Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized LOAN NUMBER 3334 IN

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1 Public Disclosure Authorized Project Agreement LOAN NUMBER 3334 IN (Industrial Pollution Control Project) Public Disclosure Authorized among INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INDUSTRIAL DEVELOPMENT BANK OF INDIA INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED Public Disclosure Authorized Public Disclosure Authorized Dated July 8, 1991 PROJECT AGREEMENT LOAN NUMBER 3334 IN AGREEMENT, dated July 8, 1991, among INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank), and INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI) and INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA LIMITED (ICICI). WHEREAS (A) by the Development Credit Agreement of even date herewith between India (the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twenty-three million four hundred thousand Special Drawing Rights (SDR 23,400,000) on the terms and conditions set forth in the Development Credit Agreement; (B) by the Loan Agreement of even date herewith between the Borrower and the Bank, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to one hundred twenty-four million dollars ($124,000,000) on the terms and conditions set forth in the Loan Agreement, but only on condition that IDBI and ICICI agree to undertake such obligations toward the Bank as are set forth in this Agreement; (C) by subsidiary loan agreements to be entered into between the Borrower and IDBI and the Borrower and ICICI, the proceeds of the Loan provided for under the Loan Agreement will be relent to IDBI and ICICI respectively on the terms and conditions set forth in said Subsidiary Loan Agreements; and

2 WHEREAS IDBI and ICICI, in consideration of the Bank s entering into the Loan Agreement with the Borrower, have agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section Unless the context otherwise requires, the several terms defined in the Loan Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project; Management and Operations of IDBI and ICICI Section IDBI and ICICI declare their commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and, to this end, shall respectively carry out Parts B and C.2, and Part B.1 of the Project and conduct their respective operations and affairs in accordance with sound administrative and financial standards and practices, with qualified management and personnel, and in accordance with their respective constitutional documents and Statement of Policy. Section (a) IDBI and ICIC undertake that, unless the Bank shall otherwise agree, Sub-loans, Subgrants and Investment Projects shall be made in accordance with the terms and conditions set forth or referred to in the Schedule to this Agreement. (b) IDBI and ICIC shall exercise their respective rights in relation to each Investment Project in such manner as to: (i) protect the interests of the Bank and IDBI and ICICI; (ii) comply with their obligations under this Agreement and their respective Subsidiary Loan Agreement; and (iii) achieve the purposes of the Project. Section IDBI and ICICI shall carry out the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08, and 9.09 of the General Conditions applicable to Loan Agreements (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of the Project Agreement and their respective Parts B and C.2 of the Project. Section IDBI and ICIC shall duly perform all their obligations under their respective Subsidiary Loan Agreements. Except as the Bank shall otherwise agree, IDBI and ICICI shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving their respective Subsidiary Loan Agreement or any provision thereof. Section (a) IDBI and ICIC shall, at the request of the Bank, exchange views with the Bank with regard to the progress of Part B of the Project, the performance of their respective obligations under this Agreement and under their respective Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan.

3 (b) IDBI and ICICI shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of Part B of the Project, the accomplishment of the purposes of the Loan, or the performance by IDBI and ICICI of their respective obligations under this Agreement and under their respective Subsidiary Loan Agreement. ARTICLE III Financial Covenants Section (a) IDBI and ICICI shall each maintain procedures and records adequate to monitor and record the progress of Parts B and C.2 of the Project and of each Investment Project (including its cost and the benefits to be derived from it) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of IDBI and ICICI respectively. (b) IDBI and ICICI shall each: (i) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than four months after the end of each such year: (A) certified copies of its financial statements for such year as so audited; and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Bank shall from time to time reasonably request. Section Except as the Bank shall otherwise agree, ICICI and IDBI shall: (a) conduct their respective operations and affairs in such manner as shall be necessary to maintain, at all times, their respective debt/equity ratio within the limit referred to in Section 3.03 of this Agreement; and (b) if such ratio shall, for reasons beyond the control of ICICI and IDBI, be exceeded, promptly take all such reasonable actions as shall be necessary or advisable to bring such ratio within such limit. Section (a) Except as the Bank shall otherwise agree, ICICI and IDBI shall: (i) not incur or permit any subsidiary to incur any debt if, after the incurring of such debt, the consolidated debt of ICICI and IDBI, respectively, and all their respective subsidiaries then incurred and outstanding would be greater than twelve times the consolidated capital and surplus of ICICI and IDBI respectively and all their respective subsidiaries; and (ii) ensure that at all times their respective

