Export-Import Bank of India: A Presentation AHMEDABAD : May 31, 2008

2  SET UP BY AN ACT OF PARLIAMENT IN SEPTEMBER 1981  WHOLLY OWNED BY GOVERNMENT OF INDIA  COMMENCED OPERATIONS IN MARCH 1982  APEX FINANCIAL INSTITUTION  OBJECTIVES: “… for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country’s international trade…” “… shall act on business principles with due regard to public interest” (Export-Import Bank of India Act, 1981) EXIM BANK Exim Bank of India

3 Leadership and Expertise in India’s Export Finance Comprehensive Range of Products And Services – All Stages of the Export Business Cycle – ExportCredits Exim Bank TODAY Export Capability Creation Product Centric Approach Customer Centric Approach “To develop commercially viable relationships with a target set of externally oriented companies by offering them a comprehensive range of products and services, aimed at enhancing their internationalisation efforts” Evolving Vision EXIM BANK

4 Organisation Appointed by Govt. of India * As per Exim Bank Act BOARD OF DIRECTORS (16)*OFFICES IN INDIA OFFICES OVERSEAS  Chairman and Managing Director  5 Directors: Government of India  3 Directors: Scheduled Banks  4 Directors : Professionals/Experts  1 Director nominated by RBI  1 Director nominated by IDBI  1 Director nominated by ECGC EXIM BANK

5 Operational Philosophy International Trade FinancingPromoting Facilitating Through Variety of Financing Programmes Value Added Business Advisory Services Research & Analysis Catalyst for Financing Projects ProductsServices EXIM BANK

6 Range of Products & Services Pre- Shipment Export Marketing Export Production Export Product Development Import Finance Advisory Services Investment Abroad Post- Shipment At All Stages of Export Business Cycle INFORMATION Advisory Services Knowledge Building SUPPLEMENTS FINANCING PROGRAMMES Value Based Services to Exporters FINANCING, FACILITATING INDIA’S TWO WAY TRADE & INVESTMENT EXIM BANK

7 Financing Programmes Financing Programmes (Various Currencies) Export Credit Import Credit Loans for Exporting Units Medium / Long Term -Lines of Credit -Buyer’s Credit -Supplier’s Credit Short Term -Pre/Post Shipment Credit -Import Loan for capital goods -Bulk Import Loan for Raw Materials -Term Loans for expansion/ diversification/ new projects/ export product development/ export marketing/ research & development -Term Loans for overseas equity investment -Direct equity stake in Indian/ Overseas ventures of exporting companies EXIM BANK

8 Lines of Credit Programme Lines of Credit (LOCs) (Long term) Exim’s own LOCs to economically strong developing countries and regional development banks At behest of GOI, concessional LOCs to developing countries in Asia/ Africa/ Latin America with a long-term perspective. While Exim raises the resources and funds disbursement, GOI guarantee and provide interest equalisation support under India Development Initiative Status of LOCs No. of LOCs operative: 86 No. of countries covered:85 Total amount of LOCs sanctioned : US$ 2.83 billion EXIM BANK

9 Project & Services Exports  Exports of projects and services, broadly categorised into Civil engineering construction projects, Turnkey projects, Consultancy services.  Over the past two decades, increasing number of contracts have been secured by Indian companies in West Asia, North Africa, Sub Saharan Africa, South & South East Asia, CIS and Latin America.  Such projects have supplemented the efforts of the host country governments in achieving their developmental objectives. Promoting Project Exports Projects Currently Under Execution with Exim Bank Support No. of Contracts: 189Value of Contracts: US$ 11.5 bn No. of Countries: 35No of Indian companies: 41 EXIM BANK

10 Promoting Investment  Term loans for equity investment overseas by Indian corporates  Term loans to overseas WOS / JV  Term loans for overseas acquisition by Indian corporates  Direct equity stake in overseas ventures of Indian corporates  Select overseas investments financed during the year (focus on mid-caps):  Jain Irrigation Systems Ltd (Israel)  Foods Fats & Fertilizers Limited (Ghana)  Alucast Auto Parts Pvt Ltd (Germany)  Vijai Electricals Limited (Brazil)  Welspun Tubular LLC (USA)  Rain Calcining (USA) Supporting overseas investment EXIM BANK

11 Overseas Investment Finance EXIM BANK No. of companies supported: 170 No. of ventures supported: 208 No. of countries: 60 Loans sanctioned : Rs cr Loan Portfolio as of now: Rs cr Snapshot of Overseas Investment Finance (as of 31 st Dec 2007)

