BEL is the group entity of LNJ Bhilwara Group (“LNJ” or “Bhilwara” or “Sponsor”). Founded in 1959, LNJ is a diversified industrial group with interests in textiles, graphite electrodes, power generation and information technology. The main operating companies of Bhilwara are BEL (which houses all the power operations), HEG Limited (graphite electrodes manufacturer) and Rajasthan Spinning and Weaving Mills (RSWM) (textiles). Both HEG and RSWM are listed on the Bombay and National Stock Exchanges.

The sponsors hold about 93.1% stake in BEL through family owned shares, RSWM and HEG. The balance 6.9% stake is held jointly by three investors Wachovia, Jacob Ballas and New York Life Investment Fund (2.65%, 0.21% and 4.01% respectively).

IFC has committed to provide total debt of about US$67 mn and equity of about $15 million (12% stake) to the AD Hydro project (being developed jointly by Bhilwara and SN Power of Norway), which includes IFC’s financing to support the project’s cost over-runs.

BEL plans to develop a portfolio of several medium to large scale hydro power assets. BEL plans to raise the funding required through a mix of debt and equity.

IFC investment is proposed to be an equity investment of up to $25 million in BEL. In addition, IFC may also consider warrants which entitle additional subscription to the equity of BEL at a later point of time.

23.90 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	23.90

* These investment figures are indicative

The potential projects are being developed in the states of Himachal Pradesh, Arunachal Pradesh and Punjab in India and Himalayan terrain of Nepal.

The Project will have strong development impact by way of:
(a) expanding the availability of electricity in power starved India through renewable sources;
(b) reducing reliance on electricity generated from conventional sources like coal and thus having positive climate change impact. With the current project pipeline, the Company will be able to save 8 mn tons of CO2 emission annually;
(c) providing employment to local people during construction and operations and
(d) pushing the economic development of low income areas like Arunachal Pradesh and Nepal through development of ancilliary industry

IFC has strong additionality by way of:
(a) IFC stamp of approval for E&S, governance and operating standards - This will help BEL create a strong profile among international and local investors which especially help the Company in the planned public listing.
b) Provide long term financing in debt and equity for multiple projects- BEL is developing several large hydro projects and will therefore have multiple need of financing in the form of project and corporate level debt and equity. IFC will therefore have strong additionality by our ability to provide and syndicate these multiple rounds of financing after helping the sponsors in AD Hydro project.
c) Implement and improve E&S standards - The projects being developed are all large and complex hydro projects and IFC will help BEL establish E&S norms at the corporate level in line with our Performance Standards which will then be applied to all of BEL projects.

This is a category A project according to IFC’s Procedure for Environmental and Social Review of Projects insofar as BEL proposes to invest in medium to large-scale hydropower projects with potential significant adverse social or environmental impacts that may be diverse, irreversible or unprecedented. IFC’s consideration of its proposed investment in the Company is based on its longstanding engagement with the LNJ Bhilwara Group in the development and construction of the Allain Duhangan Hydropower Project in Himachal Pradesh, India (including regular monitoring of the project’s social and environmental impact mitigation measures). As a condition of IFC’s participation, BEL will develop a corporate-wide Social, Environmental, Health and Safety management system, based on the management system established for ADHP, that will be incorporated into the management and operations of each of BEL’s project companies.