Japan’s leading financial institution invests $1.5 billion in SBI TO Finance Maruti Suzuki

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

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

Since the first wave of the pandemic, JBIC has committed $8 billion in investments in India, including $5 billion for financing acquisitions with commercial banks, said Toshihiko Kurihara, Chief Representative, Representative Office at New Delhi, JBIC in an interaction.

“We have a financial (commitment) of $2 billion to State Bank of India (SBI) for Maruti Suzuki supply and value chain finance. We have already disbursed $1 billion in November-December 2020 and an additional $500 million has come in…we have an additional limit of $500 million. We are ready to fund the additional $500 million,” Kurihara said.

As part of his mandate, he said the JBIC could only finance projects and investments involving Japanese companies.

“JBIC is trying to finance as many Japan-related projects in India. This is the first (requirement) because without Japanese involvement, we are not allowed to finance projects. We have helped the acquisition financing of Nippon Steel to acquire Essar Steel,” he added.

In December 2019, global steel giant ArcelorMittal completed the acquisition of Essar Steel and formed a joint venture with Nippon Steel to own and operate indebted Essar Steel for Rs 42,000 crore.

The joint venture with Nippon Steel Corporation (Nippon Steel) is called ArcelorMittal Nippon Steel India Limited (AM/NS India).

ArcelorMittal owns 60% of AM/NS India, with Nippon Steel holding the remaining 40%.

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

As per the agreement, the steel giant will invest Rs 4,200 crore for the expansion and modernization of its captive jetty at Hazira and Rs 45,000 crore to increase the steel production capacity of the Hazira plant from Current 8.6 MMTPA to 18 MMTPA.

“ArcelorMittal Nippon Steel has announced the further expansion of the Hazira steel plant. Possibly an additional $5 billion (investment may take place)…JBIC is one of the candidates among the financiers. We support Japanese partners to achieve these goals. For any investment, 40% must be made by Nippon Steel and 60% by ArcelorMittal”, he declared on the sidelines of the launch of the activity report of the New Energy and Industrial Technology Development Organization (NEDO) last week here.

He said JBIC is fully committed to financing Japanese companies’ investment in India.

“We don’t have a quantitative investment target, but a qualitative target is there. India is a very important country (for us),” he added.

JBIC has a mandate to invest in four key areas: developing and securing resources that are important to Japan; maintaining and improving the international competitiveness of Japanese industries; companies committed to the preservation of the global environment and; prevent disturbances of the international financial order or take appropriate measures in the event of damage caused by such disturbances.

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

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