12 THE SME SECTOR GLOBAL PERSPECTIVE  SMEs – Important segment of economy in developed as well as developing countries.  In OECD countries, SMEs account for over 95% of firms and 60-70% of employment.  In Asia SMEs account for 60% of capital investment, 60% of employment, 50% of GDP, 35% of exports.  SME Definition: Based on investment in plant & machinery, nos. of people, turnover etc.  Entrepreneurship Development  Generation of Employment  Better Resource Utilisation  Balanced Regional Development.  Flexibility to Adapt to Changing Environment  Input Supply to Large Enterprises  Exports

13 INDIAN SME SECTOR  SME’s contribute approx. 40% of India’s domestic production, around 35% of total exports, 80% of Industrial employment, largest manpower employer overall after agriculture.  SME’s are mostly in unorganised sector and source of livelihood for millions. Have a greater social contribution than economic contribution.  SME Constraints: Financing, Infrastructure, Taxes & Regulations, Marketing, Technology and Human resource  In view of strong local presence, SME growth is essential for country’s development. SME Units grow eventually to medium and large enterprises and SME promotion therefore becomes a major area for policy focus. INDIAN PERSPECTIVE

14  Micro, Small and Medium Enterprises Development Act (MSMED ACT): GOI enacted the act in June 2006 and it came into force from October Inclusion of service sector in the ambit of MSME. Promotion and development of SME’s, setting up appropriate legal & regulatory framework, removing barriers to competition & trade, facilitating investment and trade by strengthening the framework governing the policy, credit facilities, grants, development of skill in employees, cluster development and developing of SME policy, regulatory and financing framework.  Definitions: Based on Investment in Plant & Machinery  SME Rating Agency of India (SMERA), joint initiative by SIDBI, Dun & Bradstreet, CIBIL and several leading banks in the country. It is an independent, 3 rd party assessment of overall condition of the SME. Takes into account SME’s financial condition and several qualitative factors that have bearing on credit worthiness of the SME.  Benefits: Wide Recognition and Acceptance, Favourable borrowing terms & faster access to credit, Adds credibility, Benefits to banks. INDIAN PERSPECTIVE : CONTINUED

15 DOMINANT IN MAJOR SECTORS  Certain vibrant export sectors in India are dominated by SME Sector. e.g.  Engineering (33% of exports are from SSIs)  Chemicals (33%)  Pharmaceuticals (44%)  Leather (70%)  Processed Food (70%)  Marine Products (47%)  Sports Goods (100%)  Readymade Garments (90%) Apparel  Growth of industries in the small scale sector in India has contributed to the overall growth or the Gross Domestic Product as also in terms of employment generation and exports. INDIAN SME SECTOR

16 INDIAN SME SECTOR GOI POLICY PACKAGE FOR SMEs:Government of India has announced policy package for stepping up credit to SMEs. The main objective of the package is to double the flow of credit from the level of Rs.67,600 crores in FY04-05 to Rs.1,35,000 crores by FY09-10 to the SME sector. Public sector banks to achieve a minimum 20% y-o-y growth in credit to the SME sector & to follow a transparent rating system with cost of credit linked to credit rating of the enterprise. Exim Bank: The Bank is targeting to grow its SME portfolio at a CAGR of 30% as against the growth target of 20% set by GOI. Currently SME’s constitute around 20% of the Bank’s portfolio. SME FINANCING : EXTERNAL ISSUES

17 INDIAN SME SECTOR Challenges in Credit Delivery  Access to Information  Financial Statements  Constitution of the Business Entity  Hand Holding  Security  Monitoring Issues

18 Exim Bank and SMEs  Higher Interest Spread for SME’s  Focus Area, as with all banks  Early Client Acquisition  Diversification of Portfolio  Policy Framework (Enhanced Credit Flow to SME Sector)  Definition of SME: As per GoI/RBI guidelines.  SME Group: Handling business proposals from Rs.5 lakhs to Rs.25 crores, mostly under PEFP, EOU, Pre-shipment/Post-shipment facilities. BUSINESS IMPERATIVES

19 Exim Bank and SMEs  Pre-shipment/Post-shipment Finance/working capital  Forfaiting  Buyer’s Credit  Supplier’s Credit  Import Financing for raw materials  Finance for setting up production facilities  Financing R&D  Financing cost of setting up JV/Warehouse overseas  Financing quality related expenditure  Financing export marketing related expenditure  Insurance against default of the Importers FINANCING NEEDS OF SME EXPORTERS

