitucion and its shares are traded on the Buenos Aires stock exchange

The IFC investment will help finance a program for modernization and expansion of facilities for production of a wide range of rolled steel products wire and wire products and galvanized and black pipe at a total estimated cost of US $22 million equivalent The program is expected to be completed by 1964

Papelera Rio Parana SA-US$3OOOOOO

PAPELERA a locally-owned enterprise was incorporated in 1948 it produces pulp and paper at Campana Buenos Aires Province Shares of the company are traded on the Buenos Aires stock exchange

IFCs investment will help finance a new sulphite mill to produce dissolving pulp used by local industry for the manufacture of rayon and cellophane and bleached sulphite pulp for the production of paper in its own mills Total cost of the expansion is estimated at US$53 million equivalent The new mill is expected to begin production in 1961

Mo Och Domsjo a well-known pulp company in Sweden is a minority stockholder and will provide technical assistance for the project

15

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

AUSTRALIA

Rubbertex (Australia) Proprietary Ltd-US$90OOO (Supplemental Investment)

RUBBERTEX was founded in 1946 and manufactures a variety of natural and synthetic rubber products Rubber-to-metal bonding also fomls an imshyportant part of its operations The products are used in the manufacture of appliances automobiles tractors and aircraft

This is IFCs second investment in the fast-growing locally-owned company The first investment of $225000 in 1959 was for equipment and a new plant The present investment will help finance increased capacity and a new product line

CHILE

Cementos Bio-Bio SA-US$lOOOOOO

THIS NEW CHILEAN COMPANY is building a cement plant near Concepcion in Southern Chile with a planned capacity of about 132000 tons per year of portland iron portland and slag cement Ownership of the company is predominantly Chilean In addition to the Chilean sponsoring group shares have been subscribed by more than 4000 Chileans Koppers Intershynational SA a subsidiary of Koppers Co Inc of Pittsburgh and Transoceanic-AOFC Ltd

Total cost of the project is estimated at US$5000000 equivalent Production is expected to begin in 1961

COLOMBIA

Fdbrica de Galletas y Confites Noel SA-US$lOOOOOO

NOEL a locally-owned producer of biscuits crackers candy and alimentary pastes was established in Medellin in 1916

IFCs investment is to help finance the construction and equipment of a modern air-conditioned plant which will increase production more than 50

Total cost of the project is estimated at US$2400000 equivalent The project is expected to be completed in 1961

w

16

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

FINLAND

Tricol Oy and Oy Kutomotuote Ah-US$156OOO

THE TRICOL-KuTOMOTUOTE companies are among Finlands largest proshyducers of knitted goods They have common local ownership and compleshymentary functions manufacturing knitted materials of cotton nylon and cotton-nylon mixtures as well as wearing apparel

IFCs investment will help finance the construction and operation of a new plant expansion of production facilities and relocation of part of the groups operation Total cost of the program which is expected to be comshypleted in 1961 is estimated at US$825OOO equivalent

I NO IA

Assam Sillimanite Ltd-US$1365OOO

SINCE 1951 ASSAM SILLIMANITE has mined and processed minerals prinshycipally sillimanite largely for export These are used in the manufacture of refractory materials for the steel glass and ceramics industries The companys shares are traded on the Calcutta stock exchange

The company will continue to export substantial quantities of raw minerals The company is now entering the manufacturing field IFCs investment will help finance a new plant designed to produce ultimately 46000 tons annually of refractory materials Its production will make possible a substantial reduction in the import of refractories Total cost of the new plant is estimated at US$3255OOO equivalent Production is exshypected to begin in 1961

ITALY

Magrini Meridionale SpA-US$960OOO equivalent

Tms NEW ENTERPRISE is a subsidiary of Magrini SpA of Bergamo locallyshyowned and leading manufacturers of electrical equipment since 1904 Many of its products are manufactured under license from Westinghouse International which owns stock in the company

17

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

The new company will build a plant near Naples for the manufacture of low and medium voltage circuit-breakers IFCs investment will help finance the new plant the total cost of which is estimated at U S$35 million equivalent Production is expected to begin in 1961

PERU

Durisol del Peru SA-US$300OOO

DURISOL will manufacture under license from Durisol A C of Zurich strong lightweight building blocks and other formed building materials for a wide range of structural applications The Peruvian company is locally-owned

IFCs investment will help finance the new factory Total cost is estimated at US$800000 equivalent and production is expected to begin by the end of 1960

Fertilizantes Sinteticos SA (FERTISA)-US$3886OOO

FERTISA a Peruvian enterprise for the production of synthetic ammonia and its derivatives began production in 1959 Although the majority ownership is held by Peruvians major shareholder and sponsor of the project is the Italian chemical firm of Montecatini

The total cost of the project is estimated at US$129 million equivashylent

Compagnie Financiere de Suez of Paris has purchased $350000 of the IFC investment The Deltec Corporation of New York $1000000 and Handelsfinanz AC of Zurich $1486000

Industrias Reunidas SA (INRESA)-US$250OOO

INRESA a Peruvian-owned enterprise organized in 1941 has been engaged in the manufacture of cans nails and enamelware

IFCs investment is financing part of an expansion and diversification program to include the assembly of major household appliances and the manufacture of appliance parts Total cost of the expansion is about US$540000 equivalent The project is expected to be completed in 1960

18

lt(flio II tt $

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

Luren SA and Ladrillos Calcdreos SA-US$2BOOOO

THESE TWO ASSOCIATED PERUVIAN COMPANIES extract and process limestone and manufacture bricks in an operation located south of Lima They are locally-owned and have been in operation since 1958

IFCs investment is financing an expansion of operations including new machinery and working capital The project is expected to be comshypleted in 1961

TANGANYIKA

Kilombero Sugar Company Ltd (KSC)-US$2BOOOOO equivalent

THE KILOMBERO SUGAR COMPANY LTD is newly organized to grow and reshyfine sugar for the local Tanganyikan market

The Company has acquired a concession of fertile land from the Tanganyikan Government on the Great Ruaha River in the Kilombero Valley KSC initially will clear and irrigate about 7000 acres for sugar cane and will construct a sugar mill and refinery with an initial capacity of 20000 tons of refined sugar per year to be expanded to 30000 tons as soon as justified by increased market demand Production is expected to begin in 1962

This project will be a major step in the development of the fertile but thinly populated Kilombero Valley a 2400 square mile area containing much land suitable for rice cassava rosella tobacco cocoa and coffee as well as sugar

Total cost of the project is estimated at more than US$8 million equivalent In addition to IFCs investment US$36 million equivalent is provided by The Colonial Development Corporation (CDC) Nethershylands Overseas Finance Company (NOFC) and Vereenigde Klattensche Cultuur Maatschappij (VKCM)

Additional financing will be provided by an offering of convertible preferred shares to Africans Asians and other residents of Tanganyika through a public issue underwritten jOintly by the Standard Bank of South Africa of London and CDC

19

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

VENEZUELA

Siderurgica Venezolana SA (SIVENSA)-US$3OOOOOO

SIVENSA incorporated in Venezuela in 1948 is a locally-owned company operating a semi-integrated steel mill which produces reinforcing bars and wire rods for the local construction industry The companys shares are traded on local stock exchanges

IFes investment will help finance a program designed to reduce manufacturing costs up-grade and diversify products and increase rolling capacity The program estimated to cost US$62 million equivalent is expected to be completed in 1960

MANAGEMENT AND STAFF

THE CORPORATION continues to use the services of the World Banks Ecoshynomic Staff and Treasurers Secretarys and Administration Departments

On July 1 1960 the Corporation established its own Legal Department and R B J Richards was appointed General Counsel Mr Richards jOined the staff of the World Bank in 1952 and was assigned as Senior Counsel to the Corporation in 1959

J David Dodd a member of the Engineering Staff of IFC since 1957 was appOinted Senior Engineer on December 1 1959 following the death of Arthur M Miller Engineering Adviser

Elliott H Lee former Vice President of Morgan Guaranty Trust Company of New York was appointed Special Representative for the Corshyporation in the United States on January 1 1960 Mr Lee is located in the Corporations office in New York City

et bull 44 bull I

20

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

bull bull

bull bull

bull bull bull bull

bull bull bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

bull bull

ANALYSIS OF INVESTMENTS (As of June 30 1960)

NATURE OF PROJECT

New Expansion

ARGENTINA ACINDAR

PAPELERA

AUSTRALIA DUNCANmiddotS

RUBBERTEX

BRAZIL CHAMPION

COMINCI

DL-R

OLINKRAFT

SIEMENS

WlLLYS

CHILE BIOmiddotBIO bullCAROZZI bull MANTOS BLANCOS bull

COLOMBIA LAMINAS bullNOEL bull EL SALVADOR INTEXSA bull FINLAND TRICOL bull GUATEMALA INHSA bull INDIA ASSAM bullKIRLOSICAR bull IRAN KAHKASHAN bull ITALY MAGRINI bull MEXICO BRISTOL bull