4 consolidated internal cash generation for each year shall be at least 1.2:1 times the consolidated debt service requirements of their respective consolidated debt for that year. (b) For purposes of this Section: (i) The term "debt" means any debt incurred by ICICI and IDBI or any subsidiary thereof maturing more than one year after the date on which it is originally incurred; provided, however, that current repayments of such debt due and payable within one year shall be excluded therefrom. (ii) Debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment on the date, and to the extent, the amount of such debt has become outstanding pursuant to such loan contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into but only to the extent that the guaranteed debt is outstanding. (iii) The term "equity" means the sum of the total unimpaired paid-up capital, retained earnings and reserves of ICICI and IDBI respectively not allocated to cover specific liabilities. (iv) Whenever for the purposes of this Section it shall be necessary to value, in terms of Rupees, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Bank. (v) The term "consolidated debt of ICICI and IDBI, respectively, and all their respective subsidiaries" means the total amount of debt of ICICI and IDBI, respectively, and all their respective subsidiaries, excluding any debt owed by ICICI and IDBI, respectively, to any subsidiary or by any subsidiary to ICICI and IDBI, respectively, or to any other subsidiary. (vi) The term "consolidated capital and surplus of ICICI and IDBI, respectively and all their respective subsidiaries" means the aggregate of the total unimpaired paid-up capital, surplus and free reserves of ICICI and IDBI respectively and all their respective subsidiaries after excluding therefrom such amounts as shall represent equity interests of ICICI and IDBI respectively in any subsidiary or of any such subsidiary in ICICI and IDBI respectively or in any other subsidiary. Section ICICI and IDBI shall not make any repayment in advance of maturity in respect of any outstanding debt of ICICI and IDBI which materially affect the ability of ICICI and IDBI to meet their

5 respective financial obligations. Section The Bank and ICICI and IDBI shall, from time to time, at the request of any party, exchange views through their representatives with regard to the administration, operations and financial condition of ICICI or IDBI, and ICICI or IDBI shall furnish to the Bank all such information as the Bank shall reasonably request concerning the administration, operations and financial condition of ICICI or IDBI. ARTICLE IV Effective Date; Termination; Cancellation and Suspension Section This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section (a) This Agreement and all obligations of the Bank and of IDBI and ICICI thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Loan Agreement shall terminate in accordance with its terms; or (ii) the date twenty years after the date of this Agreement. (b) If the Loan Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Bank shall promptly notify IDBI and ICICI of this event. Section All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions applicable to the Loan Agreement. ARTICLE V Miscellaneous Provisions Section Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party s address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America Cable address: INTBAFRAD Washington, D.C. Telex: (RCA) (FTCC) (WUI) or (TRT)

6 For IDBI: Industrial Development Bank of India IDBI Tower Cuffe Parade Bombay Cable address: Telex: INDBANKIND Bombay For ICICI: Industrial Credit and Investment Corporation of India Limited 163 Backbay Reclamation Road No. 3 Bombay Cable address: Telex: CREDCORP ICIC IN Bombay Section Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of IDBI or ICIC may be taken or executed by the Chairman and Managing Director of IDBI and ICIC respectively, or such other person or persons as the said Chairman and Managing Director shall designate in writing. IDBI and ICIC shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ Marianne Haug Acting Regional Vice President Asia INDUSTRIAL DEVELOPMENT BANK OF INDIA CORPORATION INDUSTRIAL CREDIT AND INVESTMENT OF INDIA LIMITED By /s/ Anil Kumar Authorized Representative SCHEDULE Procedures for and Terms and Conditions of Sub-loans, Sub-grants and Investment Projects

