The World Bank. FOR OMCIuL USE ONLY. Report No PROJECT COMPLETION REPORT NEPAL INDUSTRIAL DEVELOPMENT CORPORATION (CREDIT 705-NEP)

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Do[RnI of The World Bank FOR OMCIuL USE ONLY PROJECT COMPLETION REPORT NEPAL INDUSTRIAL DEVELOPMENT CORPORATION (CREDIT 705-NEP) April 21, 1986 Industrial Development & Finance Division South Asia Regional Office Report No This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENT Currency Unit = Nepalese Rupees (Rs) US$1.00 = Rs 18.8 Rs 1.00 = US$ ABBREVIATIONS HMG - His Majesty's Government of Nepal ICICI - Industrial Credit and Investment Corporation of India IDA - International Development Association IDP - Indastrial Development Project ISC - Industrial Services Centre KfW - Kreditanstalt fur Wiederauftan NIDC - Nepal Industrial Development Corporation NRB - Nepal Rastra Bank UNDP - United Nations Development Programme FISCAL YEAR HMG/Financial Institutions: July 16 to July 15

3 THE WORLD BANK Washington, D.C U.S.A. For OMCML USE ONLY Office of DimctotGrn4I Opsiatons fvakat.o April 21, 1986 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report: Nepal - Corporation (Credit 705-NEP) Industrial Development Attached, for information, is a copy of a report entitled "Project Completion Report: Nepal - Industrial Development Corporation (Credit 705-NEP)" prepared by the South Asia Regional Office. Under the modified system for project performance auditing, further evaluation of this project by the Operations Evaluation Department has not been made. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disckosed without World Bank authorization.

4 FOR OFFIIAL USE ONLY PROJECT COMPLETION REPORT NEPAL: NEPAL INDUSTRIAL DEVELOPMENT CORPORATION CREDIT 705-NEP TABLE OF CONTENTS Page No. PREFACE...,...i BASIC DATA SHEET ii DISBURSEMENTS... o*... iv...0 HIGHLIGHTS... v I. INTRODUCTION I... 1 II* ENVIRONMENT II. PERFORMANCE OF NIDC Institutional Aspects Standards and Procedures *o* ****** operational and Financial Performance IV. CREDIT 705-NEP V. CONCLUSIONS ANNEXES 1. NIDC's Organizational Structure... oooo*o*o.o.***oooooo Projected and Actual Loan Operations... ooooooooooo Projected and Actual Income Statements Projected and Actual Balance Sheet Statements * Arrears Position Subprojr-at Data **o Commentc From the Borrower *... oooooooooooo.. 26 This docutmnt has a restricted distuibution and may be used by recipients only in the paormance of their official duties Its contents may not otherwie be disclsed without World Bank authorization.

5 PROJECT COMPLETION REPORT NEPAL: NEPAL INDUSTRIAL DEVELOPMENT CORPORATION (NIDC) (CREDIT 705-NEP) Preface This report reyiews the achievements uxder Credit 705-NEP for US$4.0 million which was the first credit line to the Nepal Industrial Development Corporation. It covers the implementation of the Credit and the progress and developments in NIDC operations for the period The credit was approved on May 3, 1977, declared effective on February 28, 1978, and disbursed until September 28, The undisbursed amount of US$0.673 million was cancelled. This PCR was prepared by the Industrial Development and Finance Division of the Projects Department, South Asia Regional Office. The Borrower's comments have been taken into account in finalizing the report and are reproduced in Annex 10. This project has not been audited by the Operations Evaluation Department.

6 -ii- PROJECT COMPLETION REPORT NEPAL: NEPAL INDUSTRIAL DEVELOPMENT CORPORA'ION (CREDIT 705-NEP) BASIC DATA SHEET KEY PROJECT DATA Item Total Project Cost (US$ million) n.a. Credit Amount (US$ million) Disbursed Cancelled Repaid to IDA Outstanding to IDA Date Physical Components Completed n.a. Proportion Completed by Above Date n.a. Economic Rate of Return varied Financial Performance varied Institutional Performance Less than expected OTHER PROJECT DATA Item First Mention in Files 12/05/73 Government's Application n.a. Negotiations 03/22/77 Board Approval 05/03/77 Loan Agreement Date 05/27/77 Effectiveness Date 02/28/78 Original Closing Date 12/31/81 Actual Closing Date 12/31/83 Borrower The Kingdom of Nepal Executing Agency NIDC Fiscal Year of Borrower 07/15 Follow-on Project Name Industrial Development Project Credit Number 1535-NEP Amount (US$ million) 7.5 Credit Agreement Date 06/10/85

7 -iii- MISSION DATA Number of Number of Staff Timing Weeks Persons Weeks Report Identification/Preparation 11/ /05/73 Preparation 12/ /17/75 Appraisal 09/ /15/77 Supervision 06/ /25/78 Supervision 06/ /19/79 Supervision 12/79 1 1/ 1-01/09/80 Supervision 07/ /20/80 Supervision 12/80 1 1/ 1-01/15/81 Supervision 08/ /16/81 Supervision 01/82 1 1/ 1-03/05/82 Supervision 10/82 1 1/ 1-11/05/82 Preappraisal of IDP 03/ /18/83 Supervision 07/83 1 1/ 3-08/10/83 Appraisal of IDP 11/ /16/83 PCR 01/ /13/85 Supervision of IDP & PCR 03/ /29/85 1/ Follow-up visits in conjunction with other missions in the rsgion total of of about 3 staff weeks).

8 -iv- PROJECT COMPLETION REPORT NEPAL: NEPAL INDUSTRIAL DEVELOPMENT CORPORATION (CREDIT 705-NEP) Schedule of Estimated and Actual Disbursements (Us$'000) Estimated at Appraisal Actual 1/ Year Quarter Per Quarter Per Quarter Cumulative % of Total PY78 2nd 200 3rd 400-4th FY79 1st nd rd th FY80 1st nd rd th FY81 1st nd rd th FY82 1st nd , rd , th , PY83 1st , nd , rd , th , FY84 lst , nd , rd - - 3, th , FY85 1st - 1/ 3, Total 4,000 3,340 3, / Rounded to nearest ten thousand; last disbursement was made on September 28, 1984, for US$2,270 equivalent.