PERFECT CIRCLE bull PAKISTAN ADAMJEE

STEEL CORPORATIOK

PERU DURISOL

FERTlSA

INRESA

LURENLADRlLLOS

TANGANYIKA KILOMBERO bull THAILAND CPAC bull VENEZUELA SIVENSA bullbull

OWNERSHIP

Local Foreign Joint

bull bull

bull bull bull

bull bull bull

bull

bull bull bull

bull bull

bull bull

bull bull

13 20 19 4

21

10

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

APPENDICES

BALANCE SHEET

STATEMENT OF INCOME AND EXPENSES

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS

OPINION OF INDEPENDENT AUDITOR

SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER

GOVERNORS AND ALTERNATES

DIRECTORS AND ALTERNATES

ORGANIZATION

A

B

C

D

E

F

G

H

23

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

APPENDIX A

BALANCE SHEET

JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCy-See Note 3 Appendix C

ASSETS

DUE FROM BANKS $ 147804

UNITED STATES GOVERNMENT OBLIGATIONS ($86220000 face amount at amortized COSt) Accrued Interest

$85961174 394540 86355714

OPERATIONAL INVESTMENTS OUTSTANDING (See Appendix C) -(Including $1945727 undisbursed)

Total $24648000 Held by Participants 6011000

Held by Corporation 18637000

RECEIVABLE FROM PARTICIPANTS 886000 ACCRUED CHARGES ON OPERATIONAL INVESTMENTS 313653 OTHER ASSETS 89162

TOTAL ASSETS $106429333

LIABILITIES RESERVE AND CAPITAL

ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 161414

UNDISBURSED OPERATIONAL INVESTMENTs-(See Appendix C) Investments Held by Corporation $1059727 Investments Held by Participants 886000 1945727

RESERVE AGAINST LoSSEs-see Note 7816192

CAPITAL

Capital Stock Authorized 100000 shares of $1000 par value each

Subscribed 96506 shares bull 96506000

TOTAL LIABILITIES RESERVE AND CAPITAL $106429333

Note Pursuant to action of the Board of Directors the accumulated net income of the Corporation has been allocated to a Reserve Against Losses and the future net income of the Corporation will until further action by the Board of Directors or the Board of Governors be allocated to this Reserve

24

WI1t Wi n j cent

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

APPENDIX B

COMPARATIVE STATEMENT OF INCOME AND EXPENSES

FOR THE FISCAL YEARS ENDED JUNE 30 1959 AND JUNE 30 1960 EXPRESSED IN UNITED STATES CURRENCy-See Nole 3 Appendix C

July I-June 30 1958-1959 1959-1960

INCOME

Income from United States Government Obligations $2679431 $2662003 Income from Operational Investments 473645 1116122

$3153076 $3778125

EXPENSES

Administrative expenses

Personal services $ 794547 $ 939757

Contributions to staff benefits 86496 176250

Fees and compensation 64451 99025

Representation 19788 25988

TraveL 251234 229417

Supplies 14966 13640

Office occupancy 90514 92542 Communication services 35995 48621

Furniture and equipment 20308 22560

Books and library services 12450 14749 Printing 19119 33547

Insurance 3097 6495

Other expenses 354 307 ------

$1413319 $1702898

NET INCOME $1739757 $2075227

25

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

APPENDIX C

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operational Investment OuWanding (Note J)

COUNTRY Less Cancelshy Investments ---=-------------=---- shyand Obligor lations and Not Yet

Expirations Effective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

ARGENTINA ACINDAR INDUSTRIA

ARGENTINA DE ACEROS SAbullbull PAPELERA RIO PARANA SAbullbullbullbullbullbull

AUSTRALIA DUNCANS HOLDINGS LTDbullbullbullbull RUBBERTEX (AUSTRALIA)

PROPRIETARY LTDbullbullbullbullbullbullbullbull

BRAZIL SIEMENS DO BRASIL CIA DE

ELETRICIDADE bullbullbullbullbullbullbullbullbullbullbullbull OLINKRAFT SA CELULOSE E

PAPEL bullbullbullbullbullbullbullbullbullbullbullbullbullbull D L R PLASTICOS DO

BRASIL SAbullbullbullbullbullbullbullbullbullbullbullbull WILLYS-OVERLAND DO BRASIL

SA INDUSTRIA E COMERCIO bullbullbull COMPANHIA MINEIRA DE

CIMENTO PORTLAND SAbullbullbullbullbull CHAMPION CELULOSE SAbullbullbullbullbullbullbullbull

CHILE EMPRESA MINERA DE MANTOS

BLANCOS SAbullbullbullbullbullbullbullbullbullbull COMPANIA MOLINOS Y

FIDEOS CAROZZI bullbullbullbullbullbullbullbullbullbull CEMENTOS BIO-BIO SAbullbullbullbull

COLOMBIA LAMINAS DEL CARlBE SAbullbullbullbullbullbull FABRICA DE GALLETAS Y

CONFITES NOEL SAbullbullbullbullbull

EL SALVADOR INDUSTRIAS TEXTILES SA bullbullbull

FINLAND OY KUTOMOTUOTE AB

TRICOL OY TOLl OY bullbullbullbullbullbullbullbull

GUATEMALA INDUSTRIA HARINERA

GUATEMALTECA SAbullbullbullbullbullbullbull

INDIA ASSAM SILLIMANITE LTDbullbullbull KIRLOSKAR OIL ENGINES LTDbullbullbull

IRAN SHERKATE SAHAMI KAHKASHAN

ITALY MAGRINI MERIDIONALE SPAbullbullbullbull

MEXICO INDUSTRIAS PERFECT CIRCLE SA

(FORMERLY ENGRANES Y PROshyDUCTOS INDUSTRIALES SA)

BRISTOL DE MEXICO SAbullbullbullbullbullbullbullbull

26

$ 3660000 $3660000 $ 3000000 3000000

660000

315000 90000

1000000

957000

450000

2450000

1200000 4000000

3100000

1500000 1000000 1000000

500000

1000000

140000

156000 156000

200000

1365000 1365000 850000 850000

300000

960000 960000

600000 520000

3175000

$ $ $

660000 660000

225000 225000

1000000 1000000

957000 957000

450000 450000

2450000 2450000

1200000 1200000 825000 4000000

3100000 3100000

1500000 1500000

500000 500000

1000000 496000 504000

140000 140000

200000 200000

300000 300000

600000 600000 520000 520000

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

----------------

APPENDXC continued

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS JUNE 30 1960

EXPRESSED IN UNITED STATES CURRENCY

Original Commitments Operational Operalonalnvestments OUlSlanding (]lole 3)

COUNTRY Less Caneeshy InveSlmems ---~ and Obligor Ialions and Not Yet

Expirations tffective Held by Held by Disbursed Undisbursed (Note I) (Note 2) Participants Corporation (Note 4)

PAKISTAN STEEL CORPORATION OF

PAKISTAN LTDbullbullbullbull ADAMJEE INDUSTRIES LTD

(NOTE 4)

630000

750000

630000

750000

630000

354273 395727

PERU INDUSTRIAS REUNIDAS SAbullbullbullbullbullbull LUREN SA AND LADRILLOS

CALCAREOS SA DURISOL DEL PERU SAbullbullbullbullbullbull FERTILIZANTES SINTETICOS SAbullbull

250000

280000 300000

3886000

250000

300000 2836000

280000

1050000

120000

3000000

160000

886000

TANGANYIKA KILOMBERO SUGAR COMPANY bull 2800000 2800000

THAILAND THE CONCRETE PRODUCTS AND

AGGREGATE COMPANY LTD 300000 300000 300000

VENEZUELA SIDERURGICA VENEZOLANA

SIVENSAH SAbullbullbullbullbullbullbullbullbullbull 3000000 3000000

TOTALS $42079000$17431000 ~6011000 $18637000 $22702273 $1945727

Note I General Note Original principal amounts of Commitments The Operational Investments provide in addishytotalled $45022000 of which $2943000 has tion to fixed interest for either a right to been cancelled or has expired participate in the profits of the enterprise or a

right to acquire shares of capital stock or bothNote 2

In these cases the Corporation and the Obligor must complete certain legal formalities and other conditions before the Obligor may withshy Summary of Currencies Repayable on Operational draw funds on account of the Investment Investments Disbursed

Note 3 Principal and interest receivable in Mexican pesos have been translated into their US (Expressed in United States Currency) dollar equivalents at the rate of 1250 pesos to Currency AmountUS$100

Mexican pesos $ 260000Note 4 United States dollars 22442273Of the undisbursed balance the Corporation has entered into irrevocable commitments to disshy Total disbursed $22702273burse $392485

27

APPENDIX D

OPINION OF INDEPENDENT AUDITOR

1710 H STREET NW WASHINGTON 6 D C

August 22 1960

To INTERNATIONAL FINANCE CORPORATION

WASIDNGTON D C

In our opinion the accompanying financial statements present fairly the financial position of International Finance Corporation at June 30 1960 and the results of its operations for the year then ended in conformity with generally accepted accounting principles applied on a basis conshysistent with that of the preceding year Our examination of these statements was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances

PRICE WATERHOUSE amp CO

FINANCIAL STATEMENTS

COVERED BY THE FOREGOING OPINION

BALANCE SHEET bullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbullbull APPENDIX A