20 Exim Bank and SMEs  MOU was signed with ITC Geneva, to implement the Enterprise Management Development Services (EMDS) programme of ITC for supporting SMEs in their globalisation efforts. ITC and Exim Bank have jointly implemented a financial model to appraise loan proposals of SME’s. The model seeks to evaluate SME’s based on future potential as against past financials thus facilitating credit flow to deserving SME’s.  MOC signed with Small Industries Development Bank of India (SIDBI) for cooperation in SME sector funding. JOINT INITIATIVES

21  Exim Bank – Supporting exports from Rural Grassroots Enterprises  Export Marketing support given for finding international market for products of rural industries produced by SHGs / NGOs in different states.  Exim’s network of overseas offices play a proactive role.  Export Marketing Services programme  Seeks to help Indian SME sector to establish their products overseas and enter new markets through Exim’s overseas offices and MOU partner network  No upfront fees, but operates on success-fee basis  Eximius Centres of Learning in Bangalore/ Pune/ Ahmedabad – for knowledge building & capacity creation for SMEs EMS & Skill Upgradation for SMEs Exim Bank and SMEs EXIM BANK

22 Grassroots Business Initiative  Creation of Export Capability in Grassroots Enterprises.  Export Marketing Services on success fee basis  Capacity building through training  Poverty reduction through export linkage Linking rural industries to global market EXIM BANK

23 Knowledge Building: Research Publications  Research Studies on products, sectors, countries, macro economic issues relevant to international trade and investment  Sector Studies assessing export potential.  Bilateral Trade and Investment Studies.  International Trade Related Studies.  Exim Newsletters  Export Advantage (bilingual)  Agri Export Advantage (in English, Hindi and 10 regional languages)  Indo-China Newsletter (bilingual)  Indo-Africa, Indo-Latin America and Indo-CIS Magazines (all bilingual)  Contribution to Public Policy formulation through inputs on WTO aspects, impact of exchange rates on exports, transaction costs, etc. Research & Analysis EXIM BANK

24 Exim Bank as Consultant Promotional Activities  Setting up an Exim Bank in Malaysia  Establishing an Export Credit Guarantee Company in Zimbabwe  Blueprint for establishing Exim Bank in Zimbabwe  Feasibility study for setting up the Afrexim Bank  Designing of Export Financing Programmes – Turkey, South Africa  Export Development Project : Ukraine, Vietnam, Armenia  Mauritius – Study on Projecting Mauritius as an Investment Hub for Indian Firms  Feasibility study for establishment of an export credit and guarantee facility for Gulf Cooperation Council countries EXIM BANK

25  World Bank  ADB  African Development Bank  EBRD  MIGA  IFC  UNCTAD Multilateral Agencies Trade & Invt. Promotion Agencies Export Credit Agencies  JETRO  Netherlands Council for Trade Promotion  Polish Agency for Foreign Investment  Board of Investment of Sri Lanka  Board of Invt. Mauritius  Exim Bank Romania  Czech Export Bank  Hungarian Exim Bank  JBIC  US Exim Bank  PT Bank Ekspor Indonesia  Exim Bank of China Institutional Linkages EXIM BANK

26 Exim’s Catalytic Role  Introduced innovative products such as Export Marketing Finance, Financing Program for Software Exports, FCPC, Forfaiting.  Set up Global Trade Finance Ltd. as a joint venture with IFC and West LB (now acquired by FIM Bank of Malta) in 2001 for providing export factoring facility to SMEs.  Set up Global Procurement Consultants Ltd. in 1996 as a joint venture with Indian private & public sector enterprises to take up overseas assignments in procurement advisory services.  Instrumental in creation of Asian Exim Banks Forum in 1996 and brought together 8 other Exim Banks operating in Asia to promote intra-regional trade.  Instrumental in creation of Global Network of Exim Banks and Development Financial Institutions (GNEXID) at Geneva under the auspices of UNCTAD to promote trade & development finance through cooperation and exchange of information. Exim Bank: Promoting India’s integration into the global economy… EXIM BANK

27 Exim Bank: Partner in Globalisation  Technology  Capital (Foreign Investment)  Raw Materials  Capital Goods  Final Products  Capital Goods  Capital (Overseas Ventures)  Product Development  Production  Marketing  Pre shipment  Post shipment VALUE ADDITION EXPORT M M I I T T R R O O P P EXIM BANK

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