PT TVS is a wholly owned subsidiary of TVS Motor Company Limited (“TVS Motor”, or the “Sponsor”). TVS Motor is one of the largest two-wheeler manufacturers in India with annual revenues of approximately US$800 million in 2008 and with manufacturing facilities in Hosur, Mysore and Himachal Pradesh, in India. It is the flagship company of the $4 billion turnover TVS Group, one of India's largest suppliers of automobiles and automotive components, which was established in 1911 by Mr. T.V. Sundaram Iyengar. The Sponsor’s shares are listed on the Mumbai Stock Exchange and the National Stock Exchange. As on September 30, 2008, TVS Motor’s shareholding pattern was: 8.8% held by Sundaram-Clayton Limited (holding company of the Sponsor group), 48.0% held by Anusha Investments Limited (holding company of the Sponsor group), 15.8% held by Indian and foreign financial institutions, while the balance 27.4% shares were held by Indian corporate bodies and retail investors. TVS Motor’s shareholding in PT TVS is through two investment vehicles (which are fully owned by the Sponsor): TVS Motor Company (Europe) B.V., registered in the Netherlands and TVS Motor (Singapore) PTE Limited.

The total project cost, including the first phase of setting up of the green-field facility and the proposed second phase of dealership network and product range expansion and working capital requirements is estimated to be $105.5 million. IFC’s proposed investment in the company is $12.0 million in C loan of IFC’s own account.

12.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	12.0
Equity

* These investment figures are indicative

The plant is located in Suryacipta, an established and largely developed, industrial estate in Karawang, about 55 km east of Jakarta, Indonesia. The company also has its registered office in Jakarta.

IFC’s support is critical for successful completion of an already started project. Through the proposed investment, IFC will support an existing client and the Sponsor to ride out current financial crisis and to emerge as a stronger and more competitive in the regional setting. IFC’s participation in the project would also provide comfort to other foreign investors who are wary of Indonesia's perceived macro-economic risks, and encourage additional foreign direct investment in the Country. Specifically, IFC will be: (i) enhancing the competitiveness of the Indonesian automotive sector; (ii) helping to introduce technologies that will bring better energy efficiency and green house gas mitigation in vehicles, since the products are going to have less polluting four-stroke engines; (iii) promoting the development of local supply linkages since more than 80% of the components are going to be sourced locally; (iv) helping to create new employment and (v) support a South-South investment and provide a demonstration effect to other foreign investors.

The ongoing global credit squeeze and Indonesia’s perceived macro economic risks have severely reduced access to long term financing for the company. Therefore, IFC will be providing the necessary long-term finance to enable the company to weather the challenging conditions in the financial markets and continue with its dealership expansion strategy, which will help it to remain competitive vis-à-vis other established market players. The IFC role in the project includes; -Provision of long-term financing, which is not available in the local market, particularly to a new entrant like TVS, given the current credit markets. -Provision of regional expertise: Indonesia is a new market for TVS Motor, which derives a high degree of comfort from IFC’s strong local presence in the market and relationships with the government, financial institutions and other corporates. IFC staff on the ground in Indonesia will continue providing local know-how and other needed assistance, including introducing the Company to potential partners in two-wheeler financing. -Provision of global sector expertise: Apart from being a provider of long-term finance, IFC is an informed partner that can contribute with knowledge of the automotive industry as well as other key aspects of a start-up operation in the automotive sector.

This is a category C project according to IFC’s Procedure for Environmental and Social Review of Projects because, as a second-phase financing, the investment will have no adverse social or environmental impacts that have not already been considered under IFC’s original investment in the Company.

Under the original investment, the company has demonstrated the capacity, and has committed the resources, to implement comprehensive environmental, health, safety and quality management systems consistent with international standards (ISO) as well as IFC environmental and social performance standards throughout its entire operation. This capacity and commitment has been demonstrated in the company''s recently submitted first AMR, which earned an ESRR score of B1-Good.