COMPARATIVE STATEMENT OF INCOME AND EXPENSES bullbull APPENDIX B

SUMMARY STATEMENT OF OPERATIONAL INVESTMENTS bullbullbull APPEll)IX C

28

APPENDIX E

STATEMENT OF SUBSCRIPTIONS

TO CAPITAL STOCK AND VOTING POWER JUNE 30 1960

Voting Power Subscriptions

Member Countries Number of votes

Percent of total

Amount (in thousands ofdollars)

Percent of total

Afghanistan Argentina bull Australia

361 1912 2465

33 172 222

III 1662 2215

12 172 230

Austria 804 72 554 57 Belgium Bolivia

2742 328

247 30

2492 78

258 08

BraziL Burma

IAi3 416

127 37

1163 166

121 17

Canada bull Ceylonbull Chile

3850 416 638

316 37 57

3600 166 388

373 17 40

Colombia 638 57 388 40 Costa Rica 272 24 22 02 Cuba 638 57 388 40 Denmark 1003 90 753 78 Dominican Republic bullbull Ecuador

272 285

24

26 22 35

02

04 EI Salvadorbullbull 261 24 II 01 Ethiopiabull Finland

283 671

26

60 33

421 03 44

France 6065 545 5815 603 Germany Ghana

3905 416

351 37

3655 166

379 17

Greece 527 47 277 29 Guatemala 272 24 22 02 Haiti 272 24 22 02 Honduras bull 261 24 II 01 Iceland 261 24 11 01 Indiabull 4681 421 4431 459 Indonesiabull 1468 132 1218 126 Iran 622 56 372 39 Iraq Ireland

317 582

29

52 67

332 07 34

Israel 300 27 50 05 Italy Japan Jordan

2244 3019

283

202 271

26

1994 2769

33

207 287 03

Lebanon bull 300 27 50 05 Libya bullbull Luxembourg Malaya Mexicobull

305 361 527 970

28

32

47

87

55 III 277 720

06

12

29

75 Netherlands 3296 296 3046 316 Nicaragua Norway Pakistan Panama

259 804

1358 252

23

72 122 23

9 554

1108 2

01

57 115

bull Paraguay Peru bull

266 444

24

40 16

194 02 20

Philippines Spain Sweden

416 1358 1358

37 122 122

166 1108 1108

17 115 115

Thailand bull 389 35 139 14 Turkey Union of South Africa

726 1358

65 122

476 1108

49 115

United Arab Republic United Kingdom United States

912 14650 35418

83 317 3184

662 14400 35168

69 1492 3644

Venezuela bull 366 33 116 12

Totals III 256 10000 96506 10000 ============================

bull Less than 005 percent

29

APPENDIX F

GOVERNORS AND ALTERNATES

JUNE 301960

Member Government Governor Alternate

Afghanistan Argentina Australia Austria Belgium Bolivia Brazil Burma Canada Ceylon

Chile Colombia Costa Rica Cuba Denmark Dominican Republic Ecuador EI Salvador Ethiopia Finland

France Germany Ghana Greece Guatemala

Haiti Honduras Iceland India Indonesia

Iran Iraq Ireland Israel Italy Japan Jordan Lebanon Libya Luxembourg

Malaya

Mexico Netherlands Nicaragua Norway Pakistan Panama Paraguay Peru Philippines

Spain Sweden Thailand Turkey Union of South Africa United Arab Republic United Kingdom United States Venezuela

Abdullah Malikyar Eustaquio Mendez Delfino Harold Holt Eduard HeilingsetzerJ van Houtte Eufronio Hinojosa Sebastiao Paes de Almeida Thakin Tin Donald M Fleming

Abdul Hai Aziz Julio Gonzalez del Solar Sir Roland Wilson Wilhelm Teufenstein Jean Van Nieuwenhuyse Fernando Pou Munt Mauricio Chagas Bicalho U Kyaw Nyun A F W Plumptre

Felix R Dias Bandaranaikc Rajendra Coomaraswamy

Eduardo Figueroa Ignacio Copcte-Lizarralde Alvaro Castro Justo Carrillo Hernandez Svend Nielsen S Salvador Ortiz Isidro de Ycaza Plaza Carlos J Canes sa Tadesse Yacob R v Fieandt

Minister of Finance Ludwig Erhard K A Gbedemah Gregory Cassimatis Manuel A Bendfeldt

Jauregui Gerard Philippeaux Celeo Davila Peter Benediktsson Morarji R Desai R M Notohamiprodjo

Ali Asghar Nasser Hashim Jawad Seamas 0 Riain David Horowitz Donato Menichella Mikio Mizuta Hashem Jayousi Andre Tueni A N Aneizi Pierre Werner

Tan Siew Sin

Antonio Ortiz Mena J Zijlstra Guillermo Sevilla-Sacasa Arne Skaug Mohamed Shoaib Erasmo de la Guardia Cesar Romeo Acosta Fernando Berckemeyer Miguel Cuaderno Sr

Mariano Navarro Rubio G E Straeng Sunthorn Hongladarom Ekrem Alican T E Donges Abdel Moneim EI Kaissouni John Selwyn Brooke Lloyd Robert B Anderson Rafael Alfonzo Ravard

bull Appointed between June 30 and August 15 1960

30

Alvaro Orrego Barros Jorge Cortes-Boshell Alvaro Vargas Joaquin E Meyer Poul Bjorn Olsen

Jose R Chiriboga V Luis Escalante-Arce George Peters Rea Reino Rossi

Pierre Paul Schweitzer Franz Etzel Hubert C Kessels loannis Paraskevopoulos Max Jimenez Pinto

Antonio Andre Juan Milia Bermudez Vilhjalmur Thor B K Nehru Indra Kasoema

Djalaleddin Aghili Abdul Hassan Zalzalah T K Whitaker Jacob Arnon Giorgio Cigliana-PiazzaMasamichi Yamagiwa Hazem Nuseibeh Raja Himadeh Fathi Tarabulsi Pierre Guill

Dato Ismail bin Dato Abdul Rahman

Jose Hernandez Delgado S Posthuma J J Lugo Marenco Gabriel Kielland M A Mozaffar Julio E Heurtematte Federico Mandelburger Emilio Foley Eduardo Z Romualdez

Juan Antonio Ortiz Gracia N G Lange Boonma Wongswan Sail Naci Ergin M H de Kock Husni A Sawwaf Sir Denis Rickett C Douglas Dillon Miguel Herrera Romero

APPENDIX G

DIRECTORS AND ALTERNATES AND THEIR VOTING POWER

JUNE 301960

Director Alternate Casting votes of Total votes

APPOINTED

T Graydon Upton John S Hooker United States 35418

The Earl of Cromer Geoffrey M Wilson United Kingdom J4650

Rene Larre Jean Cottier France 6065

B K Nehru C S Krishna Moorthi India 468J

ELECTED

A van Campenhout Ernst A Rott Belgium Austria Turkey (Belgium) (Austria) Luxembourg 4633

Mohamed Shoaib Ali Akbar Khosropur Pakistan United Arab Republic (Pakistan) (Iran) Iran Afghanistan Iraq

Lebanon Ethiopia Jordan 4436

Louis Rasminsky C L Read Canada Ireland 4432 (Canada) (Canada)

Takeshi Watanabe Prayad Buranasiri Japan Burma Ceylon (Japan) (Thailand) Thailand 4240

Jose Aragones Carlo Gragnani Italy Spain Greece 4129 (Spain) (Italy)

T L Hammarskiold Tyge Dahlgaard Sweden Denmark Norway (Sweden) (Denmark) Finland Iceland 4097

Luis Machado Jorge A Montealegre Mexico Cuba Peru Venezuela (Cuba) (Nicaragua) Costa Rica Guatemala EI

Salvador Honduras Nicaragua Panama 3995

Otto Donner HGorn Germany 3905

J M Garland A J J van Vuuren Australia Union of South (Australia) (Union 0 South Africa 3823

Arica)

P Lieftinck Nikola Miljanic Netherlands Israel 3596 (Netherlandf) ( Yugoslavia)

Jorge Mejia-Palacio Jose Camacho Brazil Colombia Philippines (Colombia) (Colombia) Ecuador Dominican

Republic Haiti 3296

Carlos S Brignone L Vartalitis Argentina Chile Bolivia (Argentina) (Argentina) Paraguay 3144

Ismail bin Mohamed Ali Omar Saadi Elmandjra Indonesia Malaya Ghana (Malaya) (Morocco) Libya 2716

31

APPENDIX H

ORGANIZATION

President ROBERT L GARNER

Vice President J G BEEVOR

Special Assistant HARRY MALLINSON

Director of Investments BRODERICK HASKELL

Assistant Director of Investments NEIL J PATERSON

Investment Officers ERNESTO FRANCO-HoLGUIN

GoRDON GRAYSON

EDWARD M LAMONT

PIERRE L LAPORTE

ANTHONY M LUND

General Counsel R B J RICHARDS

Senior Engineer J DAVID DODD

Chief Accounting Officer WILLIAM S B SAMPSON

Public Affairs Officer JENTRY S HOLMES

The Offices of Treasurer Secretary and Director of Administration are held by the corresponding officers of the International Bank for Reconstruction and Development (World Bank)

