The sponsors of the project are S B (Ravi) Pandit, co-founder, Chairman and Group CEO of KPIT; Kishor Patil, co-founder, CEO and Managing Director. Cummins Inc. and Lehman Brothers International are major institutional investors in KPIT. Mr. Pandit and Mr. Patil are both Indian nationals. Cummins Inc. is the world’s largest manufacturer of diesel engines and related power systems for the automotive industry. Headquartered in the United States, Cummins Inc. is publicly traded on the New York Stock Exchange. The company serves customers in over 160 countries, reporting sales of US$8.4 billion in 2004. Cummins Inc. has three Directors on KPIT’s twelve member Board. Lehman Brothers is a New York investment bank founded in 1850, and has $71 billion in total capital. The company is publicly traded on the New York Stock Exchange. Lehman Brothers owns an 8% equity stake in KPIT. Management owns 28% of KPIT Cummins Inc. owns 14%; Indian institutions own 8%; and Foreign Financial Institutions own 23%, including Lehman Brothers’ 8% stake. The remaining shares are held mainly by retail investors on the Mumbai Stock Exchange. The two sponsors, S B (Ravi) Pandit and Kishor Patil together own about 19% of shares outstanding.

The total project cost is estimated at $40.5 million equivalent. IFC is considering a possible cooperation with the company to finance part of the project.

13.50 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	11.0
Equity	2.50

* These investment figures are indicative

KPIT is headquartered in Pune, India. The company’s main office building is located in the Rajiv Ghandhi Infotech Park, an IT industry park situated on the outskirts of Pune near the main highway between Pune and Mumbai.

Information technology is an increasingly important component as a foundation for growth and infrastructure for developing countries. Nobel Laureate in Economics Robert Solow asserted as early as 1957 that technological advances are the primary contributor to long term productivity gains. Indeed, a recent study found that technology adoption accounted for 80% of productivity gains in the United States between 1996 and 2000 though technology spending comprised just 6.3% of GDP spending. Developing countries also have an advantage; without legacy technology already in place, they are likely to have less resistance to new technology adoption and can leapfrog outdated technology in favor of more recent, best-of-breed alternatives. We believe that countries such as India have the technical talent, critical mass of demand, and access to Western know-how to lead adoption of new technology in emerging markets and eventually leverage this position to join global leaders in new technology development. Information technology is particularly important and promising for India, where this industry accounts for about 3% of GDP and over 20% of exports. KPIT is a globally competitive IT service provider with the potential for significant future growth. KPIT is developing expertise in the manufacturing industry that may eventually support modernization and improved global competitiveness of the Indian manufacturing industry. IFC will play an important role in offering long term financing, sound corporate governance, guidance on business strategy and access to other emerging markets through IFC’s global presence.

This project is a category C project according to IFC’s environmental and social review procedures. There are minimal environmental or social impacts associated with this project. Therefore, no further environmental or social analysis is required.

During appraisal, the team reviewed building safety conditions and social aspects. Construction on the first, state-of-the-art office building of the new technology campus was completed in January 2005. It meets safety standards in terms of emergency exits and evacuation channels. It houses 1,500 employees in an area of 160,000 square feet and has many well-lit open spaces and common areas. KPIT plans to build two more office buildings which together will house 2,500 employees in an area of 250,000 square feet.
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