9 - v - PROJECT COMPLETION REPORT NEPAL - NEPAL INDUSTRIAL DEVELOPMENT CORPORATION (CREDIT 705-NEP) HIGHLIGHTS The Credit 705-NEP was approved in 1977 and was the first Bank operation in industry through a development finance institution, NIDC. At that time, NIDC was the only source of industrial term finance and was expected, almost solely, to develop and promote industry in Nepal which was and remains a small sector in the economy. The Credit 705-NEP was granted with the objectives of: (a) providing NIDC with foreign currency resources to finance industrial projects in the private sector; and (b) assisting NIDC to develop into a stronger development finance institution (paras. 1, 2). The utilizatiin of the Credit was slower than anticipated due mainly to the difficult industrial and overall economic environment in Nepal. This is characterized by the scarcity of natural resources, small domestic market, limited and inexperienced entrepreneurs, and lack of appropriate policy framework for industrial investments. Likewise, insitutional improvements could be achieved only slowly. The major problems encountered included the long delay and inadequate management of project implementations. On hindsight, this was due to the vascilating interest and inadequate financial commitment of project sponsors who lacked experience in industry (para. 13). As an institution, NIDC suffered from the frequent changes in top management which resulted in the lack of intensive and continuing operational strategy. It also affected NIDC's resource and financial planning which contributed to the slow utilization of the Credit. In general, the objectives of the Credit 705-NEP were substantially met although with some difficulties and over a longer period than anticipated (para. 26). Being the first operation for industry through NIDC, the Credit required close and intensive supervisions by IDA. These helped in achieving some significant changes in NIDC's policies and operations including improved financial reporting and planning particularly on its domestic resources, emphasis on the continuity in top management, intensive project supervision and arrears management and staff traning (parss ). Experience under the Credit showed the need to focus on specific subsectors such as cottage and small industries, export sector, and other key subsectors including light engineering and leather. It also highlighted the need to develop industrial policies and measures which would be more effective in promoting efficient investments particularly in the private sector. Incorporating these findings and implementation experience under Credit 705-NEP, an Industrial Development Project (IDP) was approved in 1984 to: (a) provide additional foreign currency resources to NIDC and continue to build on the institutional progtess in NIDC; (b) provide the required technical assistance in the development and implementation of appropriate incentives for industry and exports, development components for the leather and light engineering products and tourism promotion (para. 34).

10 -1- NEPAL NEPAL INDUSTRIAL DEVELOPMENT CORPORATION CREDIT 705-NEP PROJECT COMPLETION REPORT I. INTRODUCTION 1. Credit 705-NEP for USS4.0 million, was IDA's first credit line to the Nepal Industrial Development Coorporation (NIDC). The Credit Agreement was signed on May 27, 1977, and provided for an interest rate from NIDC to HMG of 8.5% p.a. and a composite repayment period with a maximum maturity on subloans of 15 years including grace period. The original Closing Date of the Credit was December 15, 1981, which was extended to December 31, 1983; the Credit was closed on September 28, 1984, with total disbursements of US$3.327 million or 83%. The two primary objectives of the Credit were to help finance economically viable industrial projects controlled by the private sector including agroindustries, mining, construction, and hotel projects; and to build a stronger financial institution through changes in NIDC's organization, reallocation and expansion of staff, improvements in appraisal standards, increased follow-up activities and revised policies and strategies. 2. Background. The Nepal Industrial Development Corporation (NIDC) was established in 1959 under a special Act, to take over the functions of an Industrial Development Centre which had been established in 1957 under Nepal's First Five-Year Plan (FY56-FY61). Its main objective is to promote industrial investment in the private sector by providing financial and technical assistance. During its initial years of operations, NIDC was also directly responsible for promotional activities such as development and management of industrial estates, preparation/dissemination of industrial feasibility reports and consultancy services. In 1975, primary responsibility of these functions was transferred to the Industrial Services Centre. For a few years following the dissolution of the Small Industries Development Corporation (SIDC) in 1972, NIDC financed cottage and village industries; these are now financed mainly through the commercial banks. To date, NIDC remains the major source of medium and long-term financing for small, medium and large private industrial enterprises.

11 -2-3. NIDC is owned by HMG (5% of the shares held by NRB) which provides most of its resources. Prior to IDA's Credit, its resources were in equity shares and a number of small loans from bilateral sources including KfW and USAID. At the time of appraisal, NIDC had an equity base of Rs million or 63% of total assets (Rs million) and an outstanding loan portfolio of Rs million. II. ENVIRONMENT 4. Credit 707-NEP was implemented during FY78 to FY84. During this period, GDP grew at an average of 2.1% in real terms against a population growth of about 2.7%. Nepal suffered major drought-induced setbacks in FY80 and FY83 with GDP declining by about 2.3% and 1.4% respectively. Agriculture which accounts for about 62% of GDP grew at an average of about 2.2%; this was significant compared to the performance during the previous years (-0.9 average rate for the Fifth Five-Year Plan, FY76-FY80). 1/ Manufacturing industry grew at abotut 2.3Z during the Fifth Plan period; it declined by about 3.5% in FY81 due to shortages in raw materials and power mainly as a consequence of the drought in the previous year. The manufacturing sector remains small despite its relatively more rapid growth and constitutes only about 5% of GDP. Most recent census data indicate that the formal private sector constitutes about 3,600 establishments employing over 60,000 workers, two-thirds of which are small, employing an average of less than 10 workers each. HMG continued its emphasis on the expanded role of the private sector in industries. This led to the promulgation of the Industrial Enterprises Act and Foreign Investment and Technology Act in These Acts expanded and improved HMG's Industrial Policy Statement of 1974 and are significant steps towards providing incentives for local and foreign private investors as well as for simplified industrial licensing procedures. However, continuing efforts to promote private sector enterprises are still required; also, the rules and regulations relating to these Acts need to be finalized and implemented. Against severe physical, institutional and economic constraints, Nepal's progress was slow in many sectors with a deteriorating balance of payments position. 5. Historically, Nepal's trade deficits were large, but were partly offset by surpluses from invisibles. The current account deficit which averaged about 4% of GDP from FY79 to FY82, has traditionally been more than matched by inflows of official grants and concessionary loans, leading to a surplus in the overall balance of payments. In FY83, the overall balance shifted to a deficit of about US$36 million compared to a surplus of about IlS$39 million in FY82, reflecting a 1/ Preliminary results of a census on manufacturing (FY82), which were available in late 1985, indicate a growth rate of about 10.5% p.a. in manufacturing during the Sixth Plan Period (FY81-FY85).