HEADQUARTERS

1818 H STREET NW

WASHIXGTO-- 25 D C

Tel EXccutice 3-6860

NEW YORK OFFfCE

33 LIBERTY STREET

Te DIgby 02]31

ELlIOTT H LEE Special Representative

E (I R 0 P E J 0 1lt F 1 C E S

27 OLD JEWRY 4 AVEX(JE DIENA

LO-mOs EC 2 EXGLA-Il PARIS 16e FRAXCE

Tel [())(rch 3middot11)2 Tel K16)(r 2510

]AfES H DAHTO- Special Representative

32

pound =

INTERNATIONAL FINANCE CORPORATION

SUPPLEMENT TO THE FOURTH ANNUAL REPORT

A Summary of Operations

from

July 1 to September 29 1960

INVESTMENTS

During the period the Corporation made 4 investments totaling $2855000 for projects located in 4 countries-Chile Finland Mexico and Venezuela This brings the number of investments to 36 for projects in 17 countries totaling $44934000 equivalent

Participations by private investors which on June 30 totaled $6011000 increased to $6411000

CHILE

Cementos Bio-Bio SA US$2OO000 (Supplemental)

In 1959 IFC committed $1000000 in the original Bio-Bio cement plant at Conshycepcion designed to produce approximately 132000 tons of cement IFCs supplemental commitment of $200000 will help defray extra costs incurred by the company principally for larger foundations as protection against earthquakes The total cost is now estimated at $57 million equivalent

The supplemental IFC investment will be substantially on the same terms as the original investment

FINLAND

Rauma-Repola Oy US$1875OOO

Rauma-Repola is one of Finlands largest manufacturing enterprises in the fields of pulp sawmilling heavy machinery and shipbuilding It is publicly owned with some 24000 shareholders the largest being KansaIlis-Osake-Pankki (KOP) a well known commercial bank in Finland

IFCs investment will help to finance an expansion and modernization proshygram This includes an increase in the output of a cellulose pulp mill from 70000 to 150000 tons per year and modernization of machine shop and shipyard facilities The total cost of the program is estimated at US$IB million equivalent

IFCs investment will be in unsecured dollar Notes bearing 6 interest and maturing by 1965 IFC will also receive additional payments dependent on dividends and an option on shares

MEXICO

Acero Solar SA US$280OOO

Acero Solar is expanding its plant chiefly for the manufacture of high speed twist drills Its present line of production includes high and medium alloy steel bars steel castings forgings and tool bits

Twist drills are used throughout industry and in the construction field and at present they are almost entirely imported Acero Solar will be the first manushyfacturer of twist drills in Mexico and expects to supply a substantial portion of the market in the sizes it will produce The total cost of the project is estimated to be US$640OOO equivalent

IFCs investment will be in unsecured dollar Notes bearing 7 interest and maturing by 1970 In addition IFC will receive a right to participate in profits

VENEZUELA

Diablitos Venezolanos GA US$500OOO

Diablitos Venezolanos a wholly-owned subsidiary of Wm Underwood amp Co of Boston has been established for the production and sale of deviled ham in Venezuela

Supplies of ham will be imported but the Venezuelan company will create an incentive program in cooperation with the Venezuelan Agricultural Ministry

to encourage bog breeding on modern and scientific lims The total cost of the project is estimated at US$l025Ooo equialent

IFCs inwsbnent will be in US dollar Notes maturing by 1969 and bearshying 65lt interest and additional payments in bolivares if earned IFC also reshyceives an option on shares

PARTICIPATIONS I INVEST~IENTS

On June 30 1960 as noted in the Fourth Annual Report participations by private investment capital in two IFC investments totaled $6011000

This total has increased during the period to $6411000 following the parshyticipation of $400000 by the Philadelphia International Investment Corporation in IFCs S3OOO000 investment in Papelera Rio Parana SA

lVIEylBERSHIP

Applications for membership from Nigeria and Sudan will be voted on at the Fourth Annual yleeting of the Board of Governors on September 29 1960 Nigerias membership will be subject to its becoming an independent conn try in October 1960

M

APPENDIX E

STATEMENT OF SUBSCRIPTIONS

TO CAPITAL STOCK AND VOTING POWER JUNE 30 1960

Voting Power Subscriptions

Member Countries Number of votes

Percent of total

Amount (in thousands ofdollars)

Percent of total

Afghanistan Argentina bull Australia

361 1912 2465

33 172 222

III 1662 2215

12 172 230

Austria 804 72 554 57 Belgium Bolivia

2742 328

247 30

2492 78

258 08

BraziL Burma

IAi3 416

127 37

1163 166

121 17

Canada bull Ceylonbull Chile

3850 416 638

316 37 57

3600 166 388

373 17 40

Colombia 638 57 388 40 Costa Rica 272 24 22 02 Cuba 638 57 388 40 Denmark 1003 90 753 78 Dominican Republic bullbull Ecuador

272 285

24

26 22 35

02

04 EI Salvadorbullbull 261 24 II 01 Ethiopiabull Finland

283 671

26

60 33

421 03 44

France 6065 545 5815 603 Germany Ghana

3905 416

351 37

3655 166

379 17

Greece 527 47 277 29 Guatemala 272 24 22 02 Haiti 272 24 22 02 Honduras bull 261 24 II 01 Iceland 261 24 11 01 Indiabull 4681 421 4431 459 Indonesiabull 1468 132 1218 126 Iran 622 56 372 39 Iraq Ireland

317 582

29

52 67

332 07 34

Israel 300 27 50 05 Italy Japan Jordan

2244 3019

283

202 271

26

1994 2769

33

207 287 03

Lebanon bull 300 27 50 05 Libya bullbull Luxembourg Malaya Mexicobull

305 361 527 970

28

32

47

87

55 III 277 720

06

12

29

75 Netherlands 3296 296 3046 316 Nicaragua Norway Pakistan Panama

259 804

1358 252

23

72 122 23

9 554

1108 2

01

57 115

bull Paraguay Peru bull

266 444

24

40 16

194 02 20

Philippines Spain Sweden

416 1358 1358

37 122 122

166 1108 1108

17 115 115

Thailand bull 389 35 139 14 Turkey Union of South Africa

726 1358

65 122

476 1108

49 115

United Arab Republic United Kingdom United States

912 14650 35418

83 317 3184

662 14400 35168

69 1492 3644

Venezuela bull 366 33 116 12

Totals III 256 10000 96506 10000 ============================

bull Less than 005 percent

29

APPENDIX F

GOVERNORS AND ALTERNATES

JUNE 301960

Member Government Governor Alternate

Afghanistan Argentina Australia Austria Belgium Bolivia Brazil Burma Canada Ceylon

Chile Colombia Costa Rica Cuba Denmark Dominican Republic Ecuador EI Salvador Ethiopia Finland

France Germany Ghana Greece Guatemala

Haiti Honduras Iceland India Indonesia

Iran Iraq Ireland Israel Italy Japan Jordan Lebanon Libya Luxembourg

Malaya

Mexico Netherlands Nicaragua Norway Pakistan Panama Paraguay Peru Philippines

Spain Sweden Thailand Turkey Union of South Africa United Arab Republic United Kingdom United States Venezuela

Abdullah Malikyar Eustaquio Mendez Delfino Harold Holt Eduard HeilingsetzerJ van Houtte Eufronio Hinojosa Sebastiao Paes de Almeida Thakin Tin Donald M Fleming

Abdul Hai Aziz Julio Gonzalez del Solar Sir Roland Wilson Wilhelm Teufenstein Jean Van Nieuwenhuyse Fernando Pou Munt Mauricio Chagas Bicalho U Kyaw Nyun A F W Plumptre

Felix R Dias Bandaranaikc Rajendra Coomaraswamy

Eduardo Figueroa Ignacio Copcte-Lizarralde Alvaro Castro Justo Carrillo Hernandez Svend Nielsen S Salvador Ortiz Isidro de Ycaza Plaza Carlos J Canes sa Tadesse Yacob R v Fieandt

Minister of Finance Ludwig Erhard K A Gbedemah Gregory Cassimatis Manuel A Bendfeldt

Jauregui Gerard Philippeaux Celeo Davila Peter Benediktsson Morarji R Desai R M Notohamiprodjo

Ali Asghar Nasser Hashim Jawad Seamas 0 Riain David Horowitz Donato Menichella Mikio Mizuta Hashem Jayousi Andre Tueni A N Aneizi Pierre Werner

Tan Siew Sin

Antonio Ortiz Mena J Zijlstra Guillermo Sevilla-Sacasa Arne Skaug Mohamed Shoaib Erasmo de la Guardia Cesar Romeo Acosta Fernando Berckemeyer Miguel Cuaderno Sr

Mariano Navarro Rubio G E Straeng Sunthorn Hongladarom Ekrem Alican T E Donges Abdel Moneim EI Kaissouni John Selwyn Brooke Lloyd Robert B Anderson Rafael Alfonzo Ravard

bull Appointed between June 30 and August 15 1960

30

Alvaro Orrego Barros Jorge Cortes-Boshell Alvaro Vargas Joaquin E Meyer Poul Bjorn Olsen

Jose R Chiriboga V Luis Escalante-Arce George Peters Rea Reino Rossi

Pierre Paul Schweitzer Franz Etzel Hubert C Kessels loannis Paraskevopoulos Max Jimenez Pinto