7 1. (a) Sub-loans. Terms and conditions of Sub-loans shall include: (i) Onlending rate to Investment Enterprises shall, unless revised by the Borrower, in consultation with the Bank, be 15%; and (ii) Repayment term shall not exceed 15 years inclusive of up to four years of grace. (b) Sub-grants. The Sub-grants shall be made only for Investment Projects under Part B.2 (a) and (b) of the Project. (c) Investment Projects. All Investment Projects shall satisfy the following eligibility criteria: (1) Investment Projects under Part B.l of the Project (i) (ii) (iii) Investment Projects shall have been appraised by IDBI or ICICI and found to have a substantial positive effect on the environment and meet the standards prescribed for the concerned industry; Investment Enterprise shall have an acceptable capital structure such that with the Sub-loan the debt-equity ratio thereof would not exceed 75:25; and No Sub-loan or combination of Sub-loans to a single Investment Enterprise by either IDBI or ICICI or both, shall exceed $10 million equivalent. (2) Common Treatment Facilities under Part B.2 (a) of the Project (i) (ii) (iii) (iv) (v) A thorough survey of the effluent situation at the site shall have been undertaken and provisions made for adequate pretreatment or disposal of effluents not suitable for common treatment; A feasibility study shall have been conducted, the economic and financial viability established, and operating and maintenance costs estimated; an adequate Investment Enterprise has been constituted or identified with institutional and technical capabilities to operate the common treatment facility; legal and financial responsibilities have been properly defined and the Investment Enterprise owner is responsible before the enforcement institutions for the quality of the common effluent after treatment; adequate cost recovery formulae have been adopted by the Investment Enterprise with the associated mechanisms for cost sharing or fees structures for the beneficiary enterprises. (3) Demonstration Projects under Part B.2 (b) of the Project

8 (i) Investment Enterprises are of small scale (below $5,000,000 equivalent in fixed assets); (ii) (iii) (iv) (v) Sub-projects represent pioneering uses of clean technologies in India or consist of prototype units for dealing with environmental problems in industry and have an anticipated widespread application; Investment Enterprises are currently efficient and economic and require a comparatively large investment for environmental protection; the financial rate of return and/or the risks involved in the required investments do not enable it to be financed on commercial terms; and financing of the Sub-loan of such Investment Enterprise shall not exceed $500, No expenditures for goods or services required for an Investment Project shall be eligible for financing out of the proceeds of the Loan unless: (a) the Sub-loan for such Investment Project shall have been approved by the Bank and such expenditures shall have been made not earlier than ninety days prior to the date on which the Bank shall have received the application and information required under paragraph 3 (a) of this Schedule in respect of such Sub-loan; or (b) the Sub-loan for such Investment Project shall have been a free-limit Sub-loan for which the Bank has authorized withdrawals from the Loan Account and such expenditures shall have been made not earlier than ninety days prior to the date on which the Bank shall have received the request and information required under paragraph 3(b) of this Schedule in respect of such free-limit Sub-loan. For the purposes of this Agreement, a free-limit Sub-loan shall be a Sub-loan for an Investment Project under Part B(l) of the Project in an amount to be financed out of the proceeds of the Loan which shall not exceed the sum of $3,500,000 equivalent, when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the Loan or of any other loan provided for in any outstanding loan agreement between the Bank and the Borrower or IDBI or ICICI entered into before the date of this Agreement, the proceeds of which have been or are being used for financing goods and services directly and materially related to such Investment Project. 3. (a) When presenting a Sub-loan (other than a free-limit Sub-loan) to the Bank for approval, IDBI and ICICI shall furnish to the Bank an application, in form satisfactory to the Bank, together with: (i) a description of the Investment Enterprise and an appraisal of the Investment Project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the proposed terms and conditions of the Sub-loan, including the schedule of amortization of the Sub-loan; and (iii) such other information as the Bank shall reasonably request. (b) Each request by IDBI and ICICI for

9 authorization to make withdrawals from the Loan Account in respect of a free-limit Sub-loan shall contain: (i) a summary description of the Investment Enterprise and the Investment Project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan, and (ii) the terms and conditions of the Sub-loan, including the schedule of amortization therefor. (c) Applications and requests made pursuant to the Provisions of sub-paragraphs (a) and (b) of this paragraph shall be presented to the Bank on or before September Sub-loans shall be made on terms whereby IDBI and ICICI shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Bank and IDBI and ICICI, including the right to: (a) require the Investment Enterprise to carry out and operate the Investment Project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (b) require that: (i) the goods and services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 3 to the Development Credit Agreement, and (ii) such goods, civil works, and services shall be used exclusively in the carrying out of the Investment Project; (c) inspect, by itself or jointly with representatives of the Bank if the Bank shall so request, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant records and documents; (d) require that: (i) the Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (ii) without any limitation upon the foregoing, such insurance shall cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Loan to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Investment Enterprise to replace or repair such goods; (e) obtain all such information as the Bank or IDBI and ICICI shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise and to the benefits to be derived from the Investment Project; and (f) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Loan upon failure by such Investment Enterprise to perform its obligations under its contract with IDBI or ICICI.