12 -3- sharp decline in agricultural exports and large increases in food related imports. Official capital inflow continued to increase, but not enough to offset the huge deficit. Gross international reserves, usually maintained at relatively high levels in Nepal, declined to the equivalent of about three months of imports. 6. Nepal's merchandise exports grew at an average of 3% in nominal terms. In the early!980's, exports decreased due to market difficulties and as a proportion of GDP, were only 4.8% in FY82, down from 6.8% in FY76. Leather exports suffered substantial declines from a high of Rs million in FY80 to as low as Rs 49 million in FY83 which is the lowest level since FY77. The tourism sector had its share of problems; tourist arrivals stagnated with the receipts in convertible foreign exchange decreasing to slightly over US$30 million equivalent in FY83 which is almost half of the level in FY Nepal has made several changes in its exchange rate system. Prior to 1978, an Export Entitlement Scheme was operational which allowed the trading of foreign exchange entitlements resulting in premiums of about 30-40%. In March 1978, this scheme was replaced by a dual exchange rate whereby exporters received Rs 16 for each dollar of export earnings compared to an official rate of Rs 12: US$1.00. In September 1981, the dual exchange rate system was unified at Rs 13: US$1.00; in addition, the Nepalese Rupee was pegged to the Indian Rupee at the fixed rate of NRs 1.45: IRs In December 1982, the Nepalese Rupee was depreciated against the US Dollar by about 8% to NRs 14.00: US$1.00. In June 1983, the dual peg arrangement was replaced with a trade-weighted basket peg with the US Dollar as the intervention currency. The current exchange rate is NRs 18.8: US$ Nepal's organized financial sector consists of: two commercial banks; two specialized financial institutions, one for agriculture and one for industry; a provident fund corporation; and an insurance company. The two commercial banks (Nepal Bank Ltd. and Rastriya Banijya Bank) dominate the financial sector, accounting for 75% of total assets and virtually all deposits. In 1984, HMG opened the commercial bapking sector to the private sector; Nabil Bank which is a joint venture with the Dubai Bank, started operations in June Two other private banks are expected to open in FY85 in collaboration with the Grindlays Bank and the Indo-Suez Bank. These banks are expected to provide more eff.cient and improved credit facilities for industry including cofinancing arrangements with NIDC. Commercial banks have been the major source of working capital for industry while NIDC is the primary source of term credit for fixed investments, although the commercial banks have responded well under the CSI Project with increasing term financing for cottage and small industry. The commercial banks have had a relatively stable base of term deposits and usually have excess liquidity which could be made available for industrial term lending. Part of the problem is the rate structure in Nepal which provides minimal, if not negative marginal spread for the commercial banks in using their own funds for term lending. IDA has maintained continuing dialogue with HMG/NRB on this aspect. Steps taken to encourage industrial lending include the amendment of NIDC's Act to enable cofinancing and joint mortgages with other financial institutions, exemption from registration fee of collaterals on industrial loans made by the commercial banks. Recently, NIDC was able to sell some of its debentures to Nepal Bank as a first major step to diversify its sources of funds.

13 -4- III. PERFORMANCE OF NIDC 1/ Institutional Aspects 9. Policies and Strategies. With the approval of Credit 705-NEP, NIDC's Board for the first time, approved formal policy and strategy statements to guide its operations. These proved to be useful in that prior lending policies were developed on an ad-hoc basis. This made NIDC vulnerable to some policies of HMG which in some cases were not financially prudent; for example, fixed debt/equity ratios for projects by geographic location and fixed time periods for processing applications were indicated in HMG's Industrial Policy Statement of The objectives of these policies were to disperse investment geographically and to process applications more rapid. However, they tended to undermine NIDC's autonomy and raise undue expectations from sponsors on the amount to be lent and timing of approvals irrespective of project requirements and stage of preparation. Although it took a longer time than expected, NIDC implemented policy recommendations made during appraisal and supervision of the Credit. It amended its Act so that it can now provide working capital loans, guarantee foreign loans of industrial enterprises, execute joint pari-passu mortgages which facilitate cofinancing arrangements, and manage/have managed assets taken over under its Act due to non-payment. NIDC also prepared an annual budget and workplan showing a shift in the focus of its strategy towards implementation and supervision of its portfolio which is appropriate. As a collection target and standard, it aims to have a debt service coverage of at least 1.1 times and its arrears would not exceed its unimpaired equity. Formal reviews and approval of its policies and strategy statements should be done by NIDC's Board and Management regularly and at least every three years. It took about eight years for its original statements to be reviaed which is too long, coinciding with the requirements of IDA's first and second credits. 10. Organization and Management. Comparative organizational charts for NIDC in FY77 and FY84 are shown in Annex 1. Based on IDA's recommendations under the Credit, NIDC's organization has evolved into an appropriate structure for a development finance institution. Initially, the two major changes were the division of the organization into two groups--one for operations and another for administration--and the creation of a project implementation and follow-up divisiun. To supplement ISC's project promotion, NIDC re-established its own Project Development and Promotion Division. Other organizational changes included the additions of a Sick Project Branch (a section under a Division) and a Training Branch. 1/ Section IV of the SAR for an Industrial Development Project in Nepal (Report No NEP, November 12, 1984) discusses NIDC's current institutional, operational and financial performance, organization, and its policy and strategy statements.

14 One of the concerns especially during the early period of the Credit, was the frequent changes in management. NIDC has had four general managers under the Credit with the first two having terms of less than two years. This improved with the third general manager who had a term of almost three years. The fourth and present general manager who is also the first appointee from within the organization, has held the position for over three years; his tenure is for four years and is likely to be renewed for another term. Another concern was the inadequate interaction between the Board and senior management. Based on IDA's recommendation, NIDC amended its Act to allow the general manager to be a full member in addition to being secretary to the Board. In 1983, NIDC's two deputy general managers started participating in the board meetings. Communication between management and senior staff and among division chiefs has also improved through regular meetings and reporting procedures. Standards and Procedures 12. Promotion. NIDC's pipeline of projects has been increasing through its own and ISC's development and promotion efforts. However, it still faces the difficult task of transforming these projects into bankable proposals and maintaining and reinforcing the entrepreneurs' interest ad capabilities. These were the main reasons for the slow comcitments and disbursements of Credit 705-NEP. In addressing this issue, NIDC has devised a reasonable strategy for the mediumterm. It would continue its periodic industrial tours to promote viable projects and NIDC's financial assistance. It plans to conduct workshops on project preparation and implementation for prospective entrepreneurs and those with approved loans. With assistance under the IDP, it would also develop a "'projects course" for its staff which would eventually be opened to relevant staff of HMG and selected project sponsors. 13. Appraisal. On the recommendation of the Policy Advisor under the Credit, NIDC adopted the project team approach in its appraisal procedures (Annex 1). This provided for a better appreciation of the projects as a whole and for more active interaction among project analysts. This arrangement did not only improve the quality of appraisal, but also shortered the processing time. Calculation of financial and economic rates of return was initiated under the Credit as a standard feature of NIDC's appraisal reports. Although the problems of many of its sr-bprojects are rooted in the difficult environment and the inexperience and vacilating commitment of project sponsors, NIDC should continue to improve on its appraisal standards. It should focus on market assessment, adequacy of suitable management, realistic implementation timetables, adequacy of working capital financing, and feedback information from actual experience. 14. Implementation/Supervision. In 1983, NIDC formed a Sick Projects Branch within its Monitoring and Evaluation Division to address the need for in-depth analysis and assistance to problem projects and to contain its increasing level of arrears. The rehabilitation of these projects requires highly qualified and experienced staff which NIDC still has to develop. Meanwhile, it has concentrated on a few projects with the largest arrears and has assigned its own