Antonio Andre Juan Milia Bermudez Vilhjalmur Thor B K Nehru Indra Kasoema

Djalaleddin Aghili Abdul Hassan Zalzalah T K Whitaker Jacob Arnon Giorgio Cigliana-PiazzaMasamichi Yamagiwa Hazem Nuseibeh Raja Himadeh Fathi Tarabulsi Pierre Guill

Dato Ismail bin Dato Abdul Rahman

Jose Hernandez Delgado S Posthuma J J Lugo Marenco Gabriel Kielland M A Mozaffar Julio E Heurtematte Federico Mandelburger Emilio Foley Eduardo Z Romualdez

Juan Antonio Ortiz Gracia N G Lange Boonma Wongswan Sail Naci Ergin M H de Kock Husni A Sawwaf Sir Denis Rickett C Douglas Dillon Miguel Herrera Romero

APPENDIX G

DIRECTORS AND ALTERNATES AND THEIR VOTING POWER

JUNE 301960

Director Alternate Casting votes of Total votes

APPOINTED

T Graydon Upton John S Hooker United States 35418

The Earl of Cromer Geoffrey M Wilson United Kingdom J4650

Rene Larre Jean Cottier France 6065

B K Nehru C S Krishna Moorthi India 468J

ELECTED

A van Campenhout Ernst A Rott Belgium Austria Turkey (Belgium) (Austria) Luxembourg 4633

Mohamed Shoaib Ali Akbar Khosropur Pakistan United Arab Republic (Pakistan) (Iran) Iran Afghanistan Iraq

Lebanon Ethiopia Jordan 4436

Louis Rasminsky C L Read Canada Ireland 4432 (Canada) (Canada)

Takeshi Watanabe Prayad Buranasiri Japan Burma Ceylon (Japan) (Thailand) Thailand 4240

Jose Aragones Carlo Gragnani Italy Spain Greece 4129 (Spain) (Italy)

T L Hammarskiold Tyge Dahlgaard Sweden Denmark Norway (Sweden) (Denmark) Finland Iceland 4097

Luis Machado Jorge A Montealegre Mexico Cuba Peru Venezuela (Cuba) (Nicaragua) Costa Rica Guatemala EI

Salvador Honduras Nicaragua Panama 3995

Otto Donner HGorn Germany 3905

J M Garland A J J van Vuuren Australia Union of South (Australia) (Union 0 South Africa 3823

Arica)

P Lieftinck Nikola Miljanic Netherlands Israel 3596 (Netherlandf) ( Yugoslavia)

Jorge Mejia-Palacio Jose Camacho Brazil Colombia Philippines (Colombia) (Colombia) Ecuador Dominican

Republic Haiti 3296

Carlos S Brignone L Vartalitis Argentina Chile Bolivia (Argentina) (Argentina) Paraguay 3144

Ismail bin Mohamed Ali Omar Saadi Elmandjra Indonesia Malaya Ghana (Malaya) (Morocco) Libya 2716

31

APPENDIX H

ORGANIZATION

President ROBERT L GARNER

Vice President J G BEEVOR

Special Assistant HARRY MALLINSON

Director of Investments BRODERICK HASKELL

Assistant Director of Investments NEIL J PATERSON

Investment Officers ERNESTO FRANCO-HoLGUIN

GoRDON GRAYSON

EDWARD M LAMONT

PIERRE L LAPORTE

ANTHONY M LUND

General Counsel R B J RICHARDS

Senior Engineer J DAVID DODD

Chief Accounting Officer WILLIAM S B SAMPSON

Public Affairs Officer JENTRY S HOLMES

The Offices of Treasurer Secretary and Director of Administration are held by the corresponding officers of the International Bank for Reconstruction and Development (World Bank)

HEADQUARTERS

1818 H STREET NW

WASHIXGTO-- 25 D C

Tel EXccutice 3-6860

NEW YORK OFFfCE

33 LIBERTY STREET

Te DIgby 02]31

ELlIOTT H LEE Special Representative

E (I R 0 P E J 0 1lt F 1 C E S

27 OLD JEWRY 4 AVEX(JE DIENA

LO-mOs EC 2 EXGLA-Il PARIS 16e FRAXCE

Tel [())(rch 3middot11)2 Tel K16)(r 2510

]AfES H DAHTO- Special Representative

32

pound =

INTERNATIONAL FINANCE CORPORATION

SUPPLEMENT TO THE FOURTH ANNUAL REPORT

A Summary of Operations

from

July 1 to September 29 1960

INVESTMENTS

During the period the Corporation made 4 investments totaling $2855000 for projects located in 4 countries-Chile Finland Mexico and Venezuela This brings the number of investments to 36 for projects in 17 countries totaling $44934000 equivalent

Participations by private investors which on June 30 totaled $6011000 increased to $6411000

CHILE

Cementos Bio-Bio SA US$2OO000 (Supplemental)

In 1959 IFC committed $1000000 in the original Bio-Bio cement plant at Conshycepcion designed to produce approximately 132000 tons of cement IFCs supplemental commitment of $200000 will help defray extra costs incurred by the company principally for larger foundations as protection against earthquakes The total cost is now estimated at $57 million equivalent

The supplemental IFC investment will be substantially on the same terms as the original investment

FINLAND

Rauma-Repola Oy US$1875OOO

Rauma-Repola is one of Finlands largest manufacturing enterprises in the fields of pulp sawmilling heavy machinery and shipbuilding It is publicly owned with some 24000 shareholders the largest being KansaIlis-Osake-Pankki (KOP) a well known commercial bank in Finland

IFCs investment will help to finance an expansion and modernization proshygram This includes an increase in the output of a cellulose pulp mill from 70000 to 150000 tons per year and modernization of machine shop and shipyard facilities The total cost of the program is estimated at US$IB million equivalent

IFCs investment will be in unsecured dollar Notes bearing 6 interest and maturing by 1965 IFC will also receive additional payments dependent on dividends and an option on shares

MEXICO

Acero Solar SA US$280OOO

Acero Solar is expanding its plant chiefly for the manufacture of high speed twist drills Its present line of production includes high and medium alloy steel bars steel castings forgings and tool bits

Twist drills are used throughout industry and in the construction field and at present they are almost entirely imported Acero Solar will be the first manushyfacturer of twist drills in Mexico and expects to supply a substantial portion of the market in the sizes it will produce The total cost of the project is estimated to be US$640OOO equivalent

IFCs investment will be in unsecured dollar Notes bearing 7 interest and maturing by 1970 In addition IFC will receive a right to participate in profits

VENEZUELA

Diablitos Venezolanos GA US$500OOO

Diablitos Venezolanos a wholly-owned subsidiary of Wm Underwood amp Co of Boston has been established for the production and sale of deviled ham in Venezuela

Supplies of ham will be imported but the Venezuelan company will create an incentive program in cooperation with the Venezuelan Agricultural Ministry

to encourage bog breeding on modern and scientific lims The total cost of the project is estimated at US$l025Ooo equialent

IFCs inwsbnent will be in US dollar Notes maturing by 1969 and bearshying 65lt interest and additional payments in bolivares if earned IFC also reshyceives an option on shares

PARTICIPATIONS I INVEST~IENTS

On June 30 1960 as noted in the Fourth Annual Report participations by private investment capital in two IFC investments totaled $6011000

This total has increased during the period to $6411000 following the parshyticipation of $400000 by the Philadelphia International Investment Corporation in IFCs S3OOO000 investment in Papelera Rio Parana SA

lVIEylBERSHIP

Applications for membership from Nigeria and Sudan will be voted on at the Fourth Annual yleeting of the Board of Governors on September 29 1960 Nigerias membership will be subject to its becoming an independent conn try in October 1960

M

APPENDIX F

GOVERNORS AND ALTERNATES

JUNE 301960

Member Government Governor Alternate

Afghanistan Argentina Australia Austria Belgium Bolivia Brazil Burma Canada Ceylon

Chile Colombia Costa Rica Cuba Denmark Dominican Republic Ecuador EI Salvador Ethiopia Finland

France Germany Ghana Greece Guatemala

Haiti Honduras Iceland India Indonesia

Iran Iraq Ireland Israel Italy Japan Jordan Lebanon Libya Luxembourg

Malaya

Mexico Netherlands Nicaragua Norway Pakistan Panama Paraguay Peru Philippines

Spain Sweden Thailand Turkey Union of South Africa United Arab Republic United Kingdom United States Venezuela

Abdullah Malikyar Eustaquio Mendez Delfino Harold Holt Eduard HeilingsetzerJ van Houtte Eufronio Hinojosa Sebastiao Paes de Almeida Thakin Tin Donald M Fleming

Abdul Hai Aziz Julio Gonzalez del Solar Sir Roland Wilson Wilhelm Teufenstein Jean Van Nieuwenhuyse Fernando Pou Munt Mauricio Chagas Bicalho U Kyaw Nyun A F W Plumptre

Felix R Dias Bandaranaikc Rajendra Coomaraswamy

Eduardo Figueroa Ignacio Copcte-Lizarralde Alvaro Castro Justo Carrillo Hernandez Svend Nielsen S Salvador Ortiz Isidro de Ycaza Plaza Carlos J Canes sa Tadesse Yacob R v Fieandt