15 -6- staff either as member of the board of directors or as full-time staff on secondment, usually handling the treasury/finance functions. As much as possible, NIDC should supplement its own staff by using outside consultants. It would take some time to develop expertise in handling problem projects and to have any significant impact on NIDC's arrears and quality of portfolio. Consequently, NIDC also needs to improve weaknesses in its appraisals and post appraisal processing. For example, in addition to close monitoring of agreed timetables, it should implement its policy of withdrawing/cancelling or withholding subloan disbursements until it has re-appraised the viability of projects arising from such delays and cost overruns. This could address problems early and contain its exposure to problem projects. This stage of the project may be the most critical in that it reveals the actual needs of the projects and sponsors who are usually inexperienced or new to industrial undertakings. 15. Institutional Assistance Program. Although there were considerable improvements in NIDC's standards and procedures under the Credit, NIDC continues its institution-building efforts by implementing an institutional assistance program. This involves an initial 24 man-months of technical assistance from the Industrial Credit and Investment Corporation of India (ICICI) which started in December ICICI staff are providing advisory services in the "nuts and bolts" of development banking; the initial focus is on the standards and procedures of NIDC's project development, appraisal, and supervision. The work would also include on-the-job training of selected NIDC's staff in the Bombay headquarters of ICICI and two months assistance for the preparation of NIDC's financial statements for the year ending July The ICICI staff are directly involved in the review of subprojects. Practical assistance and recommendations are made on such aspects as types and size of projects for cofinancing, questionnaires for appraisals and follow-up activities, improvements in loan agreement provisions, compilation of reference data, economic appraisal, formats for market surveys, procedures and guidelines for insurance coverage. The ICICI staff also assisted a task force in the follow-up and data gathering on the subprojects for the PCR on Credit 705-NEP. Monthly reports by the ICICI staff are available in the ASPID files. IDA is continuing its institutional assistance to NIDC through the Industrial Development Program (IDP). 16. Financial Planning and Reporting. Prior to the Credit, NIDC's financial planning was done through the preparation of an annual workplan and budget. This was inadequate in that it covered only one year which was to. short for planning resource requirements. Moreover, it does not contain profitability, cash-flow, and balance sheet accounts. As a consequence, NIDC's domestic -asources became a constraint in implementing the subprojects under the Credit which led to the "informal suspension" of the Credit in FY81 (para. 26). Under the Credit, NIDC improved its data gathering and frequency of reporting the results of its operations to its management and IDA. However, IDA's missions have noted two weaknesses in the reports: inconsistency of the data and long retrieval period. Some figures contained in its workplan do not tally with data submitted to IDA and/or its published account; data submitted to IDA on approvals, disbursements, collections, and arrears often do not reconcile.

16 -7- There were also large discrepancies its internal proforma and its audited financial statements. The long-form audits of its financial statement have been satisfactory, but completion and submission to IDA have consistently been delayed well beyond the agreed period, i.e. within five months after the end of its fiscal year. NIDC should continue to address these weaknesses to improve its financial analysis and planning. NIDC should also review the recommendations of the accounting and management information advisor including the required training and merger of the Accounts Division with the Finance Division (para. 24). Operational and Financial Performance 17. Loan Operations. Annex 2 shows a comparison of projected and actual loan operations of NIDC for FY77-FY81. From a base of about Rs 76 million in FY77, its loan approvals were projected to grow at 15% per year; total approvals for FY77-FY81 were estimated at Rs 530 million or an average of Rs 106 million per year. These proved to be optimistic in that total approvals for the same period amounted to only Rs 321 million or an average of Rs 64 million per year. Historically, NIDC's approvals showed no discernible annual growth rate since there is no consistent stream of medium and large projects. However, there seems to be a slight increase in the average level; the yearly averages for FY72-FY76 and FY77-FY81 were Rs 55 million and Rs 65 million respectively. For FY80-FY84, this level increased to Rs 80 million. Approvals in FY83 and FY84 were over Rs 100 million. Actual commitments and disbursements were likewise much lower than projected. Actual figures shoved that NIDC's commitments and disbursements although higher in amounts, were lower in relation to total approvals. This was evident in the utilization of Credit 705-NEP; compared to appraisal estimates, full commitment took two and half years longer and 83% of the Credit was disbursed in almost three years after the original Closing Date. 18. Profitability. NIDC's gross revenues almost doubled from Rs 15.7 million in FY77 to Rs 28.6 million in FY81 (Annex 3). Despite the lower loan operations, actual profits were satisfactory and close to projected levels. This was due to higher spreads on its portfolio; NIDC borrowed much less than projected and increased its equity with the result that its actual interest cost as a percent of its portfolio, was lower by an average of 1.3%. Administrative and general expenses were also kept at below Rs 6.0 million equivalent to about 1.5% of total assets which is reasonable. However, its provisions for bad debts were twice the projected amount which is appropriate and in line with its increasing arrears position (para. 20). These increased from 1.8Z of loani portfolio in FY77 to 4.1% in FY81. NIDC continued higher provisions and in FY84, these were 5% of loan portfolio. This was possible with its higher profitability due mainly to an increase in interest rate in FY83 to 12% from 11% which was effective since FY Financial Position. Annex 4 shows a comparison of NIDC's projected and actual balance sheet stataments. Its actual financial position reflected a substantial equity base which was 45% of total resources at the end of FY81 compared to 22% as projected. Because of NIDC's conservative capital structure, its return on equity was low averaging only 1.3% during FY77-FY81. Given the riskier business of term ending to industry, NIDC'a structure is appropriate,