Minister of Finance Ludwig Erhard K A Gbedemah Gregory Cassimatis Manuel A Bendfeldt

Jauregui Gerard Philippeaux Celeo Davila Peter Benediktsson Morarji R Desai R M Notohamiprodjo

Ali Asghar Nasser Hashim Jawad Seamas 0 Riain David Horowitz Donato Menichella Mikio Mizuta Hashem Jayousi Andre Tueni A N Aneizi Pierre Werner

Tan Siew Sin

Antonio Ortiz Mena J Zijlstra Guillermo Sevilla-Sacasa Arne Skaug Mohamed Shoaib Erasmo de la Guardia Cesar Romeo Acosta Fernando Berckemeyer Miguel Cuaderno Sr

Mariano Navarro Rubio G E Straeng Sunthorn Hongladarom Ekrem Alican T E Donges Abdel Moneim EI Kaissouni John Selwyn Brooke Lloyd Robert B Anderson Rafael Alfonzo Ravard

bull Appointed between June 30 and August 15 1960

30

Alvaro Orrego Barros Jorge Cortes-Boshell Alvaro Vargas Joaquin E Meyer Poul Bjorn Olsen

Jose R Chiriboga V Luis Escalante-Arce George Peters Rea Reino Rossi

Pierre Paul Schweitzer Franz Etzel Hubert C Kessels loannis Paraskevopoulos Max Jimenez Pinto

Antonio Andre Juan Milia Bermudez Vilhjalmur Thor B K Nehru Indra Kasoema

Djalaleddin Aghili Abdul Hassan Zalzalah T K Whitaker Jacob Arnon Giorgio Cigliana-PiazzaMasamichi Yamagiwa Hazem Nuseibeh Raja Himadeh Fathi Tarabulsi Pierre Guill

Dato Ismail bin Dato Abdul Rahman

Jose Hernandez Delgado S Posthuma J J Lugo Marenco Gabriel Kielland M A Mozaffar Julio E Heurtematte Federico Mandelburger Emilio Foley Eduardo Z Romualdez

Juan Antonio Ortiz Gracia N G Lange Boonma Wongswan Sail Naci Ergin M H de Kock Husni A Sawwaf Sir Denis Rickett C Douglas Dillon Miguel Herrera Romero

APPENDIX G

DIRECTORS AND ALTERNATES AND THEIR VOTING POWER

JUNE 301960

Director Alternate Casting votes of Total votes

APPOINTED

T Graydon Upton John S Hooker United States 35418

The Earl of Cromer Geoffrey M Wilson United Kingdom J4650

Rene Larre Jean Cottier France 6065

B K Nehru C S Krishna Moorthi India 468J

ELECTED

A van Campenhout Ernst A Rott Belgium Austria Turkey (Belgium) (Austria) Luxembourg 4633

Mohamed Shoaib Ali Akbar Khosropur Pakistan United Arab Republic (Pakistan) (Iran) Iran Afghanistan Iraq

Lebanon Ethiopia Jordan 4436

Louis Rasminsky C L Read Canada Ireland 4432 (Canada) (Canada)

Takeshi Watanabe Prayad Buranasiri Japan Burma Ceylon (Japan) (Thailand) Thailand 4240

Jose Aragones Carlo Gragnani Italy Spain Greece 4129 (Spain) (Italy)

T L Hammarskiold Tyge Dahlgaard Sweden Denmark Norway (Sweden) (Denmark) Finland Iceland 4097

Luis Machado Jorge A Montealegre Mexico Cuba Peru Venezuela (Cuba) (Nicaragua) Costa Rica Guatemala EI

Salvador Honduras Nicaragua Panama 3995

Otto Donner HGorn Germany 3905

J M Garland A J J van Vuuren Australia Union of South (Australia) (Union 0 South Africa 3823

Arica)

P Lieftinck Nikola Miljanic Netherlands Israel 3596 (Netherlandf) ( Yugoslavia)

Jorge Mejia-Palacio Jose Camacho Brazil Colombia Philippines (Colombia) (Colombia) Ecuador Dominican

Republic Haiti 3296

Carlos S Brignone L Vartalitis Argentina Chile Bolivia (Argentina) (Argentina) Paraguay 3144

Ismail bin Mohamed Ali Omar Saadi Elmandjra Indonesia Malaya Ghana (Malaya) (Morocco) Libya 2716

31

APPENDIX H

ORGANIZATION

President ROBERT L GARNER

Vice President J G BEEVOR

Special Assistant HARRY MALLINSON

Director of Investments BRODERICK HASKELL

Assistant Director of Investments NEIL J PATERSON

Investment Officers ERNESTO FRANCO-HoLGUIN

GoRDON GRAYSON

EDWARD M LAMONT

PIERRE L LAPORTE

ANTHONY M LUND

General Counsel R B J RICHARDS

Senior Engineer J DAVID DODD

Chief Accounting Officer WILLIAM S B SAMPSON

Public Affairs Officer JENTRY S HOLMES

The Offices of Treasurer Secretary and Director of Administration are held by the corresponding officers of the International Bank for Reconstruction and Development (World Bank)

HEADQUARTERS

1818 H STREET NW

WASHIXGTO-- 25 D C

Tel EXccutice 3-6860

NEW YORK OFFfCE

33 LIBERTY STREET

Te DIgby 02]31

ELlIOTT H LEE Special Representative

E (I R 0 P E J 0 1lt F 1 C E S

27 OLD JEWRY 4 AVEX(JE DIENA

LO-mOs EC 2 EXGLA-Il PARIS 16e FRAXCE

Tel [())(rch 3middot11)2 Tel K16)(r 2510

]AfES H DAHTO- Special Representative

32

pound =

INTERNATIONAL FINANCE CORPORATION

SUPPLEMENT TO THE FOURTH ANNUAL REPORT

A Summary of Operations

from

July 1 to September 29 1960

INVESTMENTS

During the period the Corporation made 4 investments totaling $2855000 for projects located in 4 countries-Chile Finland Mexico and Venezuela This brings the number of investments to 36 for projects in 17 countries totaling $44934000 equivalent

Participations by private investors which on June 30 totaled $6011000 increased to $6411000

CHILE

Cementos Bio-Bio SA US$2OO000 (Supplemental)

In 1959 IFC committed $1000000 in the original Bio-Bio cement plant at Conshycepcion designed to produce approximately 132000 tons of cement IFCs supplemental commitment of $200000 will help defray extra costs incurred by the company principally for larger foundations as protection against earthquakes The total cost is now estimated at $57 million equivalent

The supplemental IFC investment will be substantially on the same terms as the original investment

FINLAND

Rauma-Repola Oy US$1875OOO

Rauma-Repola is one of Finlands largest manufacturing enterprises in the fields of pulp sawmilling heavy machinery and shipbuilding It is publicly owned with some 24000 shareholders the largest being KansaIlis-Osake-Pankki (KOP) a well known commercial bank in Finland

IFCs investment will help to finance an expansion and modernization proshygram This includes an increase in the output of a cellulose pulp mill from 70000 to 150000 tons per year and modernization of machine shop and shipyard facilities The total cost of the program is estimated at US$IB million equivalent

IFCs investment will be in unsecured dollar Notes bearing 6 interest and maturing by 1965 IFC will also receive additional payments dependent on dividends and an option on shares

MEXICO

Acero Solar SA US$280OOO

Acero Solar is expanding its plant chiefly for the manufacture of high speed twist drills Its present line of production includes high and medium alloy steel bars steel castings forgings and tool bits

Twist drills are used throughout industry and in the construction field and at present they are almost entirely imported Acero Solar will be the first manushyfacturer of twist drills in Mexico and expects to supply a substantial portion of the market in the sizes it will produce The total cost of the project is estimated to be US$640OOO equivalent

IFCs investment will be in unsecured dollar Notes bearing 7 interest and maturing by 1970 In addition IFC will receive a right to participate in profits

VENEZUELA

Diablitos Venezolanos GA US$500OOO

Diablitos Venezolanos a wholly-owned subsidiary of Wm Underwood amp Co of Boston has been established for the production and sale of deviled ham in Venezuela

Supplies of ham will be imported but the Venezuelan company will create an incentive program in cooperation with the Venezuelan Agricultural Ministry

to encourage bog breeding on modern and scientific lims The total cost of the project is estimated at US$l025Ooo equialent

IFCs inwsbnent will be in US dollar Notes maturing by 1969 and bearshying 65lt interest and additional payments in bolivares if earned IFC also reshyceives an option on shares

PARTICIPATIONS I INVEST~IENTS

On June 30 1960 as noted in the Fourth Annual Report participations by private investment capital in two IFC investments totaled $6011000

This total has increased during the period to $6411000 following the parshyticipation of $400000 by the Philadelphia International Investment Corporation in IFCs S3OOO000 investment in Papelera Rio Parana SA

lVIEylBERSHIP

Applications for membership from Nigeria and Sudan will be voted on at the Fourth Annual yleeting of the Board of Governors on September 29 1960 Nigerias membership will be subject to its becoming an independent conn try in October 1960