17 -8- i.e. despite low borrowings, its debt service coverage ratio has been marginal (below equity in PY79 and FY81) due to rising arrears. NIDC needs to address its arrears problems directly to achieve comfortable levels of debt service capacity and should not depend on HMG's equity contributions which could camouflage the serious operational and financial weaknesses. 20. Arrears Position. Annex 5 shows NIDC's arrears at the time of appraisal and Closing Date of the Credit. Total arrears increased by 5.6 times from Rs 20 million in FY76 to Rs million in FY84; as a percent of total portfolio, artears doubled from 14% to 28.6%. These are cor.:entrated in the hotel/tourism projects in which NIDC's exposure has been substarfial being the only major domestic source of term finance. Investments in tourism-related projects, notably hotels, increased in anticipation of growth in tourist arrivals which did not materialize. In the early 1980s, tourist arrivals stagnated with a decreasing proportion of non-indian tourist. This led to very low hotel occupancy rates and financial difficulties. Another problem was the excessive delays and cost overruns of these hotel projects resulting in compounding amounts of arrears during protracted construction periods (para. 28). To emphasize improved collection performance, NIDC's strategy and covenants of the new credit under the IDP, require the achievement of a minimum debt service coverage ratio of 1.1 times and arrears level not exceeding its equity. IDA has the right to withhold withdrawal authorization if these criteria are not met and satisfactory corrective actions are not taken. To a large extent, the informal suspension of Credit 705-NEP was beneficial in focusing NIDC's and HMG's attention to take corrective measures to improve NIDC's operations (paras. 9-16). IV. CREDIT 705-NEP 21. Objectives. As stated in Section 3.01 of the Credit Agreement, "the purpose of the Credit is to assist NIDC in financing such productive facilities and resources in Nepal as will contribute to the economic and social development of the country. The Project consists in the financing of specific development projects through loans to and investments in private enterprises in Nepal, furtherance of the corporate purpose of NIDC." The appraisal report spells out one primary objective of building NIDC into a stronger financial institution through changes in NIDC's organization, reallocation and expansion of staff, improvements in appraisal standards, increased follow-up activities, and revised policies and strategies. As discussed in the above sections, NIDC has evolved into a strong financial institution than at the time when Credit 705-NEP was given. It has adopted more appropriate policies and strategies, suitable organizational and procedural changes; major improvements were also achieved in its management reporting systems, financial planning, and audit of its operations. The institutional improvements in NIDC were probably much more than expected during the appraisal of the Credit given the particular difficulties in promoting such changes in a country like Nepal. As required under the Credit, NIDC appointed two advisors, one to advise the general manager in all operational and policy matters and one to advise on NIDC's accounting, management information, resource and business planning systems.

18 Technical Assistance. Mr. Zamir Hasan, on secondment from the World Bank, was appointed as the policy advisor in February 1978 under UNDP financing. The accounting/management information advisor grant from the Overseas Development Administration (ODA) of England. Due to the delay in recruiting a suitable advisor, ODA's funds became unavailable due to budget constraints and alternative grant financing had to be secured. Three years after loan approval, Mr. Sidney Rose was appointed accounting/management information advisor also under UNDP financing. Mr. Zamir's assignment ended in December 1979 and the could not overlap with Mr. Rose as planned. Final reports of the advisors are available in the files. 23. Policy Advisor. Recommendations of the policy advisor covered the major areas of working capital, cofinancing, appraisal and follow-up standards, organizational and management controls, and financial/resource analysis and planning. One problem was the initial reluctance of NIDC's board and management to examine policy issues and reservations to fully involve the advisor in the discussion and formulation of policy. At that time, inadequate domestic resources became an issue in NIDC's operations. Despite the weaknesses of NIDC's information system, this advisor assisted NIDC to analyze and project its resources requirements which served as the basis for securing firm funding commitments from HMG/NRB. This led to the lifting of the "informal suspension" of the Credit (para. 26). The success of this component is demonstrated in NIDC's more streamlined organization and procedures including management committees recommended by the advisor and NIDC's new development finance policies and operational strategy which are satisfactory. 24. Accounting/Management Information Advisor. This assignment was originally planned for two years. However, the initial contact was for one year, but was extended for another six months. The assignment involved mainly h2!e setting up of a new ledger system for NIDC's loan accounts and arrears posiiuon. The merger of the accounts division with the finance division as also recommended to achieve centralized responsibility for consistent and accurate information. Other more technical recommendations are contained in a completed accounting manual. NIDC should still consider adopting the recommended set-up and manual. However, the constraint has been more on the availability of qualified accounting staff. Although the advisor provided step by step assistance and training to selected NIDC staff, more is needed to change over fully and implement the new system successfully. NIDC's staff were too accustomed to the old system and without proper training and motivation, were very reluctant to try and adopt new methods. The chartered accountant hired under the credit for its finance division was a good beginning, but he could not do the whole job. Consequently, NIDC retained its old system with top management support, it has recently been submitting progress reports to IDA more regularly. However, these reports still suffer some data inconsistency and long retrieval periods (para. 16). With the assistance of the ICICI staff and its external auditor, NIDC's strategy should be to adopt a medium-term program to update its accounting system which incorporates relevant and sustained training for its staff.

19 Actual Utilization and Disbursements. Credit 705-NEP was for US$4.0 million. Total disbursements were US$3.327 million equivalent or 83%. The Credit had a subloan free-limit of US$80,000 equivalent and a maximum subloan amount of US$1.0 million. NIDC submitted 28 subprojects to IDA; IDA authorized 28 subloans for a total amount of US$4.190 million of which five were subsequently cancelled. The 23 subloans under the Credit are broken down as follows. Amount Amount Number of Authorized % of Disbursed % of Sub*oans (US$'000) Total (US$'000) Total Above Free Limit 9 3, , Below Free Limit Total 23 4, , Nine subloans or 39% were above the free limit ("A" subloans); these accounted for 89% of the amounts disbursed and were subject to IDA's prior review and approval. The average subloan disbursed was about US$145,000 compared to a higher average subloan approval of US$182,000. This was due mainly to three subprojects under implementation which utilized an average of only 39% of approved amounts; a large amount of US$0.580 million was cancelled for one of these projects (Hotel Jaya). However, all but one subproject had subloans of below US$0.500 million. 26. Utilization of Credit 705-NEP was slow compared to estimates at appraisal. Credit effectiveness was delayed by six months to allow the appointment of the advisors, which was a condition of effectiveness. The original commitment date was September 30, 1979; by this date only US$1.7 million was committed and US$0.567 million was disbursed despite an amendment of the Credit Agreement allowing IDA funds for certain domestic currency expenditures and simplification of disbursement procedures. Although the commitment date was extended to March 31, 1981, a review of NIDC's performance and utilization of the Credit showed serious institutional and financial weaknesses which undermined the implementation of Credit. These included ineffective project promotion, excessive appraisal processing time, inadequate management information, particularly on arrears, and non-compliance to IDA's auditing requirements. Overall, management was also adversely affected due to frequent changes in the NIDC's general manager. Moreover, NIDC did not have enough domestic resources to ensure efficient implementation of 'ts subprojects, particularly those financed under Credit 70S-NEP. Consequently, Credit 705-NEP was "informally" suspended on July 15, 1980; this meant that IDA would not approve subloans under the Credit after this date until NIDC/HMG had full funding of NIDC's past commitments and had made satisfactory arrangements for funding NIDC's future operations. On September 9, 1981, (almost 14 months after), IDA lifted the "informal suspension" by extending the Credit's commitment date to March 31, 1982 and Closing Date to December 31, This decision was based on the following:

20 -11- (a) HMG/NRB had committed in writing to provide NIDC's estimated annual requirements of about Rs 40 million through loans or purchase of NIDC's 15-year bond/debentures which would be taxfree and guaranteed by HMG; (b) NIDC had submitted subprojects to IDA requiring subloans of US$1.9 million which covered the uncommitted balance of the Credit; it also had a project pipeline requiring about US$1.6 million in subloans; (c) NIDC had completed its long form audit which was satisfactory and appointed an accounting and management information advisor; (d) disbursements under the Credit had doubled; and (e) NIDC initiated changes in its policy and procedures which would strengthen collection/supervision activities and improve its arrears position. Projects Financed under Credit 705-NEP 27. Annexes 6 through 9 provide detailed data on subprojects financed under the Credit. Only one subloan was for an expansion project of a marble processing plant; the remaining 22 subloans were for new projects which is characteristic of NIDC's past operations. This trend is expected to continue since Nepal is still at the initial stages of developing an industrial base. Two-thirds of the subprojects were located in rural areas and accounted for over 50% of the subloans. Due to the need to locate in or around urban areas, six subprojects were established within the Kathmandu Valley such as a 4-star hotel, automotive workshop, beer distillery, soft drink bottler, printing and packaging, and a textile weaving plant. The products of the other subprojects financed under the Credit were diversified; these included chemicals, metal, marble, noodles, leather, canned juice/fruits, animal feeds, paper, electrical accessories, stone aggregates, baked bread, aluminum utensils, milled rice, and rubber footwear. 28. Annex 6 shows the dates when the subloans were approved by NIDC and authorized by IDA. The periods between these dates were quite long with an average of about 12 months. The "A" subprojects had shorter periods averaging about 8 months compared to almost 15 months for "B" subprojects, in which IDA's prior review/approval was not required. These delays reflect N4IDC's difficulties particularly with smaller projects whose sponsors are largely new entrepreneurs with little and no experience in industry. NIDC's experience indicates that the main reason for the delays were the sponsors' inability to execute post-approval formalities. Many sponsors were not ready with their equity contribution which delayed the signing of loan documents. Sponsors often faced the additional frustration of bureaucratic delays in securing needed registrations and permits. Some sponsors lost interest in their projects because of complexities of new industrial ventures and would rather had diverted funds to other easier and lower risk undertakings. NIDC is addressing this

21 -12- issue by requiring and assisting project sponsors to comply with the preestablished requirements prior to subloan approvals; this should help identify the more serious sponsors and facilitate implementation. However, NIDC has been cautious in cancelling approved loans; over 50% of the subloans under the Credit took 12 months and over (as long as 30 months) from NIDC's approval to IDA's authorization. NIDC has rarely exercised its option to cancel approved loans which are not utilized within 3 months from date of an approval letter. Another reason for the delay was the long period it took for NIDC to respond to IDA's queries particularly for the initial subprojects in which NIDC had to expand/improve its appraisal analysis and reports (para. 32). 29. A comparison of expected and actual dates of project completion is shown in Annex 7. The delay in actual completion of 20 projects averaged slightly over eight months. Only three subprojects were on schedule. There were longer delays in the nine "A"' subprojects than in fourteen "B" subprojects are still under implementation with current delays of four and seven years. One "B" subproject is still under implementation and delayed for 18 months. The main reason for the delayed completion was in the supply of imported machinery. Because of the small sizes of machinery procurements, NIDC and its sponsors had difficulties in securing quick and adequate responses to their requests for quotations. The longer delays occurred in the clearing and transshipment through the Calcutta Port; many times this resulted in piferages/damage to the machinery. The delays were prolonged due to conflict and loss of interest among sponsors as well as changes in project design, which often resulted in larger equity financing. In one project A-5 (Hotel Jaya), NIDC cancelled its undisbursed loan balance under the Credit; the project has resumed construction which would be financed by equity and loans from the sponsors. NIDC's progress report showed that subproject A-2 (Karnali Rice Mill) should be cancelled unless a viable alternative location is found. Subproject B-13 (Jayashree Kapada) expects to be in operation in 1985 under a new financing plan. As recommended by IDA's supervision missions, NIDC should provide a more realistic implementation timetable based on NIDC's actual experience including results of this PCR. 30. Annex 6 shows a comparison of actual and estimated project costs. Thirteen completed projects showed an average cost overrun of 30% over appraisal estimates (ranging from 6% to 63%). Seven projects were completed at below estimates with savings raging from 2% to 16%. Cost overruns were due mainly to the delay in implementation which resulted in price increases of local construction materials and imported equipment. In five projects, additional machinery and larger buildings were incorporated; cost overrun due to foreign exchange fluctuation was in only one project. On the other hand, cost savings were due mainly to less equipment actually installed. The reasons and impact on operations have not been indicated in NIDC's completion report, which should be examined in future supervision visits particularly since some of these projects are in arrears. Cost overruns for three projects under implementation are expected to exceed 50% of original estimates. NIDC's re-appraisal of these projects, show marginal profitability on the hotel project in which it is not increasing its financial exposure; on the rice milling project, NIDC should consider cancelling its loan unless a viable alternative location is found; on a