M

APPENDIX G

DIRECTORS AND ALTERNATES AND THEIR VOTING POWER

JUNE 301960

Director Alternate Casting votes of Total votes

APPOINTED

T Graydon Upton John S Hooker United States 35418

The Earl of Cromer Geoffrey M Wilson United Kingdom J4650

Rene Larre Jean Cottier France 6065

B K Nehru C S Krishna Moorthi India 468J

ELECTED

A van Campenhout Ernst A Rott Belgium Austria Turkey (Belgium) (Austria) Luxembourg 4633

Mohamed Shoaib Ali Akbar Khosropur Pakistan United Arab Republic (Pakistan) (Iran) Iran Afghanistan Iraq

Lebanon Ethiopia Jordan 4436

Louis Rasminsky C L Read Canada Ireland 4432 (Canada) (Canada)

Takeshi Watanabe Prayad Buranasiri Japan Burma Ceylon (Japan) (Thailand) Thailand 4240

Jose Aragones Carlo Gragnani Italy Spain Greece 4129 (Spain) (Italy)

T L Hammarskiold Tyge Dahlgaard Sweden Denmark Norway (Sweden) (Denmark) Finland Iceland 4097

Luis Machado Jorge A Montealegre Mexico Cuba Peru Venezuela (Cuba) (Nicaragua) Costa Rica Guatemala EI

Salvador Honduras Nicaragua Panama 3995

Otto Donner HGorn Germany 3905

J M Garland A J J van Vuuren Australia Union of South (Australia) (Union 0 South Africa 3823

Arica)

P Lieftinck Nikola Miljanic Netherlands Israel 3596 (Netherlandf) ( Yugoslavia)

Jorge Mejia-Palacio Jose Camacho Brazil Colombia Philippines (Colombia) (Colombia) Ecuador Dominican

Republic Haiti 3296

Carlos S Brignone L Vartalitis Argentina Chile Bolivia (Argentina) (Argentina) Paraguay 3144

Ismail bin Mohamed Ali Omar Saadi Elmandjra Indonesia Malaya Ghana (Malaya) (Morocco) Libya 2716

31

APPENDIX H

ORGANIZATION

President ROBERT L GARNER

Vice President J G BEEVOR

Special Assistant HARRY MALLINSON

Director of Investments BRODERICK HASKELL

Assistant Director of Investments NEIL J PATERSON

Investment Officers ERNESTO FRANCO-HoLGUIN

GoRDON GRAYSON

EDWARD M LAMONT

PIERRE L LAPORTE

ANTHONY M LUND

General Counsel R B J RICHARDS

Senior Engineer J DAVID DODD

Chief Accounting Officer WILLIAM S B SAMPSON

Public Affairs Officer JENTRY S HOLMES

The Offices of Treasurer Secretary and Director of Administration are held by the corresponding officers of the International Bank for Reconstruction and Development (World Bank)

HEADQUARTERS

1818 H STREET NW

WASHIXGTO-- 25 D C

Tel EXccutice 3-6860

NEW YORK OFFfCE

33 LIBERTY STREET

Te DIgby 02]31

ELlIOTT H LEE Special Representative

E (I R 0 P E J 0 1lt F 1 C E S

27 OLD JEWRY 4 AVEX(JE DIENA

LO-mOs EC 2 EXGLA-Il PARIS 16e FRAXCE

Tel [())(rch 3middot11)2 Tel K16)(r 2510

]AfES H DAHTO- Special Representative

32

pound =

INTERNATIONAL FINANCE CORPORATION

SUPPLEMENT TO THE FOURTH ANNUAL REPORT

A Summary of Operations

from

July 1 to September 29 1960

INVESTMENTS

During the period the Corporation made 4 investments totaling $2855000 for projects located in 4 countries-Chile Finland Mexico and Venezuela This brings the number of investments to 36 for projects in 17 countries totaling $44934000 equivalent

Participations by private investors which on June 30 totaled $6011000 increased to $6411000

CHILE

Cementos Bio-Bio SA US$2OO000 (Supplemental)

In 1959 IFC committed $1000000 in the original Bio-Bio cement plant at Conshycepcion designed to produce approximately 132000 tons of cement IFCs supplemental commitment of $200000 will help defray extra costs incurred by the company principally for larger foundations as protection against earthquakes The total cost is now estimated at $57 million equivalent

The supplemental IFC investment will be substantially on the same terms as the original investment

FINLAND

Rauma-Repola Oy US$1875OOO

Rauma-Repola is one of Finlands largest manufacturing enterprises in the fields of pulp sawmilling heavy machinery and shipbuilding It is publicly owned with some 24000 shareholders the largest being KansaIlis-Osake-Pankki (KOP) a well known commercial bank in Finland

IFCs investment will help to finance an expansion and modernization proshygram This includes an increase in the output of a cellulose pulp mill from 70000 to 150000 tons per year and modernization of machine shop and shipyard facilities The total cost of the program is estimated at US$IB million equivalent

IFCs investment will be in unsecured dollar Notes bearing 6 interest and maturing by 1965 IFC will also receive additional payments dependent on dividends and an option on shares

MEXICO

Acero Solar SA US$280OOO

Acero Solar is expanding its plant chiefly for the manufacture of high speed twist drills Its present line of production includes high and medium alloy steel bars steel castings forgings and tool bits

Twist drills are used throughout industry and in the construction field and at present they are almost entirely imported Acero Solar will be the first manushyfacturer of twist drills in Mexico and expects to supply a substantial portion of the market in the sizes it will produce The total cost of the project is estimated to be US$640OOO equivalent

IFCs investment will be in unsecured dollar Notes bearing 7 interest and maturing by 1970 In addition IFC will receive a right to participate in profits

VENEZUELA

Diablitos Venezolanos GA US$500OOO

Diablitos Venezolanos a wholly-owned subsidiary of Wm Underwood amp Co of Boston has been established for the production and sale of deviled ham in Venezuela

Supplies of ham will be imported but the Venezuelan company will create an incentive program in cooperation with the Venezuelan Agricultural Ministry

to encourage bog breeding on modern and scientific lims The total cost of the project is estimated at US$l025Ooo equialent

IFCs inwsbnent will be in US dollar Notes maturing by 1969 and bearshying 65lt interest and additional payments in bolivares if earned IFC also reshyceives an option on shares

PARTICIPATIONS I INVEST~IENTS

On June 30 1960 as noted in the Fourth Annual Report participations by private investment capital in two IFC investments totaled $6011000

This total has increased during the period to $6411000 following the parshyticipation of $400000 by the Philadelphia International Investment Corporation in IFCs S3OOO000 investment in Papelera Rio Parana SA

lVIEylBERSHIP

Applications for membership from Nigeria and Sudan will be voted on at the Fourth Annual yleeting of the Board of Governors on September 29 1960 Nigerias membership will be subject to its becoming an independent conn try in October 1960

M

APPENDIX H

ORGANIZATION

President ROBERT L GARNER

Vice President J G BEEVOR

Special Assistant HARRY MALLINSON

Director of Investments BRODERICK HASKELL

Assistant Director of Investments NEIL J PATERSON

Investment Officers ERNESTO FRANCO-HoLGUIN

GoRDON GRAYSON

EDWARD M LAMONT

PIERRE L LAPORTE

ANTHONY M LUND

General Counsel R B J RICHARDS

Senior Engineer J DAVID DODD

Chief Accounting Officer WILLIAM S B SAMPSON

Public Affairs Officer JENTRY S HOLMES

The Offices of Treasurer Secretary and Director of Administration are held by the corresponding officers of the International Bank for Reconstruction and Development (World Bank)

HEADQUARTERS

1818 H STREET NW

WASHIXGTO-- 25 D C

Tel EXccutice 3-6860

NEW YORK OFFfCE

33 LIBERTY STREET

Te DIgby 02]31

ELlIOTT H LEE Special Representative

E (I R 0 P E J 0 1lt F 1 C E S

27 OLD JEWRY 4 AVEX(JE DIENA

LO-mOs EC 2 EXGLA-Il PARIS 16e FRAXCE

Tel [())(rch 3middot11)2 Tel K16)(r 2510

]AfES H DAHTO- Special Representative

32

pound =

INTERNATIONAL FINANCE CORPORATION

SUPPLEMENT TO THE FOURTH ANNUAL REPORT

A Summary of Operations

from

July 1 to September 29 1960

INVESTMENTS

During the period the Corporation made 4 investments totaling $2855000 for projects located in 4 countries-Chile Finland Mexico and Venezuela This brings the number of investments to 36 for projects in 17 countries totaling $44934000 equivalent

Participations by private investors which on June 30 totaled $6011000 increased to $6411000

CHILE

Cementos Bio-Bio SA US$2OO000 (Supplemental)

In 1959 IFC committed $1000000 in the original Bio-Bio cement plant at Conshycepcion designed to produce approximately 132000 tons of cement IFCs supplemental commitment of $200000 will help defray extra costs incurred by the company principally for larger foundations as protection against earthquakes The total cost is now estimated at $57 million equivalent

The supplemental IFC investment will be substantially on the same terms as the original investment

FINLAND

Rauma-Repola Oy US$1875OOO

Rauma-Repola is one of Finlands largest manufacturing enterprises in the fields of pulp sawmilling heavy machinery and shipbuilding It is publicly owned with some 24000 shareholders the largest being KansaIlis-Osake-Pankki (KOP) a well known commercial bank in Finland

IFCs investment will help to finance an expansion and modernization proshygram This includes an increase in the output of a cellulose pulp mill from 70000 to 150000 tons per year and modernization of machine shop and shipyard facilities The total cost of the program is estimated at US$IB million equivalent

IFCs investment will be in unsecured dollar Notes bearing 6 interest and maturing by 1965 IFC will also receive additional payments dependent on dividends and an option on shares

MEXICO

Acero Solar SA US$280OOO

Acero Solar is expanding its plant chiefly for the manufacture of high speed twist drills Its present line of production includes high and medium alloy steel bars steel castings forgings and tool bits

Twist drills are used throughout industry and in the construction field and at present they are almost entirely imported Acero Solar will be the first manushyfacturer of twist drills in Mexico and expects to supply a substantial portion of the market in the sizes it will produce The total cost of the project is estimated to be US$640OOO equivalent

IFCs investment will be in unsecured dollar Notes bearing 7 interest and maturing by 1970 In addition IFC will receive a right to participate in profits

VENEZUELA

Diablitos Venezolanos GA US$500OOO

Diablitos Venezolanos a wholly-owned subsidiary of Wm Underwood amp Co of Boston has been established for the production and sale of deviled ham in Venezuela

Supplies of ham will be imported but the Venezuelan company will create an incentive program in cooperation with the Venezuelan Agricultural Ministry

to encourage bog breeding on modern and scientific lims The total cost of the project is estimated at US$l025Ooo equialent

IFCs inwsbnent will be in US dollar Notes maturing by 1969 and bearshying 65lt interest and additional payments in bolivares if earned IFC also reshyceives an option on shares

PARTICIPATIONS I INVEST~IENTS

On June 30 1960 as noted in the Fourth Annual Report participations by private investment capital in two IFC investments totaled $6011000

This total has increased during the period to $6411000 following the parshyticipation of $400000 by the Philadelphia International Investment Corporation in IFCs S3OOO000 investment in Papelera Rio Parana SA

lVIEylBERSHIP

Applications for membership from Nigeria and Sudan will be voted on at the Fourth Annual yleeting of the Board of Governors on September 29 1960 Nigerias membership will be subject to its becoming an independent conn try in October 1960

M

INTERNATIONAL FINANCE CORPORATION

SUPPLEMENT TO THE FOURTH ANNUAL REPORT

A Summary of Operations

from

July 1 to September 29 1960

INVESTMENTS

During the period the Corporation made 4 investments totaling $2855000 for projects located in 4 countries-Chile Finland Mexico and Venezuela This brings the number of investments to 36 for projects in 17 countries totaling $44934000 equivalent

Participations by private investors which on June 30 totaled $6011000 increased to $6411000

CHILE

Cementos Bio-Bio SA US$2OO000 (Supplemental)

In 1959 IFC committed $1000000 in the original Bio-Bio cement plant at Conshycepcion designed to produce approximately 132000 tons of cement IFCs supplemental commitment of $200000 will help defray extra costs incurred by the company principally for larger foundations as protection against earthquakes The total cost is now estimated at $57 million equivalent

The supplemental IFC investment will be substantially on the same terms as the original investment

FINLAND

Rauma-Repola Oy US$1875OOO

Rauma-Repola is one of Finlands largest manufacturing enterprises in the fields of pulp sawmilling heavy machinery and shipbuilding It is publicly owned with some 24000 shareholders the largest being KansaIlis-Osake-Pankki (KOP) a well known commercial bank in Finland

IFCs investment will help to finance an expansion and modernization proshygram This includes an increase in the output of a cellulose pulp mill from 70000 to 150000 tons per year and modernization of machine shop and shipyard facilities The total cost of the program is estimated at US$IB million equivalent

IFCs investment will be in unsecured dollar Notes bearing 6 interest and maturing by 1965 IFC will also receive additional payments dependent on dividends and an option on shares

MEXICO

Acero Solar SA US$280OOO

Acero Solar is expanding its plant chiefly for the manufacture of high speed twist drills Its present line of production includes high and medium alloy steel bars steel castings forgings and tool bits

Twist drills are used throughout industry and in the construction field and at present they are almost entirely imported Acero Solar will be the first manushyfacturer of twist drills in Mexico and expects to supply a substantial portion of the market in the sizes it will produce The total cost of the project is estimated to be US$640OOO equivalent

IFCs investment will be in unsecured dollar Notes bearing 7 interest and maturing by 1970 In addition IFC will receive a right to participate in profits

VENEZUELA

Diablitos Venezolanos GA US$500OOO

Diablitos Venezolanos a wholly-owned subsidiary of Wm Underwood amp Co of Boston has been established for the production and sale of deviled ham in Venezuela

Supplies of ham will be imported but the Venezuelan company will create an incentive program in cooperation with the Venezuelan Agricultural Ministry

to encourage bog breeding on modern and scientific lims The total cost of the project is estimated at US$l025Ooo equialent

IFCs inwsbnent will be in US dollar Notes maturing by 1969 and bearshying 65lt interest and additional payments in bolivares if earned IFC also reshyceives an option on shares

PARTICIPATIONS I INVEST~IENTS

On June 30 1960 as noted in the Fourth Annual Report participations by private investment capital in two IFC investments totaled $6011000

This total has increased during the period to $6411000 following the parshyticipation of $400000 by the Philadelphia International Investment Corporation in IFCs S3OOO000 investment in Papelera Rio Parana SA

lVIEylBERSHIP

Applications for membership from Nigeria and Sudan will be voted on at the Fourth Annual yleeting of the Board of Governors on September 29 1960 Nigerias membership will be subject to its becoming an independent conn try in October 1960

M

FINLAND

Rauma-Repola Oy US$1875OOO

Rauma-Repola is one of Finlands largest manufacturing enterprises in the fields of pulp sawmilling heavy machinery and shipbuilding It is publicly owned with some 24000 shareholders the largest being KansaIlis-Osake-Pankki (KOP) a well known commercial bank in Finland

IFCs investment will help to finance an expansion and modernization proshygram This includes an increase in the output of a cellulose pulp mill from 70000 to 150000 tons per year and modernization of machine shop and shipyard facilities The total cost of the program is estimated at US$IB million equivalent

IFCs investment will be in unsecured dollar Notes bearing 6 interest and maturing by 1965 IFC will also receive additional payments dependent on dividends and an option on shares

MEXICO

Acero Solar SA US$280OOO

Acero Solar is expanding its plant chiefly for the manufacture of high speed twist drills Its present line of production includes high and medium alloy steel bars steel castings forgings and tool bits

Twist drills are used throughout industry and in the construction field and at present they are almost entirely imported Acero Solar will be the first manushyfacturer of twist drills in Mexico and expects to supply a substantial portion of the market in the sizes it will produce The total cost of the project is estimated to be US$640OOO equivalent

IFCs investment will be in unsecured dollar Notes bearing 7 interest and maturing by 1970 In addition IFC will receive a right to participate in profits

VENEZUELA

Diablitos Venezolanos GA US$500OOO

Diablitos Venezolanos a wholly-owned subsidiary of Wm Underwood amp Co of Boston has been established for the production and sale of deviled ham in Venezuela

Supplies of ham will be imported but the Venezuelan company will create an incentive program in cooperation with the Venezuelan Agricultural Ministry

to encourage bog breeding on modern and scientific lims The total cost of the project is estimated at US$l025Ooo equialent

IFCs inwsbnent will be in US dollar Notes maturing by 1969 and bearshying 65lt interest and additional payments in bolivares if earned IFC also reshyceives an option on shares

PARTICIPATIONS I INVEST~IENTS

On June 30 1960 as noted in the Fourth Annual Report participations by private investment capital in two IFC investments totaled $6011000

This total has increased during the period to $6411000 following the parshyticipation of $400000 by the Philadelphia International Investment Corporation in IFCs S3OOO000 investment in Papelera Rio Parana SA

lVIEylBERSHIP

Applications for membership from Nigeria and Sudan will be voted on at the Fourth Annual yleeting of the Board of Governors on September 29 1960 Nigerias membership will be subject to its becoming an independent conn try in October 1960

M

to encourage bog breeding on modern and scientific lims The total cost of the project is estimated at US$l025Ooo equialent

IFCs inwsbnent will be in US dollar Notes maturing by 1969 and bearshying 65lt interest and additional payments in bolivares if earned IFC also reshyceives an option on shares

PARTICIPATIONS I INVEST~IENTS

On June 30 1960 as noted in the Fourth Annual Report participations by private investment capital in two IFC investments totaled $6011000

This total has increased during the period to $6411000 following the parshyticipation of $400000 by the Philadelphia International Investment Corporation in IFCs S3OOO000 investment in Papelera Rio Parana SA

lVIEylBERSHIP

Applications for membership from Nigeria and Sudan will be voted on at the Fourth Annual yleeting of the Board of Governors on September 29 1960 Nigerias membership will be subject to its becoming an independent conn try in October 1960

M

M