22 -13- small textiie project, NIDC has approved additional loans to cover overruns provided the sponsors paid-in their counterpart equity. The above experience confirms IDA's continuing concerns on NIDC's appraisal weaknesses in project cost estimates and optimistic timetables. 31. The operating results and arrears position of the subprojects under the Credit are summarized in Annex 8. Complete, accurate, updated operating data are not easily available from NIDC's clients. Many do not keep accounting records and very few accounts are audited. Income tax returns are available but cannot be relied on. Based on the best data available to NIDC, six companies showed profitable operations and ten companies were incurring losses by the end of 1984; four companies started operations only in 1985 and three are still under implementation. However, 20 of the 23 companies were in arrears which amounted to Rs 20.5 or 19% of total arrears. Collection ratio for these projects was 30% which is low but equal to NIDC's expeience on its total portfolio. The trend has been improving although slowly. VIDC expects higher collections except for A-5 (Hotel Jaya) which would still take some time to complete, A-7 (Hetauda Leather) due to a prolonged depressed export demand, and A-2 (Karnali Rice Mill) due to location problems. 32. The direct employment effect of the projects financed under the Credit, has been estimated at 1,400 jobs; this meant an actual total cost per job of about Rs 83,600 (US$4,45P equivalent) which is reasonably low. Three projects had exports of about Rs 8.0 million (US$0.425 million equivalent). Leather and canned fruits exports accounted for 57% and 39% of total respectively. Estimated foreign exchange savings amounted to Rs 33.0 million (US$1.7 million equivalent). Eighteen projects (90%) operated on only one shift; the brewery and soft drink projects were on two and three shifts respectively. Under the Credit, NIDC was to calculate financial rates of return (FRR) for projects costing Rs 1.0 million and above, and economic rates of return (ERR) for projects costing Rs 2.5 million and above. Ex-ante FRR ranged from 13% to 36%. Ex-post FRR calculated for five projects were lower; four projects had satisfactory ex-post FRR ranging from 16% to 28% and one project (marble processing) had a marginal ex-post FRR of 6% in view of existing labor and claims problems. The ERR results were generally higher than the FRR; ex-ante ERR ranged from 21% to 48% and ex-post ERR for five projects ranged from 21% to 29%. Unweighted average ex-post FRR and ex-post ERR were 18% and 25% respectively. 33. Based on IDA's review of 11 "A" subprojects, some of the weaknesses noted in NIDC's appraisal reports were: (a) Demand and Supply Analysis. Because of lack of reliable data in Nepal, NIDC needed to supplement its analysis with actual surveys and practical ways of assessing demand such as test/sample marketing and interviews of actual major consumers. (b) Procurement Analysis. NIDC's reports often did not contain this analysis; however, it followed satisfactory procedures through its Machinery Selection Committee and use of outside consultants for complex projects.

23 -14- (c) Aanagement. Provisions were inadequate in ensuring that suitable and qualified management and staffing would be available; assessment of financial and technical competence of sponsors needed to be expanded. (d) Project Cost/Working Capital. These estimates were usually optimistic and no firm sourcing of working capital was usually provided or required under the terms of the loans. (d) Others. These included the need to ensure availability of raw materials, queries on compliance with policies like sector exposure and financing of interest during construction, suggestions on size and staging of projects and on terms and conditions of subloans as well as marketing and technical agreements proposed for the subprojects. NIDC had been receptive to IDA's comments and suggestions; although these meant more research and some delay, they provided NIDC the opportunity to re-examine the projects and in some cases, had helped to improve project parameters such as obtaining appropriate equipment guarantees, cost overrun financing, and marketing/technical agreements. Through continuous IDA/NIDC dialogue, there was noticeable improvement in NIDC's appraisal quality, especially in the later years of Credit 705-NEP. NIDC's appraisal reports are now of good quality, although there are still areas which should be improved (para. 13). V. CONCLUSIONS 34. Credit 705-NEP was the IDA's first credit line to NIDC which at the time, as the only source of term finance for industry. The US$4.0 million Credit is small but was expected to meet NIDC's foreign exchange requirements for two years for small and medium enterprises. However, the Credit's utilization was slow due primarily to the difficult environment in which NIDC operates (para. 12). Improvements in institutional standards and procedures and financial planning which could be achieved only slowly in Nepal, contributed to slower utilization than anticipated. This experience has been reflected in the IDA's new credit operation (IDP) for NIDC which provides for a longer commitment and disbursement peribd. Significant beginnings were made in the difficult and long-term task of institution-building. HMG/NfDC have not only recognized the importance of but have also provided for reasonable continuity in top management; HMC has even broken its traditional practice by appointing a general manager from within the organization which is proving to be a correct decision. Senior management committees are operating and more top managemert officers attend meetings of the Board of Directors. These encourage and have resulted in participative decision-making which is a welcomed development particularly in Nepalese context. NIDC has also focused on staff training by instituting regular orientation and project analysis courses and through the joint "institutional assistance program" between ICICI and NIDC. The Industrial Development

24 -15- Project would continue IDA's support and assistance in evolving institutional progress in NIDC. Appropriate safeguards have been incorporated to promote closer monitoring which would help ensure that proper measures are taken in time. The IDP also emphasizes performance as the basis for continued involvement. 35. In comparison to other development financing institution, NIDC has relied heavily on equity financing from government and/or government-owned institutions. While equity funds may be an appropriate form to support industrial financing in Nepal, NIDC should be developing a strategy not only to expand its sources of borrowings, but also to diversify its shareholdings. This would require more precise financial planning and discipline on the part of NIDC; greater pressures of its debt service requirements would promote more cautious investment programs which must be adopted to contain its worsening arrears position. At the same time, NIDC would achieve more flexibility in planning its own operations. 36. NIDC should now focus on assisting to develop a program to expand and upgrade the accounting and auditing standards in Nepal. Availability of timely and accurate financial data is essential for NIDC to improve the quality of its lending operations and services to its clients. Scholarships could be provided to its staff for accounting and financial courses. Qualified chartered accountants could be hired for regular seminars for NIDC's clients not only to provide training but also to demonstrate the advantages of maintaining proper accounting records. The consultants/nidc staff should make available actual bookkeeping and auditing services for client groups to minimize individual costs. 37. NIDC is a stronger institution with suitable policies, more streamlined organization and procedures, higher standards, and improved staffing policies and training. In general, the objectives of Credit 705-NEP were met although with some difficulties and over a longer period than anticipated.

25 I I.1''ilI i I I S~~~~~~~~~i I 'il l~ II ~~li - I a~~~~~~~~~~~~~~~~~~ II~~~~~~~~~~~~~ II 'I 'II -1- L XaUuIy 1 Z JO T I xauut

26 ~~~~~~~Annex 2 of 2 1 4~~~~~~~~~ *j I! ll II I i Ij II,Iuj I ke i -III ~11i If 'iiws' LE1_

27 NEPAL Nepal Industrial Development Corporation Credit 705-REP Proiect Completion Report Projected and Actual Loan Operations (Rs in Millions) FY77 FY78 FY79 FY80 FY81 Total. Approvals Proi. Actual Proi. Actual Proi. Actual Proi. Actual Proi. Actual Proi. Actual Loans Equity Guarantees _ Total Commitments Loans Equity Guarantees Total Disbursements Loans Equity Guarantees Total z (D x

28 NEPAL Nepal Industrial Develostent Corooratiou Credit 705-NEP Proiect Completion Revort Proiected and Actual Income Statements (Rs in Millions) FY77 Fs.7 r79 FY80 YI81 Income Ro;. Actual Proi. Actual Proi. Actual Proi. Actual Proi. Actuol Interest Dividends Miscellaneous S Total Income Expenses Interest Administrative/General O (Depreciation) (N.A.) (0.2) (N.A.) (0.3) (N.A.) (0.4) (N.A.) (0.3) (N.A.) (0.4) Provisi4a for Bad Debts _2$ Total Expenses Net Income lefore Taxes Income Tax S Net Income Ratios (2 Net Income/Average Equity Total Income/Average Total Assets Adm. 8.4 Expense/Average 7.8 Total Assets Income 1.0 from 1.4 Loans/Average Loan Portfolio Interest 9.5 Expense/Average Loan Portfolio Gross 6.7 Spread 3.9 on Loan Portfolio Interest Expenses/Average Debt Provision for Bad 6.1 Debts/Average Loan Portfolio Debt Service 0.7 Coverage 1.6 Ratio N.A N.A N.A N.A N.A. 0.94

29 NEPAL Nepal Industrial Development Corporation Credit 705-NE? Proiect Completion Report Projected and Actual Balance Sheet Statements (Re in Millions) FY77 FY78 FY79 FY80 FY81 Assets Proi. Actual Proi. Actual Proi. Actual Proi. Actual Proi. Actual Cash aeceivables Subtotal Loans/Advances Less: Provisions (5.2) (3.3) (7.6) _(j) (10.5) (11.2) (13.8) (8.7) (17.3) (11.6) Subtotal Investments Net Fixed Assets O Other Assets Total Assets Liabilities & Equity Tax Payable Others S A Subtotal Loan-term Debts Others Equity: Paid-In Reserves Subtotal Total Liabilities/Equity Ratios Current Ratio Debt/Equity Ratio Provisions/Loans (2)

30 Annex 5 Neoal Industrial Develooment Corioration CretAt 70S-M Proiect CogaletioA ReDort rrears Position (Rs in Millions) At Aonraisal At Clgosig Date I. (a) Total Outstanding Loans (b) Amount of Arrears: - principal interest S Total (c) S (b. a) FY76 m4 1I. Sectors I of Arrears I of Portfolio L2fAIr& S of Portfolio - Hotels & Tourism Transportation V Manufacturing Cement ( 9.1) (14.0) W 1 Food ( 8.5) (28.0) ( 4.4) ( 6.7) Sugar ( 1.9) ( 0.2) ( 2.2) ( 2.1) Textiles ( 0.7) ( 0.2) ( 3.7) ( 2.1) Chemicals - ( 2.3) ( 0.4) ( 0.3) Wood Products (9.2) ( 1.5) ( 0.7) ( 4.2) Miscellaneous (12.0) jj ( 2.2) 1/ (30.2).i (29.7) 11 - Others / Includes printing and publishing, brewery, cold storage and ice plants, rice milling. V Included in Others. / Includes leather industry, beverages, rice milling, cement.

31 Nepal Industrial Develoment Cornoration Credit 705-NEP Proiect Completion Report Suburoiect Data 1/ Proiect Costs 2/ (go 000) Approval Dates Subloan Disbursement Appraisal Actual Cateaor,/Counanv NIDC IDA Amount in US$ Local Poreisn Total Local Foreign Total A-1 Nepal Pest cide 6 Chemicals Ltd. June 77 Feb.78 87,040 72, ,039 1, ,359 A-2 Karnali Rice Mill June 77 Mar.78 94,720 23, (1,156) (1,156) (2,302) Under Isplementation A-3 Bial Iron Steel (P) Ltd. July 78 Dec , , ,282 4,208 1,089 2, A-4 Godavari Marble Industries Ltd. Nov. 78 Jan , , ,875 4, ,392 6,489 9,881 N-5 Hotel Jaya International (P) Ltd. July 78 Feb.79 1,000, , (19,838) (11,423) (31,261) Under liplmentation A-6 Gandaki Noodles Ltd. June 80 Sep , , ,783 3,772 1,003 3, A-7 Hetauda Leather Industries Ltd. NoV. 80 Mar , , ,365 19,073 28,438 7,368 22, A-$ Uimalayan Orewery Ltd. Oct. 80 Mar.82 1,000,000 1,057, ,281 16,004 21,285 3,992 23,661 27,653 A-9 Nepal Beverage 6 food Products (P) Ltd. Mar. 82 may , , ,140 7,530 13,670 4,557 13,626 18,183 A-10 Nepal Bioextruders Ind. Canc. Cane O A TOTAL XJ 3,670,325 2,963, ,107 53,889 78,996 21,780 73,163 94,943 B-1 Binayak Textile (P) Ltd. May 79 Jul.80 31,000 30, s 8-2 Chitwan Feed Industries (P) Ltd. Dec. 78 Jul.80 69,583 50, , ,282 "> 8-3 Cbitwan Paper lag (P) Lt4. June 79 Jul.80 20,000 12, }-4 Pritting & Pctkage (F) Ltd. Dec. 78 Jul.80 20,833 24, I-5 Narayangadb Automobile (P) Ltd. may 80 Jul.80 33,000 20, B-6 Shastika Kstha Canc. Cance B-7 DUa Colour Lab Canc. Cacn B-8 Colorma Cane. Canc B-9 Lambini Vidut Udyog (P) Ltd. July 80 Sep.81 78,000 63, ,107 1, , B-10 Bottlers Nepal Ltd. July 80 Sep.81 25,530 24, ,843 7, ,835 9,775 B-11 Nahendra Agro Ind. Cauc. Canc Perta Roda Dbungs (P) Ltd. Feb. 80 Sep.81 18,350 17, }-13 Jai.4ree Kapada (P) Ltd. Nov. 80 Sep.81 36,000 3,; Under Implementation }-14 Shrectha Bakery (P) Ltd. Feb. 80 Sep.81 28,000 2, B-15 shaavir Alminiun (P) Ltd. July 79 Feb.82 55,572 44, , ,374 B-16 Narqyan Industries (P) Ltd. Fib. 83 Feb.84 40,540 31, , ,286 B-17 Sharp Abrassive (P) Aug. 83 Feb.84 33,445 22, Dibaya Autemotible (P) Ltd. Feb. 83 Feb a TOTAL J ?.U 5.4t0 11.4I A + b TOTAL 4,190,245 3,326, ,577 65,370 95,947 27,794 87, ,387 As of January E lxcludes working capital costs. 2/ net projects under iapleamtation D